A Further Look | Oct 26, 2020
Lost in the Fog of COVID-19: The Great Acceleration
David B. Root, Jr.
For months, I’ve been offering my thoughts and advice on navigating what has been one of our country’s most challenging years on record. The bottom line is that if we make good decisions today for a life beyond 2020, we’re going to be fine.
I wish that Washington would have had this mindset for the last few decades. In fact, the decisions made by those in power on both sides of the aisle have proven to be remarkably blind to one of the greatest threats facing our country’s financial and national security.
The alarm bells started last spring as the COVID-19 pandemic grew, to speed domestic production of medical supplies and pharmaceuticals that we have been importing from China. It had become clear that we are far too dependent on a single, and arguably adversarial source for critical medicines and supplies. The situation was so dire, that on September 30, the President signed an executive order declaring our reliance on China a national emergency. In addition, he authorized the use of the Defense Production Act.
Incredibly, China also holds a virtual monopoly on many of the critical natural resources we need to produce 21st-century technology, like electric vehicles, smartphones, artificial intelligence, 5G, missile guidance systems, and drones. Critical minerals like copper, nickel, cobalt, and platinum as well as the class of what we call rare earth, are used in some of our highest technologies. It’s time for America to assess and learn from its financial and national security oversights.
Investors and savers have learned valuable lessons during the same timeframe. Recessions, financial and natural disasters have taught us to make good decisions with an eye toward our future and for future generations of our families.
As American politicians are actively working behind the scenes to restore America’s self-reliance in these critical industries, Wall Street is also watching closely. Once we have secured our position, this strategic reversal will lead to explosive growth in 5G technology, pharmaceutical, medical supply and rare-earth mining sectors. There is a strong resemblance to the technology boom of the late 1990s. We are standing on the precipice of what is often referred to as the ‘Great Acceleration.’
If you haven’t owned stock in Amazon, Apple, Facebook, Google or Netflix in some manner, you have missed out. They have represented approximately 40% of the market’s gains over the last two years.
Now, we find ourselves looking at a whole new economy where lifestyles and workplaces are changing rapidly. Smart businesses, investors and politicians understand the next great opportunity is upon us. They also know that China, often using stolen technology from American businesses, wants to dominate this new world of technology.
I’m bullish on America’s future, but without a long-term plan to move away from a dependence on China there could be problems for generations to come. We can’t mortgage our future for apparent short-term benefits anymore. That’s why American companies leading the way in new technologies like AI and 5G, will offer the next great opportunity for investors.
I can’t write an executive order, but I can offer a prescription. Take steps with your advisor to solidify and secure your overall financial plan, while using good judgement in seeking opportunities to capitalize on new technologies going forward. It might keep you from missing out on the next generation of technology powerhouses.
When the clouds of COVID-19 dissipate, we will not only be okay, but could find ourselves positioned for accelerated success.
Thanks for reading.
This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.
David B. Root, Jr.