Multi-Unit Franchisee Magazine Issue III, 2015 | Page 72

InvestmentInsights BY CAROL M. SCHLEIF

Seeking Stability
How long can this “surreal state” go on?

M

ost markets around the
globe have performed well
following the lows reached
during the financial crisis.
Investors have anchored to a new status
quo, one marked by low interest rates,
moderate growth trends, and reasonable
returns in most asset classes. This “new
normal” has teed up a general aura of investor complacency not seen for years, potentially setting the stage for emotionally
driven behavior among the unprepared.
All things considered, markets have
proven amazingly resilient to potential
concerns for many quarters now, shrugging off a halving of oil prices and the
upswing in the relative level of the U.S.
dollar. It seems a parallel universe to the
bleak days of 2009–2011, when fears of a
eurozone breakup and the proximity to the
still-recent market downturn had investors
nervous and markets depressed. Indeed, it
has now been more than 42 months since
the U.S. stock market witnessed a pullback
of more than 10 percent, and interim daily
price swings have narrowed markedly.
While concerns are many, markets
continue to shrug them off: the classic
definition of “climbing the wall of worry.”
But key questions remain: 1) How long
can such a surreal state go on? 2) What
will the landscape look like when conditions change? 3) How should portfolios
be positioned to withstand and prosper?
While many attributes of the current
environment are worrisome, arguably the
thorniest issue is the unsustainable status
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