EIU Report Explores How to Invest in a Post-Covid World

Investors may support the following observation by The Economist Intelligence Unit (The EIU): "Equity markets have shown extreme volatility in 2020 and become increasingly disconnected from economic fundamentals: markets are being driven up by central bank liquidity and fiscal stimulus, while the real economy is in one of the deepest recessions of the last 100 years."

In its report, Where have all the fundamentals gone? Investing post-Covid, The EIU suggests that "the coronavirus (Covid-19) pandemic and geopolitical tensions are disrupting business models and may require radical changes in investment strategies."

The EIU "believes that three key themes are going to be vital for investment performance over the next five years.

• "No end to monetary stimulus in sight. With major economies unlikely to return to their pre-Covid-19 level of output for years, inflation and rising interest rates are not currently a threat. As a result, asset prices are likely to remain decoupled from economic data for some time, but fundamentals will affect relative performance.
• "Prepare for a backlash. Investors should be braced for political shocks ranging from tax increases to disorderly sovereign defaults. Governments are likely to expect more in return from companies that they have showered with wage subsidies and loan forgiveness. Countries with adaptable economies and high levels of political cohesion will be the safest bets.
• "Prepare for a bipolar world. Covid-19 has raised the stakes in the US-China rivalry, and tensions are likely to continue to rise regardless of who wins the US presidency in November. Countries and multinational companies will face growing pressure to show where their loyalties lie, and investors will need to consider the implications along supply chains. While the new order will also create new opportunities, some countries will be better placed to exploit them than others."

The report importantly notes: "Some sectors and companies have already benefited from the liquidity injection to a much greater extent than others, with equity prices surging in China, but languishing in commodity-exporting emerging markets." The EIU expects "this divergence will

continue" and "countries best-placed to adapt to the disruption of Covid-19 (those with sound economic institutions, low financial risks, and flexible labor markets) will recover relatively quickly."

As for the report's finding that investors should prepare for a backlash, The EIU explains that "[a]fter having provided unprecedented monetary and fiscal support to companies, it is likely that governments, and the public, will have a heightened set of expectations of the contribution that companies make to society. This could take the form of more robust competition policy, requirements for minimum levels of employment or support for apprenticeship schemes, higher taxes or measures to restrict high dividend payouts or executive bonuses." Crucially, "Investors will need to monitor political and policy trends carefully."

And in order to prepare for a bipolar world, I concur that "investors will need to consider the implications along supply chains. While the new order will also create new opportunities, some countries will be better placed to exploit them than others." The report adds:

Supply chain realignments will create new opportunities, but investors will need to consider carefully how they might play out in practice. For instance, Latin America clearly has the opportunity to gain from nearshoring in the coming decade, given some comparative advantages, including its long list of free-trade agreement, proximity to the US market and increasingly competitive wages. However, while some movement is likely (particularly to Mexico), our analysis suggests that many countries in the region will struggle to overcome disadvantages in too many areas: infrastructure, long distances to key markets in Asia and Europe (Chile, for example, could struggle in this area despite its many advantages), and political concerns over predictability, stability and security.

How do you think investors should prepare for investing in a post-covid world?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

Four Things Recent College Graduates Should Be Doing During the Covid-19 Pandemic

Over the past several years, from late spring through the summer, I receive requests from recent college graduates seeking advice on how to land their first post-college job. This year, however, as result of the economic recession caused by the covid-19 pandemic, many graduates are reporting that firms are rescinding internship or employment opportunities. Gina London, an executive advisor and business consultant, published an article on LinkedIn that provides four things recent college graduates should be doing right now.

1. Develop yourself

"If you're not working, perhaps you can expand your professional skills by taking an online course," suggests Ms. London. This great advice is useful for all of us irrespective of where we are on our career path. Learning should not end when you receive your college degree (nor should it end whether or not you attended college). Developing lifelong learning skills will benefit you throughout your career.

Services such edX, Coursera, HubSpot Academy, just to name a few, provide free or low-cost online classes. In addition, becoming a reader of daily or weekly periodicals like The New York Times, Financial Times or The Economist are good sources of information that will help you remain informed on current affairs. And while a Pew Research Center survey conducted in 2019 says that approximately "a quarter of U.S. adults (27%) say they haven't read a book in whole or in part in the past year, whether in print, electronic or audio form," I strongly recommend reading books in order to help improve your skills or build knowledge on a specific topic.

Even Mark Cuban, entrepreneur and owner of the Dallas Mavericks, opined on this topic during a television interview: "The first question every interviewer is going to ask you is: 'What did you learn during the pandemic of 2020? What skills did you add during the pandemic of 2020?'"

He further said: "Keep on adding to your skill-set, no matter what it is. I don't care if you're a welder, or you want to learn how to [computer] program, you want to learn about artificial intelligence, whatever it is, wherever you want to work, use this time to become great at it. Because that's where the opportunities start to open up. If you just sit back and wonder what's next, then it becomes all the more challenging."

2. Network

Ms. London contends that "[t]here's never been a better time to ask everyone - anyone - to connect. 'We're all in this together,' as the lockdown saying goes, so leverage the inherent goodwill and reach out. LinkedIn can be a goldmine if you, like a miner, remain diligent and patient as you sift the sand for those glittering nuggets."

She recommends targeting "professionals in companies and areas of interest. Message them with thoughtful requests which demonstrate you've done your homework on them and their interests and make sure to explain what makes you stand out. Then, after someone connects with you, don't go immediately in for the big request of an introduction or referral or, heaven forbid, some sort of job. No. No."

Ms. London crucially says that "If you want to ask someone for a virtual coffee for some 'advice,' give it a go. But I suggest you tell them you'd only like 15 to 20 minutes and, again, do your homework. Don't just chat. Come prepared with a specific goal in mind and solid questions."

She is 100 percent correct on emphasizing the importance of doing your homework. One of my pet peeves is when I schedule an in-person or virtual meeting with someone who failed to do their homework on me. This topic is the focus of a post I published on this blog in 2009.

I also published a post in 2017, which provides advice on the value of building stronger relationships, not just larger network.

3. Be flexible

"It may not be your dream job," says Ms. London, "but there are benefits to taking a part-time job that isn't even close to your area of study." One benefit is accepting a part-time job unrelated to your area of study will "demonstrate your flexibility and willingness to work to a future employer."

Another benefit I see is that accepting a part-time job with a big company will get you "in the system," which may make it easier to transfer to another position as part of an internal transfer.

Moreover, leveraging on Ms. London's first point above on developing yourself, many companies offer workshops for their employees or cover the fee for online courses.

4. Exercise

Ms. London correctly notes that "the pressures associated with job search during a pandemic are intense. As much as possible, get regular exercise, keep a routine, eat healthy food and try to keep calm. Remain focused but also give yourself a break."

Whether you are searching for a job or managing multiple business ventures, I cannot overemphasize the importance of getting regular exercise. Not only is exercise good for my body, but physical activity reduces my stress level. Whether it is during a cold Seattle rain or a hot summer day in Silicon Valley, I try to walk for 20-30 minutes in the morning and again in the evening. In addition, my wife and I perform the exercises found in this video (the exercises are easy to follow even if you do not speak Mandarin Chinese). And my smiley face squeeze ball is never far away.

I would write more, but it is time for my evening walk. What advice do you have for those whom are seeking work during the pandemic?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.