While conditions appear to change drastically year-to-year, our Outlooks have looked at things from an evolutionary standpoint. This year, under the umbrella of The Upside of Down, we choose to focus on these key evolving themes: Recklessly Conservative, Power Shifts, and Creative Destruction.
2008 - Just the Beginning
Last year in Just the Beginning? We revisited what we said in 2003 and emphasised that the trends we identified remained valid but had evolved. Our evolutionary predictions for 2008 were accurate. We endured our first loss year in 2008, but it was 50% better than what the markets and our competitors experienced.
Having spent the past few Outlooks highlighting the potential downside of up, we contrast the government bond market with nearly all other assets and can only explain it with this term. Recklessly conservative investment choices have led to dislocations that signal opportunity.
While we dismissed the theory of decoupling last year, we do believe that conditions have changed. A gradual decoupling is rooted in the US working through its deleveraging while China, Brazil, and other players with clean financial systems pursue growth.
What is Creative Destruction? It is the process of transformation that accompanies radical innovation. The modern evolution of Creative Destruction has to do with global collaboration, and the conduit is theWorld Wide Web.
What we really mean by the Upside of Down is that conditions have moved in our favour. As we enter a more collaborative business environment, we think the conditions for Creating Possibilities have been established, and we look forward to delivering this to your portfolio.