Lorna Tilbian Columnist The F words T he stock market pendulum has swung from risk on final f fizz is seemingly a national necessity in times of both irrational exuberance to risk off ultra-caution or, consolation and celebration. in other words, from unbridled greed to existential The strength of these 10 elements lies in their being deeply fear. Fomo (fear of missing out) has given way to oldingrained in consumers lives and in the businesses they serve. fashioned wealth preservation. The market sectors they dominate are seen as recession-resistant The Faangs American technology companies Facebook (if not recession-proof), and defensive and resilient in the face of (Meta), Apple, Amazon, Netflix and Google (Alphabet) were an economic downturn. This economic cycle has been the poster children of the free-money era from March 2009, exacerbated by the viral germ warfare brought by Covid-19 and when interest rates bottomed at 0.25% after the global financial the military war waged by Russia. crisis, to December 2021, when their upward march commenced While Federal Reserve chairman Jay Powell and his global from a pandemic-induced low of 0.1% to todays 1.75% and peers might have stood half a chance of reining in inflation given rising. the post-pandemic supply chain issues and pent-up consumer In the wake of this increase in the demand, the continued zero-Covid-19 cost of money, the leadership baton policy in China, and the military was passed from the tech titans, the aggression of Russia, have combined new masters of the universe, to the to create a severe and unprecedented The strength of these elements old stock market heroes, namely the lies in their being deeply ingrained global cost-of-living crisis. 10 Fs: food, fags, phones, pharma, To shut down the global economy in consumers lives the market films, facials, fossil fuels, firearms, overnight and then to start-stop it with sectors they dominate are seen finance and fizz. multiple lockdowns was never going as recession-resistant Each of the 10 Fs brings a unique to be easy or straightforward. The strength of its own to the stockcombination of macroeconomic and market party, as we cannot live geopolitical issues has made the job of without food, the nicotine in fags is the most addictive substance the worlds central bankers nigh-on impossible. known to man, and phones (mobile devices and Wi-Fi) are the However, this crisis, too, shall pass; growth and the Faangs will possessions without which we cannot function. be back in vogue again and the 10 Fs will recede when the global In a similar vein, pharma represents life-saving drugs and recovery eventually arrives. Technology stocks offer the only medicines, while films offer cheap escapism from harsh reality sustainable, real, long-term growth opportunities in this regard. (Hollywood came into its own in the Great Depression of 1929). Indeed, tech stocks are utilities with growth, meaning they are Facials mean affordable luxuries and low-ticket items such as must have rather than nice to have. lipsticks, and fossil fuels are the oil and gas supplies that In light of this, it is not surprising that nearly every global determine the price of everything under the sun, and that drive problem or challenge can be met with a sustainable, innovationtodays runaway inflation. driven technology solution. Where there are costs, there is When it comes to firearms, these are the beneficiaries of optimisation; geopolitics spells localisation; environmental issues increased defence budgets in the wake of Russias invasion of bring innovation; demographics, automation and inflation, Ukraine, finance relates to the banks and insurance companies growth. A safe haven in both good times and bad but only if the benefiting from the rise in interest rates and bond yields, and our price is right. 41 Impact ISSUE 39 2022_pp40-41_Lorna_Tilbian.indd 41 23/09/2022 15:18