Macro-Economic Sector Analysis
The Large Cap Growth Portfolio strategy combines a disciplined “top down” analysis with a detailed fundamental “bottom up” security selection process. LCM’s top down analysis aims to identify macroeconomic trends that represent growth opportunities in the global economy. Macro analysis helps to determine our internal growth rates for sectors, as well as for the companies within them. A variety of data sources is used to establish relative value expectations of growth sectors that are likely to benefit from these broad themes and outperform over the next 12 to 24 months. Growth sectors are defined as those with higher potential revenue and profit growth than the U.S. economy.
Resource & Inflation Concerns
The likelihood of rising inflation in the years ahead makes economic growth a necessity. Higher resource prices will be a major contributor. Unprecedented levels of money will supply growth as huge economic stimulus flows through the economy with a multiplier effect. Conventional fuel shortages will not be an isolated problem as there are multiple materials involved in its extraction and production, creating strained supply/demand relationships. Building the infrastructure for sustainable renewable energy sources will take tremendous energy to produce essential commodities.
Developing Economies
The emergence of the growing economies of China and India as well as the rest of the developing world. Currently the economies of the developing world nearly equal that of the developed world, and will soon surpass it. Rising populations and incomes (roughly 40% of the developing world currently lives on less than $2 a day) will have implications for US multinationals that can use their dominance in developed markets to enlarge their footprints in areas of higher economic growth (this includes consumer staples and technology companies).
Global Infrastructure
The compelling need for infrastructure of all types in both the developed and developing world. This infrastructure includes the rehabilitation of existing systems, as well as building new infrastructure systems including alternative energy, smart grid, and healthcare systems.
