two examples where I think the growth is, in both cases, 100% compounded.
KELLEY-WATKINS: You cannot just give the impression to investors, especially novice ones, that this is a fail-safe. Stocks like that will correct severely.
COLEMAN: Well, you’ve used the word fail-safe, and I think it’s the first time it’s been used at this table. Stock prices are made by earnings growth and public expectations, and that’s how I invest.
HUMPHREY: Well, Stephen sort of hit what I call a good point with the CRM space, the Oracles. Basically, technology, especially semiconductors, is a space that we’re playing fairly well. We’re probably market-weighted in microprocessors or PCs, but we’re over-weighted in the infrastructure, [what I] call the networking space.
The other thing I factor in is the demographics. So, therefore, I also look at other areas. I’m looking at the Wal-Marts of the world and the Home Depots. In the interest-rate sensitive area, I might look at an AIG or an American Express. Again, it’s the usual suspects, but those are the kinds of companies I buy and I do it because I think it’s a safety factor in the size of these companies. They tend to be the ones who set the rules.
B.E.: Ms. Kelley-Watkins, I know you focus on u
tilities. Any other sectors that you like?
KELLEY-WATKINS: Even within utilities, I’m participating in this huge data, digital packet moving around in wireless [communications]. Wireless has really taken a central spot in my fund because of not only the voice growth, which is substantial in itself. Everyone knows that the penetration in this country is much lower than it is in the other developed nations in the world, and that the expectation for penetration of voice wireless is huge. So, talking about a long-term growth story, I see it definitely in wireless, so I’m participating in as many ways as I can. I’m even there in the infrastructure for wireless. Tower companies are the visible piece of the invisible network that is wireless.
CARTER: Well, I think one way to hedge against a lot of the risk that’s implied with photonics, tech, and growth is to be invested in a diversified fashion, even though it makes sense, given your age, if you’re middle-aged, to be more heavily weighted into tech. But I think there are some good opportunities. When tech is not doing quite so well, we see now that your portfolio can be propped up a little bit by some value names. And, as a result of that, we’re fairly heavily weighted in the capital goods sector. We own Caterpillar (NYSE: CAT), Deere (NYSE: DE) and Cummins Engine Co. (NYSE: CUM). These are three companies, for example, that have had a lot of difficulty with labor over the last several decades. These are companies that are generally tied to the cyclical economy, and so we believe that they’re going through a sea change. They’re going to become more and more predictable in terms of their earnings.
On the retail side, we think there