Our values and principles drive our strategies and tactics. We are paying special attention to three themes in today’s investment markets.
There is going to be a lot of innovation and change in personal transportation in the years ahead. Some of us are already driving cars that warn us when we drift from our lanes, or have another driver in our blind spot, or actually apply the brakes when a hazard appears. Hybrid and electric vehicles are gaining market share from traditional gasoline engines. Whether these technologies lead to self-driving, emission-free cars or not, continuous technological improvements will be part of the landscape.
The suppliers of sophisticated vehicle components and controls and electronic displays may be beneficiaries of the innovation wave, no matter which manufacturers do the best.
Health care broadly defined has come under pressure in the markets for a variety of reasons. Politicians have jumped on the pricing scandals that seem to reveal greed or corruption. Health insurance costs are skyrocketing for some kinds of coverage as our payment system has been transformed from one kind of hash into a different kind of hash.
At the same time, the biopharmaceutical companies offer real cures and solid advances in the treatment of diseases, with amazing things coming. We human beings value life and health and will pay for it. If we own a selection of the largest profitable companies in this space, we may have the opportunity for above-average returns from currently depressed levels. No guarantees, of course.
The third theme is mature in some respects, since we’ve followed it for years. Energy and natural resource companies remain attractive. Prices remain substantially lower than the peak levels of a few years ago, trends are pointing in the right direction, future supplies have been constrained by low prices and global demand is generally strong.
We believe these three themes—the evolution of the auto, biopharma, and natural resources—honor our principles. When we seek bargains and to avoid stampedes in the markets, we gravitate towards sectors that have solid prospects and haven’t become over-priced by becoming too popular. These are our opinions, of course, not facts or guarantees. Please call or write if you would like to discuss whether these themes might be appropriate for your portfolio.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.