Investing and Financial Planning During a 10 Year Time of Trouble: 2000-2010

During the 20 years ending in 2000 for the stock market, and a similar period in real estate ending in 2004, investing and financial planning have been relatively easy because each of these asset classes was in a rising trend. However, as the stock market showed us subsequent to 2000, trends do not last forever as equity prices entered a bear market.

History shows

Since good times and bad times can be seen throughout history, the question is, where are we today and how can we be confident of our assessment? In my experience, the best way to answer this question is to understand history since it tends to repeat. Many people of aware of this fact and it is also biblical as found clearly Ecclesiastes 1:9 which states:

“What has been, is what will be. What is done is what will be done. There is nothing new under the sun.”

A number of years ago, a former chief economist of Goldman Sachs sent me a chart depicting stock market returns since 1900. This chart clearly shows history repeats, in that stock market returns show a repetitive and symmetrical pattern of rises and falls. Specifically, there have been three 20 year rising cycles and each peaked 30 years apart. The peaks were in 1910, 1940 and 1970. If history was to repeat, one would have expected another peak 30 years after 1970 or near 2000. That is just what happened.

It is worth noting that, after each peak, stock prices entered into a 10 year secular decline. I believe the same pattern is unfolding now and there are good fundamental economic (eg: too much credit) and financial data (eg: extended balance sheets) supporting this conclusion. Needless to say I do not have enough time here to provide details. Nevertheless, returning to the current secular decline period, 2000-2010, I expect it will be characterized by a series of bear and bull markets with each bear market low lower than that recorded at the prior low. The first bear market ended in 2002. We are currently in a bullish phase. Are you prepared for the next bear phase? I also have evidence that real estate will hit an important peak in 2004 just as the stock market did in 2000. Are you prepared for that?

Are you prepared?

My conclusion is that people will have a difficult time dealing with their finances and investments in the period ahead as serious problems manifest in the economy and financial markets. I believe the information I provide can help you get prepared as well as preserve assets and earn good returns. My track record supports this since I forecasted the 2000 equity peak. (You may have also if you had the above information). Additionally, during the 2000-2002 equity bear market when the Nasdaq, S&P 500 and Dow Jones Industrials declined by 56.5%, 33.8% and 20.8%, respectively, my recommended portfolio increased in value by 32%.

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