Updated: Sep 7, 2020
Pedram Abraham Mehrian, CEO and Chief Financial Architect of Family Financial Strategies,Inc., and his team of financial experts examine and analyze the outlook for the 4th Q 2020 and throughout 2021.
Download the new “2020 Midyear Outlook – Recession, Recovery, and Resilience” report, presented by Wells Fargo Investment Institute. It examines the contours of change, and how investors might adapt over the months and years to come.
When we set our 2020 investment theme of owning hard-assets last December, we foresaw market volatility and a vulnerable, late-cycle global economy. But the world did not anticipate the most serious pandemic in a century-and likely the fastest to develop in human history!
As stay-at-home orders end globally, pent-up demand for everything from haircuts to houses should spark an economic and earnings recovery into the 4th Q of 2020. Though it may have a quick start, we expect a downshift and a more gradual rebound through 2021 for two main reasons:
Fears of a new surge in COVID-19 infections
The repairing of the economic damages caused by the months-long shutdown
Tactics to position yourself.
Budgeting and maintaining cash holdings of 6-18 months of expenses to allow you the flexibility to hold your assets and not sell at a distressed time
We favor U.S. equity, especially in large-cap sectors.
There are three areas of focus:
Global Fixed Income: A low-yield environment is likely to persist despite an avalanche of new supply. Credit-focused fixed-income classes (I.E corporate bonds and promissory notes).
Global Real Assets: Commercial real estate sectors appear to be caught in the crosshairs of the global lockdown, which means there will be great opportunities to purchase prime real estate at discounted prices.
Global Alternative Investments: The Coronavirus crisis has disrupted many companies and accelerated the default cycle. We foresee opportunities that provide lending and liquidity, followed by dislocation and distress.
For the #SophisticatedInvestor that means, the economic downturn has created challenges for the income seeking investors but also opportunities in alternative investments, such as those that specialize in #DistressDebt.
Rebalance your portfolio in order to reposition funds that are performing poorly while allocating those funds to sectors that are offering opportunist buys.
“You make great money in a good economy, but you make a fortune in a bad economy” - Pedram Abraham Mehrian
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Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
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Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
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