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Pent-up demand and its potential for U.S.

Chris Buchbinder
Portfolio manager/investment analyst
Based in:
San Francisco office
Investment experience:

CHRIS BUCHBINDER: Most of the investing I do is in the U.S. I do have the flexibility to go outside of the U.S., but I spend most of my time in the U.S. As it happens, I also think that’s where the best opportunities lie right now.

The European situation is highly uncertain. If things work out well, there are probably going to be some wonderful investment opportunities, but if things work out badly, it could be quite bad over there. But if we say that it’s unlikely that there will be a global financial crisis caused by a collapse in Europe, then I think you can look to the U.S. and say, “Well, here’s a country that is recovering from the Great Recession, and we’re recovering slowly, but with a number of areas where there’s pretty clear pent-up demand.” And the industries that I would highlight — and, I think, that are going to have ramifications for the broader economy — are the auto industry and housing.

Obviously, housing was the driver of the bust, both directly and through its impact on the financial system. I think if you look at the indicators, it’s pretty clear that we’re on the other side of that now. Things are getting better at a slow pace, but that’s the way things work. They have to get better at a slow pace before it really begins to accelerate, and I think it will over the next two to three years. Similarly, the auto industry, which was crushed during the recession, has begun to improve. It’s well off its lows, but we’re still well below the level of demand we had for the prior 10 years.

And so my expectation is, again, I don’t know [if] it’ll happen in the next two or three months, but over the next two or three years, I think we’re going to see a pretty steady recovery in both housing and autos. And historically, those have been pretty significant drivers of what happens in the overall economy, both directly and through indirect effects.

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