Blog: You, us, everyone

All of the sudden, there is more upside potential in the market than downside. We think the recovery (not a technical rebound) has substantial room to go, more than the average participant may expect. This comes on the back of most retail investors only recently shifting into defensive positioning. Changing their minds will take some time, though it will fuel the market with new funds which will provide sustainability to the recovery.

Given this, long-term investors should favor area structures that benefit from the oncoming upswing through structured notes that may capture the present market volatility.

The recovery trade
Throughout 2020, stocks of companies tied to the new economy (e-commerce, robotics, automation, 5G, IIoT) – broadly categorized as long duration equities – outperformed the broader market. 

Ever since 2022, the broad equity market corrected on the back of numerous facts and concerns (inflation, breakdown of consumer sentiment, and black-swan, amongst others), and many market participants have given up the belief of better returns with equities compared to other investment opportunities. Thereby, whether a company had a solid business or not, its share were liquidated and subsequently the share price suffered. New economy companies, while they were praised in 2020, were over punished in the current down cycle.

Today, we believe that the market is very close to reaching the bottom, if this is not already the case. Classic companies with good cashflow streams tend to recover losses between 15 to 18 months, while growth opportunities can make up the lost ground in less than 9 months.

We have structured a number of exclusive deals including new economy companies where we believe that the underlying business is truly valid and profitable and an equity rebound is highly possible. The engineered solutions offer a high above-average return opportunity which is based on a solid recuring sales.