Peter Brooke 00:00
Good day. My name is Peter Brooke, and I'm a Portfolio Manager at the Old Mutual Investment Group. This is Macro Perspective 34 of 2021.
Peter Brooke 00:08
And I want to talk about holidays. The reason for that is, right now I am on holiday, riding along the Wild Coast with a bunch of friends. But we are consciously as a team, looking to make sure that people take their leave and refresh themselves. And the simple reason for that, is that the brain is a muscle, and you need to keep it fresh, to make the best possible decisions. In our industry, in fund management, we're making decisions all the time. And if you can improve your decision making, then you've got a better chance of delivering to your clients.
Peter Brooke 00:45
And one of the big concerns that we have is that many people didn't take enough leave last year. And the reason for that was in terms of Covid, and the uncertainty, their access to international travel, everyone sort of delayed their plans. And what happened is that people actually worked through and got exhausted, and therefore, the probability of good decisions decreases over time.
The - my colleague, Arthur Karas, likes to ask the question, "How much time do we spend chopping wood? And how much time do we spend sharpening the axe?" And part of sharpening the axe is going on holiday.
Peter Brooke 01:26
The second component behind this is if we look forward into the next year, it's going to be a tougher time. So, we need the team to be refreshed going into that period. The last year has been very fun for fund managers because we've had a 100% return in markets. It's been the fastest increase in the US Stock Exchange on record. And we've spoken before about a potential change in regime.
So, if you think about the reflation and the V-shaped recovery, which has driven markets up, which has been a big opportunity, now we're starting to change into a different environment, where the data will become more mixed, where markets will become more volatile. Good news will result in the risk of higher interest rates. Bad news is obviously at pressure in terms of earnings. And so, the straight upward ascent of markets cannot continue, we likely to get a more volatile environment, and it will become more important where you allocate your capital, as opposed to just being invested.
And I think this will be relevant for clients as well, in terms of... initially, they made the correct decision of not divesting - we hope - but now, you're going to have to get them to sort of sit through additional volatility. So, what we want is for our team to be refreshed, to make the best possible decisions.
If you haven't taken any leave, I hope that you do, and I hope that you enjoyed this perspective. Until next week.