2021 Economic and Investment Outlook - Investing when decades happen in weeks - KeyBank
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2021 Economic and Investment Outlook
Investing when decades happen in weeks
The Key Private Bank Investment Center team
There are decades where nothing happens, and there are weeks when decades happen.
— Vladimir Lenin
Introduction: The past is prologue
Often times, trends evolve gradually, almost imperceptibly, It is somewhat gratifying to reflect that we characterized
causing observers to evaluate their impact over years, if our outlook as one marked by heightened uncertainty.
not decades. Other times, however, events occur abruptly, Since 2020 was an election year, we were not venturing
with their influence felt almost immediately. If nothing else, too far out on a forecasting limb, thinking that 2020 could
2020 was a year in which “decades” happened. spell periodic bouts of volatility. Still, a year ago, and
Looking back one year ago almost to the day, it’s worth throughout 2020, we were right to urge investors to refrain
reflecting on our view of the world as we contemplated from making substantive changes to their portfolio based
what 2020 might have in store for us: on their political views. As we said then:
“Today’s investment environment (December “Election-year rhetoric ensures continued volatility,
2019) is marked by a myriad of uncertainties or but we caution investors not to overreact to
‘known unknowns’: the nascent impeachment mere words; campaign promises frequently differ
hearings; the upcoming U.S. presidential elections; vastly from actual policies, so we advise against
the fate of the U.S./China trade talks; uncertain making any significant portfolio changes until the
tax, antitrust, and regulatory policies; the three- results are in.”
plus-years-old Brexit saga; North Korea; the Yet, we also warned that:
Middle East; future interest rate decisions from
the U.S. Federal Reserve (Fed) and actions from “With policymakers distracted and sharply
other global central banks during a period of divided, they may be slow to respond to future
already near-zero/negative interest rates; ever- crises whenever they come.”
increasing corporate and government debt
levels; ever-expanding federal deficits; widening
wealth inequality; deep social divisions; climate
change… and the list goes on and on.”
key.com/kpb Page 1 of 92021 Economic and Investment Outlook
That cautionary caveat notwithstanding, a global is inflation. This new paradigm would heighten the need
pandemic — the worst healthcare crisis in over a to incorporate new investment tools to enhance and
century — was not on our radar 12 months ago. Nor did protect one’s overall portfolio, a subject we will return to
we foresee the worst economic decline in more than later in this year’s Outlook.
90 years, the fastest 30-plus percent market decline, Paradoxically, COVID-19 has simultaneously hastened
followed by the quickest recovery in stock market history, both a new productivity paradigm and a new economic
the deepest racial divide in more than five decades, and paradigm, which we will discuss later. But for now,
other “unknown unknowns” that defined 2020. let’s take stock of the current environment, briefly
What we did envision a year ago were three possible recap certain milestone events over the past year, and
scenarios for 2020: (1) a muddle-through; (2) a cyclical contemplate the outlook immediately before us.
breakout; and (3) a cyclical downturn.
At the time, we viewed the muddle-through scenario Thoughts on the current environment
as the most likely to materialize, assigning it a 60% In late February 2020, headlines of a rapidly spreading,
probability. We assigned a probability of 16% and 24% deadly new virus emerged across all media. By
to the cyclical breakout and cyclical downturn scenarios, mid-March, the entire world had changed. Workers
respectively. In other words, while our outlook as 2020 were sent home, classrooms migrated to virtual-only,
began was not overly optimistic, it was not premised on certain businesses closed, and other restrictions were
an imminent recession either. imposed in the hopes of limiting contagion. Terms that
Within our 2020 Outlook, we also described two more were previously unfamiliar to most — social distancing,
extreme potential outcomes that might occur over an mask compliance, and contact tracing — became
extended period, the first of which we labeled “a new commonplace and new norms — vigorous handwashing
productivity paradigm.” Akin to what unfolded in the and keeping six feet apart — surfaced.
mid/late 1990s when the Internet was in its infancy, we In a world of instantaneous information and rich analytics,
discussed how artificial intelligence, machine learning, dashboards were erected to chart the virus’s spread.
cloud computing, and other technological advances Other tools were created to detect the corresponding
could raise the economy to a higher growth plane while economic fallout in real time, measuring things such
simultaneously keeping a lid on inflation. as dine-in restaurant reservations, air travel, subway
ridership, and people’s overall mobility.
COVID-19 has simultaneously hastened both a new productivity paradigm and a new economic paradigm.
The second extreme outcome we envisaged was “a Up until that point, certain segments of the economy
new economic paradigm,” under which traditional and financial markets displayed signs of strength in the
monetary policy (i.e., lowering short-term interest rates) first five weeks of the new year: Unemployment in nearly
would reach its limits. Under this scenario, interest rates every cohort measured (women, men, highly educated,
would be cut to zero, and fiscal deficits and government less educated, etc.) had fallen to historic lows, and the
spending would be allowed to surge, analogous to what S&P 500 Index marched to record highs, adding to the
transpired from the mid-1930s through the end of the impressive gains registered in 2019.
following decade. Interestingly, we noted, this earlier As March drew to a close five weeks later, high-
period was also marked by increasing social tensions frequency economic activity collapsed, energy markets
and external conflicts flaring up around the world, crashed, large cap stocks had plunged by over 33%,
making for a parallel to today’s environment. and international equities and stocks deemed to
Moreover, we noted that the principal investment risk in be more cyclically oriented fell even further. A few
this new economic paradigm, in which the Fed creates days later, in early April, reports emerged that U.S.
money to support the surge in government spending unemployment jumped 0.9% in March (from 3.5% to
and U.S. debt issuance effectively becomes monetized, 4.4%); this was the third-largest monthly increase since
1948, the year in which formal data collection began.
Sadly, things would only get worse.
Page 2 of 92021 Economic and Investment Outlook
A month later, six weeks after imposing the first lockdowns, unemployment skyrocketed to nearly 15% as over
20 million jobs were lost in a single month, effectively wiping out the cumulative job gains accrued since the
end of the last recession in 2009.
Chart 1 — U.S. Unemployment Rate (%) Chart 2 — U.S. Payrolls (000’s)
18 160,000
15 14.7
150,000
12
9 140,000
6 6.9
130,000
3
0 120,000
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
Oct-19
Oct-20
Jan-05
Jan-08
Jan-11
Jan-14
Jan-17
Jan-20
Jul-06
Jul-09
Jul-12
Jul-15
Jul-18
Source: St. Louis Federal Reserve Source: St. Louis Federal Reserve
Around the same time, financial markets became Similarly, the number of people filing for unemployment
terrified. Credit spreads (a measure of financial stress) claims remains well above its peak during the last
widened abruptly, and market volatility (colloquially recession. The number of people needing assistance
referred to as “the Fear Index”) soared to heights not for essentials such as food and clothing is up four-fold
seen since the Global Financial Crisis (GFC) of 2008-09. from where it was at the beginning of this year. The real
In response and much to their credit, policymakers economy, in other words, is still hurting. For many, the
intervened swiftly. The Fed and other central banks recovery is a fragile one; for some, it is nonexistent.
quickly cut interest rates to zero. They also injected Moreover, as we write, COVID cases in the U.S. are
much-needed liquidity directly into the financial markets soaring considerably above levels experienced in the
by enacting emergency measures adopted during the pandemic’s initial phase. Hospitals are straining, and
GFC and providing critical backstops to corporate and their caregivers are exhausted and stressed. Fatalities
municipal borrowers at a time when it was needed most. have also inflected higher.
The massive size of the support and the rapidity with Tragically, more than a quarter of a million American lives
which it was supplied ultimately worked. Market stability have been lost due to COVID-19, and many healthcare
returned, and anxiety eased. As evidence, the S&P 500 experts warn the worst may be yet to come.
Index, having lost a third of its value in slightly more than
one month’s time (the sharpest decline from a record
Chart 3 — Reported COVID-19 Cases
high to bear territory in history), powered ahead by nearly (As of late November, 2020)
50% from late March to early June. Since then, the index
has advanced even further and is now up roughly 10% 14,000,000
12,417,009
in 2020 — a perfectly solid year by historical standards, 12,000,000
almost as if COVID-19 never occurred. 10,000,000
8,000,000
Unfortunately, COVID-19 did occur, and it is still very 6,000,000
7,759,878
much with us. While millions of jobs have returned, the 4,000,000
U.S. labor market is still roughly 10 million jobs smaller 2,000,000
92,291
than pre-COVID measures. 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20
U.S. Cases China Cases Europe Cases
Source: Johns Hopkins
Page 3 of 92021 Economic and Investment Outlook
Positively, and this is hugely positive, considerable progress immunity by the middle of 2021. This vaccine-based
in developing a vaccine has been made. Pfizer (and its herd immunity would substantially fortify business and
partner BioNTech) and Moderna announced that their consumer confidence and help restore economic activity.
respective vaccines are 95% efficacious, demonstrably However, notable caveats remain, including the vaccines’
better than expectations. These phenomenal results, durability, possible resistance to other strands of the virus,
combined with the urgent need at hand, will result in an and non-trivial logistical challenges, including distribution
expedited approval by the Food and Drug Administration and storage considerations. Other risks include a
(FDA); if all goes according to plan, 35 million Americans reemergence of new lockdowns (thereby crimping
could be vaccinated by year-end 2020. economic activity) until a vaccine is fully available.
Three other vaccines (Oxford University/Astra Zeneca, Should such occur, however, we suspect lockdowns
Novavax, and Johnson & Johnson) are also in late-stage will be regional and relatively temporary. Nevertheless,
testing. Again, if all progresses as hoped, some believe it would be difficult to characterize the vaccines’
we could begin to achieve critical mass and thereby herd progress as anything less than a game-changer.
So, what does this mean for the global Following the onset of COVID-19 and the resultant
economic shutdowns, the PMI in China plunged to 27.5
economy and the markets? in February 2020 (a PMI above 50 suggests expanding
Referring back to our 2020 Outlook issued in late economic activity; a reading below 50 suggests
2019, we cited Purchasing Manager Indexes (PMIs) contracting economic activity). Remarkably, within three
worldwide as broad barometers for economic activity. We months, the PMI in China returned to the mid-50s,
highlighted the fact that U.S. manufacturing activity was where it has remained ever since.
experiencing a mild contraction. Other parts of the world
In Europe, the PMI fell to 29.7 one month after China’s
were experiencing larger retrenchments, causalities of the
downdraft and then sunk to a previously unthinkable
protracted trade tensions at the time.
reading of 13.6 in April 2020, suggesting that large
Yet, the services segment (a larger component of the U.S. slices of the EU’s economy had stopped. Never before
economy) was expanding and offsetting the weakness had such a cessation in economic activity happened.
in manufacturing. But we felt it would be a mistake to Meanwhile, the U.S.’s PMI slipped to 41.8, outperforming
label the economy as robust before COVID-19. Hence the EU, and is now clearly in expansionary territory at
our use of the term muddle-through. 56.9 (October 2020). The EU is barely expanding, as its
most recent PMI of 50.1 indicates.
Chart 4 — U.S. Purchasing Mgr Indexes Chart 5 — Global Purchasing Mgr Indexes
(+50 = expansion / -50 = contraction) (+50 = expansion / -50 = contraction)
70 70
60
50
50
30
40
30 10
Oct-18
Dec-18
Feb-19
Apr-19
Jun-19
Aug-19
Oct-19
Dec-19
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
Oct-18
Dec-18
Feb-19
Apr-19
Jun-19
Aug-19
Oct-19
Dec-19
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
U.S. Manuf. PMI U.S. Svcs. PMI U.S. EU China
Source: Bloomberg Source: Bloomberg
Page 4 of 92021 Economic and Investment Outlook
By analyzing PMIs, one can infer loose correlations with 2. U.S. companies possess faster profit growth
stock prices and PMIs, as illustrated in the following 3. Substantial sectoral differences exist between various
charts (data as of mid-November 2020). These capture regions of the world.
the strong outperformance of U.S. stocks relative to the
In particular, cyclical sectors such as Financials and
rest of the world, a trend that began three-plus years ago
Industrials have historically held larger weights within
and accelerated in the aftermath of COVID-19 (Charts 6, 7).
European equity indexes. In contrast, growth sectors such
Earlier this year, we discussed1 the severe underperformance as Healthcare and Technology have been featured more
of international stocks relative to their U.S. brethren, citing prominently within U.S. equity indexes. In the low growth/
three elements at play: low interest rate environment since the GFC, growth stocks
1. U.S. companies are more profitable than their have outshone their value counterparts considerably. We
international counterparts profile this last factor in charts 8 and 9 below.
Chart 6 — YTD Growth of $1 Chart 7 — 3-Year Growth of $1
(Time Period: 1/1/2020 – 11/20/2020) (Time Period: 11/21/2017 – 11/20/2020)
1.53
1.15
1.45
1.10
1.38
1.05
1.30
1.00
1.23
0.95
1.15
0.90
1.08
0.85
1.00
0.80
0.93
0.75
0.85
0.70
0.78
0.65 0.70
2/2020 5/2020 8/2020 11/2020
5/2018 11/2018 5/2019 11/2019 5/2020 11/2020
S&P 500 TR USD (1.12) MSCI ACWI Ex USA NR USD (1.04)
S&P 500 TR USD (1.46) MSCI ACWI Ex USA NR USD (1.12)
Source: Morningstar Source: Morningstar
Chart 8 — YTD Growth of $1 — U.S. Growth vs. U.S. Value Chart 9 — 3-Year Growth of $1 — U.S. Growth vs. U.S. Value
(Time Period: 1/1/2020 – 11/20/2020) (Time Period: 11/21/2017 – 11/20/2020)
1.83
1.38
1.75
1.30 1.68
1.23 1.60
1.53
1.15
1.45
1.08
1.38
1.00 1.30
0.93 1.23
1.15
0.85
1.08
0.78 1.00
0.70 0.93
0.85
0.63
2/2020 5/2020 8/2020 11/2020 0.78
5/2018 11/2018 5/2019 11/2019 5/2020 11/2020
Russell 3000 Growth TR USD (1.29) Russell 3000 Value TR USD (0.97)
Russell 3000 Growth TR USD (1.76) Russell 3000 Value TR USD (1.17)
Source: Morningstar Source: Morningstar
Page 5 of 92021 Economic and Investment Outlook
However, we believe the gap between the U.S. and the home have proliferated, those companies enabling such
rest of the world will narrow in the year ahead. Similarly, technologies have seen their businesses strengthen
we anticipate the gap between growth and value stocks appreciably. Ironically, many of these companies
will narrow as well. are considered Big Tech. While they may face some
There are four reasons for these conclusions. First, as regulatory pressures, they also possess robust growth
a vaccine becomes widely available, those companies characteristics. Thus, we do not believe in abandoning
impacted most negatively by COVID-19 and the the category entirely and instead advise selectivity and
associated economic restrictions should benefit more prudence regarding portfolio construction.
by returning to normal. Think Netflix (the stay-at-home The third reason we think the gap between U.S. and
streaming juggernaut) versus AMC (the country’s largest international equities may narrow has to do with the U.S.
movie theatre operator) or Peloton versus Planet Fitness dollar. In our estimation, forecasting currencies is fraught
as two examples. Because companies disadvantaged with difficulty and has proven costly for many who
most by COVID-19 are more prevalent within value- attempt to do so. When it comes to currency, as is the
oriented stock market indexes, the value should benefit case for many things, we avoid making point-specific
as the economy regains some momentum. forecasts. Instead, as loyal readers know, we often
Secondly, we continue to believe that Big Tech will discuss outcomes that might ensue.
garner regulators’ attention, another topic we featured2 This caveat aside, we think it is reasonable to assume
this year. Big Tech refers to a group of well-known and that a weaker dollar is more likely than a stronger one
well-entrenched technology companies that have become over time. A strong U.S. dollar could materialize in
dominant forces both within growth-oriented equity indexes another risk-off environment, such as the episode in
and society as a whole. In recent years, negative sentiment the immediate aftermath of COVID-19 when the dollar
aimed at Big Tech has captured rare bipartisan support spiked 10% from late February to early March. Since
in Congress. At the same time, the two political parties then, however, the dollar has reversed itself by roughly
may cite different reasons for their opposition; greater the same amount. Similar to our premise that value
regulatory scrutiny could be in the offing. As a result, these stocks might gain momentum as the economy gains
stocks may face some headwinds, thereby causing the gap momentum, a global recovery could also likely introduce
between growth and value stocks to converge. further headwinds for the U.S. dollar, thus assisting
That said, as referenced in our new productivity paradigm international stocks.
thesis, many of the trends that facilitated Big Tech’s Though not universally true, the U.S.’s fiscal situation
dominance have been reinforced and accelerated is weaker relative to other countries in the world. This is
by COVID-19. For instance, cloud computing and partly due to COVID-19-related spending and previously
e-commerce were well-established megatrends before initiated stimulus measures, as illustrated in charts 10
the pandemic. As work-from-home and shop-from- and 11 below.
Chart 10 — Gross Debt to GDP (%) Chart 11 — Budget Balance as a % of GDP
300 0
265
250
-3.0
200 -2.7
162 -3.7
146
150 124 124 -6.0
-5.5
101 -5.9 -5.9
-6.3 -6.3
100 75
55 -9.0
50
-10.2
0 -12.0
S.
S.
ina
ce
y
ly
ain
n
UK
ina
ce
y
ly
ain
n
UK
an
an
pa
pa
Ita
Ita
U.
U.
an
an
Ch
Sp
Ch
Sp
rm
rm
Ja
Ja
Fr
Fr
Ge
Ge
Source: Credit Suisse Source: Credit Suisse
Page 6 of 92021 Economic and Investment Outlook
The U.S. dollar is still the world’s reserve currency and leaving inventories for many goods sparse and causing
affords our economy with considerable advantages. But prices to increase.
due to some of the aforementioned fiscal dynamics and Concurrently, due to the Fed’s abundance of liquidity
the fact that the Fed is likely to print more money relative provided in response to economic shutdowns, more
to other central banks, the greenback may weaken. money is chasing fewer goods in some instances.
Finally, as we expect the Fed to maintain its ultra- Ongoing physical distancing restrictions will likely
accommodative policy stance by keeping interest rates increase costs for most businesses going forward, too.
low and levels of stimulus high, inflation can possibly Such costs include labor, which might also experience
prevail. This prospect provides another support for price increases as minimum wages increase. These are
value-oriented and international stocks at the expense all potentially inflationary trends.
of growth-oriented and domestic shares. Moreover, At the same time, the aftermath of COVID-19 may cause
should an inflationary regime emerge, it would represent higher prices; globalization may have peaked, removing
a significant shift and require new tools to protect and a disinflationary tailwind. Contrary to some, we do
enhance one’s portfolio. not think that globalization is over. But globalization’s
impact on prices (particularly labor) may have reached
What longer-term issues should investors its zenith. For instance, we note that the powerful
be contemplating? demographic wave associated with hundreds of millions
Over the past many years, inflation has been relatively of workers entering the global labor market upon the
dormant. Globalization, innovation, demographics, pro- collapse of communism in 1989 and China’s ascension
business policies, and other forces have been powerful into the World Trade Organization 12 years later will not
catalysts behind this trend of disinflation (an environment be replicated any time soon.
marked by prices rising but at a slower rate than in the More tangible is the strain of U.S./Chinese relations.
past). In fact, since 2008, inflation has only exceeded the While they may not remain as tense under a Biden
Fed’s 2% inflation target 13% of the time. More interesting, administration, the era of lower trade barriers — a
nearly 40% of these occasions occurred in 2018 when characteristic of globalization — is likely over.
inflation for the full year met (but did not exceed) the 2%
Plus, there is one other more straightforward reason
threshold even as unemployment fell to unprecedented
to think inflation might increase: The Fed is willing to
lows, typically a harbinger for inflation. The impact of
allow it to happen. This became evident earlier this year
COVID-19 and an about-face in some of the disinflationary
when the Fed announced a subtle but important policy
dynamics we mentioned might reverse this trend.
shift: It signaled that it would in effect allow inflation to
In a typical recession, demand falls quickly, but supply rise above its long-standing 2% target before raising
reacts more slowly, leading to a glut in inventory. Prices interest rates. This was all the more telling when the Fed
then reduce to stimulate demand. This year, pandemic- suggested in its most recent forecast that they expect
related lockdowns triggered simultaneous declines in interest rates to remain near zero through the end of
both supply and demand. And because of difficulties in 2023. This forecast is despite an unemployment rate of
restarting supply chains, supply has lagged demand, 4% or back to near-record lows and near a level where
inflation has historically triggered.
Chart 12 — Core Personal Consumption Expenditures Chart 13 — S&P 500 Index Price/Earning Ratio
(yr./yr. %-change) Under Various Inflation Regimes
3 22 Currently, we are Stocks have faced
here ––– valuation
headwinds when
2 inflation crests
18
above 4%
1
14
0
00 02 04 06 08 10 12 14 16 18 20
10
Fed Target -2% to -1% to 0% to 1% to 2% to 3% to 4% to 5% to 6% or
-1% 0% 1% 2% 3% 4% 5% 6% higher
Sources: St. Louis Federal Reserve, Bloomberg, Key Private Bank Sources: St. Louis Federal Reserve, Bloomberg, Key Private Bank
Page 7 of 92021 Economic and Investment Outlook
What does this mean for asset allocation Chart 14 — Actual vs. Forecasted Annualized Returns
for a 60/40 Portfolio (%)
and portfolio construction?
9.5
To be clear, we are not expecting an inflationary surge in 8.2
the near term. Stocks have historically faced headwinds
when inflation rises above 4%; the likelihood of that 5.4
happening in 2021 is moderately low as disinflationary 3.9
tailwinds have not fully abated, and the Fed’s new policy
is still in its infancy.
Yet, as noted above, the pandemic may have increased
the odds that the U.S. will eventually experience a 10-year time horizon 30-year time horizon
period of high(er) inflation, and the Fed will be complicit actual/historical forecasted
in enabling that to occur. Similarly, by acknowledging the
harmful consequences of negative interest rates, other Source: Key Private Bank
central banks appear to be shifting in the same direction
at the same time that globalization may be waning and income investments again face challenges. As a result,
other factors boosting prices may be on the rise. Thus, future returns for 60/40 portfolios as a whole may be
it is essential to consider the impact inflation might have lower as well, as illustrated in Chart 14 above, which is
on asset allocation, particularly one’s allocations to derived from our Capital Market Assumptions.
bonds and their role within a portfolio. Furthermore, the diversification benefits that bonds
For many investors, a 60/40 portfolio has provided a have historically provided may have diminished as well.
rewarding outcome. By allocating 60% of one’s portfolio This trend bore out this past autumn when stock prices
to equities and 40% to bonds, these investors have fell roughly 7%. In previous risk-off episodes, investors
historically enjoyed strong nominal returns of 8–10% per could expect bond prices to rise, offsetting some of
annum over the past 10 years and longer. Risk-adjusted the weakness in equities. However, this year, because
returns have likewise been positive as bond prices and yields are already very low, interest rates had little room
stock prices have been negatively correlated with each to fall, and bond prices moved slightly lower in tandem
other. By maintaining a 40% allocation to bonds and with stocks, resulting in slightly negative returns. This
60% to stocks, investors have enjoyed some protection prompted one well-respected market strategist to
during equity market drawdowns while still participating recently suggest that “bonds may have moved from
in equity market rallies. being a riskless diversifier to a returnless non-diversifier.”
Bond prices rise primarily when interest rates fall, In our view, bonds still play an essential role in a
and bond prices fall when interest rates rise. In an portfolio; they often form an important element of
environment of modestly rising or falling prices (i.e., preservation within a well-diversified portfolio, and we
disinflation or deflation), interest rates customarily fall, are not suggesting their outright elimination. They also
thereby boosting bond prices. Conversely, in periods can act as a hedge against deflation.
of rising prices (i.e., inflation), interest rates usually rise, However, in an atmosphere defined by low interest
causing bond prices to decline. Therefore, if our outlook rates, an increased probability of inflation, and continued
for modest inflation over the medium term proves uncertainty, we think additional investment tools should
directionally accurate, future returns from bonds may be be considered. These include other fixed income
lower relative to the past and possibly even negative. varieties, e.g., inflation-protected securities and private
Future returns for bonds are also primarily determined credit funds, along with other opportunities like private
by their current yield; with long-term interest rates at/ real estate, global listed infrastructure, and other return-
below 1%, prospective returns from traditional fixed enhancement vehicles.
It is essential to consider the impact inflation might have on asset allocation,
particularly one’s allocations to bonds and their role within a portfolio.
Page 8 of 92021 Economic and Investment Outlook
When contemplating such opportunities, the need for liquidity should also be prudently re-evaluated. Upon doing so,
one may conclude that the cost of these opportunities comes in the form of gaining comfort with investing in less-liquid
instruments. However, in many instances, the benefits have outweighed the costs, especially for those investors who
are willing to consider the implications of investing when decades happen in weeks. This necessitates the need for a
long-term perspective and experienced, conflict-free advice.
We look forward to discussing this expanded toolkit in greater detail, and we wish you and yours good health and good
fortune in the year ahead and in the years to come.
For more information about how 2021 market conditions could impact your portfolio,
contact your Key Private Bank advisor.
Page 9 of 9
1
Key Question: Is the Bounce in European Equities Believable? (June 25, 2020)
2
Key Question: Is Big Tech In Big Trouble? (October 27, 2020)
This piece is not intended to provide specific tax or legal advice. You should consult with your own advisors about your particular situation.
Any opinions, projections, or recommendations contained herein are subject to change without notice and are not intended as individual investment advice.
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