As we ponder what’s occurring today in the world and financial markets, and look ahead to the future, we believe that we must consider our investment philosophy and strategy in the context of how these unprecedented events might permanently impact us. The current reality is affecting all aspects of our life and society, both in the U.S. and globally. These changes include how we work, learn, communicate, socialize (Zoom party anyone?), purchase, consume news and information, and experience entertainment. Some of these changes have long been in process but are being accelerated as a result of the effects of COVID-19. Other areas being impacted – some only temporarily and some fundamentally – include travel, trade, labor, transportation, retail, and restaurants.
Technology steps up
Innovations in technology have allowed most Americans to work, shop, and go to school from home, with varying degrees of success. Companies such as Slack, Zoom, Amazon, Prologis, Salesforce, Adobe, PayPal, Alphabet, Disney, Microsoft and others enable us to work, shop, learn and communicate from “distributed” locations. Forced experience has taught us that we do not need to physically congregate together every day to conduct business effectively, and may reorient our priorities about what is essential and what is not.
Winners will emerge
The necessity of conducting life from home is leading to the birth of new companies and technologies. Americans are highly creative, resilient, and restless, and we anticipate a great many new innovations in the next several quarters. As these innovations drive changes in our society, we may adjust our portfolios and investments to reflect this evolution. We are evaluating the potential of industries and sectors that may be less affected than others, such as food, pharmaceuticals, finance, and those, such as energy and automobiles, which are already in the midst of more permanent transformation. Our goal is to adjust asset allocation and individual investments in order to position portfolios to benefit from what we believe will be the economy of the future.