The Investment Conversation: Growth Stocks and the Tech Boom
PODCAST - 2018 Midyear Investment Outlook
The Investment Conversation: Growth Stocks and the Tech Boom
In this podcast, equity portfolio manager Tom O'Halloran talks about powerful trends that could influence growth stocks in the coming years.
VO: Welcome to The Investment Conversation, Lord Abbett's ongoing podcast series.
VO: Hello, this is Will Andrews, digital media editor for Lord Abbett. What might the rest of 2018 hold for investors? To find out, we recently gathered five of our investment leaders for a roundtable discussion on the midyear outlook. Visitors to lordabbett.com can view related articles and videos at lordabbett.com/midyearoutlook.
VO: Thomas O'Halloran, portfolio manager for growth equities for Lord Abbett, talked about how technology could drive growth in the second half of the yearâand beyond.
O'Halloran: The tech revolution is only about 60 years old. It began with the integrated circuit in 1960. I think it'll go on for another couple of centuries. It's the revolution of the brain. In 2010, $1,000 of computing power bought you the equivalent of one mouse brain. In 2023, it will buy you the equivalent of one human brain. And in 2050, it will buy you the equivalent of all human brains.
So the processing gains that lie ahead are gargantuan, offering great growth opportunities for companies that are participating in that. Cloud computing is an important new architecture. When I started in the business in 1988, my computer plugged into the wall and connected to nothing else. Now, we're all connected.
We are now engaged in this new architecture in tech called cloud computing, which is taking all of the content we are sharing, and putting it on a new platform for software to work its magic like never before. It's providing great growth opportunities. Among other things, this has enabled the growth of social networks, where billions of people tune in every day.
In medicine, we're conquering disease. It took $3 billion to map the first human genome. Now we do it for under $1,000. There have only been 300,000 genomes mapped. I believe there will be a billion mapped at some point. So that provides great opportunities for companies that are making those machines to do that and for the biotech industry. I would argue the modern-day biotech industry is only 10 years old. Because only recently did biotechs have the capacity to really understand the structure of diseases that the mapping of the human genome has enabled.
And then, let's not forget the consumer. That's where 70% of economic spending is. The consumer experience is just getting vastly better. We have a big, giant company that gets everything to us cheaper and more conveniently. We can get our hot meal tonight at the snap of a finger through delivery services.
VO: O'Halloran sounded an optimistic note on corporate earnings:
O'Halloran: Corporate earnings are fantastic. I don't think they're going to get a lot better, in terms of growth rates, but they're fantastic. And I see healthy earnings growth continuing. Interest rates are very low. The world is awash in money. The U.S. government is getting out of the way, in the sense that it is deregulating and lowering taxes. That's a good thing. So I'm very bullish on equities for the rest of the year, for the next seven years.
I think over the next seven years we're going to go a lot higher. And the main reason I'm bullish is because the technology revolution is in full bloom, and it's creating tremendous growth opportunities for companies across many different industries.
VO: That's it for this edition of The Investment Conversation. As always, you can access a full range of investment commentary and analysis at lordabbett.com. Thanks for listening.
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