By HENRY H. MCVEY Jan 15, 2020 Play Your Game Given the heightened “noise” around geopolitics and macroeconomic uncertainties, our strong suggestion is to play heavily to one’s strengths in today’s markets. All of us at KKR see a clear path forward to leverage the distinct areas of investment and operational expertise that we have developed as a firm during the last 44 years to “control our own game,” including when and where we deploy capital on behalf of our limited partners. At the moment, we feel strongly that global central banks’ decisions to hold nominal interest rates below nominal GDP at this point in the cycle means that almost all investors should overweight collateral-backed assets with upfront cash flow. Second, given the huge bifurcations now present across most major market indices, we think that there is a significant amount of value in the “middle” part of the market that does not face 1) the fancy valuations that the top decile of the market now embeds or 2) the structural headwinds – largely innovation driven – that the bottom decile of the market must now endure. Security selection that favors investments with improving cash flow generation/conversion will now be rewarded handsomely, in our opinion. Third, we think that we are now entering the decade of the Asian millennial, and given his and her preferences for Experiences Over Things, significant capital should be allocated to this investment theme in the coming years. Fourth, we remain bullish on cash-flow compounding stories that have built competitive moats around their businesses, including the ability to be a price setter. Finally, we want to overweight investment vehicles that can lean into the periodic dislocations that we think are increasingly headed our way during this new decade. If we are right, then we believe these aforementioned five top-down themes will be prerequisites for success for investors who may otherwise be swayed by headline risks or events that they can’t control. Remember: Investing isn’t about beating others at their game. It’s about controlling yourself at your own game. “ Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” Benjamin Graham American investor, economist, and professor https://www.kkr.com/global-perspectives/publications/play-your-game#