Future trends should likely benefit a broader range of companies
In addition to the parallels between today’s market environment and that of the early 2000s, perhaps more importantly, while technology and artificial intelligence will be an important part of our daily lives, we believe future trends will likely benefit a wider cohort of sectors and industries outside of just the technology-centric US companies of the past decade. Trends such as increased capex spending (versus opex only), spending to upgrade infrastructure, energy and the energy transition, defense and national security, as well as the reshoring and the localization of supply chains, just to name a few. And while many US companies stand to benefit from these trends, many more international companies stand to benefit as well. And while the US dominates the technology landscape globally, it would be naïve to assume that all the best companies in the world across a wide subset of sectors and industries reside in a single region or country.
Conclusion
So just to bring things full-circle, I think we can all agree that over the next decade, whether it's monetary or fiscal policy, inflation or interest rates, or areas where future investments are likely to be made, all point to a landscape vastly different from the past decade and one where market leadership should expand across a wider subset of sectors and industries (versus just mega-cap tech) as well as countries and regions (both US and international). Additionally, in a world of higher interest rates and higher inflation, what you pay for the companies you own (i.e., valuation) and the quality of businesses you own will matter greatly.
And finally, and perhaps most importantly, the long-standing benefits of diversification, in what could prove to be a more difficult environment for risk assets versus the prior decade where quantitative easing and access to “free” capital was abundant, could potentially help investors meet their long-term investment goals as we enter this new and much different cycle versus the last. Starting points matter.
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