Hello. This is Jeremy Richardson from the RBC Global Equity Team here with another update.

And it was a really interesting month in March where we think equity markets received confirmation of two important things. The first of which was news that the U.S. vaccination program has been so successful, beating initial expectations. If we think back to when President Biden first entered the White House, he had what many people referred to or thought was an audacious goal to vaccinate 100 million Americans in the first 100 days. Well, it looks as though those targets are being met and even exceeded.

And this, I think, is a very positive development, not just socially, but also economically because with that mass vaccination comes the prospect of economic normalization. We can return to life pre-pandemic so to speak. And that’s actually going to be very good for not only society, but also actually provides a very positive backdrop for corporate profitability as well.

The second issue that I think the market also found some very welcome confirmation of was the fact that the $2 trillion stimulus package that President Biden has been proposing has not had to be significantly revised for it to get Senate approval. And this is important because it’s a real shot in the arm to economic recovery.

So those two very positive developments, I think, have really set the tone for equity markets over the course of March, and that has largely been reflected not only in the headline index levels, which have continued to progress, but also where the performance has been coming from within the market.

And I think one of the things that really defines the last few weeks is that we’ve seen the strongest performance from those business models that were most heavily impacted by the pandemic this time last year. So those business models that relied upon people meeting people, which were those business models that ended up essentially not being able to trade for a long period of time, meaning that they ended up having to utilize a lot of their own cash reserves and resources.

That’s led a number of business models with low levels of profitability, high levels of leverage, which, with this renewed economic confidence that we’re seeing now play out, has given them a second lease of life. So they’ve bounced and some of them have bounced very, very strongly.

Now, that’s great news for those businesses and for those investors who have shares in them, but for fundamental long-term shareholders like ourselves, I’ll be honest, we’re not terribly drawn to the business models which have got high levels of debt and low levels of profitability. It doesn’t feel to us like a winning combination over the long run.

So we’ve tended to steer clear away from those types of business models. And when we get episodes such as this, where you get that strong [junk] rally so to speak, then that can create a little bit of a headwind for fundamental long-term investors like ourselves.

However, we’re not downhearted by any means because we know that these episodes are usually of short duration. And the reason for that is because the single biggest determinant to share price performance over the long run is the company fundamentals themselves. And actually, interestingly, we’re beginning to see maybe the beginnings of the end of this sort of market narrative as much more balanced performance seems to be accumulating within the equity market over the course of the last few days or so.

Now, to me, this makes a degree of intuitive sense because, to the extent that investors recently have been playing a reopening trade, then one would think by nature that should be of short duration because reopenings can only really happen once, you know, assuming, of course, that there’s no new pandemic or at least no new significant variants.

So that, I think, leaves investors like ourselves, I think, confident that in the long run that it’s going to be company fundamentals that ultimately would be driving share prices. And hopefully, as we move through over the course of 2021, and we’ve got the Q1 earnings season now just upon us, that will provide confirmation that those fundamentals are improving with that profit backdrop and that will result in shareholder value accretion coming through in share prices.

I hope that’s been of interest and I look forward to catching up with you again soon.