Advisor Flipbooks

2 · 10 INVESTMENT THEMES FOR 2023 Martin Romo is an equity portfolio manager with 31 years of experience. He is a manager for The Growth Fund of America®. Growth stocks have come under intense pressure, but for some companies I think the market is throwing the baby out with the bathwater. As a growth investor, it's essential to differentiate between companies that have reached the end of their runway or are facing stiffer competition with those that are simply in a cyclical slowdown. If you can fi nd companies set to re-accelerate when the economy improves, you may fi nd promising buying opportunities. For example, streaming companies and ad-based social networks are facing tough new competition, so investors need to focus more on profi tability than in the past. On the other hand, cloud computing growth has slowed, but this may be cyclical. I believe cloud company fundamentals remain strong, but the market seems to be punishing them to a similar degree as more troubled tech stocks — the proverbial baby with the bathwater. Likewise, the semiconductor industry has struggled with oversupply issues. I don't know what will happen over the next 12 or 18 months, but I think the chip industry may be set for a powerful cyclical recovery. If we have confi dence that the companies we invest in will survive, then the important question 2. New growth Sources: Capital Group, Refi nitiv Datastream, Standard & Poor's. As of 12/31/22. Indexed to 100 as of 1/1/05. 90 95 100 105 110 115 120 125 Ratio of S&P 500 Equal-Weighted Index to S&P 500 Index 2005 2007 2009 2011 2013 2015 2017 2019 2021 Market breadth increasing Market breadth declining Markets are moving from narrow to broader leadership

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