Register to receive our free weekly newsletter including editorials.
Averages provide the central value in a data series but provide no window into variation. Every market drawdown, financial crisis and recession is different, and market cycles only end when excesses are corrected.
The bird in the hand is worth two in the bush, and it's an apt metaphor for investment choices. In 2021, as investors hunted in the bush for decent returns, demand overwhelmed supply. Cash is the bird in the hand.
REITs come in many forms and the impact of inflation varies by the type of inflation and the REIT subcategory. Some trends, such as the end of 'just in time' and greater power of labour, have a widespread impact.
Negative real yields have unmoored asset prices from fundamentals, but inflation pressures are likely to start pushing real yields higher. Higher real yields should feed into lower risk asset valuations.
The anniversary of the pandemic low point in the S&P500 was 23 March 2021, delivering a staggering one-year return of 77%. If history is a guide, as policy normalises, investors will pivot to 'compounders' not cyclicals.
Efforts to become more sustainable will challenge many companies and perhaps even bankrupt some. Sustainability drives new opportunities but brings risks for others, and companies which cannot adapt will suffer.