Investment Bulletin

Autumn 2020


They say it takes 66 days to form a new habit. After over six months of forced change to many aspects of our daily life, a new paradigm is emerging that is likely to have a profound effect on the next decade. Governments have realised over the summer that keeping all businesses on life support is no longer the right course – instead, focus on those industries, sectors and parts of the economy that are likely to thrive, rather than just survive, as we come out of this crisis.

Looking back over the last 100 years, each decade has broadly presented as a paradigm – a clear regime. For example, the 1920s were “roaring”; the 1930s were in “depression”; the 1970s were inflationary; and the 1980s were disinflationary. Recent paradigms have included the debt boom and bust of the financial crisis in 2008, followed by monetary expansion lifting asset prices – increasing the wealth divide and leading to populist uprisings – in recent years. COVID has accelerated the shift to a new paradigm for which, like in previous decades, there will be winners and losers.

Technology is the well documented beneficiary of the COVID crisis. The forced lockdown, followed by tight restrictions globally, has required us all to change the way we live, work, shop and communicate – and the digital world has been our gateway. Whilst we are sure that the world will not return to the way it was pre-COVID, technology is not the only beneficiary. The UK Government, and others around the world are using the next wave of support to tackle the climate emergency and other key future trends, focusing their help on those industries and sectors that are thriving in the new world.

For that reason, we are looking beyond a handful of successful technology stocks to those regions and sectors that we feel are best placed to fare well as we move into 2021 and beyond, and where we do not believe share prices are excessive and opportunities lie. We are minded to avoid significant exposure to deep value areas of the energy market and those that are simply in structural decline, focusing on those cyclical opportunities that we believe will emerge stronger than before.

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