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PremiumPoints 3Q-2020 | Emerging (Arrived) Investment Themes

Posted by: Thomas F. McKeon, CFA on October 29, 2020

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We will be the first to tell you that trying to predict or otherwise peer around the corner is a waste of time. So as evidence-based investment advisors, we rely on historical evidence to inform our recommendations.

Review & Outlook 3Q-2020
The equity markets powered higher through 3Q-2020 and benchmarks like the S&P 500 Index began September 2020 after again reaching an all-time high, before ending the quarter just below the all-time high of 9/2/2020. The turmoil and nerve-rattling declines of 1Q-2020 are a distant memory (not really).
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Growth vs. Value Redux
Over the history of equity investing, the single metric that has been most predictive of future returns is: valuation. Cheap stocks outperform expensive stocks over time. Not every month, quarter, year or longer.
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A Notable Casualty
To be fair, this growth over value advantage has persisted for significantly longer—multiple years—than just the post-pandemic panic. The Philadelphia Inquirer recently reported that a well-known and respected investment management firm in Philadelphia—AJO Partners—founded by Ted Aronson—will close as of 12/31/2020.
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Emerging (Arrived) Investment Themes
The New York Times recently published an article on what they believe will be a long-term secular trend in the U.S.: Climate Migration. With forest fires of unprecedented size, intensity and frequency coupled with hurricanes of unprecedented intensity and frequency, the NYT believes that many folks will be forced or choose to move.
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What Is An Accredited Investor?
The SEC wisely limits investment into non-registered securities to accredited investors. As defined by the SEC an accredited investor is someone with a net worth of $1 million or more exclusive of their primary residence, or someone with an income of $200,000 for the past two years ($300,000) if filing jointly with spouse. These are the two definitions of accredited investor that most people are familiar with.

Importantly, there are a handful of other ways to meet the definition of accredited, the most relevant being:
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Keeping Up With the Digital Age
There is no doubt that technology has transformed many aspects of our professional and personal lives. That is true for us as investment advisors as well. Technology has not changed the timeless truth of investing:
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The Doobie Brothers and Peter Frampton Cover Eric Clapton's "Let It Rain."
Some of our favorite rock and roll veterans team up to cover the classic "Let It Rain." This is pure light and joy with guitars, keys, and drums.
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https://www.youtube.com/watch?v=T7Dm77k-tZo&list=RDT7Dm77k-tZo&start_radio=1

 


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