Being prepared for volatility yet again: A playbook for investment communicators

• Markets keep climbing despite warnings on valuations, AI/tech concentration, and emerging-market sentiment — but investment communicators aren't paid to call the top, just to be ready when consensus flips.
• Three areas look especially precarious right now: stretched equity valuations, a wobbling AI/tech trade, and emerging markets riding strong results on fragile sentiment.
• The lesson from last year's tariff tantrum still holds: pre-drafted scenario messaging, mapped spokespeople, and clear activation triggers can turn a surprise into a well-managed communications win.

The broad market this year seems to continue its march up, despite lots of warnings.  Being the one who sells too early, while markets continue melting up, can be career-destroying.  (So can being that 24-year-old featured in the WSJ and then subsequently shrinking his clients’ portfolios by 67% in July’s tech stock rout. That story is a different crisis for another day.) But market action reminds us of the triggers that can lead to market volatility.

The good news is we aren’t paid to make market calls. I’m not a market prognosticator and this blog is not meant to predict the next market blow up. Instead, we want to remind investment communications pros that it might be time to prepare for volatility.

What we know for sure is how fast market consensus can flip, how responding proactively is a differentiator, and how smart it is to be ready.

Planning for volatility: A standing capability

The best investment communicators bring a level of ongoing awareness to the market’s ups and downs.

This includes regular messaging tied to specific risks such as valuation extremes or concentration risks.  Volatility prep includes being ready with pre-drafted scenario messages, mapping spokespeople to the specific risks, and identifying the triggers that might lead to activating client or media communication.

Three areas that look precarious now:

• High equity valuations - Despite ongoing geopolitical and macro uncertainty, valuations remain elevated, leaving less room to absorb an earnings or rate surprise.
• AI/technology concentration - In late July, several chip and AI stocks sold off on earnings disappointments. The hope of AI-driven innovation and improvement in productivity seems to be holding up both stocks and the economy. Is a wobble in this area a healthy rotation out of the crowded AI trade or a genuine reassessment of the AI growth story?
• Emerging markets strong results/weak sentiment - After years of underperforming, EM has now delivered strong results and still offers good opportunities. Yet live geopolitical challenges and the ever-present possibility of new tariffs or an earthquake or a hurricane could puncture the positive momentum.

The standard playbook

What we learned in last year’s tariff tantrum was the need to be ready and reactive. So many firms had to pivot when their annual outlooks became outdated just weeks after the start of the year (see our blog on this topic).  The specific catalyst will be unpredictable, but a credible response is something you can plan for:

1. Message likely scenarios. Anticipate and even draft messaging about corrections, AI/tech drawdowns and EM shocks. This puts you in a position to be editing, not drafting, when news breaks.
2. Identify and map key triggers for those scenarios so you can make activation systematic rather than a judgment call under pressure.
3. Have a rapid response protocol. Who is the spokesperson, who signs off, and who can accelerate the review process to streamline time from draft to publication?
4. Identify the opportunity within the crisis. What strategies might benefit from the environment and where can you add value?

• • In a market decline, what valuation opportunities are created or are there options or hedging strategies that have provided downside protection?
  • In an AI/tech debacle, how important is diversification, dispersion or broader market leadership?
  • In an EM meltdown, which country or regional fundamentals demonstrate EM isn’t a single bloc and can illustrate the importance of opportunistic positioning?

5. Train potential spokespeople on the relevant topics in advance so they can be ready within hours vs days.
6. Debrief after a scenario plays out. What worked, what didn’t? Update plans as needed.

Market uncertainty is a certainty

The fact that I’m writing this blog probably means that none of the valuation, AI/tech concentration or EM markets concerns cited here will come to fruition in the near term.  But it really doesn’t matter.  The fact that the market is already signaling some uncertainty can be a call to action for investment communications pros to take time to audit your scenario messaging and spokespeople before a headline forces the question.  If you’d like a second set of eyes on your scenario planning and messaging, let us know.  That’s a conversation worth having.