Don't stand in the way of Unstoppable Forces

Jim Simpson says there are two forces likely to drive long-term returns.¹  

Investing is information processing. The trick is finding the information that matters and framing your investment position around that. 

Looking back over my career it’s clear I spent a lot of energy chasing things that didn’t really matter or were unknowable. On the other hand, I saw some themes emerge which really were Decision One themes. 

I remember being at Platinum in 1994 when the US was going through another bond conniption and Asia was eating their lunch in manufacturing. Less than a decade later, the US had turned the internet into a tool to re-create the world. 

So, you can chase all today’s debates, whether that’s tariffs, President Trump or US debt. Or you can look for what I call Unstoppable Forces – trends almost certain to drive long-term returns. 

1. China and the US

Today people see US/China as a winner-takes-all geoeconomic competition. That's missing the real question. Will the Chinese manufacturing giant - which is gaining across so many future-facing fields – capture the rewards from US-centric capital markets? 

Getting that question right could dominate global return factors for years to come. 

I see China as an unstoppable force. The West will eventually accept that and China will find its way back into global capital markets. 

2. Artificial intelligence gets real 

In less than 100 years from the development of the first computer chip we have crossed the threshold where artificial intelligence becomes a viable replacement for human intelligence. The trend is accelerating and it is the US and China that will dominate. They will reap a disproportionate share of the benefits of this technology shift. In a geostrategic sense it could be quite disruptive as they rely less on other countries.

Follow the forces

There is always plenty to think about in markets. Tariffs, US debt, war in Eastern Europe and turmoil in the Middle East are occupying investors’ minds right now. 

Yet if you focus on the China/US relationship and AI – and get very good at investing around those themes – you could be a long way towards success. 

1. Jim Simpson was a co-founder of Platinum and is an Executive Director of Platinum Asset Management Ltd. He is chair of Platinum's Investment Oversight Group.

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