Jan. 1, 2010. Where were you? What were you doing? Fast forward 10 short years and here you are. January 2020, the first month of a new year and new decade. What have you learned from the past? What will you take into your future? What will the world at large look like? What will your personal realm look like?
Writing in the Miami Herald on 1/1/2010, Dave Barry opined, the decade “begins grimly, with the pesky unemployment rate remaining high. Every poll shows that the major concerns of the American people are federal spending, the exploding deficit, and — above all — jobs, jobs, jobs.” But the focus of the Obama administration was on health care reform, an effort highlighted by a March signing ceremony where Vice President Joe Biden dropped an f-bomb on a still hot mic.
Funny thing happened on the journey to today. Despite 10 years of back and forth, health care remains a top concern and Joe Biden so far leads among Democrats nationally in a quest to defeat Donald Trump. Jobs, however, aren’t the problem they were 10 years ago as the economy remained tepid following the brutal recession that lasted from December 2007 to June 2009.
A 12/27/19 post by Reuters in London noted that investors are entering “a new decade with a spring in their step, after watching world stocks add over $25 trillion in value and a bond rally put $13 trillion worth of bond yields below zero.” As 2010 dawned and fears lingered among breadwinners and investors battered in the Great Recession, how many would have thought we’d end the decade in 2019 with no recession for 10 years, the Dow, S&P 500, and Nasdaq at record highs, low interest rates, and employers asserting they can’t find enough qualified workers?
Years ago a motivational speaker offered a pithy rhyme: “If it is be, it’s up to me!” As the press trumpets political division and “all things impeachment,” ask yourself, “How will whatever the government does impact me and the wellbeing of those I love and care for?” Yes, tax rates for anyone successful most likely will rise, eventually. Power will bounce between Democrats and Republicans. What happens with health care will impact you in terms of out-of-pocket costs, access to quality care, long-term care in later years, etc. But quality of life largely is a do-it-yourself project.
How old were you in 2010? Didn’t the last 10 years fly by? How old will you be 10 short years from now, in 2030? How old will your spouse, life partner, children, parents, anyone who looks to you for their wellbeing, be? What expectations do you have, do they have? How will your life and money skills play into a successful outcome, no matter what the government, job market, and investment markets throw at you?
There’s likely to be a recession in the next 10 years, perhaps more than one. Reuters pointed out that “solutions may need to be unconventional, even more so than the extraordinary policies of negative interest rates and bond-buying that eased the post-global funk.” Deutsche Bank predicts with “those policies maxed out…a world of helicopter money awaits…central banks or governments providing citizens with large amounts of money, as though it was being dropped from helicopters.” Free stuff, bailouts, helicopter money, deficits? No problem. “I have a pen and a printing press,” proclaims the politician.
Will the long stock market rally last another 10 years? No, but Nobel Laureate economist Robert Shiller said he believes the rally “could last months — if not more.” (CNBC, 12/29/19). Citing Trump policies and “animal spirits” as boosting confidence in the market, with people feeling confident about themselves, current market dynamics are positive. Shiller, known for predicting the 2000 “tech-wreck” stock market plunge and the 2006 housing bubble that presaged the Great Recession, nevertheless warns that price-to-earnings (P/E) ratios based on inflation-adjusted earnings over the past decade are at uncomfortable levels. That could spell trouble eventually for hot passive ETFs and mutual funds that mimic indexes, especially, as they are dominated by high valuation mega-stocks that have led the charge.
Consider having sufficient cash and lower-risk reserves to ride out the next dip, or to take advantage of future buying opportunities. How does liquidity, flexibility, debt levels, and other factors such as physical fitness and health, play into the challenges you’re likely to face in the next ten years? What resolutions must be actualized, goals attained?
Consider what you will do as an individual, spouse, parent, grandparent, breadwinner, leader, example, motivator, citizen, child of God, going forward that will enable you to say on Jan. 1, 2030, “What a great decade! I (we) done good!” Time is a scarce commodity. Use it well. Happy New Decade!
Lewis Walker, CFP®, is a financial life planning strategist at Capital Insight Group; 770-441-3553;email@example.com. Securities & advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis is a registered representative and investment adviser representative of SFA, otherwise unaffiliated with Capital Insight Group. He’s a Gallup Certified Clifton Strengths Coach and Certified Exit Planning Advisor.