Counterpoint 2022 Investment Outlook

Looking to the past can provide us with a glimpse of the future

As we enter the cold season, Covid-19 infections are rising again and yet another virus strain, the Omicron variant, is spreading. While setbacks are possible, and perhaps probable, the economy and society at large now look better equipped to cope with the virus, given high vaccination rates, an ability to develop, adapt and produce vaccines, and a capacity to adjust working patterns flexibly and our lives more generally. As the coronavirus continues to circulate and mutate, it is going to remain a threat. Yet after settling down, it will likely become a more familiar and manageable issue.

History suggests that the repercussions and effects of pandemics have changed how the world functions and people behave. For instance, the devastation of the 1918 flu pandemic was quickly followed by a period of intense economic and social interactions. The Roaring Twenties saw a flowering of parties and concerts, as well as a radical shift in architectural design. It also heralded a period of consumerism and opportunities for innovators like Thomas Edison and Henry Ford to thrive.

Looking forward

The lockdowns accelerated many of the digital trends that were already under way and catapulted us into the future. However, as the global economy works through the gears of reopening, several challenges are arising. They include supply shortages, transportation bottlenecks and higher energy prices, which are all contributing to an elevated pace of inflation.

One of the most remarkable features of the past two years is that our economies have demonstrated just how quickly they can adapt. At Quintet, we continue to believe fundamental patterns and trends will reassert themselves as the world resets. Financial markets will probably continue to experience periods of volatility along the way, but the long-term outlook for investment returns remains positive.

Bill Street, Group Chief Investment Officer