Capital Markets Spring 2020

Key Observations and Themes

Navigating Through a Crisis We highlight strategies for investing through very difficult economic environments. Innovative companies with strong competitive advantages and solid balance sheets are key to building wealth over time, in our view.

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I

Lending vs. Owning With interest rates at very low levels, stocks look attractive relative to bonds. We believe equities will outperform fixed income over the long term.

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II

Accelerating Innovation Innovation is speeding up and changing the way the economy behaves, increasingly driving stock performance.

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III

The Election In our view, evidence suggests investing in innovation and fundamentals is likely to outperform strategies that attempt to profit from policy changes.

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IV

Style Wars Powerful structural forces have caused Growth to diverge from Value. Investors looking for a reversion to the mean may be disappointed.

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V

Valuation Equity valuation may look attractive, particularly after accounting for low interest rates and changing business models, which generate more cash relative to earnings.

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VI

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