Technology is the New Oil: The Changing Nature of Emerging Markets
A variety of macro and fundamental factors are converging in emerging markets, signaling a period of resurgence. We believe structural changes, a supportive investment environment, and dynamic geopolitical influences make EM particularly attractive right now. For example, semiconductor production could soon become more critical to EM growth than commodities. Now may prove to be an inflection point, especially for portfolios focused on capturing this dynamic change. Please join us for an interactive webinar highlighting EM's changing nature and the added value of active management.
Technology’s Rising Importance in Emerging Markets
Whereas commodity production had been a major economic driver in emerging markets, we think technology is now the leading force. Semiconductor advancement is the “new oil.” semiconductor companies are so far ahead of their competitors that supply is in fact a constraint—and therefore a major investment consideration.
Wasatch Market Scout: Our Thoughts on Stock Valuations
If we do a good job of investing in high-quality companies with the potential for strong, long-duration earnings growth, we think starting valuations will matter less in generating attractive long-term performance. When we invest in a company with a high P/E ratio today, we don’t do so with the expectation the ratio will stay high indefinitely.
Opportunities Outside the U.S.
Even after the partial rebound from COVID-related losses, we think high-quality companies in certain developed and emerging markets remain compelling investments. High-quality companies outside the U.S. look especially attractive to us.
U.S. Small Caps After a Downturn: Stock Declines in Early 2020 Likely Created Attractive Valuations
To get a handle on the state of U.S. small caps after the pandemic-induced losses in early 2020, we ask: How did the U.S. small-cap group perform relative to other market-cap groups during the several years through 2019? How did they perform during the downturn...
Market Scout – Trusting Our Instruments and Covid-19 Update
Like a pilot relying on a plane’s flight-control instruments during an unfamiliar route with poor visibility, we are depending more than ever on our fact-based, unemotional investment methods. The overwhelming majority of our investments are in companies that we believe are built to withstand harsh economic shocks. Only on the margin have we slightly increased our trading activity.
Staying Humble, Focused on the Long Term
Although the relative performance of the Wasatch investment strategies was mixed during the third quarter — some strategies were a bit ahead of their benchmarks and some were a bit behind— the 2019 year-to-date and longer-term results (i.e., five years) have been exceptional across most of our strategies.
Innovation in an Age of Uncertainty
We often get a sense of the relative uniformity in financial-market performance by looking at the indexes shown on Morningstar.com. Of the 145 stock, bond, target and commodity indexes, 131 were positive and 14 were negative for the second quarter of 2019.
Great Companies Persist and Find Ways to Win Over the Long Term
We recently heard a great adage about investing: “The stock market is the only market where people head for the exit when things go on sale.” And considering what followed 2018’s stock-market rout, heading for the exit certainly wasn’t a wise move.
How the Mighty Have Fallen
Although the FAANGs were the poster children of the fourth-quarter market rout, losses were broad-based across sectors and countries. These losses were strong reminders of how important it is to pay attention to a company’s stock price in addition to focusing on its fundamentals and long-term growth prospects.
I believe this rally was the result of animal spirits based on the notion that Trump’s pro-growth policies will support the economy. At the same time, many investors assume that growth in the economy will lead to upticks in inflation and interest rates, which—along with lighter regulations—are perceived as positive for business.