2020 was unpleasant for most of us, yet the acceleration witnessed after April was generally positive for investors. The selected companies have a twin advantage of a revenue windfall and further momentum going forward.
Top Equity Selection for 2021
Baseline scenario
Never before has the economic outcome been so binary, confronting investors with two possible extreme outcomes. Scenario one consists of a complete meltdown of the present economic system, with major wealth destruction and a complete reorganization of the world order. The second scenario consists of a “muddle-through monetary policy,” with all kinds of experimental undertakings such as trade wars, political pressure for higher minimum wages, forced wealth-distribution through tax reforms, and a sharing economy, amongst other endeavors. Given this context, earnings expansions will be possible because operational efficiencies will improve (better use of robotics and automation); Therefore, GDP growth will outnumber wage growth, resulting in no inflation; interest rates will remain low; and some states will experiment with GDP/debt ratios well above historic levels. Finally, the political order will enter into a transition period with Generations X and Y at the helm. Our baseline scenario assumes that the second outcome will predominately apply, and for a prolonged period of time, probably beyond 2025. We expect that as of 2025 and onwards, the world will enter into a new growth cycle based on true innovation and wealth generation.
