I’m sitting by a swimming pool eating watermelon and a few things have drifted into my mind, as they always do when I am removed from the normal distractions of daily existence.

First, I think the idea that there is a shift going on away from consuming products to consuming experiences is Western-centric. I think it’s true that there is a shift towards experiences in regions like the US and Europe, but this is less true in other parts of world. For example, there is plenty of research showing that when people move from relative poverty to relative wealth they start buying products that are an outward display of prosperity. But as this wealth becomes normalized the spending becomes more inner-directed. Thus, a shift away from clothes and cars towards the inside of a home or towards education and travel.

So here’s a prediction. In developing markets (e.g. the BRICs) luxury goods will do well, whereas in developed markets luxury goods companies will have to warp their products around sensory experiences or even membership clubs. So, yes, consider buying shares in luxury goods companies, but only if they are well established in emerging markets.

Of course, there’s an immediate flaw in this argument. What about the Indians and the Chinese versus the English and Americans when it comes to education?

BTW, speaking of education, according to an interview with Andy McNab in the FT, recruits going into the infantry division in the UK army used to have a reading age of 12. Now it’s 7.

A second thought. There will be more bubbles in the future because global connectivity is acting as an accelerant for herd behaviour. Moreover, the scale and frequency of such bubbles will grow dramatically. I think gold is a current example of a bubble about to burst. Only a genius would dare to suggest when exactly this will happen but I will make a vague prediction of within the next 18-months.