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CONTENTS

  1. THE END OF THE WORLD (AS WE KNOW IT)
  2. GOING VIRAL
  3. A NUDGE IS NOT ENOUGH
  4. BIG BROTHER
  5. SHAKE THE DISEASE
  6. VIRTUAL CONNECTIONS

Welcome to our Mid-Year 2020 Outlook publication. 

The implication of calling something ‘Outlook’ is that we immediately put pressure on ourselves to make predictions about the future.  We have always shied away from this and, instead, focused on long-term themes which we see as inevitable and inescapable. These include: demographics – the ageing of western populations; the emergence of new economic powerhouses; and the unstoppable rise of technology and healthcare. 

Numerous publications at the turn of this year adopted the heading “2020 Vision”; it is safe to say no one saw this pandemic coming. It goes without saying that the future is always unpredictable; however, these past few months have been so strange and the outlook is even more obscure than ever. Investment decisions are hard at the best of times, but with data outside of any normal parameters and a huge range of potential outcomes – from a second or third wave of the virus, to how quickly economies can recover and the long-term geopolitical issues – it is harder than ever. 

We have maintained our philosophy. We try to identify quality businesses with structural growth opportunities and the strong finances which can take advantage of these over the long term. As a style this has worked well through this current crisis. Strong companies have simply got stronger.

So, what happens next? Abraham Lincoln used to enjoy repeating the fabled story of an Eastern monarch who asked his counsellors to come up with a single sentence which would work in all circumstances. The result was ‘And this too shall pass away’. He loved the fact that it chastened in the ‘hour of pride’ and it consoled in the ‘depths of affliction’. 

Whilst we continue to reflect on what has happened to the world in the past few months and the human cost, we must also keep our eyes on the horizon knowing that things do not stand still. The power of human ingenuity will win in the end and this virus too will pass away. 

As we move into the next phases of the post-crisis world, we will have to contend with ‘times like these’ – a more indebted, less global, and more digital society. We may have to deal with higher taxation, uncertain inflation, protectionism and populism, whilst all the time navigating the moves from global to local supply chains, and from physical to digital.

We look forward to the challenge of looking after you and your investments in this new world.

Graham Storrie

Managing Director, Adam & Company

 

  • 01 THE END OF THE WORLD (AS WE KNOW IT)

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    The virus has accelerated changes which were well underway, and the most important issues which could affect our lives are deglobalisation, populism, and the divergence of the world’s two superpowers.

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    The virus has accelerated changes which were well underway, and the most important issues which could affect our lives are deglobalisation, populism, and the divergence of the world’s two superpowers.

    Pandemics have changed the world in the past. When the Black Death hit in the 1340s it wiped out half the population. The bargaining power of survivors rose dramatically, helping fuel the Peasants’ Revolt and end serfdom.

     

    The Conquistadors certainly murdered many indigenous peoples in their colonisation of the Americas, but the diseases they brought with them killed many more. And disease epidemics were a major reason for the collapse of Darién, Scotland’s Panamanian colony, in the 1690s. In turn, this helped the ‘Union of the Crowns’ with England in 1603 to become 1707’s ‘Union of the Parliaments’.

    There have been many articles on how the current pandemic may change things. People will work from home far more. People will rely solely on online shopping. City centres are doomed. Cash is dead. Robots are the future. The surveillance state is on the rise.

    These are all true, and the world we knew even a few months ago is over. However, what is also true is the recent virus has really only accelerated changes that were well underway. And whilst the above are not trivial, the most important issues that could affect our lives for decades are de-globalisation, populism, and the divergence of the world’s two superpowers.

    The grand bargain the West has been making with globalisation is essentially this: the developed world focuses on the high valued-added things such as tech, science and advanced manufacturing, outsourcing low value-added things like mass manufacturing and services. The emerging world becomes richer and extreme poverty vanishes, whilst in the developed world low inflation, low interest rates and rising trade boost economies. Finally, the growth of trade would also see totalitarian states like China move to more democratic models.

    There are many issues with this thesis, not least that – as we have seen recently – in a crisis trade breaks down, and products don’t flow seamlessly across borders. This is especially relevant given shortages of Personal Protective Equipment (PPE) seen in the US and Europe, due to the fact it is mostly made in Asia. Production of key items such as these may have to be brought home. In the private sector, ‘Just in Time’ manufacturing – where inventories are kept to a minimum to save costs – has shown up its frailties and many will have to adopt ‘Just in Case’ where stocks are kept at high levels. 

    Populism has been on the rise since the last crisis. This would include restricting immigration, trade wars, an addiction to cheap money and a willingness to tolerate higher debts. It has been striking how quickly governments closed borders and concepts such as the EU’s Schengen Area were closed. 

    Many governments rapidly moved to restrict exports of medicines and equipment. And the days of prudence around public finances are long gone in places such as the USA – its deficits have been on the rise since Trump’s unfunded tax cuts in 2017 and the outstanding debt will reach levels relative to GDP not seen since the end of World War Two.

    The rise of the nation state has been seen in the West in the past several years. Governments and central banks played a huge role in the global financial crisis and have further shown their powers in recent months. Central banks are creating money like never before to finance the bailouts and keep interest rates down. This has gone hand in hand with the decline in multi-lateral organisations during this crisis – the G7, the EU, the IMF and so on have been nowhere to be seen.

    Much of the reason for this is contained in another trend the crisis has accelerated – the retreating role of the US on the world stage. These institutions don’t really work unless political leaders use them as instruments to get things done and during a crisis the first instinct is to go local. The future of many of these will depend on the result of this year’s US presidential election.

    However, the US relationship with China is now something which unites both Republicans and Democrats. In 20 years, China’s rise has been dramatic – from small and benign, to a genuine rival in many areas such as tech and telecoms as they battle to prove state-controlled capitalism is superior to a free market based one. 2018’s trade war rapidly broadened into a dispute over tech and global influence. The world seems set to split into blocks depending on whether they use China’s 5th generation mobile phone equipment or that of Europe and the US.

    The withdrawal of the US from the world stage under Trump left an opportunity for China to increase its influence. However, it seems they have only damaged their reputation with their response in the initial stages and their clumsy attempts to pin blame on others, again accelerating a process in place already. We continue to edge towards a second Cold War.

    “If the coronavirus is a disease of the hyperconnected world, surely the response should be to unplug and raise walls? Hopefully not. ”

    Britain’s prosperity has always depended on trade – exports and imports are as big a percentage of the economy as Germany and bigger than Japan – though we currently import more than we export. Whilst the UK lagged in the initial stages of the crisis, lacking the capacity to produce PPE for example, we excel in cutting edge science and the development and production of vaccines will be hugely important in this and future pandemics. Hopefully the world realises the mutual benefits of these trade-offs.

  • 02 GOING VIRAL

    Our connected global society is becoming increasingly vulnerable to the rapid spread of political agendas, social media trends and biological viruses alike. 

    Our connected global society is becoming increasingly vulnerable to the rapid spread of political agendas, social media trends and biological viruses alike. 

    Back in the early years of this millennium, a new dinner party game sprang up called ‘Six degrees of Kevin Bacon’. A play on ‘six degrees of separation’, the concept is that you are only six connections away from anyone in the world. Players are assigned a random actor and have to link them to Kevin Bacon via six or fewer films.  So George Clooney was in ‘Ocean’s Eleven’ with Julia Roberts who was in ‘Flatliners’ with…Kevin Bacon.

    Whilst not being as well connected as the ubiquitous Mr Bacon, we are all part of networks of people.  

    As Professor Niall Ferguson explains in his book ‘The Square and the Tower’, networks have existed before humanity. Think of insects such as ant colonies, conveying information to each other such as where food is or where predators are.

    In humans, Professor Ferguson argues, big changes rarely happen due to hierarchical structures imposing them – for example, the ‘Great Man’ theory of history – but rather due to networks. The nodes (us), the edges (our connections) and the interactions between us explain how ideas have spread throughout history and changed the course of the world.

    Network science suggests that ‘birds of a feather flock together’; we tend to be in groups with common interests. This explains how the Reformation sprang from a few disgruntled German clerics to the rest of the world, carried to others by the new invention of the printing press. Or how a small group with a mutual interest in improving the efficiency of steam engines in Britain helped accelerate the enormous changes of the Industrial Revolution.   

    BUT NETWORKS CAN ALSO CAUSE HARM

    When we think about how and why the coronavirus spread so far and so fast, there is the biological aspect, such as how infectious it is and the now famous ‘R’ or ‘Reproduction’ number, and the fact that we humans have no inherent immunity. But it doesn’t spread on its own – it is carried by people and their movements. When something goes viral like this it is all about our networks.

    Just as the Black Death came to Europe via overland trade routes such as the Silk Road and by sea merchants, so the coronavirus spread rapidly through the world. The earliest case came from the Chinese city of Wuhan, an enormous agglomeration of 12 million people which was connected to the world by its roads, trains and airport. The New York Times, using phone and flight data, estimated that 7 million people left Wuhan during the month of January before the travel ban kicked in, heading off to celebrate the Lunar New Year holiday. It was connected to China and the world by almost a hundred direct flight routes, including those to London, Rome and New York.

    “When something goes viral like this, it is all about our networks”

    So we understand why bad things such as viruses spread rapidly – the biology dictates how infectious they are and if we have any immunity to them, and our social networks carry them across the globe. But does the same apply to other things that ‘go viral’?

    We have become used to talking about our digital ‘social network’ – it was even the name of the film about the origins of Facebook. The real relationships you have, such as your school friends, are not linear, random and evenly spread. We tend to ‘flock together’ into groups with common interests, which in digital networks mean the friends or pages you follow and the things you like and share. The downside is of course that people end up in ‘echo chambers’ based on, for example, their political views. This perhaps helps to explain the increasing divisions between us.

    As we discuss elsewhere in this publication, these technologies can be extremely useful and indeed the original aim of Facebook was ‘Connecting the World’. But why do outrageous content and fake news tend to be the things that go viral?

    News used to spread slowly of course, like the Greek legend of Philippides running from Marathon to Athens or Paul Revere’s midnight ride.

    But now anyone can connect to millions of people with a click

    Many of these stories are harmless and silly. The most widely shared news article in 2018 was about a man who won the lottery and was then arrested for paying to have $200,000 of manure dumped on his boss’s front lawn – totally fake. However, there is a dark side to this, such as the ability of foreign governments to exploit fractures in society and undermine trust in government. Or the widely reported Russian campaign around the 2016 US Presidential election.

    Facebook’s original model ‘Connecting the World’ seems to have evolved into keeping us engaged on the platform for as long as possible, so they can gather data to sell adverts to their clients. Their algorithms therefore feed us this type of content, which we spread by ‘liking’, ‘retweeting’ or ‘sharing’ to others in our network. Unlike biological viruses, however, this process is entirely man-made but does follow the laws of the network.

    So our real and digital networks can greatly affect society for good and bad. To understand outbreaks such as the coronavirus and deal with them in the future, we will not only have to understand biological science, but also network science.

  • 03 A NUDGE IS NOT ENOUGH

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    As nations across the globe endeavour to slow the spread of the coronavirus and protect our societies, the science of human behaviour has never been so imperative.

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    As nations across the globe endeavour to slow the spread of the coronavirus and protect our societies, the science of human behaviour has never been so imperative.

    In the initial phase, with drugs simply not available, policies had to focus on rapid and dramatic behavioural change on a global and unprecedented scale.

     

    The insights drawn from behavioural science were fundamental to every nation’s response. They shaped the escalating measures taken by governments and were called upon to estimate and encourage public compliance and behaviours. These insights will continue to be instrumental as we aim to combat the virus and ultimately return to a level of normality.

    As we have discussed in prior Adam Outlooks, behavioural science has helped shape government policy for some time. From organ donation to pension enrolment, many policies are designed to encourage people to behave in a particular way, without being so coercive as to prevent a person from making their own decision. These were drawn together into the 2008 book ‘Nudge’ by Cass Sunstein and Richard Thaler. The latter eventually won the Nobel Memorial Prize in Economic Sciences for developing the theory.

    We saw several examples of nudges in the early stages of the Covid-19 outbreak, such as efforts to encourage good hygiene. We were encouraged to wash hands whilst singing along to “Happy Birthday”, and replace common greetings such as handshakes with something a little more creative. Adding humour, or something memorable, to a generally mundane task has been shown to be effective.

    It is a lot easier to remember to sing a song, than to estimate when 20 seconds have passed. However, as the severity of the spread of the virus increased, it became clear that ‘nudging’ was not a suitable approach for such a fast-moving and life-threatening pandemic. A far more significant and rapid shift in behaviour was required to slow the spread. Nudges work for a large proportion of the time, however total compliance was needed to stop the spread.

    Different countries moved at different paces in escalating their responses to Covid-19. In Asia, countries moved quickly, drawing on their experience in previous viral outbreaks (SARS/ MERS). In Western economies, responses were arguably slower – underestimating the infectiousness and severity of the virus, and with little experience to draw on from previous recent situations.

    The way we draw on our own prior experiences has significant and key behavioural differences to what we see others having experienced. Humans place far more weight on the former (availability bias) and also tend to underestimate the probability of negative events (optimism bias). This second bias may also explain why people continued to break the lockdown rules.

    This is also the first pandemic in the era of social media, so our responses as citizens have been in the spotlight for all to see – both the good and the bad. The combination of social media and psychological biases is a truly intriguing one. Used effectively, we have seen human kindness and altruism flourish. Used carelessly, they can encourage bad behaviours, as we saw with panic buying.

    “Nudges work for a large proportion of the time, however total compliance was needed to stop the spread”

    We all witnessed first-hand the surge in stockpiling across supermarkets and local stores – images and news stories of empty shelves and fights breaking out over highly sought-after toilet roll dominated headlines and social media. This came even before lockdowns were introduced. Such stories played into the psychological bias of social proofing or the bandwagon effect – we tend to act in a similar way to others, particularly in times of uncertainty – and this behaviour snowballed.

    Social ties and a degree of solidarity are central to getting through any crisis, and this pandemic is no different. We have seen numerous examples where social media has contributed to our solidarity. #Clapforourcarers went viral through social media, and each Thursday the nation took to the streets for a unified demonstration of appreciation.

    There was no clearer demonstration of our desire to come together than 700,000 members of the UK public putting themselves forward as NHS volunteers, helping to look after key workers as well as the most vulnerable in our society. In addition, a number of fundraisers have received global attention, having been showcased and shared in abundance online. Captain Tom Moore, the recent centenarian, walking 100 laps of his garden being one such example, which has raised millions of pounds. Such calls for help and support may never have yielded such success had it not been for the power of social media and the psychological biases that influence our behaviour in uncertain times.

    By playing to our psychological biases, government messages and social media have the power to spread fear, uncertainty and panic at rapid rates. However, they also have the power to bring a nation together, through which altruistic acts flourish. Perhaps Chancellor Rishi Sunak put it best:

    “Now more than at any time in our history we will be judged by our capacity for compassion. Our ability to come through this won’t just be down to what government or businesses do but the individual acts of kindness that we show each other.”
    Rishi Sunak, Chancellor of the Exchequor

  • 04 BIG BROTHER

    In an effort to contain the spread of Covid-19, governments across the world turned to the big tech giants and telecom companies for help.  Do our mobile phones hold the key?

    In an effort to contain the spread of Covid-19, governments across the world turned to the big tech giants and telecom companies for help. Do our mobile phones hold the key?

    As governments across the world adopted a number of solutions in an effort to slow and contain the spread of Covid-19, they turned to the big tech giants and telecom companies for help.

     

    The use of our personal data is once again in the spotlight. Governments leaned on insights generated from this data in efforts to effectively slow the spread of the virus. How can they be sure citizens are adhering to lockdown measures? How can citizens be warned if they have been in close proximity to people known to have the virus? How can they mitigate further outbreaks as well as future pandemics? Here we take a look at the power of data in the fight against the global pandemic, where our mobile phones hold the key to answering many of these questions. 

    Using mobile phone data to combat infectious diseases is not a new development. Mapping subsets of a population across various locations has already proven to be extremely effective in monitoring existing deadly diseases such as Malaria and Ebola. You can look back to 2007, and the World Health Organisation’s initiative to eradicate Malaria on the island of Zanzibar and the spread across mainland Africa.

    They utilised location data from mobile phones, provided by various Tanzanian telecom companies, to assist them in detecting the originations and spread of the disease. This approach has since been replicated across the continent and has been significantly drawn on in efforts to combat the spread of Covid-19.

    The concept is known as ‘contact tracing’. Our smartphones continually track our every movement and location, utilising cell-tower signals, WiFi and GPS (Global Positioning System) to do so. Asian countries were particularly quick to draw on the insights that could be gained by such analysis, particularly when combined with medical data. Singapore and South Korea provide good examples where mobile phone applications have been used effectively. Through monitoring of citizens’ locations, users have been alerted when the technology deems they have been in close proximity to others confirmed to have had the virus, and thus able to take steps to self-isolate. Location data has also been used extensively in Asia to ensure people adhere to lockdown rules. Experts say this has been central to their success, with comparably low death rates than those of Western economies. However, such an approach is clearly highly invasive.

    In Europe, certain countries have since adopted measures to utilise location data. In major cities such as Milan and Madrid, telecom providers have assisted in creating heat maps of their respective population’s location data, to monitor and report how lockdown has successfully restricted movement. Italian data, for example, demonstrated that citizens were initially less obliged to follow protocols, with an estimated one million people travelling in and out of the city of Milan in the first week of their lockdown. At the time of writing, UK telecom operators such as O2, BT, and Three are in talks with the UK Government on how anonymised phone location data could be shared to better understand people’s movements, slow the spread and prevent resurgence.

    “Big Brother is watching you”
    George Orwell, 1984

    The big tech companies have also released location data in a bid to help slow the spread of the virus. Google has publicly released community mobility maps – drawing on location data from Google Maps users around the world, which generate insights on movement in local communities. Similarly, Facebook has announced it will expand its ‘Data for Good’ programme, which provides academic researchers access to movement pattern data.

    Many of us will agree that if our location data can be used to slow and stop the spread of the virus, then it should certainly be encouraged and more widely adopted across the globe. Even looking forward, idealistically you can envisage the benefit generated when big tech companies, governments and healthcare providers combine to identify and treat illnesses – even before we as citizens realise we have them and become unwell.

    However, the utilisation of personal data during the Covid-19 pandemic has faced extreme scrutiny relating to invasive ‘digital surveillance measures’ and the sharing of personal data that may not be as anonymised as one may think. Critics argue that countries are compromising on citizens’ privacy in a bid to contain the outbreak. There are fears it could well encourage and lead to a new era of invasive surveillance, whereby constant monitoring could become the new norm for preventive care measures. The fears are heightened in Asia (which has suffered several serious outbreaks of disease over the past few decades), where current practice is already far more invasive than that permitted under EU privacy and data protection laws. China seems to be assembling a surveillance society which Big Brother could have only dreamed of. And we are not forced to carry these devices around – we freely and willingly give our data away.

    Furthermore, as multiple sources of data are increasingly aggregated, such as that from our smartphones and wearable devices, it begs the question: beyond the monitoring of public health, what else could all of this data be used for? Smartphones collect millions of data points – and there are growing fears over the potential for misuse and abuse of our data. The debate regarding personal protection versus relinquished person privacy will likely continue to bubble away for decades to come.

  • 05 SHAKE THE DISEASE

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    Given the incredible financial and social costs of this disease, it has never been so obvious that prevention is better than cure.

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    Given the incredible financial and social costs of this disease, it has never been so obvious that prevention is better than cure.

    Technology shares have been outperforming healthcare ones for years now. The stock market gets very excited about growth and speed and shiny new ideas, as typified by the phrase ‘move fast and break things’, which was part of Facebook’s modus operandi in the early days. The ethos is to push as fast as you can to be the first to Invent something, and not to worry if things go wrong.

     

    Many tech start-ups still live by the phrase ‘fake it till you make it’. In Silicon Valley, you tell everyone you’ve got the best thing ever, raise money on the back of it, and hope it all works out. This is perhaps most famously embodied by health technology company Theranos, which claimed to have invented a new way of blood testing. As described in the fantastic book ‘Bad Blood’, it hadn’t and a company once valued at $9b collapsed.

    The drug company slogans seem a little dull by comparison:

    'Doing now what patients need next' ROCHE

    'To help people do more, feel better, live longer' GSK

    'To build a leading, focused medicines company powered by advanced therapy platforms and data science' NOVARTIS

     

    The drug industry has a different culture and different rules to technology. ‘First cause no ill’ is the thing that medics sign up to – thankfully, given the ‘things’ they could break are you and me. Drug development has strict protocols involving testing for safety and efficacy, thus dictating a slow, science-based approach. However, for ‘unmet needs’ this can be accelerated, as seen in the rapid development of new cancer therapies.

    There has never been an unmet need like the one that brought the world to a stop. Fortunately, the global pharmaceutical industry sprang into action to combat Covid-19.

    This broadly followed three courses: examining anti-virals which would slow the progression of infection and act as prophylactics; anti-inflammatories to reduce mortality when the virus inflames the lungs; and vaccines, the most important strand in drug development for this crisis, and arguably for the past 200 or so years. These will give us immunity and allow normal life to get back on track.

    Forty years ago, the World Health Organisation (WHO) declared smallpox an eradicated disease. A virus which killed one in ten people in the eighteenth century was dead. It started in 1796, when one of the most important developments in human history took place. The English scientist Edward Jenner cut into the skin of an eight-year old boy called James Phipps and infected him with cowpox.

    Cowpox was a benign virus, and Jenner’s years of observing agricultural communities helped him realise that exposure to it could prevent someone getting the altogether more deadly smallpox virus – milkmaids were seemingly immune. The mild cowpox virus provoked the immune system to produce antibodies, which were able to fight off a future invasion of smallpox.

    We are on the cusp of eliminating other diseases too

    The discovery that cervical cancer was caused by the Human Papillovirus (HPV) led GSK and Merck to develop vaccines and now teenagers receive this injection. It should eliminate this disease in a generation or two. In a similar way, a meningitis vaccine is given to children in the developed world and, increasingly, in developing countries.

    Whilst new products for the likes of shingles and dengue fever are proving successful, the biggest prize at the moment is probably a vaccine to combat malaria. This highly infectious disease – provoked by parasites carried by mosquitoes rather than a virus – continues to cripple the development of tropical and sub-tropical regions around the world. The 200 million infections a year result in around 500,000 deaths.

    Unlike many treatments, vaccines are also extremely cost-effective when compared to the financial and social costs of treating the underlying diseases. WHO estimates the cost of the polio vaccine at 10 pence.

    The speed of development of potential Covid-19 vaccines is largely due to international cooperation and the sharing of technology across borders – unusual in the highly competitive market for drug development.

    Governments have helped with funding as have international agencies such as CEPI (the Coalition for Epidemic Preparedness Innovation), the WHO and the Wellcome Trust. For Covid-19, CEPI funded many vaccine development projects around the world and coordinated information sharing and the use of common technology, such as GSK’s ‘adjuvant’ platform which will boost their effectiveness.

    As a result of these efforts, the years-long process of understanding the virus, examining and screening candidate compounds, testing for safety and efficacy and regulatory approval has been cut to a matter of months.

    There have been many mis-steps in tackling the outbreak, from testing to protective equipment.  However, the speed of modern science in developing vaccines has been astonishing. Given the incredible financial and social costs of this disease, it has never been so obvious that prevention is better than the cure.

     

  • 06 VIRTUAL CONNECTIONS

    communication technologies have progressed immensely in recent years, providing a vital source of connection in distanced times.

    communication technologies have progressed immensely in recent years, providing a vital source of connection in distanced times.

    Never in modern peacetime have we seen such a large-scale restriction on the ability of individuals to move freely, see friends and loved ones, and conduct daily life and business. The preservation of public health has deservedly been the overriding principle in the international lockdown efforts. Nevertheless, the impact on our lives has been immense.

    “It is during our darkest moments that we must focus to see the light.”
    Aristotle

    Adam Outlooks over the years have often commented on the advances being made in our ability to communicate through the advancement of technology. Since the turn of the millennium, the progress and scale of developments in communications is something very few could have predicted. Whilst we as consumers have marvelled at the advent and subsequent progression of the smartphone, the emblem of modern communication, it is the infrastructure in the background that is arguably more impressive. And, importantly, it has enabled us to stay connected during this unprecedented period through social media, video conferencing and other channels. Virtual pub quizzes, movie nights and board games have come to the fore as we innovate to digitise our normal social activities. The efforts of humans to stay connected and commit to community in times of crisis are to be admired. Equally vital is the platform that modern communications provide in enabling governments to distribute important public messages across a range of channels very quickly. 

    Whilst the first iteration of the internet, ARPANET, crashed when it tried to send its maiden message in 1969 (it managed to send the letters “L.O.” of the word login before failing), the modern internet has progressed immensely. Harnessing the speed of light through fibre optic cables, 95% of data transmission is completed through subsea cables before local land-based infrastructure transmits these signals direct to our devices. There are millions of miles of such cables
    sprawling across our ocean sea beds keeping us connected. Originally, telecommunications companies and governments built this infrastructure. But technology companies have increasingly been building their own networks to guarantee ownership of the capacity they need for future expansion. A high profile example was “Marea”, built in 2017 by Microsoft, Facebook and Telxius, linking the United States to Bilbao, Spain. Individual ocean-spanning cables cost hundreds of millions of dollars and represent significant infrastructure investments by these businesses.

    Research by TeleGeography suggests that global internet bandwidth increased by a compound annual growth rate of 28% between 2015 and 2019 as network participants added capacity. Similarly, download speeds continue to increase in line with our demand for content, with Cisco anticipating a 240% increase in global download speeds in the five years to 2023 as transmission methods become ever-quicker and more widely available.

    Despite immense demands on the network, through home working and schooling, communication and media consumption, the network has performed remarkably well in keeping us all connected. This resilience is a result of spare capacity in anticipation for future demand growth as well as prior experience of similar demand spikes. When snowfall causes the UK to grind to a halt, for example, the network experiences significant pressure.

    In amongst all the uncertainty of the pandemic, our reliance on communications may give rise to a rebirth of the purpose and (perhaps) reputation of the social media industry. There have been increasing concerns – many of which have been proven valid – about the egregious impacts of fake news, mental health issues induced by social media and concerns over data privacy. Indeed, we have noted before the powerful observation of Twitter co-founder Evan Williams who said that “I thought once everybody could speak freely and exchange information and ideas, the world is… going to be a better place. I was wrong about that”. The current crisis has, however, brought back to the fore the original purpose of social media, which was to create genuine interpersonal connections. We can accept the good that this connectivity has brought in nourishing personal relationships in otherwise difficult times where normal social interaction simply is not possible. And if we may indulge ourselves a little to reference Dickens’ A Christmas Carol during the summer, we take comfort from his observation that:  

    “It is a fair, even-handed, noble adjustment of things, that while there is infection in disease and sorrow, there is nothing in the world so irresistibly contagious as laughter and good humour.”
    Charles Dickens

Contributors

Graham Storrie

Managing Director

Stuart Dickson

Investment Manager

mark ivory

Investment Manager

Susan Boyd

Investment Manager

Dugald barne

Investment Manager

Kay Bendall

Investment Manager

cameron-glasgow

David Boswell

Investment Manager

Allan Cameron

Investment Manager

Cameron Glasgow

Investment Manager

Kathy McGibbon

Investment Manager

Linsey McWalter

Investment Manager

Simon Murphy

Investment Manager

John Peters

Investment Manager

Peter Bottomley

Investment Analyst

Ruairidh Stewart

Investment Analyst

Graham Storrie

Managing Director

Stuart Dickson

Investment Manager

mark ivory

Investment Manager

Susan Boyd

Investment Manager

Dugald barne

Investment Manager

Kay Bendall

Investment Manager

David Boswell

Investment Manager

Allan Cameron

Investment Manager

cameron-glasgow

Cameron Glasgow

Investment Manager

Kathy McGibbon

Investment Manager

Linsey McWalter

Investment Manager

Simon Murphy

Investment Manager

John Peters

Investment Manager

Peter Bottomley

Investment Analyst

Ruairidh Stewart

Investment Analyst

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IMPORTANT INFORMATION

Issued by Adam & Company Investment Management Limited (Adam), which is authorised and regulated by the Financial Conduct Authority. Adam is registered in Scotland number SC102144. Financial Services Firm Reference Number 141831. Registered Office: 6-8 George Street, Edinburgh EH2 2PF.

The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment. Past performance should not be taken as a guide to future performance. Where an investment involves exposure to a foreign currency, changes in rates of exchange may cause the value of the investment, and the income from it, to go up or down.

The information on this webpage is not intended as an offer or solicitation to buy or sell securities or any other investment or banking product, nor does it constitute a personal recommendation. The information is believed to be correct but cannot be guaranteed.

Any opinion or forecast constitutes our judgement as at the date of issue and is subject to change without notice. Nothing in this material constitutes investment, legal, credit, accounting or tax advice, or a representation that any investment or strategy is suitable for or appropriate to your individual circumstances. The analysis contained within this webpage has been procured, and may have been acted upon, by Adam and connected companies for their own purposes, and the results are being made available to you on this understanding. To the extent permitted by law and without being inconsistent with any applicable regulation, neither Adam nor any connected company accepts responsibility for any direct or indirect or consequential loss suffered by you or any other person as a result of your acting, or deciding not to act, in reliance upon such analysis.

About Adam investments

We offer discretionary investment management to individuals and their families, and to charities. We take a long term approach to investing and we believe this gives us an advantage in a world where markets and media are increasingly focused on short term news.

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