Early Cycles Turning?  (Part 2)

Misguided energy policy raises the probability of short-term energy shortages.  Any unforeseen event or interruption of supply can create shortages that are much worse because of the lack of flexibility in the global supply chain for energy to meet the unanticipated demands of the crisis in question.

We as investors are faced with seismic changes in markets and the industries we invest in via bond and equity markets. New technologies, demographic changes, climate change, these and many other sources of change often result in the old order changing, sometimes very rapidly.

This week we want to introduce another sector we think is exhibiting the characteristics of being at or close to cycle lows.

Understanding business cycles is critical to successful investing in many sectors of the economy.  In the coming weeks, we’ll be giving examples of sectors where we see cyclical highs or lows, where investors should be considering reducing or increasing exposure.

The current situation facing investors is highly uncertain and very challenging. The question many of our investors, partners, and clients have been asking recently is:  what’s going to happen and how do we invest?

We believe that growth and value strategies are not, necessarily, mutually exclusive.  It is possible for a stock to exhibit the characteristics of both!

An increasingly common view is that the United States is in decline relative to China, the dollar is under threat and as such, US assets may not provide strong returns in future.  We analyse this narrative and give our view. Hint: we are bullish America.

Managing an investment portfolio is a very complicated and challenging task to perform!  We see many similarities between constructing a successful portfolio to the way a successful football manager, like Pep Guardiola at Manchester City, manages a successful Premier League winning team.

Climate change may seem scary to many, but to us as long-term investors, we are genuinely extremely excited about the investment opportunities on offer today in this mega-trend in the global economy.

As investors, it is the long-term that really matters.  Despite the short-term uncertainty and risk of further bouts of market weakness, for the long-term minded investor there are some very attractively valued assets available today.