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Back in the early 1970s, using a mainframe computer with just 32 kilobytes of memory to analyze stocks could produce some powerful results, recalled Ed Kerschner, now the chief investment strategist for Citi Global Wealth Management.

“The inefficiencies of the market were such that you could actually capture them by crunching data,” said Kerschner, who built one of the earliest computerized asset-allocation models. Today, with markets driven by the instantaneous transmission of data, “obviously the key is better input, not the better crunch,” he said. He specializes in thematic investing – analyzing demographic, sociological, political and technological changes and how they are likely to benefit particular industries and companies.

Citi Global Wealth Management is a Citigroup Inc. business segment that includes the Citi Smith Barney brokerage house. Kerschner, who is based in New York City, visited Iowa last week to conduct two investment strategy seminars for about 200 invited clients and guests of Smith Barney’s Des Moines office.

Kerschner joined Citi in 2004 as chief investment officer for Citi Investment Research, and has been an investment strategist for most of his 35-year career. Institutional Investor magazine has called him “one of the deans of thematic investing.”

Four themes that will produce investment opportunities over the next three to five years include the 2008 presidential election, climate change, water shortages and global infrastructure needs, Kerschner told the Business Record.

One aspect of the response to infrastructure needs is the emergence of privately owned infrastructure, including private airports, water systems and roadways.

“Those are some of the newer investment ideas we’re looking at, funds and companies that are owners and operators of infrastructure,” he said.

Looking at the theme of climate change, companies in the electric power generation and transportation industries can benefit from the move to curbing greenhouse gas emissions, Kerschner said. Alternative fuels “will be a big part of that picture.”

“We’ve seen some remarkable technological progress,” he said. “But you have to make up your mind; do you want to eat it or drive it? Ultimately, I think, we will not use food for fuel. … We’ll move to a second generation of biofuels, then I think they will become intriguing again.”

Citi is also following wind-energy companies with interest. “We think wind is a really interesting solution; it’s viable,” Kerschner said. “It’s growing at about 20 to 25 percent a year. Every year we add more wind capacity than total solar capacity, so it is certainly a much bigger story.”

For each theme, Kerschner’s analysts develop a list of potential stocks from which to choose. It has 122 stocks in 25 industries in its climate theme, but fewer than half are rated a “buy,” he said.

Smith Barney’s focus on thematic investment advice sets it apart, Kerschner said. “I don’t know that many of our competitors are doing the type of thematic work that Smith Barney is doing,” he said. The advisers then help their clients determine whether particular thematic investments are a good fit.

“For some clients, thematic investing is appropriate; for some, maybe it’s not,” he said. “Some themes may be too aggressive.”