Stubborn investors to struggle during market paradigm shift

Navigating the new era

The economist Paul Samuelson once famously said: ‘When the facts change, I change my mind. What do you do?’

Many economic facts have changed over the past few quarters. In fact, everything I am witnessing tells me we are undergoing a paradigm shift in investing. We are moving from a world of benign disinflation to one of higher-trend inflation. From a very low interest rate environment to a rising rate environment. From a long period of low volatility to a period in which volatility will likely be elevated. From maximum liquidity to liquidity withdrawal. And perhaps most importantly, from an era of elevated valuations in equities and rates to one closer to the historical norm. Lessons of th...