Most models are more optimistic than the reality (many countries are seeing birth rates dropping much faster than predicted):
edit: and figuring out how to embrace/leverage migration is probably critical for most European countries, though it also comes with many ethical questions.
when certain resources really do run out, we are saved economically by new technologies that use different resources: Haber-Bosch saved us from the guano shortage; kerosene saved the sperm whales from extinction; plastic saved the elephants by replacing ivory.
P.S. Personally I wonder if in my life time I will still have a chance to invest in All-Worlds ETF.
Perhaps, but it has to be looked at more granularly. If more people become middle class in Africa (defined as $2-$20 of spending per day) whereas population stalls or declines in the western world, then maybe companies making soap and toothpaste will benefit, but perhaps those making iphones will suffer.
Now, consider all of the doom and gloom you have heard in the last five years. Remember in 2020 when nobody went to work for a couple of months, the national GDP dropped by like 25%, and you couldn’t buy toilet paper? And then we had a pandemic for several years? And then rates rose faster than they ever have before, giving bonds their worst annual return ever in 2022? Here are some examples of what investors and economic consultants were saying during the last few years:
However, when we look at the financial world we have 2 main things to look at and both have been stunningly positive:
Fiscal spending. This has been off the charts esp. with the covid give-away
Monetary policy. Years of low and effectively negative real rates. Cut too fast and left low too long and QE to boot.
These were perfect conditions for the stock market. Rates have been increased gradually in recent years but now also in a cutting cycle.
If rates continue to be cut, even with the stretched consumer and fragile economy, I can see the stock market defying gravity again.
If the economy doesnt grow in real terms, but the central banks keep printing… how do you invest for the long term?
Ia there an alternative to stocks in stagflation?
Stocks agreed.
Gold tend to agree. But as nonproductive asset also not great.
Real estate with shrinking population, i dont know?
My point is, no matter how the economy and population develops, there is no real alternative to stocks in the long term. So maybe we worry too much for things we cannot influence
As a white water wild ride afficionado you might like this timely notice from DTCC, our favorite clearing entity in the markets, which just arrived minutes ago in my work email inbox:
Information Available
U. S. Presidential Election & Potential Market Volatility
Summary
In anticipation of increased market volatility around the U.S. presidential election, DTCC will implement enhanced surveillance of internal systems, client performance, and vendor execution in the days leading up to and following November 5. While routine performance and capacity testing results confirm our ability to handle significant volume increases, we will establish additional monitoring as a proactive measure to closely track and manage throughput, while keeping clients informed in the event processing extensions are required.
We remind clients that, depending on market conditions and changes in portfolio composition, volatile market conditions may trigger an increase in intraday calls at NSCC, GSD, and MBSD. At FICC, a special charge amounting to 10% of the VaR charge may be applied if any forward-looking indicators suggest heightened volatility in the fixed income markets. Please refer to the relevant important notice for details (GOV1766-24, or MBS1360-24).
Lastly, if clients anticipate any issues or delays that could affect their processing or funding abilities during this period, please contact DTCC Relationship Management promptly to ensure timely communication of issues and efficient resolution. You may also contact us via the DTCC Client Center.
Please do not reply to this email as this is not a monitored mailbox.
That point could be tomorrow, it could be 2028 or later. People who got out in 1996, predicting the 2000 crash, never got to invest their money back at cheaper prices than they had.
It’s hard to predict the market and our own emotions are poor indicators of where it will go. At one point, the emotions telling us the market is going to crash will be right. At other points, they won’t.
My advice is to write down in a journal when our emotions tell us the market/a specific fund/stock/asset is going to skyrocket or go down, then to come back to it when emotions show up again and see how many times our emotions were right, how many times they were wrong and how many times they were right but the market has stayed irrational longer than would have allowed to benefit by acting on them.
My other advice is to be ready for a crash even in times of apparent prosperity because they don’t always have the civility to announce themselves before they strike.
I wanted it to be soothing, actually, but I may have failed at that. The 2028 part was to say we can have 4+ (10+? More?) more years of very good market returns which we wouldn’t want to miss.
I may sound conflicting because I am a bit wary about being too positive on this board, where many people seem to think 100% stocks is a safe allocation and leverage is no big deal. A real deep crash can wreak havoc on that and the people who are on those allocations should, in my opinion, be sure to be ready to handle that, both financially and psychologically.
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