Investors who follow megatrends in technology, food, and financials are likely to see big gains in the next bull run and onward, said Bill Carrigan during an interview late last year.

Bill, give us your take on the longer-term market conditions.

Longer term, I’m quite bullish. All we need is a bit of good news from the US on their economic stimulus package, and if the market likes it, the market will probably surprise in the upside…and probably continue up for a couple of years.

So, I think the key is for investors to pick your spots. I like to use a term what I call the dominant theme. I think you’ll do best if you pick a theme that is going to work over the next several years and stick with that theme. And I’ve got a couple in mind if you’re interested.

I am. Tell us about them.

OK. I think the obvious one is technology. I think we had a technology boom in the 80s and 90s, and that was the first tech boom. That technology boom was the Internet rollout and the birth of Apple (AAPL) and Intel (INTC) and so on.

That was primarily concentrated in the English-speaking countries. Now, we’re going to have an echo tech boom which is global. So we’re going to have global rollout of Internet and so on. I think that’s got legs, and it’s got a long way to go.

The other theme, I think, is food. I would find a way to own what I would call the "soft commodities." So you know, coffee, cotton, wheat, beans, and so on. There are ETFs that can do that. In Canada, I think we have the Claymore Agricultural ETF (Toronto: COW), and in the states we have the Market Vectors Agribusiness ETF (MOO) and the PowerShares Agriculture Fund (DBA).

So there are lots of products out there so you can enjoy these things. These are long-term holds as far as I’m concerned.

And do you own any of these ETFs you just mentioned?

I own the COW.

OK. Tell us some ideas in the tech sector that you just alluded to.

The best thing to do is don’t stock pick. I think the best thing to do is just grab an index, say like the Nasdaq-100 ETF (QQQ), or you might buy the networking index. But just buy the Nasdaq and hold the Nasdaq for say five or six years, and you’ll be fine.

And do you own QQQ?

Yes, I do.

Any other sectors or asset classes that may be worth some research time?

There is one asset class that’s been brutalized, which might be very beneficial to investors who want to ride this thing for say six to nine months, and that’s US financials. Absolutely slaughtered.

I think that when these things recover, they will provide us significant returns. Because we cannot have a bull market unless we have the financials—you know, the bank stocks on board. So that’s a brutalized area. Everybody hates it. It might be a good place to be.

And, once again, would you advise looking at some sort of ETF, or is that an area where people should stock pick?

Use an ETF. Just buy…I think it’s the Sector Select SPDR Financial (XLF). Just buy the SPDR Financial.

And do you own that one?

Yes, I do, as a matter of a fact. Recently.

So, Bill, you mentioned global strength. How should investors play that?

The best way to play the global story, if you believe in that story, is still in the Dow, because the Dow is rich with multinational corporations that do business all around the world. To own the Dow, you just simply buy the Dow, and you use an ETF, the Diamonds Trust (DIA). That basket gives you the 30 stocks of the Dow.

When you look at the Dow, which is rich in multinationals, also you’ll find that two-thirds of these stocks are actually yielding more than the US Treasury, which I can’t even remember when this has ever happened. So there is another compelling reason to own the Dow.

And do you in fact own that ETF?

I own it through an ETF in Canada and I can’t recall the symbol, but it’s an ETF. But I do not own the US one.

Related Reading:

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  2. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  3. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  4. Mutual Funds & ETFs

    ETF Analysis: Schwab US Large-Cap

    Discover how the Schwab U.S. Large-Cap exchange-traded fund is managed, the index it tracks and the investors for which it is most appropriate.
  5. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  6. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  9. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  10. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  5. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  6. Sucker Yield

    When an investor has essentially risked all of his capital for ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!