The stock market is clearly not the economy. Stocks are near new highs yet millions remain un- or under-employed, wages are stagnant and the government is building enough debt to make a banana republic proud. However, it won’t be this way forever.
Right now, we are facing a demographic wall…or cliff as some like to call it. The reason is that the largest segment in the history of America, the baby boomers, are past their peak spending years and saving money for retirement. It’s easy to understand when you think of it simply. We’ve got 65 million Generation X’ers trying to take the place of 80 million baby boomers. These are the very issues I discuss in Facing Goliath – How to Triumph in the Dangerous Market Ahead.
When the majority of the population is in retirement and dying mode, it leads to fewer buyers of real estate, cars, and home appliances and risky assets suffer. This, of course, leads to slower economic growth, higher budget deficits, and a weaker dollar.
Things change dramatically in 6-8 years. That is when you have 65 million Gen Xer’s being chased by 85 million echo-boomers or millennials trying to buy their assets. Home prices will rise again, labor shortages will make wages increase, growth will come back with a vengeance and so will the stock market….only this time from true fundamentals that we can rely on and not a fabricated economy built from voodoo economics, quantative easing, and money printing.
It will be a true golden age, not just financially but for living standards. New healthcare breakthroughs, many we can’t even imagine now, will make serious disease a thing of the past. Imagine a pill for cancer? From what I hear it’s within reach.
By then Washington political gridlock will subside because one side will eventually win, making the tough choices and pushing through the ever so needed long-term structural reforms that everyone agrees on now, but nobody wants to be blamed for. That may push the retirement age to receive Social Security from 66 to 70 or 75, but that’s where it belongs, especially for those being born today who will live well past 100.
The issue is how to survive and prosper for the next few years as we wean off government stimulus. Corporate profits can’t keep making new highs if there aren’t enough people to buy more and more of their stuff. The key, of course, if you’re retired or close to it, is to be properly invested with a qualified retirement advisor. This will ensure you are looking at the big picture and getting the returns you need, but with the least risk possible so you don’t get crushed in the next crash or correction.
…… and that’s where we can help. To learn more about The Springer Investment Approach, which is our powerful proprietary Investment Management Strategy designed to manage risk and deliver returns in any market, or to get a free second opinion on your portfolio, simply reply to this email, or give me a call at 916-925-8900 for a no-cost no-obligation today!