The Old Economy

Over the past few years, investors have been enamored with new economy stocks. Companies like Etsy, Shopify, Tesla, Okta, and various others have been all the rage. More and more investors made the calculation that one simply had to own these to participate in future growth- and grow they did. However, the amount of money chasing these forced prices higher and higher, encouraging even more money to plow in just because these investments were working. Unfortunately, many of these were bid up to levels divorced from the reality of their prospects.

Now disappointments abound. It is not that some of these firms are not performing well, just that expectations got out of hand. In the meantime, the old economy stocks were left for dead. Guess what? Our economy does need what they do. Whether it is steel, power, construction materials, or other essentials, our economy cannot work without them. In fact, many of these companies also offer good growth opportunities. After all, we are going to spend more on infrastructure; young people want a new home, thus more and more power will be consumed and so on and so forth.

Valuations for the old economy stocks have been depressed. So where is the opportunity? The Bull and his partners have balanced portfolios with many of these old economy stocks that offer growth opportunities. Valuation does matter to us, so we constantly evaluate every investment for opportunity as well as risk. Diversification helps minimize any potential negative surprises. So far so good; we will continue to seek this balance of risk and reward. Stay steady my friends.

The Lonely Bull