The Storm Before the Calm

By Chris Winkler - Founder | Principal

Every summer, after an active spring client review season, our team uses the quieter months of summer to recalibrate and work on initiatives to become a better version of ourselves. It affords me the opportunity to dig into the many books growing on my nightstand. Amongst the sources of inspiration this summer, my favorite title is by bestselling author George Friedman, “The Storm Before the Calm.”

Like many professions, the advisory world and financial markets are dynamic and rapidly evolving. Change can feel chaotic. Absent objectivity and faith, we may find ourselves burrowing our way into a state of overwhelm or even worse. Aside from the impact this perspective may have on our well-being, these emotions can lead us to miss the opportunities that ultimately come through the landscape of change.

"All great changes are preceded by chaos." – Deepak Chopra

In November, I wrote to consider the Case for Objective Optimism. It was a period where inflation had been roaring, layoffs were occurring, interest rates rising impacting bond values, general sentiment was bleak. I noted: “We share a belief that collectively we will find a way through difficult times. It is in times like we’re experiencing the greatest opportunities are created. History has reminded us of this repeatedly. And for maintaining this objective view, long-term investors have been rewarded generously.”

Over the months since, markets have stabilized and responded. The Russell 3000, a broad US market stock index, is currently up 18 percent year to date. It is a great reminder that it is always darkest before dawn.

This leads me back to my opening using the book title as a metaphor, The Storm Before the Calm. Investment markets are highly efficient pricing machines over the long term. They price risk long before real data provides evidence of those risks. A great case was in early 2022. The fixed income market began to price a need for Central Banks to raise interest rates while they were using terms like ‘transient inflation’. The market didn’t care. Months later, and all throughout 2022, we saw the Federal Reserve raise rates at an historic pace to quell the inflation risks the wisdom of the crowd (investors) had priced. Once again, markets collectively seeing the coming storm. Markets similarly price opportunities, the calm.

While it’s hard to embrace change and risk, we intuitively know we will find a way through difficult times. We will become better for it. And quietly, in hindsight, even thankful for a needed shift.

If you’d be interested in reading The Storm Before the Calm (highly recommend), let me know. We’ll be happy to send you a copy!

My gratitude,

-Chris

chris@aspirean.com