Michael Brush

Wed, Jun 25, 2025, 8:58 AM5 min read

When unforeseen market-moving events heighten investors’ anxiety, the best thing an investor can do is find discounted stocks to own for the long term, as conditions stabilize.

This mindset has helped Needham Aggressive Growth Fund NEAGX manager John Barr keep calm during troubling times — and significantly outperform the stock market. “As bad as things may seem, if you look out five years, things will be all right,” he says.

• My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life?

• ‘He doesn’t seem to care’: My secretive father, 81, added my name to a bank account. What about my mom?

• Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make.

• I’m 75 and have a reverse mortgage. Should I pay it off with my $200K savings — and live off Social Security instead?

• Why this banking proposal may mean good news for the bond market and investors

Simple — but not easy. Yet over the past five years, Barr’s fund is up more than twice as much as its rival funds and benchmark index, according to Morningstar Direct.

Since Barr’s record is so unusually good, I recently checked in with him to learn about other strategies that help him produce those results. Unlike so many fund managers, Barr gets his market-beating returns with no help from the so-called Magnificent Seven stocks, outside of a small position in Apple AAPL.

Three key lessons for investors:

1. Look beyond the Magnificent Seven to “picks and shovels” — companies that produce or supply the services and components that other companies need.

2. Barr positions to benefit from long-term trends, including AI and data-center growth, the increasing complexity of semiconductors and the reshoring of U.S. multinationals.

3. Many of the fund manager’s investments are smaller, lesser-known companies. That’s the point. Because they are underfollowed by Wall Street and the media, these companies’ product rollouts are mostly unrecognized. This increases the odds they are “hidden compounders” which could grow tenfold or more.

Skeptics warn AI is in a bubble. Barr dismisses these warnings as another example of more noise to be ignored. “AI is in its early stages,” he says. One stock he points to is Vertiv Holdings LLC VRT, which he says will continue to benefit from the growth of AI and the build-out of the data centers AI needs to function.

The digital infrastructure is complex, and it runs hot. Vertiv, which traces its roots back to the first company to sell computer-room air conditioning in 1946, develops and sells the components and cooling systems that keep data centers running. This stock is well into 10-bagger-plus status, but Barr thinks it has more to run. It was a top-10 holding for the fund at the end of the first quarter.