The idea for Ascendant Strategy was conceived as the global financial crisis started – to our mind – in February 2007. “Sub-prime lending” was starting to slip into people’s vocabulary but it was then still a full six months before Northern Rock – the first official warning shot across the bows of the global economy – which for most experts was the beginning (we have developed indicators that were flashing red warning signs from December 2006).
One of the reasons I knew that a major cyclical downturn was coming was because I had been expecting it. By this stage I was familiar with a fair amount of cycles research, in particular with the work of Fred Harrison, who wrote a seminal work, The Power in the Land, in 1983 and forecast the cyclical downturn at the end of the 1980s/beginning of the 90s. He repeated the feat in the 2000s, correctly calling the bust that reached its fullest extent in 2010.
What led us to the idea of creating Ascendant Strategy was the fact that in the events that followed during 2007, 2008 and 2009, we felt that there was no practical advice for investors on how to navigate events, and what to do with their investments (we use the term “investor” and “investment” broadly. We regard any major financial decision – whether looking where to place savings, allocate an investment portfolio, undertake a major business expansion – as an investment that are subject to the same disciplines of: understanding the returns, and the risks; and critically knowing where one is in the economic cycle. This last piece of the puzzle is something that only Ascendant Strategy can really teach you).
We observed that all of the old maxims of the investing world – the efficient market hypothesis, maximum diversification etc. – did not well serve investors at this stage of the economic cycle. This feeling was reinforced by our research of trends during the recessions. For example, SMEs that rely on bank lending – with perfectly good balance sheets and business prospects – tend to be harshly dealt with by lenders during cyclical downturns, with loans called in or access to finance abruptly turned off. Often the need for finance has been exacerbated by the easy credit conditions that invariably accompany the run up into cyclical peaks. We felt that sound practical business advice helping business owners and investors make decisions informed by how the cycle operates was a massive gap in the market – and hence the idea of Ascendant Strategy was conceived.
Our Strategic Leaders research series documents the experiences of corporates and investors during the financial crisis, key decisions they were faced with and how they responded. This helps us to ensure that our advice remains as practical as possible going forward. Hindsight is always 20:20 but, as we can prove, you can look forward with a degree of clarity too. If you would be happy to share your experiences of the financial crisis from an investment or business point of view please contact us.