The Weekly Brief

Last week we introduced the idea that investors should be thinking about the long-term and investing accordingly. This translates into trying your best to ignore short-term noise in financial markets and to instead focus on investing in relatively predictable sources of growth. This week, we take this idea a step forward with an example, the biggest of them all, investing in climate change.

What will the world look like in 5, 10, or 20 years-time, this is what matters for investors, rather than the immediate news stories of the day. Over the coming weeks, we will be digging deeper into some of the biggest long-term trends that we are thinking about and which offer investors very appealing long-term investment opportunities.

Given the volatility and economic uncertainty investors have experienced this year, we think it makes sense to review the state of markets, expectations, the economy, and most importantly, take a constructive view of how investors should be positioned to navigate this.

The state of the economy is by far the most important factor for us to be thinking about as investors. It drives everything else. Our final 'bull market catalyst' is the economy, and the nuances of understanding the trajectory needed in 2022-2023 to bring about the next bull market in stocks.

The second in our series on likely catalysts for the next bull market in stocks, we look at inflation. Understanding the circumstances which would precipitate a sustained decline in inflation from here are important for investors looking to navigate the rest of this bear market cycle successfully.

Understanding the most likely catalysts for the next bull market in equities is important so that investors can be prepared to adjust allocations at the right time. Over the coming weeks we will explain what we think these catalysts are, whether we see evidence for them yet, and what to look out for as early indicators.

Last week’s inflation report triggered the biggest one day move down in stocks since 2020. This was a strange reaction and we believe tells us something about the stage of this current market cycle.

A now famous speech made in 2002, which has since come to be much criticised and even mocked, we think offers some important insights for investors. Knowledge is not just a function of knowing things, it's also the wisdom of knowing what you do not know. Applying this to investing should be fundamental to portfolio allocation decisions.

The recent declines in stock prices have been, to some extent, driven by some better than expected economic data. Good news for the economy is being interpreted as bad news by markets. Why?

However bad things might seem, they usually are not as bad as we think. That is especially true for investment markets. Optimism, when grounded in reality, is a friend to long-term investors.