Exploiting mean reversion
COVID-19 has caused huge – but temporary – economic and financial market disruption.
COVID-19 has caused huge – but temporary – economic and financial market disruption.
Many assets’ valuations and the relationships between them have strayed far from their long-term average or “mean.”
We believe the distortions to asset price valuations will unwind in 2021 as COVID-19 departs.
Amid this reversion to the mean
, we expect certain areas to be major beneficiaries.
These include certain sectors hit hard by COVID-19, small-cap equities, and some of the most beaten-down national and regional markets.
After the most significant dispersion of asset prices in history, exploiting this mean reversion will be crucial to your portfolio’s return opportunities in 2021.
Markets in 2023 will lead the economic recovery we foresee for 2024. Therefore, we expect that 2023 may ultimately provide a series of meaningful opportunities for investors who are guided by relevant market precedents. Read our roadmap to recovery: Portfolios to anticipate opportunities.
Outlook is created by a team of individuals with a depth of experience from across the Private Bank.
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