A global pandemic, social and racial unrest, fires, floods and hurricanes, political uncertainty, and now the death of Ruth Bader Ginsburg has created yet more uncertainty for our nations’ highest court. These are the characteristics of the world in which we live here in the United States.
Every one of us has a unique experience that seems to change and evolve with every sunrise. Many feel lost and alone due to isolation and the constant deluge of worrisome news perpetuated by the national media. Some are feeling insecure as a result of lost loved ones, loss of income and loss of purpose. Still others feel trapped by the inability to travel and move freely in their own communities.
What does this all have to do with the market? In my opinion, everything. Emotion drives consumer behavior, demand for products and services, and therefore the market itself. Paraphrasing, according to modern portfolio theory, all knowable information has been accounted for in the price of capital markets. But how can we know how people feel and how much they fear? We can’t, therefore we have uncertainty in the markets, and the smallest change either positive or negative that gets broadcast by the media whether traditional or social, can affect the direction of the market.
This is where my view of the market comes in and what we can do about it. The first thing we need to do is reject fear, embracing a long-term view and perspective and play the long game. Before I hop on my soap box and start preaching my gospel of positivity and perspective, allow me to share my views of what the next few months are going to look like:
- Capital Markets – We will continue to see significant volatility in the near term, most likely seeing more 1000 point drops and slow rallies as we absorb new events, including the outcome of the US election, higher unemployment numbers, potential federal stimulus, strains on the global supply chain and of course, the impacts of COVID-19. I don’t expect to see steady gains or a complete recovery in capital markets until late 2021 and beyond. But they will recover with time, so if your investment horizon is long, do your part to maintain prices and valuations by staying in the market for the long haul.
- The pandemic – Most countries in Asia and Europe are entering a new phase whereby they have realized we are living with a new disease and learning how to move forward with their daily lives without fear. The US has not reached this point yet in the social fabric and I won’t get political but suffice to say that the upcoming election rhetoric and the lack of federal leadership has contributed to the delay in establishing a united front for moving forward. I do believe that we will get there in the next 6 months and while people will continue to suffer from the disease, as a society we will recognize that we must move forward, with or without a vaccine.
- Employment – Large companies will continue to make significant reductions in full-time staff, and the retail and service sectors in the US will continue to suffer for the next several months with some smaller business closing permanently. The bright spot here will be an increase in contingent staffing, consulting and professional services as employers and workers adapt to fluctuating demand, embracing flexible staffing models to accomplish their goals.
If you are reading this, you are probably one of the lucky ones in the current economic climate. Most likely you’re still employed, working remotely and enjoying more time with your family while yearning for a more normal life where you can travel freely and eat out at your favorite restaurants after a day of shopping. If you’re not so lucky and struggling to make ends meet, then my heart goes out to you and I encourage you to have faith in your abilities and the long term prospects for our country to come together and get through these challenging times. Either way, we all have a responsibility to ourselves and each other to face each day, each hour, each moment with an attitude of progress and a mission to do the right thing, and the next right thing. At times it will be difficult, but if we have the patience to take a deep breath and think before we act, we can have a positive impact on our own lives as well as those around us.
I am reminded that the United States is a relatively young country, yet we have a lot of baggage to overcome. The original sin of slavery still weighs heavily upon us and that weight can’t be lost overnight. Those that have benefited from white privilege must be willing to recognize that fact, and the communities of color that have suffered at the hands of white privilege must resist the temptation to be resentful if we are to move forward. We are a proud nation, and we have much to be proud of, but as a nation we are a bit like a petulant teenager, with an inflated sense of self-importance. 96% of the world’s population lives beyond our borders and the world will move on without us if we don’t work together to build a better future.
The framers of our constitution and all those that have contributed to its evolution and progress have laid the foundation for us to thrive. Small business ingenuity, community faith and loyalty to human rights will ultimately lead to a society that embraces healthcare as a human right, an aversion to consumer debt and long term educational and economic reforms. These changes will not come quickly or easily, and there will be pain and even some violence along the way.
Challenge yourself to play the long game. Reject fear and division. Let’s be a nation that realizes sooner rather than later that together we can accomplish more than if we remain divided. Things may never be the same again, but they will change, and so will we.
I leave you with a quote from Abraham Lincoln that sums it all up for me, shared recently by one of my colleagues in the banking sector…
“With malice toward none; with charity for all; with firmness in the right, as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds; to care for him who shall have borne the battle, and for his widow, and his orphan — to do all which may achieve and cherish a just, and a lasting peace, among ourselves, and with all nations.”
Let’s move forward together and think about how we want to look back on our decisions today with a lens of a decade from now.
John Henning is the Chief Client Officer at Granite Solutions Groupe. He has over 35 years of leadership experience in the financial services and technology industries, and currently oversees all client account management, professional services, marketing strategy, business development and sales operations for GSG.