Finding Investment Opportunities Before the Market Catches Up

In this interview, Portfolio Manager and Thematic Research Analyst James Nguyen discusses the early interest in investing that shaped his career and why curiosity remains central to his research process.

I have been interested in investing since I was a kid. When I was 10 years old, I was buying, trading and collecting rare comic books. That translates pretty easily to investing in stocks because it is really the same interest and skill set. You are trying to find something you think the market will value down the road that not everyone is looking at right now. That is really the heart of what we do here. My early interest in trading comic books triggered the same synapses in my brain as investing, and it is probably why I have been doing pretty much the same thing since the beginning of my career.

Can you describe your role at Chevy Chase Trust and what your work involves day to day?

My primary role is as a portfolio manager, so the day to day is managing, watching and investing client assets and portfolios. But Chevy Chase Trust is a rare firm that does research in-house, so I am part of that team as well, mostly looking at tech and growth stocks. Our philosophy on managing client assets is leveraging our in-house research and introducing as many of those thematic ideas into client portfolios as possible. Then the portfolio manager works to customize each portfolio around those themes based on the individual client’s needs, risk levels and end goals.

Thematic research is a process by which we curate the broader market and the universe of thousands of stocks into a few dozen investments instead of a few thousand. It is really about identifying big, broad trends (demographic, technological or economic) in the world and finding the potential beneficiaries and leaders of those trends. I always say the definition of a good theme is one that anyone from an 8-year-old to an 80-year-old can recognize, understand and see playing out in the world.. When you are investing around these broad themes, that rising tide lifts a lot of different boats.

By nature, thematic investing involves identifying long-term trends. Short-term geopolitical events or market-moving headlines, for example, do not necessarily change whether the average manufacturing company decides to use robots in its manufacturing process. In some ways, those moments can create opportunities because the market often moves sharply up and down on such news and noise. Our process and investment philosophy help us look through that volatility and stay focused on the long-term trends that matter.

It is very different from when I started in this business right before the first tech bubble, when the internet was new. At that time, you really had to dig around for information. Now we have the internet in our pockets every day, and that provides us with almost too much information that the average investor should not really focus on. For long-term investing, most of the headlines and information we are inundated with each day are noise.  At Chevy Chase Trust, we sit through the noise knowing the research we rely on should create favorable outcomes over time.

Our themes are often big and broad, so we work to distinguish which companies will truly benefit in a way the market does not quite recognize right now. That is the key because it works both ways. Sometimes there are obvious beneficiaries of a theme, but the market has already priced in a lot of those benefits. Avoiding some of the more crowded names within a theme helps uncover some under-followed and less obvious investment opportunities.

Curiosity is one of the key drivers of the research process. It means going down rabbit holes and  digging six feet deeper than the average investor. You need that curiosity to move beyond the surface level. The deeper you dig, the more likely you are to uncover truly unique ideas.

For us right now, AI has a million different rabbit holes. It is one of the most widely talked-about topics, and the market, for the most part, is still focused on the same big names: tech, semiconductor and infrastructure companies. To us, there are fewer long-term opportunities there because the market has already priced in that growth.

With our thematic investing approach, we like to take something like AI and ask: What other industries are going to benefit? Whether it is industrial, mining or other companies that are not obviously thought of as AI investments, some of them may still be big beneficiaries of such technology.

Clients want true service, and that means addressing all their needs and goals in a customized way. Investment returns are important, but our role extends far beyond portfolio management.., The market is going to have ups and downs. It is going to react to a lot of different news and noise. Clients want experienced professionals  guiding them along the way, answering questions,  and giving them  confidence that the people managing their portfolio have a deep understanding of what’s going on.

Important Disclosures