After the Recent Election, There’s New Reason to Love the UnlovedSheaff Briefs Editor
In certain oversold industries, it’s been a long, long stretch with stocks deprived of investors’ love and appreciation, observes Sheaff Brock Chief Investment Officer Dave Gilreath. Over-regulation and disfavor have swung the “affection pendulum” away from certain basic areas of our economy, Gilreath points out, including:
- “traditional” energy (coal, natural gas, oil)
After all, Gilreath reasons, with an aging population, the importance of pharmaceuticals and medical devices isn’t going away. Similarly, as the Energy Xchange emphasizes, “renewables have a long way to go to replace oil, coal, and natural gas as primary sources of energy.” And, while debate continues to rage about whether coal can ever recapture market share lost in recent years, the new administration appears poised to lighten up on the heavy regulation that for the last eight years has battered traditional energy and industrial stocks.
As far as industrials are concerned, the demand for “stuff” isn’t likely to disappear any time soon, Gilreath asserts. Analysts at McKinsey & Company agree: “Manufacturing remains critically important to both the developing and the advanced world.”
Among those sectors at the “very unloved” end of the pendulum have been pharmaceutical stocks, at least partially due to over-regulation. “Pharmaceuticals,” comments Charles Hooper in the Concise Encyclopedia of Economics and Liberty, “are among the most-regulated products in the country.” With the president-elect “expected to seek deep cuts in business regulations” (as per Michael Corkery in the New York Times—Nov. 9), pharmaceuticals could well be on track for a comeback.
Will the effects of specific economic, trade, and tax policies implemented by our newly elected president favor the “love the unloved” approach? Too early to tell, but a value-driven stock selection guideline is very much in keeping with the Sheaff Brock general approach to the markets.
What to buy? Buy what not enough people have bought. The pendulum always seems to swing back to the side of now “unloved” market segments!