Riding A Wild Stock Market

The market’s worst December in decades create challenges for the C-suite to stay focused on core businesses.

Here are some stock market headlines from the last few days. “Market sell off was not an isolated event, expect more sharp falls next year.” “S&P 500’s lower low warns that the worst is yet to come.” And, from the most recent column from CNBC analyst Jim Cramer, “It’s not a safe market — in fact, it’s the most treacherous I’ve seen in many a year.”

As 2018 comes to a close, the stock market is breaking all kinds of records, none of them good. The Dow and S&P 500 are on track for their worst December since the Great Depression. On one recent trading day alone, both indexes lost more than 500 points. Yet, as Michele Pollack, senior client partner and member of the global financial services practice at Korn Ferry, notes, “Company fundamentals and balance sheets for the most part are still strong.”

To be sure, experts say the volatile market conditions are owed more to geopolitical uncertainty than economic conditions. A pause in hostilities has done little to quell concern about a trade war between the U.S. and China, for instance. Whether the Federal Reserve will raise interest rates after it meets for the last time in 2018 this week is still an open question. Domestic growth in the U.S. slowed in the third quarter, and is expected to slow further in 2019.

The current environment presents a unique challenge for corporate leaders where the uncertainty and volatility is owed more to political concerns than business ones. According to Chad Astmann, co-head and global sector leader for asset management and alternative investments at Korn Ferry, navigating the current interplay between government and markets requires organizations have a clear and consistent public policy approach. “Having a strong government relations team is critical to both having relevant and timely information flow, as well as an influential voice at the federal and state table,” says Astmann. Politics shouldn’t drive business decisions, of course. But leaders can help calm investors by communicating that public policy shifts and uncertainty are baked into their strategic plans.

Every company interacts with and is affected by market conditions in its own way. Thriving or struggling in volatile, uncertain, complex, and ambiguous environments (VUCA) in many ways comes down to leadership. The good news is that a majority of leaders say they are personally stimulated by change and highly engaged when driving strategies in complex and volatile environments, according to a recent Korn Ferry study.

“Leaders can’t ignore what’s going on, but they can’t get distracted either,” Pollack says. “The most important thing they can do is continue to focus on their core business and clients, communicate with their people, and be agile.”