KKR just published a nice 2021 Outlook.
I really like the clear writing and the graphs- Learning a lot just from reading and thinking about where to invest- The best part is that it is free-
That is why I love the web- So much good quality material for free. Schools are no longer necessary or sufficient to get good education- No more monopoly on learning and information-
Anyway, I digress. Here are some take away from the report-
1) Debt is not too high yet- So don’t panic. But because debt levels are high, interest rate will remain low for sometime- In such case, I believe that mortgage REITs will do well given stable and low interest rates. There is some risk of refinancing but stability is key. I will stick to being long AGNC, ARR, NRZ- And will occasionally buy other MREITs such as ORC and CHMI. Low interest rate will be also good for miners, who are already awash in liquidity- I am sure many will waste the capital but some will do good things with the cash- I am long NEM, GOLD, MUX, HL, and AG.
2) The divergence between small cap and large cap will close. This is a trade is already going on- I mostly invest in small cap, so I am happy- Probably will put more money into small caps 😀
3) China will recover faster- I think so too. But not sure if I can trust the numbers- I have not been investing in China after China Mobile. Also, given the crack down of Jack Ma, I am not sure if I want to invest in China right now-
4) Millennials will spend more online and services. Already has been happening and is accelerating. I think the market has already priced in the Millennial consumption.
5) Housing starts increasing- COVID19 definitely accelerated housing starts as people want houses with some space and away from the cities. This trend will surely last. I still like housing REITs more though. Not everyone can buy a house right away. Long IRT and BRG.
6) Emerging economies still lagging- I agree. However, I think some will surprise on the upside. I like Mexico and Brazil. I have pulled all my investments in these nations but I see potential here. Both countries have been of course hurt by COVID19 but they have just ignored it and let the economy run so they will recover more quickly. I may buy some utilities but need to do some due diligence.
7) US Dollar and US market still expensive. This is already well known. It is just that the rest of the world is on fire while US is melting- Quite a bit of difference- I will continue to be long the US market.
Thank You Jesus for this great free reports 😀
Thank You Lord for another blessed day. Let us always be thankful and share all Your love and mercy with others Amen-
Rejoice at all times. Pray without ceasing. Give thanks in every circumstance, for this is God’s will for you in Christ Jesus.
1 Thessalonians 5: 16-18
If you enjoy the content, you can support the blog through clicking the referral links that I use in my life: Acorns, Robinhood, American Express, dropbox, evernote, and Scribd.
