I don’t pretend to be an investment guru or even claim to understand all the machinations of the stock market or some of the other places to park your money. By the same token, I read and observe a fair amount about our troubled economy and my concerns are growing.
In my blog on 9/2/15 called “Danger Signals on the Horizon,” I told you about my observations on all the conflicting elements going on in our economy.
Well, nothing really has improved since then and the same negative factors still appear to be in play. The economy is moribund at best, the market is highly volatile and the job market is tight and depressed. There are now more economic forecasters who have joined the previous list predicting trouble ahead.
These include Nobel Prize economist Robert Shiller, a September survey of 31 economists, Tory James, Blackstone Group President and rogue economist Harry Dent; some are saying we can expect a crash sometime in the next two years, while some are saying it will happen in 2016.
This is a formidable array of economic forecasters who are saying this is the time to hunker down.
And they’re not alone. My money is invested with two of the financial industry’s giants; Charles Schwab and Vanguard. They both appear very concerned about what’s going on and where we’re headed.
A good barometer of how they feel is the asset allocation targets they have been ratcheting down over the last several months. This clearly shows their concerns.
Vanguard Equities Fixed*
At the end of July I was at: 80% 20%
In August I came down to: 40% 60%
Currently I’m going to: 30% 70%
Vanguard’s current reecs for age 50: 75% 25%
Vanguard’s current reecs for age 60: 64% 36%
Vanguard’s current reecs for my age: 30% 70%
*Fixed includes bonds and up to 5% cash
At the end of July I was at: 55% 45%
In August I realigned to: 45% 55%
Now I’m planning to go to: 30% 70%
Schwab’s current reecs for me: 28% 72%
With a presidential election next year, we better find a candidate with a strong handle on understanding what drives the economy; jobs, consumer spending and private investment. Otherwise, the downturn will be deeper and last longer.
This for me is THE prime issue for the next election, right up there with terrorism. All the other issues, i.e., climate change, income inequality, immigration, etc. are side issues meant to only distract.