It only took 9 and a half years, but the Fed finally raised rates. As we all know by now, the FOMC raised rates by 25 basis points on December 16th, the first increase since the middle of 2006. Back then I had been in the industry for less than 5 years, had just finished Level II of the CFA exams and was about to buy a new house, which ended up not being the best timing for a real estate purchase. Many of our newer charterholders were still in college then, and most of us work with colleagues who have never experienced an increase in the fed funds rate during their professional careers until now.

With the Fed’s recent action coming at the end of the year, when many of us are already in the mood to reflect on the past, the increase in rates has spawned numerous articles on how the world has changed in the past decade. For example, Instagram and Twitter each have over 300 million active users now, up from 0 at the start of 2006. They, along with other social media services, have not only changed how we connect with our friends, but also how we share information, organize protests and plan events (both good and evil).

In 2015 it is no longer just the manufacturing sector that fears being undercut by cheaper alternatives and automation – Uber, Airbnb, and many other startups are threatening to upend sectors ranging from transportation to lodging to house cleaning, industries that in 2006 seemed very secure. Even financial services is susceptible, as robo-advisors, passive ETFs and fundamental indexing strategies continue to erode pricing power and put more pressure on active managers to actually produce alpha.

Some things haven’t changed as much as expected. The alphabet soup of financial products – CDOs, ABS, CDS, subprime RMBS – that helped cause many bank failures and the loss of billions of dollars during the financial crisis, were left for dead by 2009. In the last few years, however, amid very low interest rates and a thirst for yield, they have come back to life somehow, like a soap opera star from daytime TV. Actually, the last ten years have killed off more soap operas on network television than financial products.

The next year will bring more change. The Fed may raise rates again, possibly multiple times. Political campaigns in the U.S. will continue, culminating in an election in November. New companies will be started, old ones will fail, mergers will occur. The stock market may correct, or it may soar to new highs (and possibly both). It is an exciting time to be working in finance, and a challenging one.

I thank each and every one of you for the work you do each day for your clients, and for adhering to the highest ethical standards despite the turmoil that sometimes surrounds us. I am constantly impressed and inspired by the work being done by charterholders in the region, and I appreciate your commitment to our Society and the industry.

As 2015 comes to a close, I want to wish all Society members and their families a very happy new year.

Joshua M. Howard, CFA
President of the Board of Directors
CFA Society of Minnesota