STEPHEN M. COLEMAN: We don’t react. We’re sort of in front of what we think the future is going to be. We’re sort of making bets about what the world will look like and waiting for [it] to come to us so that we can get what we consider to be good stocks at fair prices. And so we tend to be waiting, wondering when [it's] going to find us.
[Using] the focused equity approach, we basically take very large exposures and a very few names. Currently, we have $240 million in assets, and those assets are in 12 names. So I don’t really care what the Fed does. I genuinely do not care. The market, as we define it, is the population of stocks that we own. There are 12 companies in the whole world, as far as I’m concerned.
B.E.: Well, you’re in the minority in terms of not caring about the Fed’s action.
COLEMAN: I do not care. In fact, the Fed is taking aim at what it considers excesses in the market. But in order to crush the few tech stocks that are doing very well, it will have to kill the Old Economy.
B.E.: Is the Fed killing the Old Economy?
CARTER: I really don’t think so. I think, as was indicated earlier, they’re concerned about the wealth effect, and I think the rise in interest rates is geared specifically toward reining in the market because the fear is that if the consumer is bolstered by these gains in the market, he’ll continue to spend, and that will be detrimental from an inflation standpoint. So I think they’re wholly concerned about inflation, but I think they’re being overly cautious. And as far as the Old Economy is concerned and killing it, I really don’t think so. In order for the New Economy to thrive, the Old Economy has to be purchasers of that technology.
Jack Welch [the CEO of General Ele
ctric] once said that he wanted to thank all of those entrepreneurs who developed all of these [Internet products and services] because, ultimately, it’s going to be to the benefit of the Wal-Marts and the GEs. As we’ve seen, there’s been a huge correction within the Internet. I think the Old Economy is going to benefit because it’s going to become more efficient as a result of those technologies. There’s a symbiotic relationship there. And given the fact that rising rates tend not to seem to hurt these cyclical companies, both from a market standpoint and from an earnings standpoint, it’s going to be harder and harder to categorize companies in terms of Old Economy and New Economy.
HUMPHREY: To some extent, I agree with Nate. To some extent, of course, I don’t. The way we structure our fund, we have 40% in what we call the traditional company that reinvents themselves, like General Electric (NYSE: GE) and Corning (NYSE: GLW). We have 50% in what I call a dominant company of today, which basically didn’t exist 35 years ago,