NOTE: This is the summary of an informal dinner conversation with in-laws on market outlook and sector positioning.
Quantum computing stocks, such as IonQ and Rigetti Computing, have surged recently. This marks the last of the sectors I had expected to prosper back in 2023. Having not conducted recent research since then, I am uncertain whether a new sector―or which sector―will emerge to follow.
I do not view Trump as a thoughtless madman, as many claim. He just conducts politics like a businessman, which often confounds people, but his actions appear intentional. He may seem like a madman in the sense that his moves are unpredictable. Unless one is investing for several years or more, tactical rotation and trading are preferable during his term, as it is impossible to know what will happen next all of a sudden, as seen with the recent tariff risks.
If one insists on long-term investment, the macro trend in data remains certain. Setting aside the uncertainty of AI, I would—assuming a multi-year horizon—invest in data center-related utilities (infrastructure, industrials, and power grids) and semiconductors, the core of the so-called “Fourth Industrial Revolution.” Whether AI is a bubble or not, buildings must be constructed, servers installed, and power grids laid; these sectors are structurally positioned to capture spending regardless of whether AI enthusiasm proves excessive. However, as the tariff risks triggered arbitrarily by Trump remain unresolved, it is better to wait until after April 2, the scheduled date for the tariff agreement.
I am highly skeptical of the narrative that inflation is under control and the U.S. economy has achieved a soft landing. Significant rate cuts are unlikely in the near term. My recent macroeconomic research last term, my firsthand experience of price hikes after returning to the U.S. for the first time in 6 years, and the reality of the labor market as a job seeker all contradict the claims that the economy is good or inflation is tamed. Furthermore, as Trump clearly favors a weak dollar, gold is a prudent hedge against mid-to-high inflation and a weakening currency. I personally anticipate a commodity rally to begin within a few months, possibly as early as this summer.
I am interested in purchasing Quanta Services (PWR) in the U.S., and Mitsui & Co. and Mitsubishi Corp. in Japan, but have abandoned these plans due to Korea’s 20% tax on foreign financial income. Once the Korean stock market reaches its bottom, I intend to focus on semiconductors, manufacturer exporters, global industrials, and financials listed in the Korean stock market.