INVESTMENT THOUGHTS

I've spent the first couple of weeks of the New Year holding meetings with asset management firms, sitting in on countless webinars, and reading numerous market outlooks in order to get an idea of what other investment strategists are thinking and how our active portfolio managers are positioned to begin 2021. Not every manager/team/asset management firm have the same outlooks, which makes this a very productive exercise. Doing this thorough research project is an undertaking I do twice a year – once in January and July. As part of this process, I compile different market perspectives to help myself and our team formulate our views and what portfolio changes, if any, we should consider.

This past year has undoubtedly been challenging to navigate on various levels, including investing. This pandemic has shifted individual's perception of risk, what they value in their lives, and, for those that are able, how a shift to remote work affects how they think about lifestyle. Throughout this difficult year, portfolio managers and investment strategists that I've been in constant communication with have identified two key themes, both for the U.S. economy and the broader capital markets. The first is the theme of "resilience," and the second is the idea of "accelerated change." All of those factors are directly tied to the real estate market. In this month's piece, I take a deeper dive into the different market components and what investors are thinking.

While everyone, including investors, closely watched the U.S. Presidential Election, it was ultimately the announcement of a successful vaccine trial by Pfizer that proved to be material enough to move the capital markets. When incorporating Moderna's positive news about their successful drug trial, investors have become more optimistic about 2021 and onward. Rightfully so, there is now light at the end of the tunnel. However, before we get closer to that light, there will be bouts of market volatility generated by the virus's resurgence. From listening to medical professionals and health care analysts who have been keeping a close eye on the pandemic throughout 2020, there is a growing belief that the next 12 weeks could be even worse than what we saw in March. As we head into year-end, it's essential to look ahead at the equity markets' longer-term prospects while understanding the problematic current economic conditions and how they may impact the capital markets in the short term.

The upcoming U.S. Presidential Election has been on the minds of the majority of Americans and investors alike. Investors like to look ahead and predict what the election will look like and subsequently make investment decisions based on what they feel the new or continuing administration policies will be. Before we take a look at what is on investors' minds and which asset classes could perform well post Election Day, I want to point out that as long-term investors, we aren't basing any decisions based on who is elected. History has shown that the party in power is not a significant differentiator of investment returns: there are too many other factors, variables, and events that impact markets and assets over time.

Last month's resignation by Japanese Prime Minister Shinzo Abe was a surprise. Given Japan's size and role from a global economic and capital markets perspective, I wanted to dive deeper into where things currently stand and how investors are approaching the country.

Throughout this pandemic, there have been two big capital market themes that we have been paying close attention to and highlighting in our updates: the dispersion between growth (predominantly tech) and value names, and the re-opening of the U.S. economy. Here is an update and our latest thoughts on where we stand in both of those cases, especially how closely tied they are to one another.