Learning To Hurdle Perfect Storms
As another year approaches a close, it's worth looking back and taking stock of where we began and where we are. Because 2005-like many years in this new millennium-has been characterized by turbulence and uncertainty. Call it a series of perfect storms.
Early in 2005, the national dialogue was dominated by the possibility of true democracy in Iraq and Social Security reform at home. Ten months later, it seems like democracy in Iraq has a better chance than entitlement reform in America, which may be a commentary on the limits of democracy.
It's hard to remember a five-year period in the last 50 years when we've seen as many natural and man-made disasters as the last five. And going back just 12 months to the Indian Ocean tsunami, the last year has been the worst. Ferocious hurricanes now appear to be a fact of life in large parts of the country.
Sad to say, terrorism also is becoming a part of ordinary life, so much so that when a modest terrorist attack occurs, many of us just shrug it off. I'm sure all the estimates that people are more likely to be struck by lightning or to die in their bathtubs than to be victims of a terrorist are true.
But we don't have to feel good about it. After a recent night in which only 86 cars were torched in France, a senior government official in that nation remarked that was close to a normal night before the most recent uprising started.
Becoming desensitized to recurrent turbulence and disaster is part of humans' protective emotional armor. And the generosity Americans have demonstrated to victims of the 9/11 attacks, the tsunami and the Katrina/Rita disasters is gratifying.
Still, I was modestly disconcerted to see the stock market go up on July 7, the day of bombings in London, even though I learned long ago that equity markets served other functions besides pleasing people occasionally. Why did it rally? Because it was over there or because it could have been worse-or both.
In this strange, small world, the majority of us who haven't been bombed, hit by a tsunami or hurricane or even had their car burned, are feeling pretty lucky these days. How many of your clients are complaining about portfolio returns? A lot of them were very upset when they were up only 30% in 1998. From what I hear, these days most are pretty copasetic.
Probably the biggest lesson for this profession over the last year has been the comical way the so-called Merrill Lynch rule has played out. In 1999, a few giant brokerage firms asked the SEC to waive a serious part of the 1940 Investment Advisers Act, and the SEC initially complied like a doorman anxious for a big tip. Suddenly, just before the rule was implemented, the big firms started to regret their own Capitol Hill victory. Whether the SEC remains as malleable to Wall Street's needs going forward remains to be seen.
But the merits of focusing on your clients and your business and standing up when necessary to do the right thing seems to be paying dividends for this profession.