The Old Economy Is On A Roll !

What a strange world we live in. Party leaders don’t seem to remember parties and apparently ‘dead money’ sectors don’t want to die. Market analysts will not want to be compared to the credibility bonfire that is Boris Johnson and the Prime Ministry of Sound but who wants to hazard a guess as to the best performing industry sectors over the past 12 months? If you had volunteered tech or healthcare you’d be wrong. However, if you’d ignored climate crisis, the work-from-home revolution plus a tech invasion of financial services and hesitantly picked banks, bricks and barrels you’d be spot on. Dead money and leaders, eh! At least Fred West knew how many people were in his garden. The data, like the Downing Street garden parties, is damning. Clearly, oil, real estate and financial firms are very much alive in the following chart (source: Finviz) highlighting the relative performance of the major industry sectors compared to the S&P 500.

It is easy to be dazzled by the fantastic success of new economy companies and the huge financial milestones hitting the headlines on a daily basis. And…who could not be impressed by the following this week:

  • Irish hospitality technology start up, Flipdish, hit unicorn status and a $1 billion valuation after a Tiger Global led (again!) funding round.
  • Changpeng Chao or “CZ’ is the founder of Binance, the world’s biggest cryptocurrency exchange platform, and now the richest man in Canada with a net worth approaching $100 billion.
  • The FT has reported Chainalysis research showing almost $41 billion of NFTs were sold in 2021. That compares to a 2020 total NFT sales of just $250 million and a global art market of circa $50 billion and built over centuries!

However, the headlines generated by the leaders of the “old economy” are worth keeping an eye on. Consider these snippets and wonder if there might be even more ‘catch up’ to be done on the dazzling tech and Web3 sectors …

Ford’s market cap tops $100 billion for first time ever – Barron’s

Berkshire Hathaway may be on its way to becoming the next trillion-dollar company – CNBC

Crikey, when Henry Ford and Warren Buffett are still featuring in financial headlines we need to pay attention. More specifically, we need to watch those companies which embrace new technologies, irrespective of their age. In Ford’s case the market is excited by its positioning in the electric vehicle (EV) revolution and once tech-shy Buffett/Berkshire Hathaway is one of Apple’s biggest shareholders these days.

One can’t help thinking of Domino’s Pizza and how its adoption of the internet drove one of the best performing share prices of the past two decades; even better than that of the internet king Amazon! So think pizza and positioning. Then, take a closer look at old economy stocks which might have been buried by the commentariat a tad prematurely…..

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