Hi, I’m Mark and we’re back with this week’s edition of Morningstar Minute, where we catch up on everything happening in markets. So I’m joined by Bryce today. So Bryce headlines continue to talk about Iran, the impact on markets markets plunging. What’s happening.

Anderson: Yeah. So Iran continues to dominate the headlines. And understandably and over the months the markets are in the red. But over the last week with some of those markets and particularly in Europe, have clawed back a bit of those returns. And look, the environment is still pretty uncertain. And I guess markets aren’t locking that. But I think it’s part of investing in equity markets.

LaMonica: And when we get these headlines about market performance it obviously makes people nervous. Volatility makes people nervous. So I think any advice that you have for investors out there that are trying to figure out how to react to what’s happening.

Anderson: Yeah, sure. So volatility is pretty uncomfortable. And understandably I think we’re pretty hardwired that we hide losses height uncertainty. But volatility is actually the price you pay for investing in equities. And generating those returns in the long term. So advice for investors would be firstly stay calm, stay invested and focus on the long term.

LaMonica: Maybe let’s talk about what you and the rest of the investment team are doing. Have you altered your portfolios? Do you see opportunities? What are you seeing out there?

Anderson: Yeah. In terms of these macro events, we we like to prepare not predict. So in terms of how we, I guess, react to markets and market movements and these falls in markets, we tend to be pretty measured. We focus on our our process, our valuation driven asset allocation process. And that points us to areas where there’s a bit of a dislocation between price and what we say.

It’s a long term value. So trying to tune out a lot of that noise and focus on long term. And that’s uncovering a few opportunities at the moment.

LaMonica: Okay. Where are you seeing those opportunities.

Anderson: Yeah. So obviously there’s some concerns around inflation, concerns around what that means for cost of living and cost of living pressures. So part parts of the market where we’re seeing I guess opportunity is in those areas which are impacted by those forces and which have been, I guess, indiscriminately sold. So where we lock is in that consumer discretionary and cyclical area, as well as some of the, I guess, more cyclical end of consumer staples.

So a couple of industries probably to call out would be global luxury and fast moving consumer goods, meaning that that premium end.

LaMonica: Okay. Now this is a little different than I think a lot of the commentary, a lot of investors are thinking about oil or, you know, perhaps some of the defense companies. What do you have to say to that and that investor focus on those two sectors?

Anderson: Yeah, I think that’s the obvious thing is to go towards stuff that you think is positively impacted by, increases in oil inflation expectations, defense spend, all that sort of stuff. But that gets really reflected in prices pretty quickly. And we prefer to go on the on the second order impact and go with the noise I think is greatest, because that’s when the behavioral, I guess biases are greatest and potentially where we get the most separation between price and value.

And at the moment, that is where where we’re looking where the inflation is a negative, where cost of living is impacted, where oil is potentially a cost that’s going to go up. And that’s where we tend to fish, rather than in the obvious spots where prices, I guess, reflect those changes pretty quickly.