There’s a Time and Place for Nostalgia – But Not When it Comes to Investing

Since the financial crisis of 2008, many people continue to ask themselves, “When will things get back to normal?” The answer to that question is that the world that we now live in is the new normal, and many of the changes we have seen over the last few years are here to stay.

Perhaps the biggest difference of all is that people are no longer able to ignore what’s going on in the world of global finance. It wasn’t always that way. In previous decades, people had the luxury of just focusing on their own financial affairs and tuning everything else out. They didn’t have to pay attention to what policy makers in Europe were doing, what long-term interest rates were in Japan, or what were the potential effects of an economic slowdown in China. But in today’s world of financial interconnections, events like these no longer occur in a vacuum and investors who choose to ignore them do so at their own peril. At the same time, understanding all of this is an enormous challenge.

Bailouts and various monetary easing policies have become the tools of choice for governments around the developed world who are all desperately trying to re-inflate their over indebted economies. And as central bank balance sheets balloon without producing the hoped-for growth, policy makers are simply doubling their efforts in the hopes that this time their efforts will be enough. These actions ultimately have an impact on us all. No one is immune to the consequences (both intended and unintended) of these financial dealings. What’s required now is for us to accept and embrace the new normal rather than vainly hoping for a return to the way things used to be.

Artificial influence from governments across all markets is historically documented to fuel perpetual boom and bust cycles across different asset classes. Think of the dot.com bubble of 2000, and the housing bubble of 2006.

So while it’s perfectly normal (and encouraged) to be nostalgic about classic cars, Wrigley Field, or receiving a hand-written card in the mail, waxing nostalgic about normalized interest rates and free capital markets is pointless at best, and dangerous at worst. The brave new world of market volatility is here to stay.

Conscient Capital was built on the premise that the times we live in are unlike any other era in our lifetimes and that they require an alternative vision for investing. We aren’t trying to change our reality. We’re trying to work with it, rather than against it. This approach requires a great deal of knowledge, experience, and perspective. And that is what we provide for our clients: Creative, critical, and independent thinking; an alternative to the status quo.

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This post was written by Conscient Capital