We had some pretty thick ground-fog the other day.
We didn’t have fog very often where I grew up in Minnesota. The prairie is flat and clear, and the temperatures evenly distributed. But in northern New England, the mountains cool much faster than the surrounding land. The heavier cold air flows downhill into the valleys, where the atmosphere is thick with moisture. The cold, dry air forces the water vapor to condense, and a thick fog forms.
It’s interesting that foggy prospects arise from mountainous terrain. When there are high peaks and deep valleys, the fog can make it difficult to travel. You’re never sure what will come lumbering out. I’ve had narrow run-ins with moose, bear, wild turkeys, and deer during my early morning drives, especially in the fall, when the warm days contrast strikingly with the sharp, frosty nights.
Photo: MrsBrown. Source: Maxpixel. CC0
We find a similar pattern in the markets. When horizons are visible and volatility is low, it’s pretty easy to see what’s down the road. Obstacles are clearly marked, and while we may need to slow down to get around them, it’s pretty straightforward to tell where we’re going and what kind of progress we’re making.
By contrast, in highly variable markets the fog can come up suddenly. While we’re making plans, something emerges that obscures the picture. A surprising economic report, a stray remark from the President or a CEO, or a surprising policy move by the Fed can make things murky. That’s why it’s so important to have different types of assets that do well in diverse circumstances – some that grow, some that are more secure.
A hundred years ago, Joseph Conrad wrote that it isn’t the clear-sighted who lead. Rather, the greatest accomplishments are achieved in a blessed, warm fog. Understanding how and why the fog arises helps us plan and decide well, even if it’s merely to wait a few hours for the sun to burn the fog away.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”