I start this blog with these phrases to contemplate the issues that I am facing. This is one of the first times that I have started to think about my future for my family's sake. What will I being doing in 5 years and will it be good enough to provide for my family? Will I be able to put my son through college? Will I have enough to retire on.
Some of us have 401K accounts, and the majority of those are in mutual funds. We have suffered some huge losses and we have seen them come back some what during the past two years. Let us look at a number from the Wall Street:
Dow Avg. Unemployment
Jan. 2, 1930 244.2 8.7
Jan. 2, 1931 169.84
Jan. 2, 1932 74.62 23.6
Jan. 3, 1933 59.29
Jan. 2, 1934 100.34 21.7
Jan. 2, 1935 104.51
Jan. 2, 1940 151.43 14.6
Jan. 2, 1945 152.58 3.9
Jan. 3, 1950 198.89 5.3
Jan. 11, 1951 244.72
We have seen spikes in the stock market since the recession and most of us would like to recoup our 401K as quickly as possible. But if history is an indicator we have a long way to go. It took the economy of the 1930's and 19640's 21 years to recoup it's losses.
Let us look at some recent history that some of us grew up with, the Jimmy Carter era of 18% interest rates and a gas shortage that saw gas go from 25 cents a gallon to 50 cents, etc. What did the market look like in those years:
Jan. 3, 1972 889.3
Jan. 3, 1973 1043.8
Jan. 3, 1974 885.32
Jan. 3, 1975 635.54
Jan. 5, 1976 877.83
Jan. 5, 1977 978.06
Jan. 5, 1978 804.92
Jan. 5, 1979 830.73
Jan. 1980 891.41
Jan. 1981 932.92
Jan. 1982 884.36
Jan. 1983 1190.34
As we can see there are peaks and valleys in the 1970's through the early 1980's, but we need to know that we are going to need a good decade to recover from the economic turmoil. Unemployment was high as well. But one disadvantage we have is our national debt.
You may have seen headlines from a few days ago that we are approaching WWII debt levels. What does this mean for us? We have to tighten our belts and be prepared to sacrifice in order to get out of this mess.
I have begun the same approach. Tighten the belt and be prepared for the ups and downs of the coming decade.
1982 was the last time we saw unemployment at 9.7% and prior to that it was in the early 1940's. The only thing I recall from the early 70's was the high interest rates for mortgages and loans. Doubling your savings during those years was easy, rates went as high as 21%. It is a little harder to do today with savings accounts only earning 3% or less. We all tend to risk our money in the stock market in hopes of earning more. The stock market is a gamble, and when you gamble you take the risks associated.
I think the economic turn of 2010 to 2019 will hinge on real estate. Why real estate? More people have mortgages then in the our history. The amount of secured debt hinges on our country's economic growth, the fiscal responsibility that our government has to us the people, and the responsibility of the people to pay their debts.
Finally, I decided to really read the Declaration of Independence for the first time since high school. It is amazing how much of what is said is totally applicable to our times. Here are a few phrases that stand out and draw your own conclusions:
That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,
That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government,
For imposing Taxes on us without our Consent:
For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has excited domestic insurrections amongst us, (he being King George)
God Bless America and each and everyone of us.
we are the horse in 1984
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