My team was recently meeting with a client discussing investment models and the difference in risk levels and allocations. We were saying how we don’t change our investments flippantly. Rather, we try to separate the news from the noise and only make large-scale changes if there is a materially significant event.
They asked the question that you’re probably asking: “ What makes a significant event?”
I gave them two examples.
2001
The first is from 2001. (I’m appropriating this first example because I was not in this business at the time. Mark was here. I was mowing the grass around hog barns and fitting in a roofing job here and there with my brothers). But since I am the son of Mark Weddle, I was staying apprised of current events. For most of you, including my client, the mention of 2001 almost instinctively sends you to September 11th. And it should. That was the significant event.
If I asked you if you remember the international incident that happened earlier that year, you might respond the way our client did this morning, by scratching your head before eventually saying, “Nope, it’s not coming to mind.”
What happened on April 1st, 2001, was that a United States Navy plane had a mid-air collision with a Chinese fighter jet, killing the Chinese pilot and forcing the Navy plane to make an emergency landing on the island of Hainan. For 11 days, the Chinese government held 24 US service members in custody, and the rest of us wondered if we were about to go to war with the second largest power on the planet. This would have been materially significant if it had escalated. Thankfully, cooler heads prevailed, diplomacy succeeded, and the service members returned home unharmed. Of similar importance, we did not go to war with China. Crisis averted.
COVID
The second example I often reflect on is COVID. Many of you remember where you were, what you were reading, and how uncertain things felt in mid-March of 2020. At the time, widely cited projections suggested that, even with mitigation efforts, the U.S. could experience over 1 million deaths within a relatively short period.
Like many others, we closely followed emerging data—reviewing reports frequently as new information became available. As the situation evolved, we observed trends that differed in timing and trajectory from some of the early projections. While the virus remained serious and the ultimate human toll significant, the pace and progression unfolded differently than many initial expectations.
Looking back, it ultimately took over two years for U.S. deaths to reach approximately 1 million. This experience reinforced for us how uncertain and dynamic real-world events can be, and how important it is to continuously reassess data as conditions change rather than rely on any single projection.
So what?
The point of this is that we all have a responsibility to distinguish news from noise. And every generation gets their test case on this. In fact, nearly every decade gets their opportunity. This decade has been marked by inflation. The last one ended with COVID. The 2000s had both the terrorist attacks in 2001 and the Great Recession in 2008. The one before that ended with the.com crash. The list goes on.
As events unfolded in the two scenarios above, there were a wide range of projections and interpretations of the data that were possible. In periods like this, different outcomes are possible, and decisions must be made with uncertainty.
If you ask our broader perspective, the most materially significant events of the current decade might have not happened yet. I personally doubt that the higher inflation since 2022 is going to remain the biggest story. It is more likely that the 2020s will be marked by the decoupling of US and China relations and the subsequent nearshoring, the AI-tech boom, and the increasing (and unsustainable) sovereign debt of governments all over the world.
But like we have said before, the job is to remain vigilant and discerning, and by adhering to Napoleon’s definition of a genius: “a man who can do the average thing when everyone else around him is losing their mind.”
This material is provided for informational purposes only and does not constitute investment advice. All investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy will be successful. The views expressed reflect current opinions and are subject to change. Forward-looking statements are based on current expectations and may not be realized.