Recent Bluestone Memos
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Our world is changing. Three megatrends are in play that are going to affect all of us. Structures fundamental to our global society, that we take for granted, are being bulldozed.
The megatrend most in the news is COVID-19. This nasty virus is highly infectious, it’s easy to get and easy to pass on. It’s probably not going away soon, and worldwide vaccination is probably a long ways off. We might as well get used to physical distancing, face masks and handwashing. On the other side of this COVID mountain the world is going to be different: retail, entertainment, travel, public transit, healthcare, small business, work – many changes adding up to a fundamental cultural shift.
On top of this pandemic, a watershed geopolitical crisis is in play. The showdown between the world’s two superpowers, the U.S. and China, is changing the global rules of the game. Consequently, the steady advance of globalization since the Second World War is now moving in reverse, changing how the world functions economically, financially, militarily, and politically.
A third megatrend is changing our financial world. After a four-decade downward trajectory, interest rates on government bonds have finally collapsed to zero. 0%! This is without historic precedent, it makes no sense, and no one knows how this is going to play out. If bonds, the traditional low-volatility-low-risk investment, are no longer a viable option what are investors to do? This changes the very fabric of the financial world, and investors everywhere are trying to figure it out.
The story of these three megatrends is far from over. We live in a time of disruption, change, and rapid advancements. For now, no surprise, the economy is in recession, governments are building up staggering levels of debt as they spend trillions trying to prop up the economy, and financial markets are responding with wild volatility.
Interestingly, in all of this trouble and upheaval, stock markets have rebounded and are approaching new highs. This is counterintuitive, but it makes sense, because stock markets are forward-looking. In bad times they “climb a wall of worry” in anticipation of good times, in our case a return to economic growth in 2021.
We believe our style of investing is well suited for this environment. If the Portfolio Managers running our Mutual Funds can uncover solid businesses that will thrive in our changing world, and invest in them when the share price is attractive, we should be able to continue to calmly secure wealth in the long run.
The call today is for courage, patience, hope…and clear thinking. It’s true, life on this wonderful blue planet is fraught with danger – war, disease, natural catastrophe, economic and financial volatility. But human resiliency and drive, humanity’s growing collective wisdom and knowledge, advancements in science, technology and medicine, should all not be underestimated.
Life today is far better than anything imagined only fifty years ago. Optimism is reality. It’s worth getting out of bed in the morning and taking care of oneself, and striving to do one’s best, to live life well.
The future draws each of us, all of us, forward, inviting us to a flourishing life and a flourishing world.
This memo was prepared solely by Terry and Patty Rempel who are registered representatives of FundEX (a member of the Mutual Funds Dealers Association of Canada and the MFDA Investor Protection Corporation). The views and opinions, including any recommendations, expressed in this memo are those of Terry and Patty Rempel. Bluestone Financial is a personal trade name of Terry and Patty Rempel.