Innovation & Disruption - Covid Speed Breaks Out

Welcome to the last Friday Musings for 2020. I have done multiple 2021 Outlook presentations over the past two weeks (attached) - here is what speaks to me.

Speed, Covid’s signature, is breaking out beyond health. The speed of the Covid response - global money, human ingenuity and technology coming together to create a vaccine in 1/10th of the normal timeframe - is going to be replicated in regards to climate and other big issues.

I am a big believer in post Covid life looking a lot like pre Covid…. Death of the Office is Dead Wrong for ex. Asia, 1st in, 1st out, suggests this is likely to be the case especially when one looks at China.

One thing that is NOT going back to pre Covid conditions: speed of change. It's like driving in a 55 mph zone and then a 65 mph one - we have shifted to a faster pace of innovation & disruption. Speed of market reaction (public & private) has also changed. Think TSLA instead of FAANGS or ICLN instead of ESGU.

Regime shifts are occurring across societies and markets. Health policy leads, followed by a melding of fiscal with monetary policy (Fed no rate hikes till 2023 provides runway). Across the Tri Polar World, climate has joined the policy top table: net zero commits by China and Japan in Asia, Europe’s Next Gen linkage of JFR & Green Deal and the incoming Biden Admin placing climate at the center of its economic policy.

Policy driven markets provide scope for thematic led investment decisions executed via ETFs - the perfect vehicle for asset allocation.

My 3 phrases for 2021: A “Global Economic BOOM” will set off a “Great Rotation” across assets, regions, countries, thematics, sectors, styles & factors that inspires a “Golden Age for Asset Allocation”.

Besides the normal stock - bond - commodity - alternative portfolio allocations, I suggest one needs to think about how one is allocated thematically, to wit: clean energy, EV, gaming, cyber, fintech, genomics, ecommerce, crypto… to name a few. Do you have exposure to these themes - do you have ENOUGH exposure?

Use pullbacks to ensure one is positioned properly.

What do you think? Does this resonate? Peering into the near future is always a challenge. Reach out if you are interested - I am looking at some model portfolios to help think through these issues.

It's been a wild year - lots to contemplate over the holidays - enjoy the downtime bc change is coming…FAST.