Transcript:
Easan Arulanantham:
So you mentioned supply chain issues. And it’s you we always see them in the news for like the future, you know, the past year, you could say, how will they affect my future like my investments in the future?
Tom Vaughan:
I actually think, ironically, that supply chain issues are going to be a positive for investments in the future. I know that’s like a completely contrarian thought process. But the reason I say this is because one of the big pushes right now for inflation is the fact that we don’t have enough products for the demand that’s being asked. And so as supply chain issues get better and better, we should see less inflation should take more pressure off the Federal Reserve’s, you know, need to really, you know, cut back on the economy. And that’s a good thing for the stock market, it’ll look at that very well, as we’re sitting right now, the outlook on supply chains is relatively negative. And if I’m right, and things do improve, throughout that, you know, next six to 18 months, that should continue to improve the investment arena. Because one of the things that you need as a company is if you got demand, somebody wants 100 units, and you can only make 80, you’re not reaching your full potential for, you know, what you can do in terms of your, you know, revenues and what have you. So that’s where supply chain restrictions can cause problems for companies. And we’ve seen some of that at Apple, in the third quarter reported that they could have sold a lot more, and they didn’t, because they couldn’t get the products, right. And so they did better in the fourth quarter, they’ve come a long ways in their supply chain issues.
And I think that’s my key point, just I’m telling you, companies will go out of their way to try to solve supply chain issues when they no demand is there. Because it’s a lot easier to spend money and get aggressive and try to really go after things. You know, during a period of time where the stock market is at the bottom, you know, the demand is high, it just it’s going to take care of itself. So I guess I have a little different outlook on that I actually think supply chain should help you here going forward, it has probably hurt us over the last 12 months, because inflation is at least partly being driven by the supply chain shortages. But I think going forward, it’s going to get better and better. And I think that could be one of the reasons the markets running up right now. Is that realization, and one of the reasons the market didn’t go down as far as it could have, because there could be some improvements coming on the horizon.
Easan Arulanantham:
Do you think there will ever be like a shift in the demand? Because as people as the economy or as people become more comfortable with more services, like traveling again, cruises? Do you think the demand for pure products will shift downward and services will go up? And that will change the whole supply?
Tom Vaughan:
Yeah, I have three themes on the demand side. And our one the Federal Reserve is raising rates that brings down demand, just because things cost more credit card charges cost more, you know, mortgages cost more, so there’s less demand for homes, which is a huge driver. Right? So that’s one area, then you would look at, you know, just the fact that there’s more supply, right, that that that kind of helps on the inflationary side, but the demand, you know, in total, is also being fed by some of the stimulus money that came out. There’s a lot of liquidity running around. So that starts to burn off. Yeah, I think you make a good point there, I think that you know, it is going to get to be more even the Federal Reserve has talked about this several times that one of the problems is that if you look at goods and services services haven’t had much inflation goods have had almost all the inflation goods or what we can buy right now, theoretically, without much risk, right?
We can order from Amazon services, we got to go out most of those are kind of face to face things travel being one of the biggest, right, so once people start spreading their money across a more even distribution of goods and services, it’ll take some of the pressure off of the demand for goods. Because, you know, if you’re traveling and spending money on travel, maybe you don’t buy as many things from Amazon because you only have so much money, you know, to spend in any one year. So yeah, that’s another piece that’s gonna I think a wind here is the pandemic that moves forward. I have seen a tremendous number of clients talking about traveling, basically this summer, this fall, all kinds of trips that are scheduled and planned and people are excited about that. So there’s some pretty hefty money I think, gonna start running towards travel here, especially if there isn’t some other huge wave of virus outbreak and what have you. So we’ll see how that goes.