It’s what’s ahead that matters

Reviewing how 2020 set the stage for powerful secular trends

This planet we call home whirls around the center of our galaxy at some 220 kilometers per second. Yet in 2020, a virus one-millionth the size of a needle tip brought the world to a standstill. National borders, once free and frictionless, suddenly froze. Commutes were cut. Bedrooms converted to offices. Parents (bless them) became schoolteachers. Time itself felt motionless.

The human impulse is to think all of this is permanent. It isn’t. Pandemics are a feature, rather than a bug, of the past’s longer running rhythm. Yet Covid has unleashed a new world, sending the earth spinning faster and further into the future. Perhaps paradoxically to some, most of Forstrong’s Super Trends (which I have delineated in my articles over the past year) have accelerated – rather than stopped or reversed.

Where to from here? Today’s outlook is a high-voltage one, charged with potential scenarios that make typewriter keys twitch with possibilities. What is certain is that the highly stimulative policies introduced to address this year’s economic fallout will linger far longer than the virus itself. A key lesson from the past is that when policy turns, especially during a crisis, it turns in a big way. We should not underestimate the power of this decisive shift.

Many are still misreading this. In fact, sweeping changes are washing over the investing climate that make many vulnerable to missing important signals. This observation reflects two strains of analysis. The first is fundamental: The economic slump triggered by Covid is completely different from any previous downturn in recent history. We have never been here before. Covid is more of an exogenous shock rather than the typical bust driven by monetary tightening or a deflating asset bubble. What precedents can we use as a guide?

The second type of analysis is behavioural. The great filmmaker Martin Scorsese once said, “Cinema is a matter of what’s in the frame and what’s out.” Investing is the same. There is what we see and what we do not see. What appears outside the frame is often more important. Yet, today, people can plug into digital platforms that systematically exclude sources of information, enclosing members in an intellectually impenetrable layer of like-minded peers and biased blogs. A potentially rich, textured subject stays one dimensional. And so, the world can look completely different depending on the type of media consumed or group one identifies with.

All of this can be excitingly subversive or, on the opposite end of the spectrum, impervious to unconventional perspectives. Of course, it’s all a trap. Inhabiting one distinct mental world presents a clear and present danger. The individual is chronically deprived of any new information. But beyond the individual’s regular sightline, where the world could be perceived from a different angle, less innocuous trends may be quietly surfacing. It is there, in the wilder edges of the margins, where the best insights often occur.

Looking ahead, the pandemic’s chilling effect on mass movement is thawing. People, information, and capital are starting to churn, even if the trajectory of those pathways has been permanently altered. At some point, the world will spin freely again. More than ever, investors need to look out further and lean into long-term secular themes. Wide-angle global perspectives will be crucial to discern the path ahead and set the right investment roadmap.

I hope to continue to provide some illumination along that path in my blog posts and articles over the coming year.

Best wishes for a healthy and prosperous 2021!

Tyler Mordy, CFA, is CEO and CIO of Forstrong Global Asset Management Inc., engaged in top-down strategy, investment policy, and securities selection. He specializes in global investment strategy and ETF trends. This article first appeared in Forstrong’s Aug. 31 edition of “Ask Forstrong,” available on Forstrong’s Global Thinking blog. Used with permission. You can reach Tyler by phone at Forstrong Global, toll-free 1-888-419-6715, or by email at tmordy@forstrong.com. Follow Tyler on Twitter at @TylerMordy and @ForstrongGlobal.

Notes and Disclaimers

The foregoing is for general information purposes only and is the opinion of the writer. The author and clients of Forstrong Global Asset Management may have positions in securities mentioned. Commissions and management fees may be associated with exchange-traded funds. Please read the prospectus before investing. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.