With almost 15 months of uninterrupted inflation increases, it now can be expected that the next phase will be a top-out with the economy moving forward at a lower speed. This in turn will impact the economy and corporate profits will grow less—actually, we expect them to fall slightly below the long-term trend.
With these new conditions, investors are advised to position their asset allocation in the following manner. Focus should be given to corporations that:
• Have a solid balance sheet and solid capital utilization ratios,
• Benefit from deglobalization, decarbonization, automation, and
• Benefit from spending related to re-armament and cybersecurity
The present economic conditions are typically a stock-picker’s market. This is particularly true as the market is in a cyclical downturn. Sustained declines will offer attractive buying opportunities as the market is expected to bottom-out sometime ahead.
While we continue to advocate that investors should consider a well-diversified portfolio (regionally, sector, and size), we are fine-tuning our investments in favor of IIoT-related opportunities. Why?
Ever since the beginning of the Industrial Revolution, companies have been increasing operating efficiency while at the same time reducing costs for product standards. We believe that the golden age of robotics, automation, and artificial intelligence is still to come. Future developments and benefits will occur in the following areas:
- Work place reorganization: In the future, the global available workforce will be lower. Therefore, the reliance on predictive AI and automation will increase.
- Getting more for less: Ever since the introduction of modern CPU and GPU processors, the costs of dealing with a unit of data or instructions have become cheaper. We would expect this trend to continue, though at a slower pace. However, as the utilization ratio will increase, opportunities addressing the mass-market with the latest technologies are still worth looking at.
- Reinvestments: In order to keep up with the competition, corporations have entered into an ever-accelerating re-investment cycle. Investment opportunities in the areas of robotics, automation, and security will be key beneficiaries of this move.
How to invest and benefit from these trends
Since 2017, our company has held an investment strategy that focuses on automation, robotics, semiconductors, and next generation opportunities in the healthcare field. The asset allocation is host to a number of compelling opportunities. As of today, we consider that most automation and robotics enablers are truly under-appreciated, be it in terms of market valuation or the technology they are about to launch. For more details, please contact us via this link: https://www.ix-7.ch/Support/Contact.aspx