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Caveat emptor: let the buyer beware

13 August 2021
man and child on a beach

Russell Harrop, Head of International Equities 

It’s not luck that the likes of Amazon, Alphabet (Google), Microsoft, Zalando and Adobe have been in the right place at the right time. We have consistently said that, rather than the pandemic changing everything, trends that were already in place have, for the most part, accelerated. What is clear though is that just as the paths for many countries into the pandemic and lockdowns have been very different, the same is already being seen as countries come out of lockdowns. Indeed, the ‘best’ performers such as Australia and New Zealand – which squashed community transmission such that deaths have been minuscule compared to most other countries – will continue to keep their borders closed for the foreseeable future. With the Delta variant rampant across the world and both countries at very low vaccination rates, it’s pretty obvious what opening borders now would do. Spoiler alert: a virus doesn’t care how well you locked down last time.

So, while we want to talk of how the world emerges from the COVID-19 shadow, the experience underneath the surface is so very different in so many places that talking in such ways obscures the lived reality of most people. I was pondering on this when running to the hairdresser and speaking to him, the owner of a local restaurant, and a mortgage adviser.

The hairdresser is in central London, close to the financial district, and though every time I have run there it has been a bit busier (though still eerily quiet), the number of boarded up shops has grown and grown. Several lunch chains appear to have completely given up the ghost, and those that are open close at 2 or 3pm. The salon owner has given up his lease and is moving to West London. As he puts it, even if people come back three days a week, he can’t cover his rent, so he’s moving to an area where people live and work. Meanwhile, the owner of the local restaurant said government schemes and converting to takeaway allowed them to keep their heads above water, but their reopened West End restaurant is only at 50-60% capacity at lunchtime and dead in the mornings, with few office workers and tourists around. The mortgage adviser, by contrast, says he’s never been busier – helped by government schemes as well as plenty of reassessment of where people want to live.

Obviously, underneath any average there are countless anecdotes that prove an average is only that. However, I think it’s important not to forget that we remain in the middle of an unprecedented global situation, the outcome of which we probably won’t know for years and years. And the level of disruption we have just seen pales beside what the latest update from the Intergovernmental Panel on Climate Change’s implies for the future. Which leads us to believe the losers over the coming years will be far more numerous than the winners, and the key to investing will be to make sure you have enough of the latter and few of the former. Whatever you own, make sure you know what and why. Caveat emptor.        

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