Not so equal distribution


Andrew Bradley, CEO, Fiscal Private Client Services

The Tokyo 2020ne Olympics has come and gone. It will always be remembered as the pandemic games. Much has been said about whether it should have gone ahead at all. One fact is without question – there have been many dynamics that have had a huge impact on performances.

What was startling was the gap between the performances of the participants. Many seemed happy to just be there and they were not that focussed on their performances. This is understandable to some extent with what the world has gone through over the past eighteen months. This was a brief interlude to escape their reality.

The Olympics has always been the pinnacle of world sport. It is supposed to be the gathering of the worlds best – at their best. The margins between winning and just being there have always been so small. However, in these pandemic games, the gaps were much bigger than before. Some athletes performances were beyond incredible and others were well below par. Such was the performances in certain events that the Olympic and world records were shattered. In athletic events like the 400m hurdles for men and women, the 1500m for men to name a few the new marks are a quantum leap forward. Even in the sprint events for men and women, the winning margins are normally so small with the difference being in split seconds. Not so this time around. The range of results was much wider than usual. This phenomenon was not restricted to athletics. It played out in many of the events.

What was on display at the Olympics is also playing out in every day life for individuals, families and even businesses. The pandemic has impacted everyone in many different ways. For some it created an environment where they thrived, playing to their strengths, while for others it had catastrophic consequences.  It would be an over simplification to say that those who were able to deal with the pandemic did well at the Olympics, and those who could not or were in environments that could not, suffered. But the stories emerging are showing that to be a big factor.

Looking at the school results of students over the past eighteen months is also starting to show some abnormalities. In a normal school environment there is a usually a broad ‘n’ shaped distribution of academic results. A few students on the left doing badly and few on the right doing very well and the bulk in the middle doing ok. However, in a Covid environment where online learning has come to the fore, the distribution of academic results is more of a ‘u’ shaped curve. Those that are able to deal with the new way of learning are doing as well if not better than before. The students that are struggling, are really struggling and doing badly. The students are either doing well or doing badly and there are not that many in between. The vast majority of students who usually make up the bulk of the students in the middle, with average academic results is disappearing.

This is also playing out among every day people and in businesses. There are those who are doing very well and thriving. Others are struggling and do not know how they are going to get out of the doldrums they are in.

From a company results point of view the same is true. Some companies are in trouble and going out of business, while others are thriving. There is not much in between. It is either feast or famine. In some instances this is industry centric, with these industries under huge pressure because of the new business environment. However, in many instances there are companies who are thriving way beyond their peers in their sectors. It would also be an over simplification to say that some have simply dealt with the pandemic betters than others. But that is the case in a number of examples.

From an investment perspective it is wise to seek out those industries which are likely to thrive in the new environment we are going into. However, don’t just dwell in this space. It is crucial to seek out those leaders and their businesses who have the right approach and mindset. There are many examples where they are making their companies successful despite and because of the pandemic. Just like in the Oympics and in the classroom, there is usually a normal distribution of companies whose success ranges across the spectrum. Going forward there is unlikely to be a normal distribution of performances, for a long time to come. There will be big winners and big losers. This will have an impact on how we go about selecting companies for investment and how we go about constructing client and investment strategies. The gaps between the winners and those that were there, will not be so small to make it inconsequential. The difference in results will be marked.