There’s a power grab going on in the Capital both obvious and unsurprising. But from my perspective the impact will come from legislation and the legislation coming from the current administration is focused on two things, renewable energy programs and taxes. The challenge is as always, is how to pay for it. In the past it was the industrial giants that provided funds for cover to the same government entities that now seem eager to move on to the new giants of technology. Oil profits aren’t going away, globally, but they are rapidly losing usefulness domestically, and they know it.
That leaves our focus on the beneficiaries of tax legislation and that includes the consumer, infrastructure, and my growing interest in healthcare; the one area that is almost certain to eventually find a place in the current debate. In having reduced some exposure to the technology of healthcare in favor of companies that offer existing products and research and development in the pipeline, in areas including mental health, advanced DNA research and healthcare services, that, in my opinion, will be vital to the future of those living in the new normal.
Worth mentioning is the impact of legislation that comes form foreign policy. The rise in sanctions from the last administration put a damper on certain industries that give insight to what may come from the current administration’s uneasy start to what was expected to be a better relationship with China. Exposure in the portfolios to companies with widespread business in China, such as Nike (NKE), Starbucks (SBUX) and more directly Alibaba (BABA) also included in the Internet Asian Retail ETF (EMQQ), will be closely watched for any challenges that could impact their activities.
If it appears that this commentary seems embedded in political influence, it unfortunately is. It’s not a new focus, but the pandemic has opened the door to many changes on the economic landscape that must be considered when managing exiting and new investment ideas. The uses of fundamental analysis have been crucial in keeping investments in sync with the original intent in considering them. Likewise Technical analysis helps to keep track on the momentum when it starts, and when it appears to deteriorate. For now, the broad markets are definitely overbought, and accounts are ready for any disruptions. And lastly, disruptions are the last focus of my analysis. Traditionally disruptions are an outgrowth of decades of popular culture. From Elvis distracting the new post war generation, to the Beatles driving the new generation into the self-proclaimed revolution, and the list goes on in each of the last five decades. The disruption has one feature, to distract away from obvious economics and towards the industries that feed consumerism directly linked to economics. Today that aspect of popular culture, love it or leave it, has never been more important to consider, especially when the consumer is nearly 70% of GDP. A lot to look at, an array of possible interpretations, and enough to keep us looking for opportunities.
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