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.


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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.

 

Important information

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

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