Stay in the game: Investing in a late-cycle world

WHILE concerns of inflation, monetary policy and a possible recession continue from the previous quarter into the fourth quarter of 2023, an important variable has changed: The economic cycle is further along, with the game clock running down.

A winning investment strategy in this environment calls for getting off the sidelines and positioning portfolios for attractive late-cycle opportunities while they’re still in play. Fortunately, investors still looking to transition from benchwarmer to potential benchmark-beater still have time to get their head – and their portfolio – in the game.

Over the summer and leading up to the US Federal Reserve’s decision to hold rates steady in September, our outlook has differed from the consensus on two key points. Firstly, we believe inflation and interest rates will stay higher for longer, and, secondly, we don’t expect US rate cuts in early 2024.