Transcript:
Easan Arulanantham:
What are some industries that have some relative strength compared to the broad market?
Tom Vaughan:
So basically relative strength in terms of what’s happening in this down market, right? As far as that goes. So we saw a couple in the previous question where, you know, certainly energy has had relative strength is up 45% This year, and Vanguard Total Stock Market Index is down 16. That’s relative strength. Not as much lately, but certainly for the year. Energy, I’m sorry, utilities. We saw with Vanguard utility ETF, it was up, you know, 7%, when the markets down. So that’s, that’s pretty good relative strength. And so, you know, that’s what’s happening that’s out there. Technically, the entire bond market has relative strength versus the stock market, just because it hasn’t fallen as much, maybe not the entire bond market, but big chunks of it. And certainly the Vanguard Total bond market index has done better, you know, overall, even though it’s down a lot than then then the overall market has done so. But I guess the better question that I would think of is just, you know, what is going to have better relative strength going forward, because energy had it and doesn’t seem to have it as much now could still do? Well, especially with the situation in Russia, that could bring up the price of energy. Still, I hope not, because that’s the hardest thing to control. But that’s possible. And then, of course, the area that I think and the area that we’ve made a big investment in that’s still working out so far, is Clean Energy. We’re using iShares, Clean Energy, ETF, ticker symbols iclm, in this had some decent relative strength versus the market. And the reason I think that it has some interest to me is that the situation in Ukraine is actually driving kind of investment.
We’ve already had a large drive into Clean Energy for a long number of years now. But this is going to bring home the concepts to the entire world that if you are dependent upon another country, for your energy, things can go wrong. And so with Clean Energy, and solar and wind, etc, you can at least get to a spot where some of the energy is being produced by yourself. And that becomes, you know, a, you know, a situation where government money is coming in, that’s big money, right? You got companies moving in that direction, got households moving in that direction. And so I like that I think that’s going to do well, it is is it is a fairly volatile assets, we only have it in our accounts above 50%. Stock, you know, so kind of that, you know, more conservative accounts, we don’t use that, just because it does move quite a bit. But that’s an area that’s been showing relative strength and a half, I think has a chance to continue showing relative strength versus the market. And then, of course, this new inflation reduction. Bill has a big chunk going towards Clean Energy. Perhaps that helps, too. Right, we’ll see what happens.
Easan Arulanantham:
It’s definitely interesting area, especially when I clean is it’s a lot of smaller companies that know how revenue so you know, something happens, their revenue expectations, they can that, you know, ETF can get really bumped down.
Tom Vaughan:
Although it’s interesting compared to, you know, take a cloud computing or, you know, genomics and a lot of these areas, I believe that I clean was down about 40% from his high and those are down 60 plus. So it’s still held up even in that kind of crazy arena of kind of overpriced stocks. Again, I think it has some really great potential going forward, and a lot of interest. So that’s, that’s but yeah, those are things to be cautious of. It’s why we only use it in our more aggressive portfolios, and our biggest exposure is 6%. So not a lot but it’s still still an area that I can think of that I think might have some relative strength coming forward.