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March 28, 2022, 9:15 a.m. EDT

How to future-proof your stock investments and outperform the market at the same time

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By Michael Brush

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ASML is a key player because it has a sophisticated lithography system. It uses shorter wavelengths of light to cram more detail onto wafers. In lithography, light is projected through a blueprint of a pattern that gets printed on silicon wafers.

3. Favor companies that lower systemic risk

Jabusch is a great example of a portfolio manager who came into the industry from out of left field. Yes, he has an MBA, and he booked a lot of experience at Morgan Stanley. But he also spent five years studying anthropology and archaeology at the University of Utah. I don’t meet many fund managers who studied archeology.

This background gives Jabush a different way of looking at the world, which may help his fund’s outperformance. “The more you look at ancient civilizations, the more you see what structural risk caused them to degrade and collapse. Very often it is the same things. Political instability caused by acute levels of inequality,” he says. “Or it can be a resource problem caused by drought.”

Another major cause: disease. “This tells me what I need to avoid investing in to lower the structural risk of my portfolio,” says Jabusch. “If I want to future-proof my portfolio, I don’t want to own the causes of the risk. I want to own the solutions for it. Especially when they have intellectual property and a cheaper product.”

In short, favor companies that reduce systemic risk caused by climate change, disease and scarcity of resources, such as water. “We are seeing nation states and cities and individuals fall over themselves to reduce systemic risk,” he says. You want to be in the companies they turn to for help. This way, you are positioning for what Jabusch calls the Next Economy, or one where solutions to systemic risks have been implemented. This explains his fund ticker NEXTX.

This isn’t a “Zen thing.” It’s just investing strategy that is “our best opportunity to preserve and create wealth,” he says.

Moderna /zigman2/quotes/205619834/composite MRNA -0.55% : A great example of how this big-picture perspective can pay off for you is Moderna.

Moderna develops ways to tweak messenger RNA, which transfers information stored in our genes to cells, to tell them how to carry out essential tasks. Jabusch owned Moderna pre-Covid because he liked the potential of this intellectual property to develop vaccines and therapies.

Then Covid hit. Shareholders like Jabusch benefited from their forward-thinking because Moderna was well-positioned to develop a Covid vaccine. The stock advanced over 2,200% from where it started 2020. It’s still up over 800% after paring some gains.

Given his long-term investing horizon, Jabusch is probably not selling. It’s his second-largest position, at over 4% of the portfolio. A lot of mutual fund managers cap position size at 2% to reduce risk, so this is a sign of conviction.

All of the companies above check the box for lowering systemic risk and contributing to the “Next Economy.” Maxeon Solar Technologies and Canadian Solar help advance de-carbonization. ASML helps create chips in products that do the same. Besides reducing the burden of disease, Crispr Therapeutics’ and Caribou Biosciences’ gene editing may help deal with climate change by creating algae that make plastics now produced from petroleum, or crops that are more drought-resistant, more nutritious or able to hydrate with sea water.

Here is one more example.

Brookfield Renewable Partners /zigman2/quotes/203824572/composite BEP -2.24% : This “clean” energy company invests in hydro, wind and solar power generation plants in North America, Latin America, Europe and Asia. It also invests in companies developing fuel cells and power storage. It’s one of the largest pure-play public renewable companies in the world. “Brookfield won’t be a fast grower, but it provides ballast in the portfolio,” says Jabusch.

Like all his stocks, Brookfield looks cheap relative to its long-term intrinsic value, in his view. It also pays a 3.2% dividend yield.

Michael Brush is a columnist for MarketWatch. At the time of publication, he had no positions in any stocks mentioned in this column. Brush publishes the stock newsletter Brush Up on Stocks. Follow him on Twitter @mbrushstocks.

US : U.S.: Nasdaq
$ 123.64
-0.68 -0.55%
Volume: 3.94M
Sept. 23, 2022 4:00p
P/E Ratio
Dividend Yield
Market Cap
$48.37 billion
Rev. per Employee
$ 34.51
-0.79 -2.24%
Volume: 360,832
Sept. 23, 2022 4:00p
P/E Ratio
Dividend Yield
Market Cap
$22.30 billion
Rev. per Employee

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