A "New Normal" For Investors
I get the sense from talking with people about the economy and the stock market that they're pining for getting things 'back to normal.' When they could depend on stocks and mutual funds going up for the longer term... high-paying jobs were plentiful... and there was relative peace and prosperity in our country.
Unfortunately, those days are just about over. China, Russia, Brazil and India are the new growing economic powers rich in manufacturing and resources; while the United States has morphed from the world's largest creditor nation that produced everything it used, and had the world's reserve currency; into the world's largest debtor nation that manufactures very little.
The value of the US Dollar has and will continue to decline because of insane levels of federal spending and borrowing. And sometime in the next few years the Greenback will no longer hold the title of World's Reserve Currency. Because of these declining fundamentals, I don't see the US getting back to the old normal anytime soon.
What we'll see is a "New Normal," or baseline that Americans will have to adjust to. As Jim Rogers has said repeatedly since the late 1990s, commodities have been - and will be much better investments for the short-to-medium-term future; probably until the mid to late 2010s. American stocks will be mired in a longer-term secular bear market, at least until the end of the commodities bull market cycle.
The last half of the 20th century has been a rare period in American and world history where a country and continent had unprecedented peace and stability. I believe that it's spoiled and fooled a lot of Americans into believing that ever-increasing home and stock values are their birthright, and they shouldn't have to endure bear markets, recessions or depressions. Now it looks like the US has (or will experience, depending on your point of view) all three economic specters.
Investors MUST start taking control of their financial future, and not leave it up to their "trusty" stock broker or financial planner. They need to start investing for cashflow, not just capital gains. This will be a necessity for Baby Boomers and other Americans to learn - and not an option - if they want to maintain and increase their wealth into the 21st Century.
The days of passive, buy and hold (or as I call it "buy and hope") investing are over. Get educated, get financially literate, and get in control of your investments and financial future. This is the only way Americans can deal with the New Normal coming our way.
Unfortunately, those days are just about over. China, Russia, Brazil and India are the new growing economic powers rich in manufacturing and resources; while the United States has morphed from the world's largest creditor nation that produced everything it used, and had the world's reserve currency; into the world's largest debtor nation that manufactures very little.
The value of the US Dollar has and will continue to decline because of insane levels of federal spending and borrowing. And sometime in the next few years the Greenback will no longer hold the title of World's Reserve Currency. Because of these declining fundamentals, I don't see the US getting back to the old normal anytime soon.
What we'll see is a "New Normal," or baseline that Americans will have to adjust to. As Jim Rogers has said repeatedly since the late 1990s, commodities have been - and will be much better investments for the short-to-medium-term future; probably until the mid to late 2010s. American stocks will be mired in a longer-term secular bear market, at least until the end of the commodities bull market cycle.
The last half of the 20th century has been a rare period in American and world history where a country and continent had unprecedented peace and stability. I believe that it's spoiled and fooled a lot of Americans into believing that ever-increasing home and stock values are their birthright, and they shouldn't have to endure bear markets, recessions or depressions. Now it looks like the US has (or will experience, depending on your point of view) all three economic specters.
Investors MUST start taking control of their financial future, and not leave it up to their "trusty" stock broker or financial planner. They need to start investing for cashflow, not just capital gains. This will be a necessity for Baby Boomers and other Americans to learn - and not an option - if they want to maintain and increase their wealth into the 21st Century.
The days of passive, buy and hold (or as I call it "buy and hope") investing are over. Get educated, get financially literate, and get in control of your investments and financial future. This is the only way Americans can deal with the New Normal coming our way.
posted by Brian Ochsner | 6:42 PM
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