PTF. I'm optimistic; I don't see any reason for a major contraction in the near future. The market overreacts to every piece of news, both good and bad, and investors who've had no real experience of inflation in years are spooked. But the fundamentals are pretty strong.
The massive buildout of renewable energy in the U.S. and Europe is a huge opportunity for investors. The accelerating spread of automation is likely going to increase the returns on capital in the next five to ten years. And the work-from-home revolution will lead to big gains in efficiency and productivity, a fact I don't think the market has absorbed yet.
COVID is still messing up supply chains, and Russia's war in Ukraine is causing price spikes in food and energy, both of which are contributing to inflation. But both those things are more likely to be transient problems.
+1 on everything. Supply chains are still recovering. I expect eventually China will stop their lockdowns. The Ukraine conflict resolving would go a long way, and while that's not imminent, transitioning from Russian oil has already started.
And the work-from-home revolution will lead to big gains in efficiency and productivity, a fact I don't think the market has absorbed yet.
I read an article with an attempt to be neutral citing two sources for productivity during work from home. The weaker study "surveyed 353 U.S. Internet users" and found that telemarketers were more productive at home. But a full on research paper did "a large-scale survey involving nine European countries, 259 establishments, 869 teams and 11,011 employees to show that the impact of working from home". Other studies had ignored the "co-worker impact", which they considered in their study design. Their conclusion was that most people had worse productivity working from home. I view this study as both larger and better run, and would trust it's conclusions. But if you have a large study more recent than 2019, that could also be convincing.
https://onlinelibrary.wiley.com/doi/full/10.1111/ntwe.12153
There's a lot at play here, and I don't have studies I can cite you.
1. A 2019 study about WFH does feel out of date. WFH exploded in popularity during COVID, and that's going to change the kind of people WFH, and companies now have to focus on enabling WFH.
2. Employees could be less productive WFH, and it could still be a net economic gain. Savings on commuting to the office. Savings on office leases. Less sick days. More possible employees. Employees able to work in their preferred job without moving. Employers able to recruit people nationally or globally.
The internet has been poo-pooed as a technological marvel that didn't really move the needle on productivity, and COVID changed that. The lockdowns of 2020 would've been much more destructive in the 80s. Now knowledge workers can take their laptops home without missing a beat. I expect there are more gains to be had here as companies realize the advantage of ending office leases, recruiting nationally, and improving the productivity of remote workers by changing culture/management.
Anecdote: I'm pretty confident that I'm less productive WFH, but then again, finding a local job would severely restrict my opportunities. I'd either have to relocate, travel regularly, settle for a bad fit at one of the handful of local jobs in my niche, or switch niches. And my current employer would find it difficult to replace me with a local candidate or someone willing to relocate. My ideal work situation would not be 100% WFH, but 3-5 days a week at an office within 15 minutes of my house. I live in the urban core of large city, but because I have niche specialty that would drastically reduce my options.
Not every employee, company, or even industry will be able to make WFH work, but those that do could unlock massive potential. And companies that learn how to do it well will have a competitive advantage.
