OPEN ANY NEWSPAPER or scroll through the latest newsfeed and it’s clear that we’re living in an economic climate marked by ambiguity. Across geographies, the pace of economic growth varies, government policy is clouded by uncertainty, and broader geopolitical instability persists. These are among many factors contributing to “a diverging world.”
This worldwide divergence means that determining the economic consequences of transmitting a global force into local investments is more difficult than ever. For example, the inflation picture is still cloudy; it has risen in places such as Brazil and Russia, fallen in India, and is mixed in the largest economies of the U.S., Eurozone and China. What is clear, however, is that local policies and conditions trump global forces.
So, what does this mean for investing? With a few exceptions, real interest rates are close to zero or negative across the globe. This means holding cash may be costly because it is unlikely to keep pace with inflation. In addition, many economic forecasts today are closely clustered around a consensus view. In a diverging world, this clustered consensus can suddenly break, revealing vulnerability to higher volatility. The result is that tactical opportunities can arise frequently and diversification may be more critical than ever.
Finally, if one thing above all else has been proven over recent years, it’s that assessing sustainability is critical. In a diverging world, investors need to begin considering sustainability in all aspects of their portfolios.
We know the lack of clarity in the markets today can be unsettling. Informed investors, however, will continue to identify and seize opportunities to strengthen their portfolios. At UBS, we’re here to work with you and help you navigate the evolving landscape.
Contact us today to start the conversation.
This column is sponsored by The Thornhill Wealth Management Group.
column by G. CONLEY THORNHILL, CFP®, CIMA®
Senior Vice President–Wealth Management
Eric E. Johnson, CFP®, CIMA®
Vice President–Wealth Management
UBS Financial Services Inc.
295 1st Street South, Winter Haven, FL 33880
BIO: Conley works with high net worth individuals as well as institutional clients by delivering highly customized wealth management solutions. In addition, in 2010 and 2011 he was selected as one of the Barron’s Top 1,000 Advisors. Conley Thornhill is a CERTIFIED FINANCIAL PLANNER™ practitioner and holds the Certified Investment Management Analyst® designation.
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