Resilient Investing: One World, Many Futures

We hope by now some of our new readers are feeling eager to explore the soaring vision of resilient investing that most of our clients share. Be aware, though: if you want to be a resilient investor, you need a pioneering spirit. In these volatile, uncertain times, the old road maps that guided 20th century investors are no longer sufficient. The landscape has changed, and you’ll be traveling on new pathways that have yet to see much traffic. This can be disconcerting, as it lacks the appearance of stability. That Rock of Gibraltar was once an image of the financial industry, but turned out to be a mirage.

The uncertainty that plagues today’s investors became clear to us over the past several years, as clients and friends shared their notion that the world has come unmoored, and that “business as usual” is no longer a reliable anchor for making decisions about their investments, or their lives. While these wide-ranging conversations are often rich with insight and full of passion, our role as investment advisors asks us to act from an objective view of the world, free of personal and emotional bias. As you can imagine, this is no easy task!

The global economy has proven to be remarkably resilient, having adapted and grown in spite of (or because of) dramatic, world-shaking events. So it seems likely that our fundamental social and economic structures will remain intact, at least into the near future. Yet the potential for disruption—sudden or slowly mounting environmental, economic, and social upheavals—has increased to the point that it may make sense to hedge our bets on that front.

On the other hand, we see that rapid advances in technology, along with the interconnection of global civil society, contain a wealth of creative promise that we’ve just barely begun to glimpse. This could catapult us forward more rapidly, and in different directions, than we’ve imagined.

With this awareness comes the need to give due consideration to several plausible futures that are beginning to emerge, co-existing in ways that are already visible. Here’s a glimpse of the future investment landscapes that are coming into view. It’s important to stress right away that we don’t suggest that any one of these is likely to dominate our future, or that they are equally likely—they are archetypal images that we are analyzing in a more nuanced way.

Global Scenario 1 – Breakdown, “The Long Emergency”
Economic, environmental, and/or social meltdown, leaving the global economy in tatters

Global Scenario 2 – Muddle Through Down, “Relentless Struggle”
Rolling recessions amidst a failure to address the systemic causes of environmental, social and economic decline

Global Scenario 3 – Muddle Through Up, “Incremental Progress”
Gradual improvement of key quality-of-life indicators within the status-quo framework of political and economic systems

Global Scenario 4 – Breakthrough, “Rational Emergence”
Exponential social innovation, new technologies, and the evolution of wisdom/consciousness to deploy them wisely

What do you think? Are there any that seem absolutely impossible to you? Can you imagine that aspects of any and all of these descriptions could come to fruition?

Most people have been making investment and life plans based on the assumption that we’ll continue living under some variation of a Muddling Through scenario. Relatively few have seriously considered, let alone prepared for, scenarios that upend the status quo structures upon which these investments rely. Of those who have taken action, some have done so in a reactive way, rashly bailing out from the global economy in anticipation of some sort of apocalypse, or perhaps dreaming of a prophetic worldwide awakening.

But preparing for a range of possibilities can be done in a healthy and balanced way. As a resilient investor, you’ll want to at least consider them all, and likely take some steps that will help you adapt to any scenario you see as possible, even the ones that you consider unlikely. This will help you face the future with fresh eyes, and provides a framework that lets you move forward with confidence.