Commentary
The silver economy: A secular opportunity
July 2, 2026
Before we discuss the silver economy, let’s talk about the markets as we are at the mid-year mark.
Rumbling grows louder and louder that we are in stock market euphoria. By many metrics, including trading volume, margin debt and multiples, in our view, this is shaping up to be one of the biggest stock market bubbles in history.
If we go back to 2000, we had a different market composition.
- Passive investing was less than 20% – today, it is over 50%.
- Retail share of trading was less than 10% – today, it is above 20%.
- There were no leveraged ETFs, zero-day options, etc.
- Hedge funds managed around $600 billion – that number is now above $6 trillion.
- Active managers were mainly fundamental bottom-up, split about equally between value, growth and core.
- Systematic investing (quantitative funds) accounted for the management of $200 billion – today, around $2 trillion.
So, what happens when this bubble deflates? In our view, today’s market structure differs materially from prior cycles, making historical comparisons more challenging.
What is risk in this situation? Is it underperforming the market or is it losing money? Pension funds have an estimated rate of return of 6 or 7%. Should they look to reduce risk? Diversify their portfolio?
Diversification, quality and long-term opportunity
At Global Alpha, we believe in building true small cap portfolios, diversified by country, currency, sector and industries. At the same time, we remain exposed to different long-term secular industries. We buy quality companies, defined by stronger growth and margin profiles; with strong balance sheets and low debt.
Unfortunately, this approach has not been rewarded over the last few years. Not even for famed investors like Warren Buffet who underperformed the S&P 500 by 20% and the Nasdaq-100 by 30% year over year.
As he famously said, “Be fearful when others are greedy, and greedy when others are fearful.” Perhaps he viewed the overconcentration as others being greedy, which recalls another Buffet quote:
“Only when the tide goes out do you discover who’s been swimming naked.”
As investors clamoured to the top ten, the rest of the small cap universe was left a little stark.
On that note, there’s still opportunity in the markets, represented by the silver economy.
A trend that never gets old
From Japan to Italy to the United States and Canada, the world is facing the largest demographic shift in its existence. According to data from World Bank Group, about 16% of the current population (ex-Africa) is over 65. And 18% is less than 14. By 2050, it is expected that less than 15% of the population will be less than 14 and over 26% will be over 65.
World Bank Group also indicates that Japan is the globe’s fastest aging society. 35% of its population is over 65 years of age, with 6% of that older than 85. By 2050, more than 50% of the population will be above 65 years old.
Countries like Korea and Italy are not far behind. What does an aging, “silver” population mean for investments?
A population that is only getting older means that there are growth prospects for companies that offer or adapt their products to cater to that demographic.
In our portfolio, we have several names that are in that category:
- Extendicare Inc. (EXE CN): a Canadian operator of long-term care as well as one of the largest providers of home health care in Canada.
- Service Corporation International (SCI US): one of North America’s largest providers of death care services.
- Challenger Limited (CGF AU): one of the largest providers of annuities in Australia.
- Globus Medical Inc. (GMED US): a medical device company focused exclusively on spine disorders.
We also have many other companies in the portfolio who have a growing part of their revenues addressing this market. One such company is Shanghai Conant Optical Co. Ltd. (2276 HK), which is the second largest global manufacturer of optical lenses and a leading manufacturer of lenses for smart glasses.
We also own WeRide Inc. (800 HK, WRD US) a diversified, Robotaxis, Robobuses, Robovans, autonomous driving stack and software licensing, deployed globally in China, the Middle East and Europe.
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Overall, while current markets may be expensive and structurally different from past bubbles, investors should focus on diversified, quality small-cap companies exposed to durable secular trends. Our team is constantly looking at thematics to identify long-term trends like this one of the silver economy.
The securities identified and described do not represent all securities purchased, sold or recommended for client accounts. It should not be assumed that investments in these securities were or will be profitable.
