Since the beginning of the pandemic, the Federal Reserve has added more than $5 trillion in newly created dollars to the economy. In 2020 alone, the Federal Reserve added more than $3 trillion to its balance sheet, almost double the record previously set during the Great Recession. US debt stands at around $33 trillion, while global central banks have printed over $13 trillion in the past several years.

Stock markets and housing markets are completing a fourteen-year bull run cycle that began in 2009, while the bond markets completed a forty-year bull run cycle in 2021. With global governments’ money printing spree and deficit spending at all-time highs, the world has entered an environment of moving back and forth between inflationary and deflationary cycles and heightened volatility.

Market dislocations across capital markets are increasing in frequency, while the global risk landscape has been elevated more than in any recent period. We are seeing a period of unsustainable public and private debt levels, declining supplies of natural resources, and increased environmental stresses and natural disasters. We believe these factors will keep volatility elevated and make the investment environment ever more challenging. The conventional asset allocation and “buy and hold” approach, which advocate being invested in ALL sectors ALL the time, may produce lower returns going forward.

Recessions, market uncertainty, inflationary and deflationary cycles, and bear markets will create attractive risk-reward opportunities for those who are able to navigate across asset classes and can look beyond the headlines to take advantage of the dislocations and emerging opportunities.