Cautiously
accelerating
The virus threat is receding, the
equity averages are expanding, and there is finally a sense of “normalcy”
returning...at least more so than when the world was (literally) in the death
grip of the pandemic. One of the most
significant after-effects of the last year is the way in which people are
reevaluating priorities and the meaning of what it is to be “healthy and
wealthy”.
As a result of all the stresses we
have experienced...the loneliness, solitude, and grief brought on by death and
the consciousness of our mortality....many have changed their perception about
what they need or require for happiness.
Unfortunately, it took a calamity like Covid-19 to change beliefs but,
just like markets themselves, it sometimes takes a capitulation of dynamic
proportion to recalibrate quantifiable expectations.
For many, the threshold for a
well-fulfilled life isn't as high as once imagined.
Change is a part of life. Values and relationships have supplanted the
need to keep up with unrealistic financial expectations. Perhaps the lessons have been learned,
perhaps not, or maybe only fleetingly.
Perception sometimes is everything.
One such perception is that the
wealthy were more prepared to ride out the health and financial crises than
were the less fortunate. Indeed,
discretionary money is a luxury not afforded (no pun) by everyone. Thus, as markets have rebounded upwards so
too did the financial well-being of the rich.
This was not the case for the less well-off. In fact, the “recovery” is still a myth for
those in lower socio-economic strata.
Revising
expectations
So what, then, constitutes
wealth? For those who aspire to it, it seems
that it is the accumulation of “more toys” than the other guy; a constant
comparison between one's starting point and an expected end point, almost
always defined by what their neighbors have or do. Curious, though, that there are cultures is
which being rich is defined by the quality of one's soul, family experiences,
and relationships to the community at large.
There are no right or wrong answers to this conundrum, simply that which
meets one's own criteria for happiness and fulfillment.
Too often, however, Wall Street
contributes to these erroneous definitions of wealth by disseminating
advertisements equating status and wealth building as “my money equaling the other guy's, plus-one”..... an unfortunate standard by which thinking of
oneself first, the other person second, and never having enough to be happy is compulsory
for a well- lived life. Through good
times and bad, sell-offs and phenomenal gains, Wall Street perpetuates the
notion that your status is achieved by inching your nose just slightly ahead of
the next guy.
I get it. It all comes down to goal setting and
personal preference. But there is no
standardized definition of wealth or achievement. The big banks may roll out the red carpet for
their “premier” clients, but in the end we all occupy the same human space in
our communities.
The magnitude and amplitude of the
global recovery cycle varies across regions, heavily dependent upon local
vaccination levels. This divergent
structure is creating a unique investment opportunity based upon county and
sector-specific fundamental changes. Last
week's inert market demonstrated that there are serious revisions taking place
in earnings expectations and in rotational leadership, forsaking the “front end” engines of the economy
(discretionary staples, cyclical companies, industrials, etc.) for the more daring
inflation-driven models (commodities, financials). We do not believe that current price hikes
represent a secular change in the inflation picture, but rather a temporary
surge in costs brought on by pent-up demand and shortages in the supply
chain. We caution our clients to prepare
for more volatility in a post-pandemic economy feeling its way towards a new
normal. We also urge restraint in
judging others, because ultimately, how we feel
about the changes in our world is an
intrinsic effect for everyone to explore to relieve the distress around us.
