The famous investor Peter Lynch was a proponent of using your own day-to-day experience and spending patterns to find investment opportunities.  He advised investors to look for trends in places where you like to shop and spend money on a regular basis to see if it could be an investment opportunity.

Another investment strategy is to look at megatrends that have a big impact on society and see if you can spot an investment idea.  The purpose of this article is not to make specific investment recommendations, but to point out themes and megatrends where you can look for potential investment ideas.

Web 2.0

The advent of the web brought many investment opportunities.  In fact, the investment options were too many, and they came too fast, leading to the disastrous bust of the dot-com bubble.  After a short hiatus, the web investment opportunities are back.  This time companies are more mature and business models are better defined.  Profitability is no longer considered an “old-economy” concept, and the lavish parties have been replaced with tight controls on spending.

So what are some of the Web 2.0 investment ideas?  Open source software certainly seems to be gaining good momentum and a number of companies are looking to challenge the 800-pound gorillas like Oracle, SAP and Microsoft with open source solutions for CRM, ERP, databases, and office software solutions.

Social networking companies were a big hit in this second wave of web-based solutions, but this market now seems a bit crowded with MySpace, FaceBook and LinkedIn having taken leading positions.  Will others social networking companies do well?  It is hard to say, but keep an eye on where young people congregate on the web, and you may find new investment ideas.

Video is here to stay, as demonstrated by the popularity and high sales price of YouTube.   The convergence of technologies will make video even more prevalent, and it will become ever more difficult to distinguish computers from other appliances such as televisions and cell phones.

Whether it is videos, social-networking, open source web-applications, or other ideas yet to be unveiled, investments in web-based companies are back.  The next Google maybe in its early stages of formation right now.

Wikinomics

Wikinomics is another emerging trend that should not be ignored.  Mass collaboration through wikis has proven to be an effective and powerful means to increase innovation and reduce cost.  Look for companies that use wikis effectively and you might find a great investment idea.  For more information on this topic, see the article “Wikinomics”.

Global Warming

Global warming is causing shifts in weather patterns that can have profound implications for humanity.  The USA Today reported on how investment firms are busy trying to identify what stocks and sectors will benefit or be hurt by these changes.   Lehman Bros. issued a 143-page paper called “The Business of Climate Change”.  “Global warming is likely to prove (to be) one of those tectonic forces that – like globalization or the aging of populations – gradually but powerfully changes the economic landscape” says John Llewellyn, senior economic policy adviser at Lehman.

Here are some global warming related investment opportunities:

Agriculture – Ethanol is gaining greater interest and momentum as an alternative fuel.  This is boosting demand for farm equipment and other technologies that help protect crops.

Alternative Energy – Windmills, fuel cells, solar panels and other green methods of generating energy are regaining popularity and the technology keeps getting better.

Automotive – Many automotive companies are producing cars with the technology to run on either gasoline or ethanol.  Other solutions such as hydrogen, clean diesel and biodiesel are becoming more promising, and could be good investments.

Financial Services – The Chicago Mercantile Exchange is benefiting from the trade of weather contracts which has increased tenfold since 2004.  Options and futures trade allows insurance, energy and utilities companies to hedge potential losses related to weather.  Another area of growth in Financial Services is “green” investment vehicles such as the mutual funds offered by Domini Social Investments.

Technology – Technology that exists right now could reduce the world’s power use by 30% overnight, says Alex Lidow, CEO of advanced control maker International Rectifier.  The manufacturing of energy saving devices has huge investment potential, and International Rectifier is benefiting from this growing business.

Security

Since 9-11 security has become a recurring concern that has fueled innovation in this area.  From biometric scanning devices to robotics, staying one step ahead of the bad guys requires investments in new technologies, and many companies are trying to benefit from this trend.  Another area of concern is identity theft and cyber security.  Software companies are constantly struggling to make software more secure, and companies that can improve e-commerce security and create innovative ways to protect personal identities will do quite well.

The Graying of America

The oldest baby-boomers are starting to enter retirement age.  The need for services for the elderly is about to explode.  This creates a tremendous opportunity in healthcare, entertainment, tourism, and other services that cater to making life easier for this large demographic sector.

These megatrends are creating significant changes in society, and therefore, can become opportunities for smart investors who can find the right investment vehicles to leverage these changes.