Nothing To Fear But Fear Itself

A famous line used in the inaugural address of Franklin D. Roosevelt may provide some insight as to the background for the recent vote against Britain remaining in the European Union and the ascendance of politicians, on both sides of the aisle, that speak to disgruntlement.

The common thread appears to be an ascendance of nativism, populism and mefirstism.  It seems to be clear that a significant number of people, on both sides of the Atlantic, are afraid.  They are afraid of increased immigration, globalization and a perceived loss of job opportunities.

These fears are not without some justification.  Employment opportunities for individuals with only a high school education have seen a dramatic decline over the last forty years.  For most people, real wages have basically stagnated for years.  Bureaucrats, regulators and investors have done relatively well.  A lot of voters are angry and willing to take a chance on change, any change, without fully understanding the long term implications.

Investors should recognize that we may be in a period of turmoil with a decrease in predictability.  This suggests that a careful review of long term objectives and attention to rational diversification may continue to be a rewarding strategy.  Knee jerk reactions to day-to-day events often result in greater than anticipated risks.

All comments and suggestions are welcome.

Walter Kirchberger, CFA®