Presented by the Hardee Investment Group and RBC Wealth Management –
It’s been a very interesting six months for investors. Even though the market is basically flat for the year, some stocks and industries have gone up and some have gone down, which is frustrating. Leading the pack on volatility has been the energy sector, which bottomed in early January, rallied strongly into mid-April and has given back most of that through June. On the other side, cybersecurity has burst into our consciousness with cyber attacks on Sony, Blue Cross Blue Shield, NSA and other government agencies. The stocks in this group have been on “fireeye” with gains over 25 percent year to date as evidenced by the only exchange traded fund “Hack.”
Our main themes of energy consumers not producers, industrial America and growth over value still remain strongly in play. Oil has stayed in a range between $48 and $62 a barrel with gasoline prices hovering around $2.50 a gallon. Users of energy, such as chemical companies, are reporting excellent earnings. I recently met with Calumet management, and the outlook for them is quite positive, as they benefit from a surplus of cheap oil. Furthermore, I spent two days in Corpus Christi looking at the billions of dollars of new petrochemical plants being built to take advantage of cheap dependable feedstock. This advantage is making industrial America a force to be reckoned with.
Growth over value is becoming more evident as witnessed by cybersecurity. This industry didn’t exist to any extent six years ago. Now, we see increasing cyber attacks throughout. We believe this is a very young industry that is one of the fastest growth industries ahead of us. Boris and Yurgi are coming, and they want your information.
Finally, this is a great time to go to Europe. The dollar is up over 25 percent versus the Euro. It’s a bad time for Europeans to go to Disney World, because it costs them 25 percent more. There is a currency war developing, or what we call a “beggar thy neighbor” policy. Both Europe and Japan are devaluing their currencies to make their products cheaper to the rest of the world. In that way, they hope to stimulate economic recovery in their respective countries. It seems to be working as Toyota, Sony, Daimler Benz and BMW reported record quarterly profits. It’s a bad time to sell a Cadillac in Europe.
Being in the right industries will be critical to investment success. I have meetings with management of companies we own scheduled throughout the summer and plan to make “field trips” to see first-hand the changes occurring in our favored themes.
We know you have a choice when deciding on a team to help you realize your financial goals. We do things a little differently at the Hardee Investment Group by doing what’s in the client’s best interest. We encourage you to experience the difference. We thank you for your trust and confidence in us. It’s a responsibility we don’t take lightly.
This article provided by H. H. “Will” Hardee, AWM of the Hardee Investment Group and a Managing Director – Financial Advisor at RBC Wealth Management in Houston, and was prepared by or in cooperation with RBC Wealth Management. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance. RBC Wealth Management does not provide tax or legal advice. RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.*
