Eric serves as a Portfolio Manager and a member of the Investment Committee at Accuvest Global Advisors, sub-advisor to a consumer-oriented strategy at Rational Funds. As a member of the Investment Committee, his responsibilities include research, investment analysis, technical analysis, macroeconomic commentary, and portfolio strategy & implementation. Eric is a frequent writer about the power of the consumer spending theme and global consumption trends. He is a brand consultant and leads the Alpha Brands Consumer Spending Index committee. He holds the Series 7 and 66 licenses.
My team and I are constantly looking forward, and trying to get into the mind of consumers to identify potential investment opportunities. 2020 was the year where portfolio concentration, expensive growth stocks and active trading was a winning trio. 2021 thus far has been the mirror opposite with value significantly outperforming growth and re-opening stocks and cyclicals offering strong portfolio value.
As thematic investors who assess global consumer spending trends, we have so many exciting secular trends to explore. One of the largest and most prominent consumption trends is the dramatic rise in Fintech innovation and the slow but steady death of cash as the primary method of transactions. Cash used as a percent of total global purchase transactions is estimated to be roughly 70% so it’s still very large.
Let’s connect the dots as U.S. investors to see if there’s any obvious allocation decisions we can make based on the definition of core. Largely, when an investor decides to invest in a “core” passive vehicle, it’s an index ETF and when they choose an active fund, performance-chasing is often the primary driver of the fund selection.
As human beings, we consume from the day we are born until the day we pass. Personal consumption is the largest and most predictable phenomenon there is. Seven billion people spending money to acquire things they want and need always offers interesting investing opportunities. Sometimes, however, certain spending categories become more important than others.
This weeks blog is a continuation from last weeks theme of a return to social gathering and normal consumption spending as we head into 2021. Mean reversions are one of the best opportunities in the investment business.
When one plots the full business cycle on a chart it looks a lot like a mountain range or a roller coaster. There are peaks and valleys and period of “goldilocks” in between. Unfortunately, as investors we have to take the boom and bust cycles together.
I don’t know about you but to me, 2020 feels like it’s about three years long. The market started off the year incredibly well only to fall off a cliff in late February. Since February, there’s been significantly higher uncertainty than any of us are used to.