Predator or prey?

You’ve probably noticed that some animals, like chickens, sheep, and zebras, have eyes on the sides of their heads, while others, like wolves, tigers, and owls, have eyes facing front. The first group, whose primary aim is not to be eaten, values awareness of what’s around and behind. For the second group, more focused on the catch, the ability to perceive depth is critical to successfully navigating the world and securing their prey.

For investing, seeing what lies ahead is paramount. Our perception of future economic trends helped us increase our risk asset exposure when virus fears were high last year. It also helped us tilt exposure toward reopening and reflation beneficiaries in September, even before vaccines had been broadly rolled out.

Today, if we just look around and behind us, we see economies reopening, inflation rising, and equity volatility sitting at its lowest level since before the pandemic. But if we look forward, we see something different.