The following is a transcript from the “Money Clinic” podcast episode titled “Investment Masterclass – The hunt for global growth stocks.” Host Claer Barrett introduces the episode by inviting listeners to participate in a survey for a chance to win a pair of Bose QuietComfort 35 wireless headphones. The episode discusses the current state of global markets, focusing on the high valuation of tech stocks and the hunt for future growth opportunities.
Guest James Thomson, a fund manager with over 20 years of experience, shares his insights on investing in growth companies. He emphasizes the importance of paying for quality, resilience, reliability, and recurring revenue when investing in growth stocks. Thomson manages the Global Opportunities Fund at Rathbones, a fund that has grown to £4bn and is one of the top performers in its sector.
Thomson explains that the Global Opportunities Fund focuses on finding industry champions that are overlooked and offer sustainable growth opportunities. He highlights the importance of investing in companies with scalable and repeatable strategies, pricing power, and a track record of consistently exceeding expectations. Thomson also discusses the qualities he avoids, such as recovery stories, turnaround situations, and speculative businesses.
Barrett and Thomson delve into specific stocks in the fund’s portfolio and discuss the investment strategy behind them. They remind listeners that the podcast is for informational purposes only and advise seeking professional financial advice before making investment decisions.
Overall, the episode provides valuable insights into the world of growth investing and offers listeners a glimpse into the thought process of a successful fund manager. As we look towards the future, James is targeting companies that he believes have more growth potential. While some may question how much more growth can realistically be seen, especially in the current stock market with big US tech companies, James remains optimistic about the new era of computing being driven by technology companies.
Among the businesses James owns are Microsoft, Google, and ASML in Europe, which is a semiconductor equipment company. He also mentions Nvidia, the largest holding in his fund, which he has been gradually selling to manage risk and capitalize on gains. James has been redirecting some of these funds into other potential opportunities that could benefit from the advancements in AI technology.
One such investment is Amphenol, a giant in the industry of connectors and electrical equipment. While not a well-known name, Amphenol plays a crucial role in the data center industry, which is a key component of the AI-driven revolution.
Despite the opportunities in emerging markets and the UK, James has chosen to focus on developed markets in his fund. He believes that he lacks the expertise to properly navigate investments in emerging markets and prefers to leave that to dedicated EM fund managers.
When it comes to UK stocks, James sees potential but remains cautious. He believes that the FTSE 100 is dominated by international companies with limited exposure to the UK economy. The more exciting opportunities, he suggests, lie in the FTSE 250, but liquidity constraints make it challenging to invest in these mid-cap companies.
In terms of growth investing, James emphasizes the importance of durability and resilience. He highlights companies like Waste Connections, a garbage collection company, and Rollins, a pest control company, as examples of lower-risk, recession-resistant investments with stable growth potential.
Overall, James’s investment strategy focuses on identifying companies with growth potential in the evolving tech landscape, while also maintaining a diversified portfolio that balances risk and growth opportunities. In the southern United States, pest control is considered a crucial service, with 75% of customers on rolling contracts, averaging four visits per year. Pest control companies deal with a variety of unwelcome guests, from termites to ants, mice, and rats, especially in the hot and humid climate of the region.
Investing in pest control businesses is seen as a smart move, with these companies showing resilience even in tough economic times. James Thomson, an expert in the field, highlights the success of his investments in companies like Amazon, Rightmove, and Visa, which were once considered risky but have now become industry leaders.
Thomson’s strategy of diversification and trimming holdings to manage risk has paid off, with healthy returns for his clients. Despite some missed opportunities, such as selling Nvidia too soon, Thomson remains focused on delivering strong performance for his investors.
Investing in volatile markets can be challenging, and experienced investors like Thomson have weathered tough times, such as the 2008 financial crisis. By staying focused on long-term goals and being prepared for market fluctuations, investors can navigate through challenging times and come out stronger on the other side. Looking back, I believe that one of the most valuable learning experiences of my career was when I realized the need to focus on risk management in my fund. By adding a defensive buffer to the portfolio and investing in less economically sensitive businesses, I was able to weather market dislocations and position myself for recovery during crises. Companies like Costco, which offer value and consistency, can be key players in navigating through challenging times.
When it comes to investing, acting impulsively can be a major pitfall. Planning in advance and allocating investments wisely can help navigate uncertain environments. Overconfidence and the inability to admit mistakes are also dangers to watch out for. Holding onto strong investments for the long term and resisting the urge to overtrade can lead to better returns in the end.
In the ever-changing landscape of the market, adaptability and resilience are crucial. Economic growth may slow down, but the pace of change continues to accelerate. By staying flexible and allowing time to heal mistakes, investors can overcome challenges and thrive in the long run.
As we wrap up our discussion, it’s clear that a balanced approach to investing, combining art, common sense, and adaptability, is key to success. Thank you for joining us on this episode of Money Clinic. If you enjoyed the show, please spread the word and leave us a review. And if you’d like to share your own money issues on a future episode, feel free to email us at money@ft.com. We look forward to hearing from you. Thank you for listening, and we’ll see you next time on Money Clinic. The Art of Mindfulness: How to Stay Present in a Busy World
In today’s fast-paced world, it can be easy to get caught up in the chaos and lose sight of the present moment. But practicing mindfulness can help you stay grounded and focused, even in the midst of a busy schedule.
Mindfulness is the practice of being fully present and aware of your thoughts, feelings, and surroundings. It involves paying attention to the present moment without judgment, and can help reduce stress, improve focus, and promote overall well-being.
One way to cultivate mindfulness is through meditation. Taking just a few minutes each day to sit quietly and focus on your breath can help calm the mind and increase awareness of the present moment. This can be especially helpful during moments of stress or anxiety, when it’s easy to get caught up in negative thoughts or worries.
Another way to practice mindfulness is through everyday activities. Whether you’re eating, walking, or even driving, you can bring mindfulness to the forefront by paying attention to the sensations and experiences of the moment. This can help you fully engage with your surroundings and appreciate the simple joys of life.
In a world that’s constantly moving and changing, it’s important to take time to pause and be present. By incorporating mindfulness into your daily routine, you can cultivate a sense of peace and clarity that will help you navigate the challenges of life with grace and ease. So take a moment to breathe, to be still, and to embrace the beauty of the present moment.