Better Days Ahead

Post-pandemic strategies to preserve and grow your net worth

As the post-pandemic economy begins to unfold, investors must update strategies to take advantage of the new reality Illustration by Antony Hare By Ian MacNeill

PTrudeau announced at a fall 2020 UN meeting that the government of Canada was going to pursue policy objectives in support of “the Great Reset,” an effort to “reimagine economic systems that actually address global challenges like extreme poverty, inequality and climate change.”

While some may find the scope and suddeness of this economic reimagining rather unsettling, the University of Toronto’s Dimitry Anastakis argues that economies are always in a state of flux. Our economic model is simply adapting to societal shifts, many of which were already underway pre-COVID.

“The Great Reset is really just an acceleration of trends that were already happening,” says Anastakis, who is a business historian at the Rotman School of Management. “It is basically a recognition that we have a bunch of problems, and COVID-19 has shown us that we can accelerate some of the solutions to those problems, so let’s get to work.”

THE WORLD HAS CHANGED

The kinds of trends that have exposed the weaknesses in our current abilities to adapt – both politically and economically – are many and varied.

A partial list would include climate change and the need to move toward a more carbon-neutral economy in order to forestall environmental disasters; the rise of populism in a world where there seems to be little consensus on values; the increasing cost of health care; the increasing number of people finding themselves living precariously through job loss or stagnating wages; the impact of robotics and artificial intelligence; the rise of the sharing economy; and in general, a fundamental questioning of the values or lack of them in the current model of capitalism.

And looming over it all, there’s a younger generation banging on the door, demanding its share of the spoils or at least the ability to purchase a home in which to raise a family, something previous generations took for granted.

The impact of COVID-19 on the so-called gig economy could serve as a textbook example of how the pandemic has accelerated change. Long before the first coronavirus victim was identified, an increasing number of workers were performing functions from their homes that would previously have been done at the office. Suddenly, except for our beleaguered frontline workers, almost everyone was working from home and, for many of them, it worked.

It also had a knock-on positive effect to both society and the environment. Overnight, the public transportation system became sufficient to demand. Instead of bumper-to-bumper commuter traffic spewing greenhouse gases, you could drive from the suburb of Surrey to downtown Vancouver, a distance of 30 kilometres, without so much as tapping the brakes. (Lead-footed drivers rejoiced; the Vancouver Police Department recorded a 44 per cent spike in excessive speeding.)

Obviously, a lot of work-fromhomes will eventually migrate back to their office towers and water coolers. But the lesson has been learned, and the savings in benefits calculated in terms of costs, environmental impact and personal stress. Expect more offsiting to come.

OIL IS NO LONGER KING

One aspect of the prime minister’s speech that attracted both opprobrium and praise was his insistence that the way forward lies through the building out of the infrastructure needed to create a more sustainable economy, one that is less carbon-dependent.

This, too, is a trend that is simply being accelerated, and cooler heads in the oil and gas industry were already reading the writing on the wall. Last summer, British Petroleum’s stock took a bump when it announced it was shifting away from fossil fuels and toward clean energy. And oil giant Exxon was expelled from the Dow Jones Industrial Average because energy stocks make up a declining portion of the stock market, representing just 2.5 per cent of the S&P 500 now as opposed to 15 per cent in 2008.

Ironically, Exxon gave way to electric carmaker Tesla, which is now valued at $550 billion – more than Ford, GM and Fiat Chrysler combined. This despite the fact that Tesla only makes 450,000 cars annually. Compare that to GM, which sold 7.7 million vehicles in 2019!

Which brings us to the economy and investing going forward. Although the doomsayers were predicting the economy would drop