Randall Dishmon, Senior Portfolio Manager, Global Equities
As a professional money manager, I get asked all the time about my
"outlook" for the market. My answer has been the same for nearly 20
years…"I don’t have one". I don't…for good reason. I have not yet met
the person who has any ability to predict what the market is going to
do, but even more importantly: I don’t buy the market.
What the
market is going to do is often irrelevant to the outcome for my clients.
The question itself is the real problem. It shows a critical flaw in a
person's thinking – the only reason to ask that question is to attempt
to time the market…a perfect example of what I call "cyclical thinking".
I don’t like cyclical thinking. It is one of the main enemies of the
successful investor.
Successful investors have to be expert at
recognizing the difference between cyclical and structural. At the core
of my investing philosophy is this: I look for structural trends, simply
put "how is the world changing?". A perfect example that I’ve been
investing in for my entire career is the rise of ecommerce. It was not a
cycle that led to 4 years of ecommerce being favoured and then
mean-reverted to 4 years of brick and mortar retail outperforming.
That's the difference: cyclical change separates markets into growth
companies and value companies. Structural change separates the market
into winners and losers.
Losers don't mean revert…they go bankrupt. It is important to recognize the difference.
With
that in mind, here is my outlook, but not for the market, rather for
the structural growth trends I'm currently invested in:
• Move to the cloud
The
transition to cloud computing will continue stronger than before: prior
to COVID 19 it was considered a "nice to have", it is now considered
existential. As one CEO told me very recently, "If I don’t get to the
cloud like…yesterday, I don't have a business tomorrow". It is a
once-in-a-generation type shift that is changing the way every company
on the planet does business. Not many things do that.
• Rise of Ecommerce
In
my opinion, Ecommerce will only accelerate even further as it has
become the only option in a COVID world. Even in a post-COVID world, we
think behaviour will change with physical brick and mortar stores not
being used as much. Every crisis in the past 20 years has sped up the
market share gains of ecommerce. I expect this time will be no
different.
• The Electronification of Money
This actually
started in 1950 with the first credit card and has grown globally at a
rapid rate for over 60 years. I expect this to accelerate during this
environment and continue afterwards. Why…ever look at money under a
microscope? Don't.
• Diagnostics and Research
It has been on the rise for two decades and I believe it will again accelerate as a result of this environment.
Everything
we own in these areas earns substantially more than their cost of
capital – that’s where compounding comes in. We believe this will
continue for at least the next decade. That kind of compounding makes
short-term concerns meaningless.
Hear more from Randy about his philosophy and approach
Listen to his latest update OnDemand
Investment risks
The
value of investments and any income will fluctuate (this may partly be
the result of exchange-rate fluctuations) and investors may not get back
the full amount invested.
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individuals or the business have expressed opinions, they are based on
current market conditions, they may differ from those of other
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