New stock-market investment theme: ‘Violence in America,’ says Fundstrat’s Lee

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New stock-market investment theme: ‘Violence in America,’ says Fundstrat’s Lee


The past 12 months in the U.S. has been particularly tumultuous, framed by the COVID-19 pandemic and marked by a number of episodes of civil unrest on the grounds of inequality and politics, and that turmoil is something investors should bank on for the longer term, according to at least one strategist.

Thomas Lee, founder of Fundstrat Global Advisors, says that violent crimes in the U.S. have been on the rise and doesn’t envision that abating soon as the U.S. is locked in the throes of the worst pandemic in generations and a change of leadership in the Oval Office that has been less than smooth.

“And the events of the past week in Washington, in my view, are symptomatic of a greater challenge facing America. That Americans are taking action in their own hands outside of legal avenues, possibly because of the loss of faith in institutions,” Lee wrote, referring to the riot by supporters of President Trump at the Capitol, which resulted in at least five deaths. ”

House Democrats were set to begin efforts Monday to remove Trump from office ahead of President-elect Joe Biden’s Jan. 20 inauguration for his apparent role in inciting mob attack, which sought to halt the certification of Biden’s electoral victory.

Lee’s report argued that America, which saw weeks of protests and sporadic violence last summer in the wake of the death of George Floyd, an unarmed Black man who was killed by a white police officer in Minneapolis, is becoming more violent—a fact that investors should be prepared for.

Lee argued that the rise in violence goes beyond civil unrest. Homicide in America was up by 37%, reversing some 30 years of progress.

“That is simply a staggering surge. In cities at the heart of the [Black Lives Matter] protests, the rise is even greater,” the Fundstrat analysts wrote.

“In fact, Richard Rosenfeld, lead author of ‘Pandemic, Social Unrest and Crime US Cities’ notes that 2020 homicide rate exceeds the rate of the late-1980s and 1990s,” Lee noted.

“This is simply astounding,” he wrote.

With that in mind, what is an investor to do if civil unrest and rising crime are trends that aren’t likely to abate in the near term.

Lee says because citizens will want to protect themselves, there are ways to play that theme from an investing standpoint.

Video-surveillance companies, including Digital Ally
DGLY,
Recon Technology
RCON
and Stanley Black & Decker
SWK,
are worth paying attention to, Fundstrat writes.

Lee qualified that the stocks weren’t recommendations but were certainly worth watching.

He also pointed to Napco Security
NSSC,
Flir Systems
FLIR,
NXT-ID
NXTD,
and Ubiquiti
UI.

On the home security front, Fundstrat suggested watching ADT Inc.
ADT,
Alarm.com Holdings
ALRM,
Arlo Technologies
ARLO,
The Brinks Co.
BCO,
Fortune Brands Home & Security
FBHS,
Honeywell
HON,
Monitronics International
SCTY,
and Vivint Smart Home
VVNT.

In terms of personal protection, Axon Enterprise
AAXN
and Image Sensing Systems
ISNS,
are mentioned, while drone stocks worth a gander include AeroVironment
AVAV,
Ambarella
AMBA,
Boeing
BA,
Nvidia
NVDA,
Parrot
PAOTF
and Plymouth Rock Technologies
CA:PRT.

On Monday, stocks were on the defensive, with the Dow Jones Industrial Average
DJIA,
the S&P 500 index
SPX
and the Nasdaq Composite Index
COMP
pulling back from record highs put in on Friday. Weakness was attributed in part to rising bond yields, as wella s worries that efforts to push Trump out of office could detract from a legislative agenda that might help to support the economy and the market in the midst of the pandemic.



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