In recent years, the rapid advancement of artificial intelligence and the proliferation of cryptocurrency, coupled with a spate of high-profile wildfires, have raised questions about the traditional perception of electric utilities as a steadfast and secure defensive investment.
The common wisdom shared by a Morgan Stanley sales manager to clients after the stock market crash on October 19, 1987, was, “Invest in utilities. Even during challenging times, people have to pay their electric bills.” This was the time when I was leading the research in corporate bonds at Morgan Stanley.
However, the dynamics of the market are changing and with it the risk profile of electric utility bonds. How this will impact investors in the long-term remains to be seen.
