The European Central Bank has added to the boatloads of pandemic stimulus out there, credited for shielding stocks and investors from bad news. But stock futures are under pressure, which could threaten yet another winning session for the S&P 500.
The index is up 40% from its March 23 lows, and some are nervous. It might be time to hold onto that long-term investing plan with both hands.
Our call of the day, from Brad Neuman, investment strategist at equities manager Alger, is banking on 50-year technological revolutions, noting we’ve just finished one that has ended with smartphones and information in the palm of your hand.
“We think that we’re in a new long-term technological revolution, which we call the age of connected intelligence…and that means we think that there’s going to be a lot of connected devices,” Neuman tells MarketWatch. Think the “Internet of Things” and lots more data being produced and processed in the cloud, and more access to that data for everyone at an affordable price.
“Ultimately, all of that data being analyzed by these very advanced hardware and software systems manifests itself in artificial intelligence and better decision making,” he says.
How to play it? Via semiconductors and equipment makers, such as LAM Research,which help process data, or cloud-platform companies such as Amazon and Microsoft that provide hardware and software to analyze the data and eventually will provide artificial intelligence as a service.
Payments is also a key theme within connected intelligence, which means owning Visa and PayPal. And health care is also a “good microcosm” on the theme of analyzing big data and putting it to good use, says Neuman. So the Alger team owns companies that provide material and equipment to do that, such as Thermo Fisher or Bio-Techne. Finally, you can buy the cloud-based software companies to help develop and market drugs — such as Veeva Systems, he says.
Veeva is in the Alger Small Cap Growth Z fund.
So why a strategy like this right now? “One of our core beliefs at Alger is that innovation can transcend economic volatility. In any period over the past 150 years…there’s always an area of innovation that’s thriving and companies that are growing because of it,” said Neuman.
This article originally appeared on MarketWatch.
