Summary

Jared’s focus is on sentiment and social mood. He believes 2020 marks the point of maximum depression akin to the early 1990s when after the recession in 1991 there was a great deal of pessimism which manifested in changes in culture. In 1994 asset prices embarked on a great run. The election of 1996 (Clinton v Dole) saw one of the lowest turnouts in history as government impact on daily life was negligible so engagement was minimal. Jared see’s sentiment improving after this US election and the development of vaccines. This informs his expectation of political moderation which in turn is extremely positive for capital markets. Jared believes the next decade could be similar to the 1950s and 1990s which were two of the best decades for stock markets. He thinks in this environment Value can outperform Growth. Growth stocks were clearly the beneficiary of the pandemic but this just exacerbated a trend that has been in place many years. It was easy to predict that with the development of vaccine’s this trend would reverse. Witness the huge performance of small cap value over large cap growth. Japan is an extension of the value over growth thesis, exemplified by Buffets investment in Japanese trading companies giving him exposure to Japan, to value and to commodities. The disinflationary trend of the last 40 years has ended due to vast fiscal spend and direct money transfer to people with a high propensity to consume. Jared expects this to be seen in the money velocity figures going forward. Japan is the greatest beneficiary of some inflation. At the same time, Jared believes bonds are overpriced and while it might be tempting to get exposure to short duration this is not such a good idea. There is a strong likelihood that if interest rates start to rise there will be yield curve control in the US. Jared is a buyer of high yield as the Implicit Fed put on corporate credit is here to stay judgng by the example set in Europe where the ECB liquidity program initiated in 2014 is still in place. Jared is also a buyer of Bitcoin given improving supply demand dynamics. He calculates a loss of around 10bps a day from institutional buying and see’s the potential for large gapping up the price.

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