Sunday, June 13, 2021

Innovation, the Key to Resilience

Ask the CFP


We cannot live only for ourselves. A thousand fibers connect us with our fellow man. ~Herman Melville 


QuestionWhat are the biggest changes you see as we move into 2021? 

Answer: A chronological recap of 2020 can help us stroll into the new reality of 2021 


 

January brought the first diagnosed COVID-19 case in the United States. In February, the unemployment rate was 3.5%, the lowest in 50 yearsDuring March, COVID-19 became a national emergency, Disney World closed, Fed Funds interest rates were at zero, financial markets dropped dramatically and $50 Billioof Federalaid was released. In April, unemployment hit 14.7%, the highest rate since the Great Depression. Financial markets found their way back to where they had started the yearand Joe Biden secured the Democratic nomination. It was a long hot summer with unemployment stabilizing around 6.9% prior to the election. 

The digital era took hold as we found new ways to conduct business with technology advancements e-commerce and virtual meetings. If you’re not yet 100% comfortable with webinars and Zoom meetings, please let us knowwe’re happy to provide tutorials. During this time, our team showcased our commitment to staying in touch with sweet treats, ice cream gift certificates, hand sanitizers and plenty of online educational opportunities, all with safety at the top of this list, as we navigated the new normal. 

An example is the transition from cable television to streaming. There is an attractive combination of content and cost savings that make going back to traditional television unlikelyThere are notable leaders in the top areas of streaming, cloud computing, tablets, fitness trackers, social media, virtual meeting software, virtual home assistants, and virtual payment systems. Most of us can easily name the leaders in each of these categories. 

Social media users are drawn to large user bases which leads to scales of economy for platform results. These entities rely on machine intelligence and cloud storage space. According to Microsoft CEO Satya Nadella, in two months the growth in cloud demand exploded to what was anticipated to take 2 years. The economic barriers to entry and switching costs are significant, making it tough for new entrants to mobilize and achieve profitability in a reasonable amount of time. As we saw last year, supply chains matter, raising the question of whether companies should outsource or vertically integrate manufacturing of equipment needs. 

As of January 7, 2021, Congress certified the Electoral College vote tally validating Joe Biden’s win as President. We don’t know what this will mean for trade with other countries, including China, but it is worth noting that there are a number of e-commerce companies outside of the U.S. whose technological capabilities and growth rates are accelerating. Not all innovative leaders are based in the United States. 

On the health care front, gene therapy and new applications of artificial technology are working on fast-tracking drug development, including cancer treatments using cell therapy. Pharmaceutical innovation is accelerating for COVID-19 therapeutics and vaccines as well. Telemedicine is another area of health care that is rapidly evolving. Using a laptop or smartphone for a house-call became commonplace behavior for many of us this past year. Personal devices and wearables allow us to monitor our health and provide diagnostic information to physicians. With medicine delivery, we may only see our doctors for procedures and physical exams requiring palpable diagnostic capability. 

Increased online activity led to increased cybercrime. Fraud detection applications are constantly emerging along with artificial intelligence in which tons of data is processed in realtime with computer algorithms that get smarter by the nanosecond. Limitless computing power, image recognition and autonomic vehicles are no longer science fiction. The world looks vastly different; many important technological breakthroughs have already taken place.  

Investors are increasingly asking for quantifiable screening of companies through an ESG (Environmental, Social and Governance) filter. This lens holds companies to high standards of governance and goals for operating in the best interest of investors, employees and society.  

Trade deals and geopolitics will likely dominate global financial discussions. Baking in long term-thinking with the rapid innovation in the world today may help investors focus on the long-term perspective, looking past market volatility and maintaining conviction in durable companies. Resilience, innovation and durability are the themes. Stay focused and plan accordingly 

Diversification and strategic asset allocation do not ensure a profit or protect against a loss. Investments are subject to market risk, including possible loss of principal. There is no assurance that any investment strategy will be successful. The opinions expressed are those of the writer as of January 7, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance does not guarantee future results. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. 

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. 

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239389-1041, email darcie.guerin@raymondjames.com. Website: www.raymondjames.com/Darcie. 

 


 

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