Revenge of the Have Nots
Well that did not take long. Last quarter we talked about the haves and the have nots. The market narrowed dramatically and technology, specifically AI-driven technology, was the only area that produced positive results. We knew this was not sustainable, but we had no idea it would change so dramatically so quickly.
If AI is the coolest place to be, then utilities must be the most boring, but not this quarter. For some time now we have pointed out the lack of return in utilities and how it makes no sense whatsoever: These are strong companies with solid dividend yields, as has been the case historically with utilities. However, there is no universe in which we are all driving electric cars and having our work done for us by AI that does not include an enormous increase in electricity production.
Utilities must grow significantly to keep up with the demands of the all-electric future. It seemed like they would lag forever, but this quarter they finally got the love they deserve with a 19 percent return. We often say that it is easy to know what the market will do, but nearly impossible to know when it will do it. Any investors who patiently waited for utilities to do what they should were finally rewarded.
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