1 Main Capital: Outlook
1 Main(mān) Capital(ˈkapədl): Outlook
My expectations for the coming year are for a (hopefully) boring economy. I am optimistic(ˌäptəˈmistik) that COVID vaccines(vakˈsēn) will be successfully administered(ədˈminəstər) to broad swathes(swäTH) of the global population and that global GDP will gradually enter a period of recovery(rəˈkəv(ə)rē). That, in addition to massive stimulus(ˈstimyələs) spending should provide a favorable backdrop for consumers to spend and for businesses to grow their earnings.
At the same time, market valuations(ˌvalyəˈwāSH(ə)n) are on the high end of historical levels, though they are not extreme(ikˈstrēm) by any means, and especially not when compared to historically(hiˈstôrik(ə)lē) low interest rates(rāt).
As pointed out in prior(ˈprī(ə)r) letters(ˈledər), there are certainly pockets of euphoria(yo͞oˈfôrēə) and speculation(ˌspekyəˈlāSH(ə)n) out there. As these pockets grow, it is natural to be concerned that their unraveling(ˌənˈravəl) could eventually hurt consumer confidence and spending. However, I am hopeful that the global reopening will, at least for the mid-term, be the overwhelming factor helping to drive economic(ˌekəˈnämik) growth.
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Of course, the most dangerous risks are the ones we are not thinking or talking about today and hopefully none emerge(əˈmərj). If they do, I will keep an open mind and make sure we are positioned as though my net worth was substantially invested alongside you (it is).