• The Necessary Evils Portfolio offers defensive investing opportunities through companies with stable, inelastic demand.
• High regulatory barriers and infrastructure costs create strong economic moats for established market leaders.
• The portfolio includes key companies in essential sectors like waste management, chemicals, and environmental services.
• Long-term demand is supported by key trends like population growth, urbanization, and environmental regulation.

The Dirty Work: Why Boring Might Be Brilliant for Your Portfolio

Let’s be honest, shall we? Most of us, when we think about investing, get drawn to the bright, shiny objects. The tech disruptors promising to change the world from a garage in California, or the biotech firms on the cusp of a miracle cure. It’s exciting, it’s glamorous, and it makes for a great story down the pub. But I’ve always found that the most compelling opportunities are often found in the places nobody wants to look. The grimy, unglamorous, and frankly, quite dull corners of the economy that just keep chugging along.

I’m talking about the companies that do society’s dirty work. The ones that collect your rubbish, treat your water, and manufacture the industrial chemicals that are in almost everything you own. These are the necessary evils of a functioning world. They aren't pretty, but their very necessity might just be their greatest strength.

The Unshakeable Nature of Need

Think about your own life for a moment. When times get tough and you need to tighten your belt, what’s the first thing to go? It’s probably the fancy meal out, the new gadget, or the weekend away. What’s the last thing you’d ever stop paying for? The services that keep your household from descending into chaos. You’re still going to put your bins out for collection, and the factories that make your food and medicine are still going to need their chemical inputs.

This is the simple, powerful idea behind these businesses. Their demand is what economists might call inelastic, but what I call stubbornly persistent. It doesn’t really matter if the stock market is soaring or sinking, the fundamental need for these services remains remarkably stable. This creates a potential bedrock of revenue that companies selling discretionary goods can only dream of. It’s a defensive quality that, to me, looks particularly attractive when economic uncertainty is in the air.

A Fortress Built of Red Tape

Now, you might think, if this is such a steady business, why doesn’t everyone start a waste management company? The answer is simple. It’s an absolute nightmare to do so. The regulatory hurdles are immense, the capital required to build the infrastructure is eye-watering, and the public is, shall we say, not always thrilled to have a new landfill or chemical plant as a neighbour.

These high barriers to entry create a formidable protective moat around the established players. Companies that have been in the game for decades have already navigated the labyrinth of permits, invested billions in infrastructure, and secured long term contracts with municipalities. For a new competitor to challenge them is almost unthinkable. This lack of competition can give established firms a degree of pricing power and market stability that is incredibly rare. While no investment is without risk, this structural advantage is certainly something to consider.

These companies are the unseen scaffolding of our daily lives. They are the operators working behind the curtain, ensuring the show can go on. For investors who believe that stability has its own kind of appeal, exploring a collection of these industrial stalwarts, like the Necessary Evils basket, could offer a different perspective. It’s a strategy that bets not on the next big thing, but on the things that must always be.

Deep Dive

Market & Opportunity

• Companies provide indispensable services with inelastic demand, creating defensive characteristics during economic downturns.
• High regulatory barriers to entry protect established market positions for existing companies.
• Services are considered essential infrastructure that society cannot function without.
• Switching costs for industrial customers are high, creating customer stickiness and protecting market share.

Key Companies

• Waste Management, Inc. (WM): North America's largest waste management company operating an integrated network of collection routes, transfer stations, and disposal facilities.
• Republic Services, Inc. (RSG): A leader in the solid waste collection and recycling sector with operations deeply embedded in community infrastructure.
• Waste Connections Inc. (WCN): Focuses on secondary markets and integrated service offerings, often growing by acquiring smaller regional operators.

Primary Risk Factors

• Regulatory changes can impose additional costs or alter competitive dynamics.
• Potential for unexpected expenses from environmental liabilities.
• Public opposition to certain activities can create operational challenges or limit expansion.
• Competitive dynamics can shift due to mergers, acquisitions, or new entrants.
• Commodity price fluctuations, such as fuel and chemical feedstock costs, can affect profitability.

Growth Catalysts

• Long-term demand is supported by population growth and urbanization trends.
• Technology adoption, such as route optimization software and advanced monitoring systems, improves efficiency and reduces costs.
• Industrial activity and evolving manufacturing trends influence demand for chemical and environmental services.
• Increased focus on climate change and environmental awareness creates new opportunities in remediation, pollution control, and sustainable waste management.

Investment Access

• The Necessary Evils Portfolio is available on the Nemo platform.
• Nemo is an ADGM-regulated platform.
• Offers commission-free investing.
• Provides access to AI-driven research and user-friendly tools.
• Fractional shares are available starting from $1.