consumer staples

That ’70s Post

photo shows a close-up of the 1970s LOVE postage stamp for 8 cents

A TV sitcom from the turn of the millennium, That ‘70s Show was the story of teenage friends in the late 1970s. A period piece, the trappings of the show remind me how dramatically the life of the American consumer has changed—and yet the ’70s might come around again.

No, we are not going back to a time when the great new retail products included patented suitcases with wheels, Mr. Coffee automatic coffee makers, and Pong games. But for certain economic trends, That ’70s Show might seem more relevant once again.

Back then, inflation and interest rates were at multidecade peaks, up in the teens. Commodity prices were roaring higher, and shortages emerged. For forty years now, interest rates and inflation have been sliding: rates for each have been near zero for years.

Perhaps, finally, the trend is changing. Inflation rates and interest rates may rise again—perhaps persistently, for a period of years. No one knows for certain.

Inflation means rising prices. Just consider the changes you might have noticed recently with houses and cars and lumber, even our groceries and gasoline. Seems prices are on their way up, quickly in some places.

These things have major effects on the investment markets. Bonds and other fixed income investments may struggle if interest rates move higher; commodity producers may benefit from rising prices. Keep in mind that winners and losers emerge when things change.

We may be getting that ’70s feeling in some ways, but it’s a good reminder that history has provided a solid foundation for our work here with you.

Clients, if you would like to talk about this (or simply reminisce about the ’70s), email us or call.


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Portfolio Developments, Emerging Themes

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This has been an eventful year in the markets, to put it lightly. Unforeseen events have had dramatic effects.

We wrote about some of the themes in our portfolios last fall. Airlines and biopharmaceutical companies both seemed attractive, with valuations at seemingly favorable levels. Needless to say, global pandemics turn out to be as great for biotechs as they are lousy for airline travel.

Our natural resource holdings had similar variation. Turmoil helped the shares of precious metal miners and hurt the shares of industrial metal producers as much of the global economy shut down.

We are keeping the long view in mind. The next energy revolution, driven by solar power and batter storage, will still require higher production of copper and other minerals. The decades-long trend toward higher levels of air traffic will resume. These are our views.

As we review the finances and prospects of our holdings and rebalance where appropriate, another theme has emerged. The shares of some basic kinds of companies, those involved in food and shelter and beverages, have gotten to bargain levels, in our opinion. It seems like it has been a long time since we felt that way, and we are excited to add holdings in these lines.

Last fall we believed that international equity markets had some attraction based on value compared to US holdings. We are more excited now about the emerging bargains we perceive here in the US.

Clients, these are the conclusions our principles and our processes are leading us to. If you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. .

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets..

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.