Encouraging Signals Outweigh Realistic Concerns
You may ask, “Okay. I know what the investment world has produced over the last 20 or so years but what does the future hold for me?” You remember 2000, ‘01 and ’02 and how the market roared back stronger until 2008 came along. The market has grown like gang busters since 2008. Of course, we cannot forget last spring, due to Covid19 closures and its dramatic recovery. Now, what can we expect?
Regardless of a few reasons for real concern, such as how our Government is spending money they don’t have, the rising cost of everything over these last 4 months, our ability to gather and travel still being scrutinized. Despite taking all that into consideration, it seems almost weekly the market is reaching all-time highs.
Which raises the question, is the market overvalued and can I still make money by being invested? Or is it time to lock in your profits? You may even have more questions.
May I share my thoughts, from where we are today and what we may look forward to. It is said the market does not like uncertainty. Well, you should know there has always been and there will always be uncertainty. Each year of our lives holds unknowns. This is not a cause to cocoon ourselves and hide. The key has always been and will always be, to act on the information we have at the time and not allow the unknowns control our future decisions.
However, taking into consideration the causes of Covid19, there is a pent-up demand for products and services. At this time, unemployment is 6.1% which can be viewed as good and bad. Bad for those currently out of work but good if you view humans as a resource and when the work force needs more employees, they will be available to be hired for future growth.
Also, as a result of Covid19 our GNP, Gross National Product, projections are very attractive. Between economic growth and excess government spending we are already experiencing 11% inflation over the past 4 months, if it was calculated with the same method used in the 1980s.
With inflation will come higher interest rates. This will increase the cost to purchase things using loans and to conduct business for corporations. As with almost everything, there are two sides to each circumstance. Some companies are able to make more profit when interest rates are higher.
Remember, over time, many corporations will either adjust to new environments or just naturally thrive in almost any market condition. Ultimately, profits are what drives the value of a company, meaning their stock is driven up in value. This also applies to the fact that there are many companies that will make a profit regardless as to who is in the White House.
There is a good reason for optimism toward our domestic stock market. Regardless as to how some international stocks look attractive, there are still too many potential negative nuances to consider action for international investing at this time. Making domestic markets look attractive to international investors who will invest in the USA Stocks.
Our economy’s engine is driven by consumer spending. There is a generation of people born from 1981 to 1997 referred to as Millennials. Globally, there are 2 billion of them. Generally speaking, they all think alike, in how they acquire and manage information, and purchase and consume merchandise. They are a larger population than the Baby Boomers and they have been and will continue over the next several years to inherit trillions of dollars. At the same time, they are achieving their peak earning years.
When you add all this up, including the influence of so many Millennials, a wave of consumer spending is on our horizon. What companies will benefit from this trend? What products and services will be sold and developed to satisfy their wants and needs? How can you benefit from the Millennials and other megatrends such as 5G Telecommunications, Robotics, AI (Artificial Intelligence), IoT (The Internet of Things), Precision Medicine, etc.?
These are examples of the opportunities a trained, experienced Wealth Manager can help you profit from.
If you have assets outside of TSP, are near retirement or have already retired, you may want to explore other investment opportunities.