Financial markets are best entered at the inflection point, when even if the data that most people use to make their decisions is ugly and the news is not so great there exists nevertheless a launching point for a new, positive market cycle.
Unfortunately, though, investor psyche is wired such that “people want data that confirms market optimism,” said Liz Ann Sonders, senior vice president and chief investment strategist at Charles Schwab & Co. “They don’t feel comfortable till all the unemployment and trade data is out, and inevitably, they miss the inflection point at which they should have entered the market.”
That’s why investor psyche and sentiment are at the heart of what Sonders does.
As one of the most popular, widely listened to and respected voices on market and economic outlook, Sonders—who has a range of investment strategy responsibilities reaching from market and economic analysis to investor education, all focused on the individual investor—believes she has a duty to keep things simple and to tone down what she terms “the fire hose of information” that hits the investing public.
“I am an interpreter: I fly around at the 30,000 foot level, and I look around and try to interpret what’s going on around me in a way that the broad public can understand,” Sonders said. “As someone who has been in this business for 28 years, I feel there is no bigger turn-off than someone who’s trying to sound like the perfect guy or girl. Those of us who do what we do have a duty to keep things simple for our public.”
The simpler the information is, the easier it will be to bring investors back into the markets. That many still have a “muscle memory” of the crisis is a good thing, she said, but at the same time, the pervasiveness of skepticism that is still causing many to hunker down and stay away from the markets is doing them a disservice.
Before she joined Schwab in 2002, Sonders served as managing director at U.S. Trust (a division of Schwab between 2000 and 2007), and she was a member of the firm’s investment policy committee. She has also worked at Avatar Associates, an original division of the Zweig/Avatar Group, as both managing director and senior portfolio manager.
In 2005, Sonders was appointed to and served on the President's Advisory Panel on Federal Tax Reform, as well as on then-President George Bush's bipartisan tax reform commission. Last year, she was inducted into the Alumni Wall of Fame at her alma mater, the University of Delaware, alongside Vice President Joe Biden and New Jersey Governor Chris Christie. Earlier this year, she was awarded an honorary doctorate degree by the university.