As I write this article, summer is blazing and half the world is on vacation. The financial markets, meanwhile, are swinging like pendulums. Another day, another 300 points on or off the Dow, which seems to be climbing back from the abyss. For now.

In spring the real estate crisis moved in for good and the headlines took on an apocalyptic cast. In June the stock market, which had been gradually declining, went into free fall. Skyrocketing oil prices were one factor. Staggering losses by banks and the freeze-up of the credit markets were another. Escalating grocery bills didn't help. "It feels like there was a switch that occurred overnight; we went from one regime to another," says Mohamed El-Erian, co-CEO of PIMCO. The markets flipped from optimism to pessimism, plenty to scarcity, liquidity to de-leveraging, disinflation to inflation, stable asset prices to volatility. "The reality is that there's been a number of changes that have been going on for a while. They reached a critical mass and then started interacting with one another, and the dynamics became nonlinear," El-Erian says. The financial innovations that had propped up a whole highly levered world went down like dominoes, and the party they underwrote-the houses, the buyouts, the hedge fund fees-was over.

As you read this article, you've probably finished your summer break. Now you can't escape the fact that the capital markets have shifted, and continue to do so. When the cleanup is over, we'll be in a new New Economy, and unlike the New Economy of the 1990s, this one doesn't promise to grow to the stars. We're hamstrung by debt, as a nation, as a financial system and as individuals, and we'll need to devote time, resources and creativity to digging out. At the same time, the rest of the world's economies will be giving ours a run for its money. "There are some fundamental tenets of good investing that won't change-develop a plan, stick with the plan, make it dispassionate and unrelated to current market events," says George Gatch, president and CEO of JPMorgan Funds Management. "But there is a fundamental change, which is we've entered a different era in terms of expectations for returns of traditional asset classes."

Your clients will need you all the more, to build and preserve wealth; you'll owe them discipline and foresight. "Our job is to make sure the client has no problem if something's going down," observes Harold Evensky, chairman of Evensky & Katz in Coral Gables, Fla. "The silver lining of these times is that many of us are refocusing on what we're all about."

The Next Normal

You could say that we're on the road to the next normal. At a certain point the financial markets will stabilize, and when they do, they will most likely look quite different.

"Some of the things we have taken for granted as the way things are may not be the way things will be," points out Dennis Stattman, manager of the $29 billion BlackRock Global Asset Allocation Fund. "The one that's really becoming apparent is access to cheap oil. That has become the minute-to-minute focus of the stock market at this point, because people have come to realize that expensive oil is here to stay."

Expensive oil on its own would be inflationary, but not disruptive. "The degree to which it's expensive is what we don't know," Stattman continues. "It's going to be harder for us than for some of the other developed economies. Forty years ago we were the world's largest oil producer and so when energy got expensive in the 1970s, a heck of a lot of the wealth transfer that occurred was from the nonproducing states to the producing states. This time it's a more pronounced transfer from the U.S. to the oil-producing nations."

Growth and wealth have dispersed to other countries, and in many ways that's a good thing. "The world has become over- reliant on the U.S. as the engine of growth and of consumption," El-Erian says. "Think of the image of a plane in flight. The world could be imagined as a plane with one engine: the U.S. consumer, who is exhausted. The plane hits an air pocket. There's a bumpy transition and the plane loses altitude. In the plane, it feels awful." But you're still in the air. And new engines-that is, new markets-are coming online to provide lift for everyone.