Information is everywhere: leverage what you learn
For the last year or so, we’ve lived in a Covid bubble, of sorts. Now, more and more states are reaching the goal of 70% vaccination. Along with that, mask mandates and capacity limitations are being lifted and we’re moving ahead in our “new normal” which, in a lot of ways, looks a whole lot like our previous normal.
But as I like to say, “It always comes back, but it comes back differently.”
What this means is that if you take just about any behavior or commodity or economy, after a significant disruption—such as a natural disaster, a war or a pandemic—things always come back, but they aren’t the same. Sometimes the changes are obvious and more often, they’re much more nuanced, but they exist— and therein lies opportunity. If you look at where we were a couple of years ago and where we are now, you can develop insight into where we’re likely headed.
That’s what we’ll look at today: How to leverage insight to help you plan for your future, whether that includes investments, business, or job opportunities or anything else.
As for a quick market and governmental recap, the big news this week is that Biden and Putin are meeting as I write this, which follows on the heels of the G7 Summit in England. As was expected, the pandemic was at the forefront of topics, including development of a strategy to get people in poorer nations vaccinated; climate change; and economic and political challenges involving China.
This afternoon, Jerome Powell gave a Federal Reserve update. Indications of an interest-rate increase in 2023 should come as no surprise as the Fed tries to provide accurate analysis and set expectations. Still, I can’t help but wonder if this is a “red herring,” meant to cool things off enough now to avoid raising rates later. Time will tell.
In residential real estate, supply-chain issues seem to be easing some and lumber prices have dropped significantly in the last week or so. Hopefully, this means that construction will get on track, although I don’t anticipate any real easing of inventory in most markets, not for a while. Still, if interest rates do tick up significantly, it could lead to increased inventory, simply because the buying frenzy may slow some.
Read the tape and analyze the trendlines
I’ve talked a lot about how to read the tape in this blog and it’s something that I’ll always go back to (and Read the Tape is, in fact, the title of my ForbesBooks podcast and upcoming book). When you learn to do this, you’ll spot changes in behaviors, habits, needs and desires that can help you deduce where an industry or society is likely headed. It’s also important to analyze the trendlines.
In Investopedia, James Chen explains, “Trendlines are easily recognizable lines that traders draw on charts to connect a series of prices together or show some data's best fit. The resulting line is then used to give the trader a good idea of the direction in which an investment's value might move.”
And, as I see it, many of the current trendlines are clear:
Inflation is here and will stick around for a while
Interest rates are due for an increase, which may or may not happen, depending on how investors and lenders respond to the Fed’s announcement this week of a planned hike in 2023
Tech isn’t unwinding from the overexuberance that we saw last year, but it’s settling a bit, although we should expect its strength to continue—the future may not be quite as reliant on Zoom, but rest assured that innovation will continue and the best tech minds are hard at work on next-level communications
Residential real estate is still stuck in an inventory shortfall and while costs for materials have stabilized and are even easing some, it’ll be years before inventory catches up to demand, so high prices will be the norm for a while longer, possibly several years
Major cities are swiftly making a comeback, even more robustly than I predicted earlier in the pandemic (of course, no one knew then that we’d have a vaccine and a majority of Americans vaccinated by now—a surprising and welcome outcome)
Hard assets look like a decent bet to me
And whether I like it or not, crypto is here to stay, although I think that for a while still, major companies will hold off on investing heavily, simply because it’s still too difficult to account for it
Leisure travel is making a strong comeback, although after summer, the realities of work, termination of federal programs like enhanced unemployment benefits and even inflationary impacts may soften it a bit. Business travel was so dismal in 2020 that it’s nearly inevitable that it will get a big boost for the next several years and the same can be said for international travel. Here’s an excerpt of the current, five-year outlook from the U.S. Travel Association (access the full outlook here):
Retail and restaurants are outperforming expectations now, too, but for the reasons that I mentioned in regard to travel, I think this will settle a bit, sooner rather than later.
Another industry to watch is health care, which pivoted dramatically during the pandemic, especially growth in telehealth, and I think we’ll see some significant advances in how that develops.
Analyzing today to predict future behaviors
I base my opinions on information I find by looking at past behavioral changes after a major disruptive event, reading the tape and trendlines today and making realistic assumptions based on what I’ve found. Then, I find ways to leverage that information through the investments I make.
In several posts over the last 14 months, the predictions I’ve made have been quite accurate, although I admit that the Covid bubble is unwinding quicker than I’d anticipated. (That’s a good thing, of course, although it’s far too soon to say that we’ve moved into a post-pandemic reality on a global scale and I hope the rest of the world will soon join us as more people gain access to vaccines.)
Now, we’re grappling with scenarios that simply didn’t exist on a national or global scale before, such as how to develop ideal hybrid work models that allow for onsite and at-home options while fostering innovation, creativity and collegiality that dissipated during the lockdowns. Innovations that make either or both work scenarios more effective and appealing will be winners (as will companies that successfully navigate these waters).
We also need to look at what we’ve learned about pandemic response, specifically, and global crises, more broadly: What did we do well -- such as developing vaccines in record time? Where and how will our new knowledge accelerate further innovation? What exacerbated economic, health and social challenges and how will these be mitigated or resolved?
And as we move forward, consider:
What kinds of tangible goods do we need to develop?
What kinds of transportation should we focus on as we move forward? We know that electric cars will continue to grow, so what ancillary opportunities exist, like wide-scale development of charging stations?
How do we better manage supply-chain and distribution issues?
What do future communication channels look like and what do we need to get us there?
How did the pandemic impact productivity and which of these changes will stick and which will fade?
What changes need to be made to the healthcare system?
What other major trends and issues do we see or have we learned about that will impact the future?
For example, we recently learned that birth rates are falling in several of the world’s leading industrialized countries, including the US, China and Germany.
What happens as our population ages and retires and there aren’t enough workers to sustain current levels of production and growth? Who will work, and where, and how? Which problems will be mitigated by that new reality and what new problems will arise?
If you want to know where the opportunities are tomorrow, then these are the questions that you have to ask, analyze and answer today by reading the tape.
