Do you remember a time when the global economy was good? Can you remember at any point in your lifetime where things were just ‘good’? In fact they didn’t have to be good. What about just ‘OK’? Or as my Grade Three school report would often say, ‘satisfactory’.
I can’t remember such a time. It might have existed in the 80s, perhaps. But then again the standard variable home loan rate was around 12–14%. Oh and there was that 25% single day fall on 20th October 1987. So maybe the 80s weren’t that great.
What about the 90s? Well they didn’t start too well did they? The recession we ‘had to have’. Not a great time really. But they did finish well. The stock market was achieving new highs, and even recording the biggest single day gain ever of 6%.
Then there are the 00s. Oh, maybe we should just forget the noughties. The Dot Com bubble and the infamous and (still) lingering Global Financial Crisis. Geez, there was plenty to worry about in the 00s. Probably wouldn’t call that very good either.
That brings us to the 10s, or ‘tensies’ as I like to call them. Well, I guess we may as well write off this decade completely. Right? I mean the only major report on the news is how every major economy worldwide is struggling. Even six years into this decade it’s not looking very good, is it?
There’s more reason now to be cautious, to worry, to have concern about the future of everything. Concern for your job, your wealth, your family, your country…you.
Trouble brewing all over the place
You can look overseas and see trouble brewing. In just over six weeks the UK will go to a historic vote. It’s possibly the biggest decision the general public will ever get to make on the fate of their country. Do they stay in the EU or leave?
The US said if the UK leaves they’ll go to the ‘back of the queue’ for trade deals. At an event in London, PM David Cameron said,
Can we be so sure peace and stability on our continent are assured beyond any shadow of doubt? Is that a risk worth taking?
He was of course alluding to the event of war should Britain leave the EU. Even five former General Secretaries of NATO wrote a letter to The Telegraph in which they said,
Given the scale and range of challenges to peace and stability we face collectively, the Euro-Atlantic community needs an active and engaged United Kingdom.
They further explained in their view that,
…Brexit would undoubtedly lead to a loss of British influence, undermine NATO and give succour to the West’s enemies just when we need to stand shoulder-to-shoulder…
Meanwhile over in Greece it’s time for more bailout cash. The Eurozone lenders agreed to unlock another 5 billion euros to cover June and July debt payments. Does that really make sense? Here’s more debt to pay off your debt…
Maybe the ‘Brexit’ supporters have a point…
Then the Financial Times reports that things are getting tense (again) with the Chinese and the US. And this hasn’t even anything to do with the fact that Donald Trump might actually be President by the next year.
No, this tense situation is over chickens. Well there’s a bit more to it than that. The FT says that the US is challenging China again in the World Trade Organisation. The reason is China’s anti-dumping tariffs on US poultry products.
The US is desperately keen to get the Trans-Pacific Partnership deal through congress before Obama vacates the White House. The downside is China might not be so keen on the TPP knowing that Trump is now running for the top job.
Considering Trump said he would favour a 45% tariff on Chinese exports to the US, things might look a bit shaky if he gets in. While I still think that’s a remote chance, he’s in the game. Maybe, just maybe, he’ll win. And the reverberation around the world will be significant.
All this adds to the own domestic issues at home. Deflation pressures. A rate cut…maybe more to come. New taxes, new budget, changes to superannuation again. Maybe even another new Prime Minister in just over seven weeks’ time.
Should be a fun few weeks for the Commonwealth. Brexit one week, Aussie elections the next. I wonder what the Queen thinks about all this? Probably not much, I’m guessing.
Is it really that bad? No it’s probably not
Still there’s plenty to worry about right now. And you’ll continue to read even more about it all every waking second of every day you’re alive. You see this is the new world we live in. It’s very different from the decades gone past.
All the previous decades weren’t good or great all the time. But they did have some aspect of positivity. Not this new world. Positivity is out the door. Pessimism is the new optimism.
Part of it is that you get the news thrown at you 24 hours a day, seven days a week. It’s on your phone, computer, tablet, TV, watch…it’s everywhere. Even standing at the baggage claim at the airport you can get a dose of bad news.
The reality is not everything is truly as bad as the media makes it out to be. They’ve been worse in the past, that’s for sure, and the world has always come out the other side.
This time is no different. Sure, even in Australia things aren’t great right now, but more often than not there is a brighter day out the other side. It might be hard to see, but if you can and you can realise that things do improve, then you are one step ahead of most.
Uncertain, confusing, and difficult conditions like these present opportunities for investors. If you know where, how and how much to invest you can play the safe game (if that’s your thing), or take on some risk and make a truckload.
Take for instance the 511 companies on the ASX that, in the last 26 weeks, have made greater than 10% returns. 98 of them have made triple digit returns.
The key though is that in all kinds of markets you can make money. It won’t always be double digit returns. Sometimes it will be triple or quadruple digit returns. Sometimes it will be single digit returns. But you can make positive returns, even when it looks like the world is going to end.