The ocean surface is covered with waves and turbulence, but if you dive down, it is calm. We all have the ability in us to dive down into that calm region. If you are worried about missing out on a trade, you will be prone to take trades you shouldn’t be taking. If you are emotionally agitated, you may snatch your profits instead of letting them run, or you may hold onto your losers. You need to pull away from all those primitive reactions to a higher self—a calm and centered person – Amrit Sall (Unknown Market Wizards)
After reading the quote above while looking through Jack Schwager’s Unknown Market Wizards it reminded me of an insight I learned a few years ago.
On a trip to Porto, Portugal, two years ago, going surfing at Matosinhos struck me as a highlight of the trip. Seeing the ocean and getting to experience the thrill of flying to shore on a board after forcing myself up try after try was incredible. But the most memorable and poignant part was the strength of the waves there, which would flatten me or pull me under at varying times. The waves’ choppiness and intensity were something I had never experienced before. One second they were calm and the next strong enough to wipe me out. They would take me to shore or fizzle out after a few feet. Getting caught up in that was my weakness at the time. I was overanalyzing, always looking and changing my mind about what was worth riding or waiting out, and trying to guess from the smallest details what was important and what would be the best indicator of their worthiness.
I am not an expert surfer. Getting up twice in two hours on the board showed me that. But the lessons on the water brought me to an easy analogy for the current markets. Market volatility on low time frames can easily be likened to those waves. It is strong, fast, and difficult to manage. That surface is chaotic and crowded, with hundreds searching for the right wave on that beach and millions a day looking for profit on some trade. The signals, noise, and constant news feeding your thoughts are no different. It can be extremely difficult to wean yourself off it, think only of long term goals up above the water, stick to your guns, and not try to change your methods.
The waves are only at the top of the water. Below those waves, if you dive down, is the calm of the ocean, which allows you to escape from the chaos above. Taking a deep dive into the market and understanding the opportunities available from their genuine value and data is equivalent to diving under the waves. This calm, peaceful space is where the real strength of an ocean is, and its valuable parts are hidden below the waves, requiring focus to dig into.
Expanding the analogy a bit and looking at macro trends as the current that pulls the waves towards the shore is a nice way to frame it. The treasures are dragged below the surface towards land, and the only way to see them before they pop up in everyone’s view is by taking that dive and ignoring the surface’s commotion. However, by extension, what can be brought to shore is oftentimes also smashed against the rocks, unable to ultimately escape the current it’s trapped in. It strikes me that what I am seeing in the economy is no different.
At Broadfield Systems, I have held a conviction since 2023 in the necessity and eventual fulfillment of reshoring hard assets and industries back to America from overseas and, by cause and effect, the necessary increased investment in American infrastructure as the general current and central focus of capital inflow. Others are coming to recognize this same underlying shift. Research published by the McKinsey Global Institute back in May 2026 highlights that American annual imports of manufactured goods are nearly $3 trillion. Reducing risks across the most vulnerable supply networks would demand an estimated $2 trillion in capital allocation, about 6% of national GDP. Simply maximizing current domestic manufacturing capacity addresses hardly a fraction of that, leaving the remaining required assets to be constructed anew.
Allocating to specific, highly profitable areas or areas devoid of competition is the key to avoiding the rocks. That takes diligent research on profitable hard sector assets with durable advantages and on businesses that generate cash flow. Piling onto the same names where analysts are plentiful and public sentiment is present is an easy way to get the same results and crash into the rocks. Long-standing data leads me to the same conclusion. Academic research published by Hong, Lim, and Stein in the Journal of Finance (2000) underscores that market prices reflect fresh information far more gradually in equities lacking broad analyst coverage. This, however, can cut both ways, with good and bad news both requiring deep dives to understand them.
However, trying to catch phantom waves is equally ridiculous. Looking for the “Big Kahuna” and running around only to be met with nothing is a waste of valuable time and capital in the market, and it is what gives many managers bad names and reputations. Waiting and trying to see treasure when the tide is low helps you find it early, but others are doing the same, making it a game of speed (I am not a sprinter either, so I stay away). So while understanding the overall pull of capital is important for getting in early, equally important is understanding the current landscape of volatility in your clear view. Being a surfer in this regard and watching the waves for a great swell to take advantage of can be a great strategy. Occasionally a wave comes, and even if you want to dive, you would be a fool to not try, especially if your risk management and system tell you to take advantage. This helps keep you away from chasing the unknown and helps you to find a few smaller trends in the overall macro environment. Knowing the system and style of investing that allows you to see the opportunity is what makes it possible.
The real work is below the surface, understanding the pull and overall movement that cause the volatility above. Diving deep for value is key and helps you stay focused on the overall current. But spending too much time below the waves will make you miss a great swell now and again. The deep dive is the focus and main strategy, with surfing as the exception, taken only when the system says it might be worth the wipeout. Having that comfort in knowing a deeper knowledge lies below is what stops you from overanalyzing and allows you to paddle out.
