On Monday I am participating in a Bull/Bear debate hosted by Citigroup's Tobias Levkovich.
Tobias is an old friend -- we go back to when he was a capital goods analyst on the sell-side of Wall Street.
I will be representing the Bearish case against UBS's Head of Investment Strategy.
This week Tobias sent me a series of topics he would like to discuss after we respectively deliver our investment positions.
One topic caught my interest.
"Technology is seen as generating growth but often at the expense of some others, such as online sales versus brick/mortar stores - is there a new area that you envision as being prone to major disruption?"
That is a great question from Tobias.
It is hard to predict areas that may be the next sector subject to disruption -- because almost every area is subject disruptive change these days!
However, Tobias' query renewed a project I was working on late last year -- shorting the investment managers (e.g. T. Rowe Price (TROW) , et al).
More and more money is going to passive products and strategies and away from active managers. Those products are by definition not as energetic compared to active managers. This is occurring at a time in which transaction costs and investment management fees are being disrupted.
A toxic cocktail may loom ahead:
* Lower stock market prices
* Less volume and activity
* Lower transaction pricing (commissions)
* Reduced investment management fees reflecting the continued share gains of passive products and strategies
So investment managers may be the next group to feel the disruption... and may be headed for share price falls.
More on this in the week ahead.
(This commentary originally appeared on Real Money Pro on March 27. Click here to learn about this dynamic market information service for active traders and to receive Doug Kass's Daily Diary and columns from Paul Price, Bret Jensen and others.)
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