The past year has been one which in some ways has been better than many expected. Economic growth has proved more resilient than many feared and whilst interest rate rises have been painful the inflation which caused them has begun to fall sharply. Yet, the turbulence associated with these things has proved more than unsettling enough to make for a year where investors have experienced only muted returns.
We can see this as a year where we took our medicine, accepting that in order to curb inflation and restore economic stability we would have to have higher interest rates, lower returns and weaker economic growth. We can see the coming year as one where we hope to enjoy the benefits of that process.
As we look to the world in 2024, we see opportunities across a wide range of asset classes that can support portfolios. As interest rates fall it is our job to harness those opportunities and look in particular at those areas which are now very cheap following two difficult years. We also see a world on the verge of the artificial intelligence (AI) revolution. This promises to deliver the most rapid period of productivity growth we have seen in our lifetimes. Productivity growth is ultimately what drives stock market returns and gives us much cause for optimism about the decade ahead.
We can reflect over this holiday and New Year period upon a difficult series of years for the world; marked by pandemic, war and inflation. But we can also remind ourselves that ultimately, we invest in a dynamic world which has the capacity to re-build itself after every crisis. It is this creative, destructive and then creative again process that enables portfolios to thrive in the long-term.
Can I take this opportunity to wish you a happy New Year from all of us.