Secular growth driver

Economics , New York University M. Accounting and Harvard Business School M. Callinan holds the CFA designation. Opinions expressed are those of the author, are subject to change at any time, are not guaranteed and should not be considered investment advice. Mutual fund investing involves risk. Principal loss is possible. The Osterweis Emerging Opportunity Fund may invest in unseasoned companies, which involve additional risks such as abrupt or erratic price movements.

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By clicking "agree" or continuing to browse this website without electing an option, you are also accepting our Privacy Policy. Share Print. Published on September 23, In our view, the specific market dynamics that influence a company's sales growth prospects have a greater impact on equity returns than the overall direction of the economy. Cyclical vs. Secular Growth Broadly speaking, growth falls into two categories — cyclical and secular.

Cyclical Growth Cyclical growth, as the name implies, is highly correlated with the economic cycle. Investing Investing Essentials. What Is Secular? Key Takeaways Secular refers to market activities that unfold over long time horizons, or that aren't influenced by short-term factors.

A secular trend or market is one that is likely to continue moving in the same general direction for the foreseeable future. Secular stocks include technology firms such as Netflix and eCommerce leaders such as Amazon.

The secular movement of a long-term trend can be neutral flat , positive, or negative in its direction. While experts consider them to be long term, secular trends are not necessarily permanent. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Secular Market In a secular market, broad factors determine the direction of an investment or asset class over a long period of time.

Decoupling Decoupling is when returns on asset classes diverge from their expected pattern of correlation. It can also refer to economic and market decoupling. What Is Dual Class Stock? A dual class stock is the issuing of different levels of shares by a single company with distinct voting rights and dividend payments.

BAT is an acronym referring to Baidu Inc. When management is able to generate even more value for investors beyond its organic growth, investors should cheer — and with NVDA stock, they have. These are the exact kind of groundbreaking narratives I like to track on a daily basis. Nvidia should be attractive to long-term investors for three main reasons:.

Admittedly, there are some segments that are struggling in our new coronavirus-altered world. For instance, automotive revenue has been sluggish as the industry has been hit hard by the coronavirus.

That said, other areas are thriving. For instance, datacenter revenue and gaming have been on fire. Analysts expect However, I think these estimates may be conservative.

Nvidia continues to show just how big its growth potential is and how much runway is left. Earlier this year, Nvidia closed on its acquisition of Mellanox. Nvidia does a lot of business in the datacenter, as does Mellanox but in a different realm. In fact, the two companies often worked together, which creates an excellent combination of synergies. The summary and statutory prospectuses contain this and other important information about the Funds. You may obtain a summary or statutory prospectus by calling toll free at , or by visiting www.

Please read the prospectus carefully before investing to ensure the Fund is appropriate for your goals and risk tolerance. Get our most recent outlooks and fund updates and receive invitations to our conference calls and webinars, right in your inbox.

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Share Print. Published on June 18, Growth stocks have lagged cyclicals so far in , but we remain steadfast in our belief that secular growth is the key to generating long-term returns. Source: Jefferies, Factset The trend makes sense, as cyclical stocks are more sensitive to changes in GDP, and the economy has been expanding rapidly throughout the post-pandemic recovery.

How We Find Secular Growth: Exploiting Inefficiencies Our investment philosophy is laser-focused on finding secular growth , as we believe this is the best way to generate long-term returns. Non-Linear Growth Rates Are Key First and foremost, we seek to identify superior growth companies, both on an absolute and relative basis, that follow classic S-curves of adoption.

Source: Bessemer As the above chart demonstrates, growth for both Shopify and Twilio has been much stronger and persisted longer than analysts expected. Entry Points Make a Big Difference Third, we seek attractive valuations by taking advantage of price dislocations due to 1 mystery i. For example: In , Etsy, an online marketplace for independent sellers, traded at 5x sales.

In other words, in , Etsy traded at just 1x projected sales! In , Fiverr, an online marketplace for freelancers, traded at 3x sales.

Secular Growth Can Masquerade As Cyclical Growth The last major type of inefficiency we try to exploit is the misclassification of companies that the market considers to be cyclical, whey they really possess secular growth characteristics. Final Thoughts Regardless of the market environment, our philosophy has remained constant — we believe that secular growth is the key to generating long-term returns.

Learn More about the Emerging Opportunity Fund. Written by. James L. He is a principal of the firm and a Portfolio Manager for the emerging growth strategy. Wong serves on the investment committee of the Asian Pacific Fund. Invest With Us Learn More.