Selected Publications

Q2
2020

Our View

July 2020

Global equity markets rebounded strongly in the second quarter from late March market lows (Chart 1), exceeding many investor expectations that were acutely focused on frightful economic data and the continuing health crisis. Unprecedented global liquidity in the form of monetary and fiscal programs, improving economic data, and historically low interest rates, have led investors to the conclusion that equities are the only option for compounding long-term capital. While peak volatility is behind us, our base case is that a recovery to 2019 economic and earnings levels is a long way off. The most critical catalyst for a recovery is, of course, a vaccine or a proven therapeutic solution. There is reason to be constructive, even optimistic, that a vaccine may be feasible in 2021 with over 150 vaccine candidates in development and manufacturing plans already in place to produce on a monumental scale. Nonetheless, this crisis has revealed multiple fragilities that were underappreciated until they were so starkly exposed, and a rapidly evolving investment landscape that is revealing some important conclusions – including three that we believe will impact investors for years to come. read more ❯

Q1
2020

Our View

April 2020

First and foremost, everyone at New Providence hopes you and your family are healthy and safe. If you want or need to speak with any of us, for any reason, we are available at any time. The coronavirus is not just a human health crisis, it is also an economic one; and while we are all working remotely, we are entirely focused on successfully managing your capital through this crisis. read more ❯

Why Invest in Developing Asia?

March 2020

If one had to design the ideal stock market, what would it look like? It would have to offer a sizable number of securities, to enable the most skilled investors to build differentiated portfolios; provide sufficient liquidity, to allow flexibility in sizing positions; present valuable trading inefficiencies and frequent mispricing of stocks, to be exploited through fundamental research; exhibit a high dispersion of returns, favoring talented stock pickers over index huggers; and be supported by a steady stream of fund inflows from large allocators. read more ❯

Q4
2019

Our View

January 2020

We have now started the third decade of the 21st century. This gives us the opportunity to examine, decade by decade, performance of investment markets, in an attempt to determine whether there are patterns in the past that might give us some insight into the future. The primary conclusion that we reach is that what worked in one decade is unlikely to work as well in the next one, and conversely, what didn’t work in one decade is quite likely to work well going forward. Ten-year slices of performance data may seem arbitrary and calendar specific, but they are long enough to eliminate short-term trading patterns. read more ❯

International Series: The Base Case for India

November 2019

The investment opportunity in India is driven by some of the same social and economic transformations that have been taking place in China and Southeast Asia over the past several decades. India is particularly well positioned in Asia because of its very favorable demographic profile, longer potential runway of growth, stable and democratic political institutions and reasonably well-developed financial system. read more ❯

Q3
2019

Our View

October 2019

Third quarter returns for equities and bonds were mostly positive (Table 1) and mark a continuation of the narrative that low and declining interest rates are good for both equity and bond markets. The past is not necessarily prologue, but year to date there has been a bull market in optimism. For example, the S&P 500 has appreciated over 20%, while S&P 500 earnings have grown only 1.5%, the difference, of course, is an expansion in valuation multiples. Earnings will need to accelerate, or investors may grow concerned that stock prices are ahead of fundamentals, and this may be a tall order with global growth slowing and wage pressure rising. read more ❯

Unncessary Evils

Summer 2019

Basic Test. New Providence is led by experienced professionals who view investment counseling as a profession, not a business, and are committed to the pursuit of excellence in all aspects of our work. Such work centers on the shaping and ongoing refinement of both comprehensive and specialized investment programs for a select group of wealthy families and endowed charities. Given the US-centric bias of portfolios stewarded by many recipients of this essay — a bias at odds with the very full current pricing of assets flattered by it — the time is ripe for such principals to undertake a thorough review of their investment policies and practices. read more ❯

Q2
2019

Our View

July 2019

The second quarter offered something for everyone, with global stock and bond markets producing strong returns (see Table 1). The most interesting aspect of returns year to date has been the markets’ interpretation of the environment. Bond markets have been strong on the presumption that the Federal Reserve, and other global central banks, will cut rates due to data suggesting weaker economic growth. Lower bond yields and inverted yield curves have traditionally been indicators of something ominous coming, but equity markets have taken that same economic data and concluded that bad news is good news. The S&P 500, for example, closed the second quarter at an all-time high. read more ❯

Our Views published prior to 2019 are available upon request.