The Great Instability

Take a look at any individual business, industry sector, global region or economic market and you’ll see change happening constantly. It’s this volatility that the investment world relies on, and which allows it to thrive in a way it never could if there was little movement. Conversely, change that’s too intense in nature, too volatile, can have troubling effects with far reaching consequences – achieving a stable balance is a challenge.

Looking at the current global pandemic, there could be no truer example of this volatility and instability. However, while the COVID-19 outbreak poses a clear and present danger to humanity, and the immediate focus for the authorities is to protect human life while preventing an economic collapse, it is also important to not to lose sight of the medium to long term.

Of course, instability will be something market analysts will be used to. Still, what we have observed is that longer term historical market trends come nowhere close to what is happening today. Economic, political and environmental factors are converging on an unprecedented scale, creating a great deal of uncertainty discussed across boardrooms and within policy meetings. It’s a phenomenon we are calling ‘The Great Instability’.

A shift in one area of investment can have implications that extend far beyond its origin. From an economic point of view, a change in one commodity can affect the share price or yield somewhere else, and even influence another market’s currency, stability, economic outlook or fiscal policy. Strong employment figures, poor literacy rates, GDP or trade figures can have knock-on effects that may or may not have been anticipated and acted upon.

Political uncertainty is unprecedented, and elections are fraught with unpredictable outcomes and consequences. Governments and central banks across the world have different attitudes on how to tackle challenges and manage crises. Still, the influence of each approach goes far beyond local realities. Many fields will experience tighter regulation, aimed to either control or encourage change. Understanding which industries and companies are going to benefit from such tightening and which will have to change their business model is one of many questions demanding further investigation.

At the heart of it all is our constant desire for progress and improvement in the way we live and work. But how far can we push this ambition? In many cases, it risks happening at the expense of the world in which we live – an interconnected society where one shift is echoed by many more. Climate change is a prime example of this. The increasing global appetite for material goods and travel is positive for economic growth but comes with a corresponding increase in pollution and greenhouse gases. However, disruptive technology is constantly innovating, finding ways to offset and even reverse this impact.

Predicting exactly what will happen – and when – is challenging. Where will the next price shift occur? Which sector will survive? What will fall and who will thrive? One event can have an impact on many others, in many places, often without warning. Stable and steady, predictable outcomes seem to belong to the past.

As the ebbs and flows vital to the mechanics of the global economy become harder to anticipate, an expert view is needed more than ever to answer challenging questions. Where, what, and when to invest in the era of the great instability?

Finding answers requires a broader perspective and the consideration of all the variables and factors that can help unearth great opportunities from even greater instability. Looking at things from multiple angles helps to build a fuller picture. This matters even more in a time when variables are extraordinarily interconnected and are resulting in such instability. Now, more than ever, a broad lens is essential to look at any topic, stimulate debate through considered insight, and make informed decisions.

So, with the latest part of our Investigator Series, we’re going to investigate in great depth the main issues underpinning this great instability. We want to equip investors with our views and predictions on how to navigate through these uncertain times, and with the knowledge to make better-informed investment decisions.