Appreciating the path

As we start to see the daffodils in bloom, we are reminded that spring is on the way. Before we are overcome with blooms and pollen, I was thinking about how we can enjoy the trees during the winter months. The redbud tree in my yard is a Forest Pansy, which is unique for its burgundy leaves and its shorter height.

All redbuds are amazing for the brilliant flowers which signal spring has arrived. When I look at the branches in winter, I am struck by the path of the branches reaching for the sun. Like all trees, they want the sun to help with photosynthesis and to create energy for growth. Most tree branches are fairly straight, while some take a more curved path. Redbud branches have a zig-zag pattern to get where they are going.

As I sit here trying to determine where the economy and markets are headed, I am struck by the simple linear or curved path that most people assume for the future. The line into the future may look straight when we take a 10-year to 20-year horizon, but in reality, there are many twists and turns on the way.

We are living during a complicated time for technology, the environment and politics. These elements contribute to (or detract from) the path and to our eventual outcomes in our lives. There are several concerns on our radar:

  1. Recession in the next 12 months
  2. Inflation in our goods and services
  3. Ongoing conflict in Ukraine
  4. Uncertain relationship with China

All these items may bring some rain on our parade, but we have seen them before and we can navigate them with due diligence. We strive for value, quality and balance in our portfolios, so there are always choices to be made.

How we feel about our path can also affect the journey. When I look closely at the redbud, I see a disjointed development of the branches and flowers. When looking from afar at the tree filled with flowers, the underlying branch are hidden, and I am overcome by the colors.

I think the jagged path is a much better way to anticipate the path forward for markets and the economy. Like the redbud branches, they grow in one direction, but adjust frequently. It is still moving in an upward direction, but slight changes help it to find the sun. We are all on a path towards some end goals, but the turns and changes are to be expected. Expecting a linear or smooth path is very comforting, but ultimately there are bumps and turns on the road. It may be better to enjoy the straight sections of progress as the exception versus the rule.

The recent frost has also hurt some of the shrubs, but good roots, healthy trimming and fertilizer can help the plants to recover. Our economy is similar. We go through difficult times, but we adapt and are better off for the challenges. Let’s change our expectations and celebrate the blooms on every branch.

~ Stephen Davenport, CFA