The Future Is Unwritten

Looking back on 2025, I am reminded of a conversation I had with Rob Arnott back in March of 2020, right as the Covid crisis was peaking. We titled it This Too Shall Pass after one of Rob's favorite sayings.

The following jumped out at me when I went back to it recently.

"The strongest bull markets are not built on a foundation of good news, but on diminishing bad news. Wouldn't it be nice if the world of academic finance had coined the expression "equity fear premium" instead of "equity risk premium"?! That premium is at its best when fear is at a peak. It will be hard to be perfectly right on the turning point, naturally, but don't wait for the good news—just wait until the pattern of bad news lets up."

To a shocking extent perhaps, Rob's quote captures neatly the story of markets since peak "bad news" for 2025, that week that stretched from April 2’s Liberation Day to whatever history will call April 9.

Much less shocking, Rob formalized this insight in a fabulous academic paper this year, which he, his co-author Ed McQuarrie, and I talked about at length on TREUSSARD TALKS.

I encourage you to listen here: https://www.treussard.com/newsletter/fear-not-risk-treussard-arnott-mcquarrie.

Now, I recently spoke with Paul Solman.

Paul has been explaining the economy and markets to the American public for 50 years. A large portion of that time, since 1985 to be precise, he's been the economics correspondent on the PBS NewsHour. I remember Paul explaining credit default swaps on PBS in the middle of the Global Financial Crisis like it was yesterday.

For his trouble, Paul has earned eight Emmys, five Peabodys, a Loeb award, and a James Beard award (for media, that is).

Leave it to the self-described "pathological explainer" to cut to the chase.

"It's a stochastic universe. It's a probabilistic universe. It's a chaotic universe, in the sense of chaos theory. So you have to be agnostic with respect to the ability to say what's gonna happen next.

You are asking a perfectly reasonable question, since that's what we're all worried about. What's gonna happen? I have no ***** idea. Then, wait a second, do you just throw up your hands, hide under the bed? No. You come up with a set of strategies that protect you as best you can. And this is the profundity of economics. 

The profundity of economics is that it is life. All economics is about decision-making. Costs and benefits, and you want the benefits to outweigh the costs."

Well, there you have it.

Fifty years dedicated to making sense of the world around us.

And more decades still dedicated to making sense of what life is about.

"I say to myself, as every religious tradition tells you, be here now. Be in the moment. Be friendly to everybody, whether it’s the head of the World Bank or a janitor or someone asking for money on the street.

There's more good in the world than bad, and small acts of human kindness—all of those things, those are goods in the world. And they ought to be cultivated as best as one can. And by telling you all that, my hope is that I infect your subconscious to act accordingly."

Consider me infected.

Listen to the full conversation here: https://www.treussard.com/newsletter/explaining-economics-to-america-paul-solman

In the meantime, if you feel the way I feel about 2025, here is a song that you may want to carry with you into 2026. And if you're in more of a punk mood—which I have sympathy for—this one will be your version of choice, by the irreplaceable Joe Strummer. For what it’s worth, I’m with Joe. Let's be "the people who bring humanity back to the center of the ring."

And remember: The future is unwritten, just like Joe says.

Grab a pen. I'll see you in 2026.