Burt White is Managing Partner and Chief Strategy Officer of Carson Group (www.carsongroup.com).
Russ Alan Prince: What attracted you to Carson Group and your new role as Chief Strategy Officer?
Burt White: Many claim to be pioneers in the wealth management space, but very few have delivered as much innovation and elevated what it means to thrive as a financial professional as Ron Carson, CEO, and founder of the Carson Group and one of my greatest mentors. I've said many times that adaptability is one of the world’s greatest superpowers and in all my years in this industry, I’ve never seen another company better positioned to innovate and deliver forward-thinking industry thought leadership at such a rapid pace than Carson. I truly couldn’t be more excited to join this cause of partnering with amazing financial advisors to impact the lives of tens of thousands of households all over this country.
Joining Carson granted me the opportunity to become part of a leadership team that, unlike the revolving door at so many other places, has been together for more than a decade. I now have the chance to work with them to build and deliver an end-to-end investment ecosystem that drives growth for the firm’s 130 partners, who collectively manage $20 billion in assets.
Carson Group provided me with the chance to continue to spearhead innovation, so we can become a magnet for independent advisors who want to be inspired to do more—and do it better—for their clients. I am proud to play a role in advancing Carson’s capability to deliver an unparalleled wealth management experience for advisors and their clients across the country.
Prince: Can you share insights on the current market volatility and inflation puzzle?
White: The volatility we are experiencing is due to the fact that we are in a recession—not an economic recession, but rather, a confidence recession. This is a situation where investors aren’t clear on the Federal Reserve’s actions, and its ability to get inflationary pressures quickly under control. This lack of confidence weighs on the markets and becomes a wet blanket that cools hope for a recovery.
Maybe nothing is more concerning to Americans than the recently high inflationary numbers. But despite the surging prices of everything from food to gas, we believe the steps the Fed is taking are starting to work, and in the coming months, additional interest rate hikes will contribute to slower price increases. In fact, the prices of commodities have moderated across the board and bode well for downward pressure on future inflation in months to come. After all, lower commodity prices today turn into lower finished goods prices later.
That said, the S&P 500 Index’s crossing into bear-market territory in June, grabbed a lot of media attention, but we need to remember that it’s just an arbitrary line in the sand. We’ve been here before and these prior bear markets help to place periods like this one in the proper context.
When trying to assess the likely downside of a market, one of the key questions to figure out is whether or not we are in a recession. While this current market volatility is the 14th bear market since 1950, it’s only the 5th to occur outside of a recession. This non-recessionary characteristic is a vital factor, as these versions of bear-market periods are usually shallower and lead to a swifter recovery than the majority of declines that occur during recessionary times.
For example, bear markets that occur outside of recessions average a 28% decline versus the 39% average decline during recessions. With this current stock market volatility already pricing in the majority of the typical non-recessionary bear decline, cautious optimism remains that the market is approaching a likely bottoming level. In addition, during the five previous non-recessionary bear markets, like the one we are experiencing now, the market posted one-year gains of at least 23% after each one and averaged 30% advances in aggregate.
Declining markets are always troubling but adhering to a well-crafted investment plan and having the expertise of a tenured advisor can help investors avoid potentially harmful emotion-based responses to what have historically always been short-term market challenges. What is important to note is that despite the periodic rise in market volatility, stocks have always weathered these challenges over the longer term. Evidence is that all-time highs for stocks were just over 6 months ago, and stocks have historically climbed every single wall of worry presented before it. And with a long-term perspective, stocks will be there again.
Prince: From your perspective, are we heading into a recession, or do you think the feds can achieve a “soft landing?”
White: Challenges undoubtedly remain, but I would estimate that the likelihood of a recession has risen to about 33%. That said, household and business balance sheets are very attractive, the labor market remains the best in a generation, and consumer spending remains strong despite higher prices of goods. These factors, along with the overall health of the US banking system and that inflation appears to have peaked, lead us to believe the Fed can achieve the sticking of the elusive “soft landing” over the next 18 months and likely avoid a recession.
Carson Partners offers investment advisory services through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors. Carson Coaching and CWM, LLC are separate but affiliated companies and wholly-owned subsidiaries of Carson Holdings, LLC. Carson Coaching does not provide advisory services.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.