July 10, 2024
If North Carolina Were A Stock, I’d Buy It!
by Adam J. Morgan, CFA, CMT
According to the moving company, PODS, more people are moving to North Carolina every day than anywhere else in the United States. Apparently, retirees and those looking for a better lifestyle find our affordable housing and relaxed disposition welcoming. Of the top ten destination cities on PODS’ list, four are located in North Carolina!
We live in an area in high demand. That beats the alternative. It’s easy to see why anyone planning a retirement would consider the Carolinas. The promise of a more relaxed, affordable lifestyle with access to the mountains, beaches, and yes, high-quality financial planning would attract anyone. Who could blame them? But counting the inbound retirees tells only part of the story.
Armor is located on the vertices of North Carolina’s Research Triangle, an area known for its vibrant technology community and the three research institutions that envelop it. The Triangle, officially named “The Raleigh-Durham-Cary NC Combined Statistical Area,” is one of the strongest regional economies in the entire country. In many ways, the Triangle is a marvel of modern capitalism and appears well positioned to continue to prosper for many years to come.
According to The Research Triangle Regional Partnership, sixty-four people move to the area every day, and many of them move here to work in the Technology and Life Sciences industries. That bodes well for the area as technology jobs typically pay more than the average job. As they make more, they spend more, and so on… Technology jobs also helped North Carolina to recover quickly after the pandemic and are a big reason why we still have lower unemployment than the national average.
After World War II, North Carolina’s economy needed an upgrade. At the time, it was an economy dominated by agriculture, textiles, and the furniture industry. The area universities were looking for a way to collaborate on research and provide opportunities that would ultimately keep graduates of those universities in-state. If you build it, they will come. I’d say it worked.
Fast forward to today, a lot has changed. The life sciences industry has exploded, the research money that drives emerging technologies has grown exponentially, and the Triangle has grown well beyond the original 7,000-acre plot of land purchased to hold the Research Triangle Park (RTP).
FujiFilm Diosynth Biotechnologies recently broke ground on a brand new $2 billion biopharmaceutical manufacturing facility located in Holly Springs. Yes, you read that right. Holly Springs. In total, FujiFilm is building one million square feet of manufacturing space that will employ 1,400 people, many of them earning six-figure salaries. Not bad for a town with a population of only 1,000 people in 1990.
And the future looks even brighter!
Annually, the NC Technology Association publishes the Tech Innovation Index, which ranks urban metro areas across the country by their metropolitan tech performance. North Carolina had ten metro areas that ranked in the top one hundred, nationally. The Research Triangle ranks first in North Carolina, but the report also shows that pockets of smaller tech communities have begun to spring up around the state. Hickory ranked 100th.
Now, couple that with the lowest corporate income tax rate in the country, and you’ve got a perfect economic storm brewing. At a time when high-earners and businesses are fleeing high tax states like New York, California, and Illinois for a friendlier business climate, many southern states are rolling out the red carpet for businesses. North Carolina was named CNBC’s best state for business in 2023.
All of this is occurring at a time when artificial intelligence promises to up-end virtually every industry in the world, beginning with the Life Sciences industry. Artificial intelligence is transforming research & development by applying data science and machine learning to massive data sets, enabling rapid discovery of new molecules, which in turn become new pharmaceutical drugs and advanced medical therapies. Many in the pharmaceutical industry are suggesting that AI may someday soon lead us to more personalized medicines customized to perform optimally for our own individual body, and odds are good that at least some of those discoveries will happen in the Triangle.
But North Carolina is not a stock, and we cannot buy it. Or can we? At the risk of making a blanket statement that is sure to catch the watchful eye of our wonderfully talented compliance team partners, I love North Carolina real estate. Obviously, location matters and obviously, all real estate properties are not the same. But if you own a home anywhere near the Triangle, the broader economic tailwind should help support higher home values in the future.
I look at my investment portfolio as having four basic components: stocks, bonds, real estate, and cash. If you have a cash reserve that works for your lifestyle, you are sensible about the stocks and bonds that you own, and you own property in North Carolina, well… you might just be better off than you think.
