Timing is important, but not everything … Eric Fry’s track record to prove it … why a great business is more important than great timing … where Eric is finding opportunities today

Time is your friend. Impulse is your enemy.

That comes from the billionaire founder of Vanguard Investments, Jack Bogle.

With this in mind, I feel the need to apologize…

The headlines, data, and stock market twists-and-turns we cover here in the Digest tend to have an undercurrent of “do something!” rather than “be patient.”

And while “do something!” can be the right advice depending on your personal financial situation, for most investors with a 3+ year timeframe, the urgency to act can be counterproductive if you’ve previously positioned yourself wisely.

Said another way, time in a good investment is often far more important than timing a good investment.

Our macro expert Eric Fry drove this point home in a powerful way in his latest issue of Investment Report

Here’s how he worded things:

“Timing is important, but it’s not everything.”

A few examples from Eric’s investment career illustrate this perfectly.

In December of 2000, Eric recommended shares of healthcare giant, Humana. Over the next two years, the stock fell 20%.

However, within three years, investors who stuck with Eric’s research were up 70%. After five years, those gains grew to 270%. And after seven years? 500%.

In 1999, Eric recommended buying shares of Royal Garden Resorts (now known as Minor International), a Thai hospitality company.

Two years later, the stock was down 37%.

But after eight years? Despite that initial 37% headwind, Royal Garden shares were up 2,000%.

More recently, in November of 2019, Eric recommended his Investment Report subscribers buy wireless speaker company Sonos.

Four months later, the stock had lost half of its value. But within 12 months of that low-point, Eric’s subscribers were toasting gains of 180% as they took partial profits.

Here’s Eric’s bottom-line:

Obviously, buying a great stock near a major low is ideal. But the investment gains that can accrue from buying an excellent stock at less-than-ideal times can be absolutely astonishing… as long as you have the patience to stick with it.

Why does this matter today?

We’re at a crossroads in the market that threatens to confuse, paralyze, or mislead investors.  

On one hand, there’s a growing body of bullish data suggesting the market is finally turning the page. I’ve read some analysts suggest the S&P will be setting a new all-time-high this year.

On the other hand, there are still ample reasons for caution, with different analysts remaining very bearish. One I follow recently made the case for the S&P to fall to 3,000 (about 27% lower).

Depending on your personal market bias, the urge to “do something!” and time this market could be strong – whether that’s “get long” for a budding bull, or “batten down the hatches” for a brutal bear.

But as Eric just noted, the more important variable in your long-term returns is “buying an excellent stock” not “perfect timing.”

So, where is Eric looking today for these excellent stocks? What sector might be forgiving in the long-term if buying today proves to be less-than-ideal timing?

U.S. electric vehicle (EV) manufacturing.

It’s boom-time for the U.S EV sector, even if the broader economy is weakening

Before we launch into those details, for newer Digest readers, Eric is our macro investment expert. This means he evaluates markets and asset classes from a big-picture perspective to identify attractive opportunities. Once something is in his crosshairs, he digs down to find the best, specific investment to play the opportunity.

It’s been a powerful strategy. In his decades in the business, Eric has dug up 40 different 1,000%+ gaining investments. That’s more than anyone we know of in the newsletter industry.

Returning to the U.S. EV boom, here’s Eric from his latest Investment Report issue:

…Despite the challenging stock market conditions, the U.S. EV-manufacturing boom continues to gain momentum.

Based on my reporting from late last year, 28 EV or EV-battery facilities were either operating or under construction within a 300-mile radius of Chattanooga, TN.

Incredibly, that number has surged to 37!

Not surprisingly, some folks now refer to the region as the “Battery Belt.”

Eric’s most recent research on the growth is eye-opening. As he details in his issue, the latest additions to the list of EV-related facilities include:

• A $4-billion EV battery manufacturing plant to be built by Hyundai Motor Group (HYMTF) and Korea’s SK ON in Bartow County, GA.
• An $800 million EV battery manufacturing plant to be built by Japan’s Envision AESC in Florence, SC.
• Massachusetts-based Ascend Elements opened North America’s largest battery-recycling facility in Covington, GA on Mar 29, 2023.
• Nevada-based Redwood Materials announced it will invest $3.5 billion to build a new EV battery recycling facility in Charleston, SC.
• Germany’s Aurubis AG (DE), one of the world’s leading metal recyclers, broke ground on a recycling and secondary smelting facility in Augusta, GA.

Eric keeps going, detailing a full list of nine different companies that are building-out in this new Battery Belt.

Back to his issue:

As these nine examples show, the Battery Belt of the Southeast is still booming… now more than ever. Most of the 37 facilities I have identified are not yet operating; they are merely under construction.

But as these facilities come online during the next three years, along with numerous supporting industries, the resulting prosperity should become more palpable – both for states in the region and for investors.

That said, America’s booming EV industry is already a significant contributor to the echo boom in reshoring. According to a newly released report from the Reshoring Initiative, reshoring plus FDI job announcements surged 53% last year, thanks to “a huge surge in EV batteries and chips.”

Regular Digest readers recognize this idea of “reshoring” as we’ve featured Eric’s research on it before. He calls it “Made-in-America 2.0.” As you can see, it’s becoming a major economic and investment trend.

Eric writes that last year, a UBS survey questioned U.S. manufacturing executives about their future production plans. More than 90% of the respondents said they either were in the process of moving production out of China or had plans to do so. And about 80% said they were considering bringing some portion of it back to the U.S.

The U.S. EV sector is a massive beneficiary of this reshoring. By extension, well-positioned investors are likely to be huge beneficiaries themselves, even if the market has one final leg lower (and all the more so if the market does not).

So, how might you invest?

For the broader “Made-in-America 2.0” trend, we’ve pointed toward the ETF “AMER.” Though not an official recommendation, this “Made in America” ETF has top holdings that include Hormel Foods, Northrop Grumman, Tyson Foods, Altria, and Nucor.

Plenty of great businesses there, but not exactly the concentration in EV technology that we’ve been highlighting today.

For that, you could research which U.S.-based tech companies are doing the most onshoring and cross-reference them for their exposure to EV tech.

As a starting point, the website Reshorenow.org is an invaluable resource for more information, even providing a master list of companies that are bringing jobs and manufacturing back to the U.S.

On the other hand, if you’d prefer to access Eric’s research on this investment story and the related stocks Eric recommends, click here to join him in Investment Report.

In any case, let’s end today by returning to today’s uncertain market environment juxtaposed against this budding U.S.-based EV growth story.

Here’s Eric with our final word:

…In the here and now, we must continue to grapple with a somewhat-hostile stock market.

Although stock prices are no longer falling week by week like they were most of last year, neither are they rewarding investors with abundant gains.

But keep in mind that challenging markets are the ones that create the buying opportunities… the kind that produce outsized gains down the road…

Have a good evening,

Jeff Remsburg