John Manley, chief US equity strategist for Wells Fargo Funds, spoke to Business Insider on July 11, 2017, where he discussed rapidly growing, technically advanced companies like Amazon shaking up various industries. Following is a transcript of the video.
Joe Ciolli: And sort of the last thing I wanted to touch on is Amazon. It’s sort of the spectre looming over the market. We coined the term “getting amazoned” around here. It means when a company, you know, gets caught in the crosshairs and maybe I’m is on by one of the competitors, and their stock price goes to the floor. We saw that happened with the Whole Foods deal. A lot of the groceries really got crushed, and the conclusion that we reached was that you know, that kind of put everyone on notice. Maybe there’s no industry that’s 100% safe from the tentacles of Amazon. What do you think about that? Do you — how are you playing the sort of this Amazon threat, this come in and rock an entire industry at a moment’s notice?
John Manley: Well, again I can’t talk about individual companies, certainly not Amazon. But I can talk about obsolescence. One of the good things about being old is you can look back and see how much things have changed. Things get obsolete. What’s technology today wasn’t necessarily technology 3 or 4 years ago. At one point in time International Harvester was a technology company. Things change, and I think if Amazon is doing anything they’re merely the vessel that change. They are trying to make things more effective, that’s happening throughout the economy. That’s a bad thing if you’re in the crosshairs. But overall, how did we get to be where we are? How do we get to the richest nation in the world? How do we live as good as we do — as well as we do? Well, I think it’s because ultimately people did things more effectively and efficiently and as they did them they hurt other people who were doing them less efficiently. So I think you got to be careful. One of the tricks about by and growth stocks, is you have to realise the growth of still going to be there at some point in time, and it’s going to go away at some point in time. So I think Amazon may be an interesting touch point, but it’s not the whole story. I think the story is watching for obsolescence, watching for growth, watching for the continuation of growth.
Ciolli: And just to kind of go off of that, you’ve said in the past that, you know, something that you think will help underpin continued gains in tech, is just the fact that so many industries, whether it’s energy, industrials, they’re all adopting technology, and that in the end, if you go down the pipeline it really plays back into the technology companies. Is that something that you think could — even if earnings were to dry up or slow, is that something that you think could keep going higher in the medium-term?
Manley: I think so. I think if that’s going on, I don’t think that earnings are going to shrivel up. Unless they’re spending more in R&D or something like that. But I think that’s the story, that they provide value. That they — it’s worth people to buy their products, and they’re not being forced to buy their products. They’re buying them because they want to. Well, that’s how Standard Oil got started, that’s how US Steel got started, that’s how Ford Motors got started. They could provide things better and cheaper than those who went before them. And I don’t think the world has changed an awful lot from that.