While the business world is constantly changing, there are always opportunities for investors to generate high total returns. Certainly, there are many ways this can be done. However, here are three areas of interest for investors which will always provide the chance to make a significant profit in the long run.
Upward rerating
While share prices across the globe have risen significantly in recent years, there are always some stocks which offer upward rerating potential. This is true in any market conditions – whether there has been a bear market or a bull market. Such companies may trade at discounts to their intrinsic values because of challenges they are facing within their respective industries, or internal problems which have pegged investor sentiment back. Either way, focusing on value investment opportunities is one route to generating high total returns.
Furthermore, share prices have never risen in perpetuity. A Bull Run is always followed by a bear market. As such, waiting for a more opportune moment to buy a range of shares could be a sound strategy. They may offer significant upward rerating potential in the long term.
Technological change
Another area of interest for investors could be changing technology. This is not limited solely to the technology sector, since companies in a range of industries develop and employ improved technologies which may provide them with a competitive advantage versus peers. This can lead to greater efficiency, more profitability and a higher share price.
While it is always difficult to envisage the direction and speed of technological advancement, it will be a constant in future. History shows that technology never stands still, and it could provide a growth avenue for Foolish investors in the long run.
Compounding dividends
While dividends may not be the most exciting aspect of investing, history shows that their reinvestment can contribute a major part of total return over a prolonged period of time.
Certainly, dividends are not particularly common or all that impressive at less mature companies which require large amounts of capital to deliver on their growth strategy. However, mature companies which do not require major reinvestment are likely to exist in the long run due to their entrenched positions within their chosen markets. The dividends they pay could increase over time, with their reinvestment by investors providing an opportunity for compounding to have a positive impact on overall returns.
Takeaway
While making a million in the stock market is never easy, focusing on strategies with longevity could be a sound means for investors to generate a seven-figure portfolio. In the long run, there will always be value opportunities for a variety of reasons, while bear markets will inevitably provide the potential for upward reratings. Similarly, embracing technological change and generating high dividends which are reinvested could also help you to increase the value of your portfolio in the long run.