Depending upon their industry and its growth outlook, stocks in the U.S., Japan, other growing countries such as Canada, Australia, India, China, and Europe, are moving ahead. Depending upon their near- and intermediate-term outlook, some sectors are moving haltingly — sideways or down — and some are moving upward vigorously. Other markets, including emerging markets, will have a much tougher time moving ahead, as they are bedeviled by numerous logistical, political and economic headwinds.
We favor specific industries and assets in the countries mentioned above for investment. We have mentioned them in many past letters: growth industries in software, biotechnology, technology hardware, cybersecurity, logistics, communications, food, online retail, and alternative energy, as well as hedges against future inflation and political instability, including gold. It would be normal at this stage of the cycle for volatility to increase as we near the election in the U.S. As a result, we recommend buying the dips.
We believe that liquidity being created by the Federal Reserve and other central banks and the governments of many growing nations is now and will continue to provide massive liquidity, which will stimulate world economic growth. In summary, short-term we may see some volatility; longer-term, “Don’t fight the Fed.”
Thanks for listening; we welcome your calls and questions.
