What’s the best thing to talk about when the market is firing on all cylinders? Recessions, of...
3 Huge Themes for 2012 and Beyond
02/02/2012 11:43 am EST
Investors who follow megatrends in technology, food, and financials are likely to see big gains in the next bull run and onward, said Bill Carrigan during an interview late last year.
Bill, give us your take on the longer-term market conditions.
Longer term, I’m quite bullish. All we need is a bit of good news from the US on their economic stimulus package, and if the market likes it, the market will probably surprise in the upside…and probably continue up for a couple of years.
So, I think the key is for investors to pick your spots. I like to use a term what I call the dominant theme. I think you’ll do best if you pick a theme that is going to work over the next several years and stick with that theme. And I’ve got a couple in mind if you’re interested.
I am. Tell us about them.
OK. I think the obvious one is technology. I think we had a technology boom in the 80s and 90s, and that was the first tech boom. That technology boom was the Internet rollout and the birth of Apple (AAPL) and Intel (INTC) and so on.
That was primarily concentrated in the English-speaking countries. Now, we’re going to have an echo tech boom which is global. So we’re going to have global rollout of Internet and so on. I think that’s got legs, and it’s got a long way to go.
The other theme, I think, is food. I would find a way to own what I would call the "soft commodities." So you know, coffee, cotton, wheat, beans, and so on. There are ETFs that can do that. In Canada, I think we have the Claymore Agricultural ETF (Toronto: COW), and in the states we have the Market Vectors Agribusiness ETF (MOO) and the PowerShares Agriculture Fund (DBA).
So there are lots of products out there so you can enjoy these things. These are long-term holds as far as I’m concerned.
And do you own any of these ETFs you just mentioned?
I own the COW.
OK. Tell us some ideas in the tech sector that you just alluded to.
The best thing to do is don’t stock pick. I think the best thing to do is just grab an index, say like the Nasdaq-100 ETF (QQQ), or you might buy the networking index. But just buy the Nasdaq and hold the Nasdaq for say five or six years, and you’ll be fine.
And do you own QQQ?
Yes, I do.
Any other sectors or asset classes that may be worth some research time?
There is one asset class that’s been brutalized, which might be very beneficial to investors who want to ride this thing for say six to nine months, and that’s US financials. Absolutely slaughtered.
I think that when these things recover, they will provide us significant returns. Because we cannot have a bull market unless we have the financials—you know, the bank stocks on board. So that’s a brutalized area. Everybody hates it. It might be a good place to be.
And, once again, would you advise looking at some sort of ETF, or is that an area where people should stock pick?
Use an ETF. Just buy…I think it’s the Sector Select SPDR Financial (XLF). Just buy the SPDR Financial.
And do you own that one?
Yes, I do, as a matter of a fact. Recently.
So, Bill, you mentioned global strength. How should investors play that?
The best way to play the global story, if you believe in that story, is still in the Dow, because the Dow is rich with multinational corporations that do business all around the world. To own the Dow, you just simply buy the Dow, and you use an ETF, the Diamonds Trust (DIA). That basket gives you the 30 stocks of the Dow.
When you look at the Dow, which is rich in multinationals, also you’ll find that two-thirds of these stocks are actually yielding more than the US Treasury, which I can’t even remember when this has ever happened. So there is another compelling reason to own the Dow.
And do you in fact own that ETF?
I own it through an ETF in Canada and I can’t recall the symbol, but it’s an ETF. But I do not own the US one.
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