Sanskrit Finance

We have a few investments, and a great investment advisor, but I don't really understand anything in the vicinity of the finance universe.  But I was intrigued with the headline in a recent e-mail from the corporation that manages my money:

"After the storm: Preparing for an altered investing landscape."

'Altered landscape' is what The New World is all about.  I read on:

As we’ve worked through different scenarios, I was interested to see that several trends began to emerge...  Driving these trends is a drop in supply as weaker companies have gone out of business and cheap debt.  Access to low-cost debt has allowed smaller companies to invest in new technologies, suggesting that they may emerge from the pandemic in a stronger position to compete.

It’s that changed landscape that we think investors need to prepare for now.

In equities, we anticipated a shift away from investor interest in the growth and high-quality stocks that historically have characterized the end of an economic cycle. Instead, as the global economy begins to recover from the pandemic in the U. S. we likely will see a shift into small-cap stocks that typically perform better as economic growth begins to accelerate. As I’ve already mentioned, we already are seeing signs that small cap companies are well-positioned for the recovery.

We also anticipate the global economy, and specifically emerging markets, will grow faster than the US. Global diversification may be increasingly important to capture global equity gains as emerging markets potentially offer more attractive opportunities than developed markets.

As I referenced previously, commodities also are beginning to look attractive. Oil-price drops devastated weaker suppliers last year and supply levels likely will stay constrained in the near-term. The suppliers that remain may be slow to respond to the increased demand from a recovering travel industry and consumers resuming their daily routines. The lag effect should support higher prices. Agricultural commodities’ prices also may continue to climb on rising demand.

Unlike equities and commodities, fixed income investors may face increased headwinds. Today’s low-yield environment may continue for a while, so what should investors do if they need income? As the economy begins to recover, higher-yielding investments such as emerging market bonds and preferred securities may be worth considering: however, both of these types of investment come with increased risk so should be approached with caution.

This, of course, might have been written in Sanskrit, for all the sense it made to me.  But it purports to speculate on the landscape of the new world, so if you speak the language, it's all yours.  Enjoy.