Investors are quite confused as to how to play the stock market - they're unsure of what to believe and how to evaluate opportunities after the big swings that have been happening since 2007. How do you invest based on bottom-up fundamentals when you are not sure you can trust the reported fundamentals or how to you follow the technicals if the market does not charting a "normal" course?

The answer may lie in focusing on top-down analysis honing in on specific themes - areas of the economy you feel will benefit from trends that will persist for a given time period. For 2010 and beyond, persistent themes include a commodity "supercycle" that focuses on materials for building infrastructure, improving the ability to grow food and treatment for the side effects of metabolic syndrome. (For more, see What's the difference between "top-down" and "bottom-up' investing?)

Commodity Supercycle
The growth of some emerging economies and the re-birth of others have created a high and elongated demand for commodities that build infrastructure. Brazil, India, Russia and China, the BRIC nations, are leading the way in the demand to improve and build new infrastructure to accommodate their growing status in the global economy. One commodity that is the basis for many components of infrastructure is copper because it has important chemical and physical properties needed for building and there are no real substitutes. The global demand for copper is expected to result in a shortage of 88,000 tons next year causing an expected 25% increase in price.

In addition, analysts expect an increase in demand and prices to continue until 2012. This positive theme bodes well for companies like Freeport McMoran (NYSE:FCX). FCX is the world's largest publicly-traded copper company and it estimates EBITDA will increase by $375 million with a 10 cents per pound increase in copper prices. A high sensitivity to the price of copper and a stable and strong demand outlook make this a compelling theme. (For more, check out Where Top Down Meets Bottoms Up.)
Feed the World
Global hunger continues to plague our world. Many countries, such as the aforementioned BRIC nations, are experiencing improvements in GDP and their citizens are demanding more and better food products. As such, companies that can improve food production capabilities in geographies that previously had difficulty producing any agriculture products, and can increase production levels in countries where the demand is increasing due to a higher wealth status can benefit from these trends.

Monsanto
(NYSE:MON) and CF Industries Holdings Inc (NYSE:CF) are two such companies. MON, a leader in agriculture productivity, and seed and genomics, produces modified seeds and other products to help agricultural products grow in more difficult conditions and in faster times with greater yield. The company estimates total gross profit growth of almost 28% from 2009 through 2012, with 2010 estimated growth of 13-15% over 2009 in the all important seed and genomics business. CF is one of the largest manufacturers and distributors of fertilizer products that improve the quality and yield of agriculture products. The company notes that global consumption should continue to outpace production. This means that the need for increasing yields is great and one such method for increasing crop yields is to use fertilizer products. (For more, see Top-Down Analysis: Finding The Right Stocks And Sectors.)

Trimming the Fat
Metabolic Syndrome is the name for a condition that exists when a group of risk factors come together to increase the risk of diabetes, stroke and coronary heart disease. The main symptom is excessive weight around the middle of the body and can result in kidney disease, heart attack and diabetes, among others. This type of obesity is on the rise in the U.S., with the latest data showing that 32% of adult men and 36% of adult women are obese, a trend that has been steady. As a result, companies that treat the side effects of the syndrome will benefit from this trend. Davita (NYSE:DVA) provides dialysis services to those with chronic kidney disease. Due to the increasing trends of U.S. obesity, DVA has demonstrated a five-year revenue growth rate of almost 23%, and these trends do not show signs of reversing.

Conclusion
When investors are finding it difficult to uncover stocks that appear attractive based on a bottom-up approach, a top-down analysis may provide opportunities. Theme investing focuses on trends that will be maintained or will accelerate in the future; thus it requires a long range viewpoint making it a difficult task. Infrastructure build and food supply/demand imbalances of emerging countries are trends that have been strong and will persist in the future. Obesity in the developed world, particularly the United States, will continue to lead to ancillary problems that will require the spending of more health care dollars. After identifying these trends, stock selection can result in positive investment returns. (For more, check out A Top-Down Approach to Investing.)

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