How Will 2020’s Major Events Impact Investment Portfolios Going Forward?June 15, 2020
2020 has proven to be a year full of major events that have impacted the economy and sparked social change. What impact will the consequences of these events have on investment portfolios moving forward? We explore our thoughts here.
Historically, there have been perhaps a half dozen times when major change came upon our society, and therefore upon our economy, which then provided a major investment advantage for those who positioned their wealth accordingly. Or, said another way, incurred a major disadvantage for those who didn’t. KLR Wealth believes we are on the cusp of one of those times in 2020.
More on the current events
We are speaking of course of not just one, but two, major events that have hit us all like a two-by-four in recent days – (1) the Covid-19 pandemic, and (2) George Floyd’s untimely death and the world-wide unrest that has followed.
Either one of these incidents could easily be powerful enough to bring about major societal change…but the two combined will undeniably redefine us as a collective, aggregate society – what we value, how we interact with each other, and what our legacy will be, among many other deep and profound consequences. We cannot begin to fathom what many of these after-effects will be any more than we could when the Iron Curtain fell in 1989, or when we suffered the 9/11 attacks in 2001. Maybe somebody with greater wisdom and insight than us will present a better descriptor but for purposes of this article we are going to refer to both combined events, and their aftermath, as simply ‘2020’.
The economy adjusts to major events
Our economy is the aggregation of every financially-based choice we individually and collectively make with our own limited resources – is in sum and substance a derivation of our society, it will adapt and adjust to that societal change. Examples of two recent economic-centric major changes that truly affected our society were Paul Volcker’s Federal Reserve breaking the back of inflation in the 1980’s, and the Great Financial Crisis of 2008-09. Our economy will also adjust to the events of 2020.
Strength through adversity
In every case so far, and we at KLR Wealth strongly believe this will prove no different, we emerged as a far stronger society, with a correspondingly stronger and more dynamic economy than from where we were before. When history is written perhaps a couple of decades from now, it is entirely possible that every change that came before (at least since WWII) will pale in comparison to our double-fisted 2020.
So, what is this investment imperative?
To simply say ESG, the current vernacular on Wall Street for investing with a positive awareness for Environmental, Social and Governance issues, is really not to do it justice. As the prime ‘E’ focus, we already know about the compelling science around climate change and how that has already begun to impact our daily lives, and the issues around ‘G’, among them gender equity in the Corporate Executive Suite, are beginning to receive widespread recognition.
But in our opinion, 2020 will become all about the ‘S’, the potential massive upheaval in all facets of societal awareness. Plus, since all three – the ‘E’, the ‘S’ and the ‘G’ - are front-and-center for the largest generation in our country’s history, the Millennials; now truly coming of age as an overwhelming societal/economic/political force, this must be embraced as an investment philosophy. Not to do so is to fight the rising tide, a rising tide that may never ebb. This is the imperative.
Where else does the imperative apply?
This imperative is not limited to investment portfolios. It will be equally true for other forms of capital stewardship, most notably to include business ownership. Those who adapt and change will over time have the winds of 2020 at their backs. Those who don’t will do so at their own eventual peril.
Wall Street is in our opinion still in the very early innings of providing first-class ESG-oriented investment solutions. As society changes and as the economy changes, Wall Street will positively respond. You might know that KLR Wealth has already embraced several ESG strategies within client portfolios, to include specific KLR Wealth ESG models. We will now accelerate that ESG positioning, to include over time, every asset and sub-asset class for a truly diversified ESG portfolio for our clients.
Questions? Contact us.