Morgan Stanley’s U.K.-based strategist Edward Stanley recently wrote that since 2000, one per cent of stocks generated 40 per cent of overall shareholder returns. These success stories he calls moonshots, and he published a 91-page report in search of the moonshots for the next decade.
Mr. Stanley researched academic publications, patents, venture funding and later-stage public investment and derived 12 areas where moonshots are most likely to occur. These are The Augmented Self, The Extended Self, Adversarial Networks and Deepfakes, Domestic Robotics, Nano-, Soft- and Xenobots, Prefab Construction, Small Modular [nuclear] Reactors, Bio Printing, Floating and Vertical Farms, Data Centers In Space, Transparent Solar Cells Panels, and finally Tunnelling and Hyper Travel.
Some of these theme titles beg clarification. The Augmented Self, for instance, refers both to bionic appendages and brain implants and The Extended Self poses a halting or slowing of the aging process. In terms of deepfakes, Mr. Stanley writes, “Individuals, corporations and governments need to prepare for a world in which we are exposed to a mix of genuine and fake videos and photos that will be indistinguishable to the untrained eye.”
Bio Printing involves the 3D printing of skin grafts, implants and potentially entire organs. The process is already in testing to repair skeletal muscle systems.
Mr. Stanley discussed 80 different companies involved with these trends but unfortunately most, like Canadian transportation start-up TransPod, are still private and uninvestable. Some of the public companies include Hyundai Motor Corp (owners of robotics leader Boston Scientific), Thermo Fisher Scientific Inc., Walt Disney, Rolls Royce and General Electric.
The key takeaway for investors is not, however, the individual stock names. It is the knowledge that some of these technologies, many of which seemed farfetched and fantastical a short decade ago, are reaching a more mature stage where investment makes sense.
-- Scott Barlow, Globe and Mail market strategist
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
Stocks to ponder
iA Financial Corporation Inc. (IAG-T) This stock has been staging a strong rally in recent months. The Quebec-based firm is a leading insurance and financial services company with operations across North America. As Jennifer Dowty tells us, iA Financial has a seasoned management team, solid financial results, a dividend that’s growing, and a reasonable valuation.
Intact Financial Corp. (IFC-T) This is another top performing stock operating in the insurance industry, rallying more than 20 per cent year to date. Some 12 of 13 analysts have buy recommendations. Jennifer Dowty looks at the investment case.
Western Union Co. (WU-N) This company was founded in 1851 and stationed in the rarefied air of Denver. Providing a yield of better than 6 per cent, with a payout increase every year since 2006, this enterprise can be classified as a dividend aristocrat. Looking forward though, the question is whether this pattern is sustainable, and whether the enterprise will even be able to keep the payout at this level. The Contra Guys explain why they believe the stock is worth taking a risk on.
U.S. midterm elections may add more risk to shaky stock market
Another source of potential stock market volatility looms in an already tough year for Wall Street: an approaching midterm U.S. elections that will determine which political party controls Congress. Republicans are expected to make gains in the Nov. 8 vote, setting up a scenario favored by many investors because it would split the government now controlled by President Joe Biden’s Democratic party. But chances for Biden’s Democrats have been improving, according to betting and polling websites. Lewis Krauskopf reports.
Regulators face pressure to review discount brokerage rules as DIY investors turn to social-media posts for advice
Canadian regulators are paying closer attention to the rise in do-it-yourself investor activity as online users, many of them first-time investors with limited knowledge of financial markets, turn to unreliable social-media platforms for financial advice. Clare O’Hara reports.
ESG backlash weighs on sustainable investing in Canada
The flow of investor money into sustainable funds in Canada has slowed to a trickle, as the ESG space globally faces intense scrutiny from investors and regulators. Tim Shufelt reports.
Spreads: A weaker recession clue in Canada
While the linkage between negative spreads and recessions appears to be strong in the U.S., it has been weaker in our home and native land. Norman Rothery shows us some numbers to prove it, and has some thoughts on current recession risks.
The parallels between success in value investing and a well-balanced life
Value investing professor Dr. George Athanassakos tells us about some basic attributes for investing success - and how they can also lead to a fulfilling life.
Others (for subscribers)
Wednesday’s Insider Report: Chairman invests over US$22-million in this oversold tech stock
Tuesday’s Insider Report: Company leaders are trading these four dividend stocks
Ask Globe Investor
Question: I‘ve recently sold my business and have a small profit to invest (about $100,000). As I’ve been self-employed most of my life, my RRSP is small, and I have no tax-free savings account (TFSA) as of yet. I have an outstanding mortgage loan against the business of $65,000 at 2.39 per cent fixed for two more years. Our $500,000 total mortgage is our only personal debt.
As my husband and I approach our retirement years (about five years to go) we are trying to determine the best course of action for these funds during this market turmoil. He currently earns $135,000 a year and I now earn $50,000. Do we invest it in a spousal RRSP to take advantage of my husband’s much higher income? He has a work pension and $180,000 in an RRSP with approximately $150,000 in RRSP room. Or do we pay down the loan and invest the difference?
I understand every circumstance is different and a lot of information is left out. I feel quite comfortable investing all of it. (Dividend and growth ETFs are my preferred vehicles.) He’s leaning toward paying down the mortgage and investing the difference.
Pros and cons? Any advice is appreciated.
Answer: I’ve always been a firm believer in paying off debt. This is especially true in the years leading up to retirement. It becomes more difficult to make debt payments after stopping work because in most cases family income drops. You already have a hefty debt load in your personal mortgage. Getting rid of the business loan will make life a little easier.
You might consider using the balance to open your own TFSA. Your husband appears to be financially well positioned, with his pension plan and his RRSP. You should be building your own asset base.
--Gordon Pape (Send questions to email@example.com)
What’s up in the days ahead
Fund manager Gordon Reid tells us what he’s been buying and selling of late.
More Globe Investor coverage
For more Globe Investor stories, follow us on Twitter @globeinvestor
You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.
Compiled by Globe Investor Staff