The Old World Is Dead: Investing in the Age of Disorder

When markets cycle, they usually take a familiar path. There is protest as the new order is imposed on the old order.

One aspect is the amount of doomsayers that are only too keen to point out how everything is about to go the hell in a hand basket. 

But the reality is that over the transition period we can see two distinct phases. The first is destruction and the second is the rebuild. Both are messy and provide considerable uncertainty for investors.  

No one likes destruction except of course those doing the destroying. But they believe they are creating a better future. Donald Trump is a person who evoked considerable controversy and it is pretty much a love him or hate him with not much in between. But Trump is really just continuing what he started and what Jow Biden continued to do.

And that was largely driven by the changed needed to the United States. The global trade system has been emerging markets, mainly China, delivering developed nations with a dazzling array of cheap goods. But that can't last forever and now the United States sees that their national interest has changed from cheap goods to national security as their manufacturing industries disappeared.

Those days are well and truly gone.  

Here is the main point. Don't think about the tariffs as the US sorting out the economics of the global market. It is much more important than that.

It is about the national security of the United States and their discovery that the country has placed itself and its security largely in the hands of it's geopolitical competitor.

The old world is dead and we are in transition to the new world. It is going to be messy, volatile and you will see plenty of destruction along the way. But there will always be countries, sectors and companies to invest in as this change takes place. 

That's why we believe it is more important than ever to understand the global dynamics currently at play. We won't always get it right, but we at the very least realise it is no longer about economics and efficiencies and free markets etc. It is about national security and that is a whole new ball game.