Cabot Wealth Management's Roadmap to Retirement

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Information about Cabot Wealth Management's Roadmap to Retirement
Economy & Finance

Published on October 1, 2014

Author: mikkiwilson



Understand your retirement income and estate planning options with this Roadmap to Retirement presentation by Greg Stevens, CFP, Senior Wealth Advisor, and Tom Vautin, Senior Financial Planner, of Cabot Wealth Management.



Curing Cancer Genomics & Biotechnology Dennis Wassung, CFA® Portfolio Manager Cabot Wealth Management, Inc. 216 Essex Street Salem, Massachusetts 01970 800-888-6468 View slide

Genomics What is it? Genomics – The study of organisms’ hereditary information. An organism’s genome is its complete set of DNA. DNA – The chemical compound containing instructions for developing and directing all the body’s activities. An identical copy is in each cell. DNA Sequencing – The process of determining the exact order of the chemical bases that make up DNA, about 6.2 billion in total for a human. The map of a person’s DNA can tell us a lot about them, from their eye color to their likelihood of developing cancer. Scientists understand parts of the map, but most of it is still a mystery. View slide

Genomics Why is this important? Predictive Medicine – Based on my DNA, what are my chances of developing a particular disease? Testing & Diagnostics – What disease is this? Is it an aggressive form in need of treatment, or is it better to wait? Therapeutics – What causes this disease, and what drugs will cure it? At the heart of genomics is the promise of personalized medicine. Because of differences in DNA, treatments do not work the same for everyone. Someday our current practice - prescribing the same drug for everyone who has a given disease - will seem archaic. This is truly a revolution in healthcare.

Why We Need Better, Targeted Drugs

Lower Cost Per Genome Drives Adoption

Next-Generation Sequencing (NGS) Source: Illumina, Inc.

Oncology Market Evolving Source: Illumina, Inc. & U.S. Department of Energy Office of Science

Evolving Biotechnology & Biopharma Landscape Source: Quintiles Transnational, Inc.

Market Evolution Toward The Patient Source: Quintiles Transnational, Inc.

Where Are We Headed? Source: Illumina, Inc.

Investment Opportunities  Gene Sequencing – Equipment & Technology solutions to rapidly and cost-effectively sequence DNA  Biotechnology – New Drug Development & Commercialization, Genetically-targeted drugs  Testing & Diagnostics – Testing for & diagnosing specific genetically defined diseases and condition.  Bioinformatics & Data Analytics – Analyzing the massive amounts of data created and gleaning critical information from gene sequencing

In The Clouds… Cloud Computing – A Major Transition

Cloud Computing Benefits

$410 Billion Worldwide Software Market

Enterprise Software Market Evolution Source: Veeva Systems, Inc.

Moving To The Cloud Saves Money Source: IDC Research Cloud Software Analysis, Sep 2012; Veeva Systems

Industry-Specific Cloud Platforms Sources: Demandware, Euromonitor, Gartner, eMarketer Global eCommerce

Investment Opportunities  Cloud Software (aka “Software-as-a-Service” or SaaS) – Enterprise Software “lease” business model gaining wide adoption – CRM, Marketing, HCM, ERP – Lots of attention from the Big Guys (Acquisitions)  Cloud Infrastructure – Internet and data center infrastructure needed to enable the “Cloud” in all of its forms  Industry Cloud Software Applications – Companies are developing and gaining traction with industry-specific cloud platforms – life sciences, financial services, eCommerce, etc.  Cybersecurity technology – Software and hardware solutions to protect consumers and companies, whose personal or business data reside in the cloud


What are Frontier Markets? Frontier Markets are less developed than Emerging Markets. We view the investment universe in classes. In order of market maturity (with examples): 1. United States* 2. Developed Markets (Germany, Canada, Japan) 3. Emerging Markets (Brazil, China, Russia, Mexico) 4. Frontier Markets (Kuwait, Nigeria, Argentina, Pakistan) In terms of development, Frontier Markets are like Emerging Markets 20 years ago. But they are catching up at a faster rate. *US is a Developed Market- a special case as our home country and the most advanced

What are Frontier Markets? Source: Wall Street Journal

What are Frontier Markets? Frontier markets hold 35% of the world’s population, produce 16% of its economic output, and represent 4% of global market value Source: Everest Capital

Why Frontier Markets? 1) ATTRACTIVE DEMOGRAPHICS Growing working age population, the prime time for fertility and economic productivity 30 20 10 0 % of Pop. Over 65 today Kuwait Nigeria US Japan 20 10 0 -10 % Growth of Working Age Pop, 2015-2020 Kuwait Nigeria US Japan Low “elderly dependency ratio,” the resource transfer from young to old

Why Frontier Markets? 2) “LEAPFROGGING” Skipping generations of technologies saves time, money and resources. Examples: photography, M-Pesa Access to modern political and economic theory through an increasingly global education system % of Mobile Phone Users Regularly Making or Receiving Payments on their Phone 68% 50% 29% 24% 13% 11% Source: Franklin Templeton

Why Frontier Markets? 3) RESOURCE RICH Frontier markets contain about 40% of the world’s natural resource reserves and nearly 26% of gas reserves They have an opportunity to avoid the “resource curse,” where corruption and inequality follow abundant natural resources (Russia, Mexico, South Africa) Source: Everest Capital

Why Frontier Markets? 4) GROWING FAST 5)REASONABLY PRICED 6) GOOD QUALITY Growth: Valuation: Quality: Est. Sales Est. EPS Return Growth Growth Price/ Est. Price/ Price/ Dividend on Rate '13-15 Rate '13-16 Earnings Earnings Book Yield Equity Operating Profit Margin Debt/ Equity Debt/ Assets United States 5% 12% 18.1 16.8 2.7 1.9% 15.0 14.0 104.8 23.9 Developed Int'l 2% 15% 17.6 15.1 1.6 3.3% 10.6 9.6 180.6 24.5 Emerging Mkts 4% 8% 13.4 12.2 1.5 2.7% 10.9 10.9 109.3 22.4 Frontier 28% 25% 12.0 11.2 1.8 3.7% 15.4 18.7 88.3 16.7 Green represents the most attractive metric. Red is least attractive. Data: Bloomberg 9/19/14

Risky? Less Than You Think LOW DEPENDENCE ON FOREIGN CAPITAL Frontier economies are self-sustaining. Infrastructure investment is fed by citizen savings, not hot foreign money. LOW CORRELATION TO OTHER MARKETS These markets and economies respond to military coups, typhoons, oil discoveries etc., not broad global macro events. Each country has idiosyncratic drivers. Single country volatility is high, but low correlations mean lower collective volatility- see the chart. Source: Wall Street Journal

Other Risks? BALANCE The main benchmark (MSCI Frontier Markets Index) is not well balanced. Kuwait and Nigeria comprise almost half the index. Banks and other financial companies dominate. Solution: Frontier markets should be part of a diversified portfolio LIQUIDITY Market access, company size, and share availability are barriers. Most Frontier companies trade less than $3mil in value per day, raising the cost of entry and exit. Solution: US-traded funds like FM & TFMAX are liquid but don’t solve the underlying issue

Return Comparison (2-year)

Thank you

216 ES SEX STREET SALEM, MA 01970 (978) 745 -9233 (800) 888 -MGMT www.eCabot . com info@eCabot . com

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