In 2020, there are 4 very powerful and visible phenomena, the convergence of which is likely to bring tremendous change and disruption, much of which will be at the expense of incumbent business models and with significant investment implications.

Today, perhaps as never before, the interdependency of global economic, social, and environmental systems has been laid bare.

While the immediate economic shocks from COVID-19 have been dramatic, they likely will seem immaterial when compared to the deluge of tidal waves that have swelled up from the revolutionary innovations and permanent shifts adopted by businesses and consumers to cope with the crisis.

The monetary and fiscal stimulus implemented since the coronavirus erupted has been sizable, and policymakers around the world have acted with unprecedented speed.

The strong recovery of financial markets in recent months has far outpaced the real economy’s more mixed rebound. We show that a broadly similar divergence has been a feature of every U.S. recession for more than 50 years. Furthermore, the timing of such divergences has typically been a powerful signal of a forthcoming macro recovery.

Longer time horizons naturally have a wider window of uncertainty; the more time, the more opportunity for foreseen and unforeseen risks to jump into the picture. However, at this juncture, our perception of time and risk is flipped.

This paper investigates the divergence of environmental, social, and governance (ESG) ratings.

At this point in the cycle, investors should consider focusing on risk management and mitigating downside risk in investment markets, a process inherent in active management.

In our view, society has started to shift away from the shareholder primacy model. The COVID-19 pandemic is likely to accelerate this shift, requiring investors to understand the value companies have been creating for and extracting from all stakeholders.

While the future of traditional fixed income investing may look gloomy, we believe private debt can help investors meet their income needs at a time when it is harder than ever to find real returns.

Lionstone expects migration of people and firms to the “Hockey Stick” of America will be a primary characteristic of the 2020s. Millennials are facing many of the same challenges and opportunities their parents, the baby boomers, did, and are expected to make similar quality of life choices.

Using newly-available materiality classifications of sustainability topics, we develop a novel dataset by hand-mapping sustainability investments classified as material for each industry into firm-specific sustainability ratings. This allows us to present new evidence on the value implications of sustainability investments.