The Prudent Retiree - May 2017
“Meet the New Boss, Same as the Old Boss.”
-The Who - Won’t Get Fooled Again
The Who was one of Rock’s supergroups from the 60’s and 70’s. Their songs spoke to that generation. It was a time of turmoil at home and in the world. Wars, economic uncertainty and political unrest. Sound familiar?
Many are predicting that President Trump’s recent travails with Russia and former FBI Director Comey will be his Watergate and he’ll suffer President Nixon’s fate. The concern is the ensuing chaos will cause a market crash.
Current politics is not our concern. A look at economic conditions between then and now can be helpful in assessing the health of the market and what we might expect.
Watergate began in October of 1973. So-called Comeygate is just beginning. The underlying economic backdrop is starkly different now than in 1973. In 1971, Nixon enacted wage and price controls, import restrictions and ended the dollar’s fixed convertibility to gold. The result was a sharp devaluation of the dollar and a quadrupling of oil prices. Inflation surged to 12% and unemployment hit 9%. The Fed raised the federal funds rate to 13%.
These economic measurements are a far cry from now. Unemployment is down to 4.4%. Inflation is 1.9% and the federal-funds rate is 0.75-1.00%. The dollar is strong and oil prices are low. These economic conditions are favorable for stock prices.
Yes, the politics are toxic- then and now. The Who sang “History ain’t changed” and history says economics, not politics drives the market. By the way, the market fell more than 50% from the beginning of 1973 to the end of 1974. The calendar says 2017, not 1973.
Forsyth, Randall W. "Trump, Nixon, and the Economy." Financial Investment News - Stock Investing News - Investment News - Barron's. Dow Jones & Company, 13 May 2017. Web. 13 May 2017.
Here at Horseman Group, we strive to provide you with the highest possible level of customer service. Feel free to reach us at 314.692.7842 or firstname.lastname@example.org with any questions regarding your investments, risk management, or retirement.
Should you wish to be removed from this mailing list for any reason, please respond to this email with your request, and your name will be removed immediately.
Horseman Group – 3 CityPlace Drive - Suite 290 – St. Louis, MO 63141 – 314.692.7842 – www.horsemangroup.com
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC a Registered Investment Adviser. Horseman Group and NPC are separate and unrelated companies. The views expressed within are of John Horseman, not National Planning Corporation (NPC), and should not be construed as investment advice. Investment decisions should be based on individuals’ investment goals, risk tolerance & time horizon. Past performance is no guarantee of future results. NPC is not to be held responsible for and may not be held liable for the accuracy of information available. Investing involves risk including the potential for loss of the principal amount invested. There is no guarantee that any investment strategy will be able to meet its intended objective. Certain statements contained within are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans, or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Indices are unmanaged measures of market conditions. It is not possible to invest directly into an index. Past performance is not a guarantee of future results.