It was exactly fifty years ago that Monty Python’s Flying Circus proclaimed “And now for something completely different.” It was also precisely fifty years ago that the US withdrew from the gold standard, thus ushering in a “completely different” era of monetary policy arrangements, inflation dynamics, and market relationships. Paradigm shifts may be infrequent but, when they occur, they can have profound consequences.
This edition of the Market Know-How coincides with another moment where the future could potentially look “completely different” from the recent past. As the global economy begins to reopen we will discover over the next few months what the new post-COVID-19 “normal” looks like: will inflation prove to be sticky in a way we haven’t seen for decades, and will central banks have an increased tolerance for that? Will taxes have to rise to recoup the costs of the fiscal largesse? Should we be recalibrating valuation models to reflect structural changes to crossmarket relationships?
The next phase of the recovery may prove to be a paradigm shift: a move into a world of “completely different” macro and market relationships to those which we have been accustomed to in recent years. Hence, the last decade’s successful portfolio allocation may require adjustments for the years ahead. In this Market Know-How we explore how some of those factors may shape the investment landscape.
We emphasize:
- Elevating the importance of income and broadening out to non-traditional investments.
- Focusing on strategies seeking to increase portfolio resilience and capitalize on normalizing rates and inflation.
- Evaluating risk and return characteristics for digital assets, and staying on top of transformative trends impacting the investing landscape.