Embrace the Chaos
The results of fiscal policy are starting to come through the economist statistics, and they appear to be very strong. We are going to get some sort of infrastructure bill, and likely a less than anticipated tax increase. Now that we are a year past the initial Covid crisis and possibly halfway through our next market cycle, investors are having mixed perspectives and emotions. If you are waiting for the proverbial shoe to drop you might need to keep waiting. If you take anything away from this commentary, we hope it’s this: things actually look great in the economy on a macro basis.
Potential market outcomes in the next 2 years could be anything from absolutely spectacular to a never-ending risk of disaster (potentially even a single liquidity crisis buried in the depths of some overleveraged family office). To the average investor, last year proved that the market and the economy are two very different things. Strength in one does not always carry through to the other, although we expect it will over the coming months. We are likely about to climb an insane wall of worry for the next few months, with a mounting list of concerns that could derail this.
Some investors have made more wealth in the past year than they could have ever imagined. Others have FOMO from not making more, and a whole lot were completely left on the sidelines, furthering socioeconomic inequality in our society. Even policies meant to help the masses ended up in the pockets of the few. Regardless, the money is in the system. We are left with a K shaped recovery for both companies and households, except the upper right portion of the K has gone parabolic.