By: Scott Davis
As an overall sector, Industrials has not captured much attention by portfolio managers in quite some time – underperforming now for 4 straight years and 8 of the last 10. Even before the pandemic, we were cycling down in a legitimate short-cycle recession and 2020 will trough somewhere close to the “worst recession on record”. Industrials have proven to be exactly what they have always been – deeply cyclical. But we believe the investment backdrop as we head into the last quarter of the year should start to look much different. For one, industrials have high odds of outperforming after tough recessions and the cycle overall has bottomed for all but the most late-cycle of markets.