Recession – Know Laboratories

March 6, 2019

Consciousness, Disruption and Chaos. It’s All Good!?

But that happened over several generations and centuries. We are going to see that kind of upheaval in many industries in half a generation.

“The results can have a tremendous impact on our understanding of how the immune system functions and how the incidence of some of the most serious illnesses, including diabetes, cancer and Alzheimer’s, might be avoided,”

Economic Recovery

Journal of 2020 Foresight

The Coming Recession Will Be Different

“Markets and most businesses will figure out how to survive. New businesses will keep launching. New technologies will thrive. We will continue to need food, shelter, transportation, communication, and all the things we think of as normal today. This will all happen while technology “eats” jobs faster than it creates them. It was all well and good when we went from 80% of the workforce on farms to 1% today. But that happened over several generations and centuries. We are going to see that kind of upheaval in many industries in half a generation. Can you blame frustrated workers? People wishing that they can have their jobs protected? Wanting the government to do something? In the coming decade, I think politics will be more important to markets than ever before. That is not to say investors can’t figure it out. Recovery from the Great Recession was the slowest on record. The next recovery will be even slower.” John Mauldin Contributor, Markets forbes.com Photo- Getty

Technology-Driven Disruption

10 Industries On The Cusp Of Technological Disruption

“The experts of Forbes Technology Council are often ahead of the curve when it comes to tech trends. Below, nine members share their insider perspectives on the industries and services that are on the cusp of tech disruption in the near future.

1. Doctor’s Office Visits. 2. Financial And Legal Services. 3. Healthcare Diagnostics. 4. Education. 5. Data Protection. 6. Customer Service. 7. Insurance. 8. Automotive Industry. 9. Security. 10. ‘Paper Pushers’. Expert Panel, Forbes Technology Council.” forbes.com Photo- Getty

Memories of the Past

How the Brain Creates a Timeline of the Past

“The brain can’t directly encode the passage of time, but recent work hints at a workaround for putting timestamps on memories of events. Invigorated by empirical support for their theory, he and his colleagues have been working on a broader framework, which they hope to use to unify the brain’s wildly different types of memory, and more: If their equations are implemented by neurons, they could be used to describe not just the encoding of time but also a slew of other properties — even thought itself. But that’s a big if. Since the discovery of time cells in 2008, the researchers had seen detailed, confirming evidence of only half of the mathematics involved. The other half — the intermediate representation of time — remained entirely theoretical. Until last summer.” Jordana Cepelewicz, Staff Writer quantamagazine.org Photo Cydney Scott for Boston University Photography (Howard); Courtesy of Karthik Shankcar

Consciousness Frontiers

How we identified brain patterns of consciousness

“Research like this has the potential to lead to an understanding of how objective biomarkers can play a crucial role in medical decision making. In the future it might be possible to develop ways to externally modulate these conscious signatures and restore some degree of awareness or responsiveness in patients who have lost them, for example by using non-invasive brain stimulation techniques such as transcranial electrical stimulation. Indeed, in my research group at the University of Birmingham, we are starting to explore this avenue. Excitingly the research also takes us as step closer to understanding how consciousness arises in the brain. With more data on the neural signatures of consciousness in people experiencing various altered states of consciousness – ranging from taking psychedelics to experiencing lucid dreams – we may one day crack the puzzle.” Davinia Fernández-Espejo theconversation.com Photo whitehoune/Shutterstock

Chaos and Serious Illness Prevention

Immune system found to tap into chaos theory to regulate itself

“This isn’t just a system that tolerates chaos either. As the levels of NF-κB swing up and down, the activation of certain genes increases, meaning the protein is working at peak efficiency when there’s a healthy amount of chaos in the system. “The results can have a tremendous impact on our understanding of how the immune system functions and how the incidence of some of the most serious illnesses, including diabetes, cancer and Alzheimer’s, might be avoided,” says Mogens Høgh Jensen, co-author of the study. “For example, we know that cancer is related to a failure of signaling within the body. So, to avoid cancer, it is imperative to have the right dynamic at work in cells.” Michael Irving newatlas.com Credit: agsandrew/Depositphotos

Steps:

6) Anticipate changing circumstances and economic cycles.

7) Persist and pivot to navigate external threats and opportunities.

17) Sketch out your trajectory in 5-year timeframes. Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

August 10, 2018

Which forces have peaked or are reversing themselves?

Turbulent changes in the current of our life – its pace, pattern and scale – challenge our notions of what is real.

Since beginningless time people have wanted to know where life will take them.

Today you and I are in one of those periods that occur every 200 or 300 years when people don’t understand the world anymore, when the past is not sufficient to explain the future.

Turbulent changes in the current of our life – its pace, pattern and scale – challenge our notions of what is real.

How do you stimulate your own powers of foresight?

Consider the following thought provokers.

Ask yourself, in following categories

What are the brand new trends and forces?
Which are the ones growing in importance?
Which current forces are loosing their steam?
Which have peaked or are reversing themselves?
Which are the “wildcards” about to disrupt us in the future?

TECHNICAL thought for food:

Electronics,

Materials,

Energy, Fossil, Nuclear, Alternative, Other,

Manufacturing (techniques),

Agriculture,

Machinery and Equipment,

Distribution,

Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space),

Communication (Printed, Spoken, Interactive, Media),

Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources),

POLITICAL thought for food:

Post-Cold War, Third World,

Conflict (Local, Regional, Global),

Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction,

Governments (More/Less Power and Larger or Smaller Scale),

Taxes,

Isms: Nationalism, Regionalism, Protectionism, Populism,

Cartels, Multinational Corporations, Balance of Trade, Third Party Payments,

Regulations (OSHA, etc.) Environmental Impact,

U.S. Prestige Abroad.

SOCIAL Thought for food:

Labor Movements,

Employment Patterns, Work Hours / Schedules, Fringe Benefits,

Management Approaches, Accounting Policies, Productivity, Energy Costs,

Generations: Elderly, Boomers, X, Y, Z

Urban vs. Rural Lifestyles,

Affluent vs. Poor,

Neighborhoods and Communities,

ECONOMIC Thought for food:

Unemployment / Employment Cycles,

Recession, Balance of Payments,

Inflation,

Taxes,

Rates of Real Growth,

Distribution of Wealth,

Capital Availability and Costs,

Reliability of Forecasts,

Raw Materials, Availability and Costs,

Global versus National Economy,

Market versus Planned Economies,

Planned or Organic Growth.

Steps:

6) Anticipate changing circumstances and economic cycles.

7) Persist and pivot to navigate external threats and opportunities.

17) Sketch out your trajectory in 5-year timeframes. Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

July 12, 2018

When’s the Next Recession? Will You Be Ready This Time?

Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

Get an early handle on the potential for a major recession, consider the potential impacts on you, your career, your organization and respond sufficiently ahead of any expected economic downturn.

Source: Shaping Tomorrow’s AI Robot, Athena.

Forecast: The Fed will tighten too much and tip that curve into recession territory sometime next year.

Trend: Economic, Political

Sector: Financial

Insight and Source: Economist who helped discover predictive powers of bond market says there’s no sign of recession right now Ron Insana | @rinsana

Forecast: Developed countries are badly equipped for another recession, both economically and politically, and central banks should be wary of raising interest rates just to control inflation.

Trend: Economic, Political

Sector: Financial

Insight and Source: Summers Warns the Biggest Economies Are Not Prepared for Another Recession Christopher Condon , Joao Lima , and Paul Jackson

Forecast: Many economists now expect a mild recession in the U.S. by 2020 at the latest.

Trend: Economic, Political

Sector: Financial

Insight and Source: IDC Forecasts Worldwide IT and Telecom Spending to Slow After Last Year’s Rebound; Economic Risks Have Increased

Related Forecasts:

“The U.S. central bank forecast one or two more hikes for 2018.
Assuming no additional stimulus in 2020, the fading of the U.S. fiscal sugar-rush after 2018-2019 could lead to withdrawal symptoms that could exacerbate a cyclical slowdown.
The U.S. could target an additional $200 billion in Chinese goods, followed by another $300 billion – bringing duties on a total of $550 billion Chinese products, which is more than the $506 billion the U.S. imported from China in 2017
In the US, headline inflation is projected by the IMF to increase to 2.5% from 2.1%.
The IEA predicts the U.S. will add 1.7 million barrels per day in 2018, followed by another 1.2 mb/d in 2019.
Being well overdue for a recession in the US, the unbridled optimism of global investors will eventually end, once they consider the plethora of rising risks.
Achieving policy objectives will become more challenging from 2020 amid a technical recession in the US and a faster deceleration in Chinese economic growth rates.
In the next three years, a rising amount of bonds maturing within one year entails rollover risk if financial conditions tighten abruptly.
A recession in the US will cause economic growth in Canada to slow to a little above 1% in 2020.
The risk of a recession really picks up after a year, or sometime in 2020 because that is when you start to see the fiscal stimulus start to fade.
One change from recent years is that corporate car rental prices in North America are expected to rise by as much as 5 percent in 2018 due to operator issues.
The US stock market is on the brink of an imminent crash that could trigger another global recession.
Borrowing costs climb to a four-year high just as investors begin to anticipate a downturn in the global economy.
US rate hikes risk triggering a recession in 2019 or 2020 by putting the brakes on growth.
With unemployment at 4.1%, inflation fears are rising: Typically, the Federal Reserve starts to increase interest rates to slow the economy and push inflation back into its lair – but in doing so, the Fed raises the risk of recession and pushing down already lofty stock markets.”

Steps:

6) Anticipate changing circumstances and economic cycles.

7) Persist and pivot to navigate external threats and opportunities.

17) Sketch out your trajectory in 5-year timeframes. Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

January 12, 2018December 30, 2018

Appreciation

“Why swim upstream, if the current is moving everything in the opposite direction, right?”

Using economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.

An excerpt from Book Two in “The Knowledge Path Series” dedicated to helping you make more money from a lifestyle businesses you’re truly passionate about.

Peak around the corner.

About the time of my own mid-life crisis I discovered the author Harry Dent.

He introduced me to economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.

Amy Poehler’s fictitious Pawnee, Indiana didn’t grow on me until season five when neighboring Eagleton, an ultra-affluent town, was written into the script.

In the sixth season the town of Eagleton, involved in a longstanding rivalry with Pawnee, goes into bankruptcy and is absorbed by Pawnee.

An effort spearheaded by Leslie after she sees no other way to save the town.

Having lived in a small Indiana college town on a bluff overlooking the Ohio River for four years and, then in another rural college town for my masters degree, I sought higher quality-of-life choices in a region that wasn’t so topographically flat.

But where?

And what if I discover after I move that I don’t like it?
What do I need to know ahead of time?
What if I chose a new Eagleton somewhere else and it files bankruptcy?
That can’t be good – except for Amy Poehler, right?
Nearly anybody can forecast the future.

How do you know which ones will come true?

I set up “The Journal of 2020 Foresight” after researching the top 100 trends and predictions from a variety of technical, economic, social and political sources.

And, knowledge labs to monitor key indicators in 5-year timelines –

2003 to 2008,
2009 to 2014 and
2015 to 2020.

Why swim upstream, if the current is moving everything in the opposite direction, right?

The first knowledge lab, conducted during the 5-year timeline between 2003 to 2008.

We began tracking some of Dent’s forecasts, especially the following four out of our original 100:

“4 – Basic innovation in communication technologies is allowing more people to relocate their homes to small towns and exurbs, and telecommute to business.

3 – The baby boomers are moving into their vacation-home-buying years, which, in combination with the first trend, will stimulate demand for property in attractive resort towns.

2 – The echo baby-boom generation is now moving into its household formation years, which will stimulate demand for apartments and rental property in the cities, and has already caused commercial property in these areas to appreciate,

1 – There is a broad geographic migration towards areas of the country with warmer climates. You can expect the first three trends to be accentuated in the southwestern United States. “

Back to Harry Dent’s economic cycles and bubble forecasts.

He included a bubble wildcard as a fifth forecast.

The mother-of-all depressions, arriving sometime in the 2009 to 2015 time horizon.

Which presented itself as the mother-of-all Great Recessions.

Millennials and Boomers Shape the Economy

If you review the 2009 to 2014 timeframe, the financial experts suggest a simple investment strategy. Find the stocks that performed horribly, lagging far behind the market leaders.

“You want to buy stocks of the companies where that extra income is going to be spent. That could make technology, for one, a big beneficiary, as well as healthcare and entertainment.”

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part Three in a 3-Part Series.

Part One: Tomorrow

Part Two: What Lies Ahead?

Please remember. Check in with your financial planner as the following trends and opinions change and may have before you read this.

Is there a rule of thumb you can count on going forward?

You know like “buy low, sell high.”

As they say in my family, it’s all relative.

If stocks earn 4% a year, but cash in the bank earns just 1%, stocks still win by a long shot.

So Baby Boomers will have to stay in the stock market for a portion of their portfolio.
For Millennials who invest on a regular basis in an IRA or 401(k) plan, and who won’t need to tap into their funds for two decades or longer, just buy and hold.
Unlike the Baby Boomers who fear a significant loss over the next five years, don’t fret about bad financial news.

In fact, root for falling stocks, because you’ll be getting more shares for your money.

If you review the 2009 to 2014 timeframe, the financial experts suggest a simple investment strategy.

Find the stocks that performed horribly, lagging far behind the market leaders.

While the market leaders run out of steam, the laggards will probably …

beat U.S. returns over the next five years by buying low to eventually sell high. But psychologically, it’s hard to buy losers.

Losers like:

Foreign stocks and bonds.
Emerging-market stock funds .

They’ve lost 5.8% a year.

“We’re expecting to raise our positions there in the back half of 2016.”

Understand the risks, though.

In a world where a stronger dollar and weaker currencies depress the returns for American investors in foreign markets it may be time to nibble here and there.

“It will never be obvious when the markets, or their currencies, have hit bottom. next five years.”

In a reversal, financial advisors and economists expect China’s share of global growth to fall to 21%.
But, they expect emerging economies’ share to climb to 34%.
And, previously out of favor European and Japanese stocks will continue to benefit from their central bank policies aimed at keeping interest rates at rock bottom to support growth.

But there’s no getting around the fact that …

“the world will face a financial crisis rooted in mammoth debt levels.”

In 2016 a pivot in pay increases will be welcome news in the U.S. households.
But, maybe not for stockholders as promotions and bonuses usually come at the expense of corporate profit margins.

And, the grass is greener.

The percentage of talented employees voluntarily quitting their jobs for better opportunities is the highest since early in the Great Recession.

Typically though …

“It takes a long time for people to realize they’re in a better bargaining position.”

That can change quickly thanks to the Internet and social media.

Once trading places begins, Millennials and savvy Gen Xs can take advantage of a powerful means to discover which companies are good ones to work for and which to avoid.

Consumer Behavior Influencing Stock Performance

It won’t take long for workers who feel under appreciated to make the jump.

And, that’s great, right?

“In a perfect world, rising wages would spark a ‘virtuous circle’ where workers would boost spending, driving up demand for goods and services. That would lift business sales and earnings, in turn allowing companies to continue raising wages.”

A virtuous circle takes time to develop in a less than perfect world like the one you and I live in.

But, here’s another simple rule of thumb.

Where the real economy may influence the stock market.
Where consumer spending by Millennials and Baby Boomers may figure into gains in your portfolio.

As one expert put it.

“You want to buy stocks of the companies where that extra income is going to be spent. That could make technology, for one, a big beneficiary, as well as healthcare and entertainment.”

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames. Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

October 31, 2017October 31, 2017

What Lies Ahead?

So, the forecast remains turbulent with plenty of volatility

Harry Dent years before even predicted the “Mother of all Depressions” lasting well into the decade beginning in 2010 and lasting until 2020.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part Two in a 3-Part Series.

Part One: Tomorrow

Please remember. Check in with your financial planner as the following trends and opinions change and may have before you read this.

What about the 25 year old Millennials?

Many, if not most of the college educated are burdened by student loans and high rents that eat up a huge share of income.

Good news for landlords, probably not so much for the starter home demand, yet.

But, for those who successfully found good employment with a fresh start on a career path, even if their pay rises they’re reluctant to spend — or take a chance on a new job — so, don’t count on a broad positive impact on the economy just yet.

Their risk aversion may be one of the biggest overhangs from the Great Recession.

Look, they witnessed the financial woes their parents or friends endured after the 2008 crash.

While the demographic trends probably aren’t as negative for growth, you should account for them and prepare to adjust in any long-term scenarios you construct.

Obviously they’re the early adopters for companies including Airbnb and Uber..

And as another expert cautioned …

It’s impossible to know in advance how many business ideas will spring up to disrupt or even replace existing industries.

The period after the 2008 financial crash turned out to be pretty decent for the U.S. economy.

Many economists and financial news channel pundits peddled dire forecasts in 2009 and 2010.

Harry Dent years before even predicted the “Mother of all Depressions” lasting well into the decade beginning in 2010 and lasting until 2020.

Instead, by the end of 2015 …

The official unemployment rate is back to 5%.
Corporate earnings reached record highs.
And a venture capital boom has funded thousands of promising start-up companies.

But, what lies ahead?

Have we celebrated too soon?

The contrarian message appears more reasonable.
The economy and markets face challenges that could make the next five years very different.

Like what?

Don’t expect more than “low single digit returns on stocks and bonds.”
The annualized investment returns will be lousy as the January 2016 steep plunge foreshadowed.
Were talking 4% to 4.5% roughly half of what wealth managers plan for their clients.

And, that’s through the end of the decade

So, the forecast remains turbulent with plenty of volatility.

News at 11.

Will we ever return to tried and true savings vehicles for the Baby Boomers hitting retirements like their parents swore by?

One economist says don’t hold your breath,

“As for bonds, with yields so low it’s mathematically impossible for fixed-income securities to earn high returns.”

How is that possible?

Five years ago a 10-year U.S. Treasury note was paying 3.5% in annual interest.

Now, new notes pay 2.11%. The drop in yields means older, higher-yielding bonds have risen in value, boosting their “total return” — interest plus principal change.

Yeah, so?

But with the Federal Reserve’s decision in December to begin raising short-term interest rates from near zero, it becomes more difficult to imagine longer-term rates declining significantly, barring a new recession or global shock.

Here’s what hurts my brain when wrapping my head around bonds.

If longer-term rates stay where they are, all you earn is the interest.
And if market rates rise, older bonds will fall in value, offsetting some or all of your interest earnings.

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames. Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

August 29, 2017September 5, 2017

Who’s Free to Move About the Country?

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals.

Part Three in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part Two: Demographic Lifestyles and Buying Power

Part One: Determinism

What about those aging Baby Boomers?

If they follow the broad trend lines, they will retire in place.

The community they now call home after their last corporate transfer.

Where their children and grandchildren call home.

Dent recommends checking out the best suburban and exurban communities on the edge of attractive cities in addition to the more compelling resorts and university towns.

If we look at the trends in which cities and geographical areas have attracted the most retirees in the last decade we can get a better clue as to where the growth will continue to accelerate as the pre-retirement and retirement age groups grow in the coming decade.

For this next part, remember what Mammoth realtor Paul Oster wrote – Dent’s track record makes him a better demographer than an economist.

Remember that on a 63-year lag for average retirement, baby boomers will be retiring in rising rates from 2000 – 2026.

After this boom ends, deflation is almost certain to ensue for at least a decade and possibly into the early 2020’s.

Dent said that means the cost of living, the price of real estate, and the interest rates should drop substantially.

This deflationary downturn will offer direct benefits to real estate owners and buyers.

Has the time come and gone – when Dent’s trends wither on the vine?

We only have to review Lake Tahoe and Mammoth Lake’s real estate markets to call into question the accuracy of Dent’s first trend.

The first trend is a broad migration pattern towards exurbs and small towns, many of which will continue to hold most of their value through the downturn.

This third wave of migration – an exodus from the suburbs – will accelerate through the first half of the 21st century, continue long after this Deflationary Shakeout ends.

The second trend will be a strong and consistent rise in retirement home purchases.

Baby boomers will drive the market for this kind of property from 2002 into around 2030.

A third long-term real estate trend to take advantage of after late 2008 is the rising demand for rental property in urban and suburban areas.

Why?

Apartments will be in relatively strong demand through about 2017 due partly to the aging of the echo baby boom generation.

Seems reasonable, and while we may have dodged the “Mother of All Depressions” he predicted instead with the Great Recession, Dent’s view on demand may be currently playing out.

Demand will be further strengthened by the effect of the depression era on individuals who are of an age to shop for starter homes, but who must delay this purchase until the economy improves.

Stuff happens in our lives.

Recall two midlifers, Johnny from Boston and David from Canada — two refugees from the cold weather who moved to Cabo San Lucas to start over.

Dent writes

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals.

He ticks off several reasons.

We attain a certain level of affluence through the combination of high earnings and a sudden drop in necessary family expenses as children leave the nest.

We confront our mortality, either by taking care of ill or elderly parents or by seeing the inevitable aging in ourselves.

For baby boomers and older Gen X-ers each reason can usher in a more positive ending.

Above all, retirement looms on the horizon as an expanse of freedom that many of us, working 8-to-5 jobs, have not known before.

All of these reasons compel us to pause, reflect, and consider how we are going to live the rest of our lives.

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

While Dent believed California would grow, other communities in the West were forecasted to grow much faster.

And without paying a high price tag for a similar lifestyle.

Dent suggested these additions to your Western bucket list.

From Hollywood to Silicon Valley, along the coasts into Portland, Seattle and Vancouver, and inland to Utah, Colorado, Arizona, New Mexico and Texas, we see the most innovative cities in America spawning most of the growth companies.

What do they have in common?

These businesses, primarily in the fields of high technology and entertainment, are the backbone of the new information economy.

If you’ve ever lived or traveled in the West, you know there is a clear difference in culture between the western states, the east coast, and the central areas of North America.

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

July 8, 2017August 29, 2017

Equity

“Buy land, they’re not making it anymore.” — Mark Twain.

Unlocking Equity. From www.SeniorLiving.Org

Figure out if you should unlock that equity for investments.

Or more specifically, how to tap into your source of capital to fund your retirement.

Part One in a 4-part series weighing the pros and cons of investing in real estate over the course of a life time.

Leaving aside rental and commercial property or other indirect forms of investing in real estate, such as REITs, a more common scenario involves typical homeowners.

Those who bought years ago, paid off their mortgage or will have shortly and despite the negative impact of The Great Recession managed to build a decent amount of equity.

Point one.

Don’t take what follows as financial advice.

If you haven’t consulted professionals, well, what are you waiting for?

Do so at once!

Back in February of 2007 I read a FidelityReport published by Fidelity Research Institute that compared unlocking equity for investments to risks and relative returns of stocks, bonds and cash.

Point two.

Fidelity emphasized how much a home, and therefore it’s equity, is subject to market cycles.

History lesson.

Previous generations of Americans treated home equity as an illiquid asset being built up almost invisibly as mortgages were paid down.

They considered this growing equity either as an “asset of last resort” or as a source of bequests to heirs.

And, of course, back then those homes cost what a luxury car today goes for today.

So, it’s no surprise that future generations are on track to carry much larger mortgages.

And, they will continue to do so into their late middle age and even deep into their retirement years

… perhaps on the assumption that these larger debts will be compensated for by a continued rise in home values.

By 2007, more than 80% of all Americans over age 65 owned homes.

The median price of new homes in the United States has averaged an annual appreciation rate of 5.9% since 1963.

Point three.

Fidelity cautioned, even before the more recent Great Recession

… historical experience suggests that real estate investments can suffer serious and sometimes prolonged downturns.

Sometimes it can be across the board.

But, baring a prolonged deflationary slump teetering on an economic depression, it is certainly true for local regions struck by extended economic decline.

Local real estate prices and your return on investment rise and fall with economic factors

… such as interest rates, per capita income, building costs and unemployment rates.

Shifts in your mortgage loan market can reduce your monthly payments.

Those innovations make housing more accessible.

Like variable rate and interest only loans.

But, they don’t come without their own set of risks.

Beyond the loan market, don’t forget to monitor important variables expanding or constricting the local supply of real estate properties.

General availability of land.
Land use restrictions.
Tough zoning rules.
Building regulations.
Slow administrative procedures.

And, of course shifts in demographic trends

Population growth.
Migration patterns.
Immigration rates.
Average household size.
Household formation age (individuals in their thirties).

Fidelity said American real estate values endured three sharp “corrections” during ten-year intervals.

From the early 1970’s to the early 1980’s.
During the early 1990’s.
And, during The Great Recession at the end of the 2000’s to mid 2010’s

With the severity and duration of the downturn that occurred in 2006 still uncertain (published in 2007).

Fidelity tracked investment performance back to before you were born.

How did they say real estate investments held up?

Returns on a dollar invested in residential real estate in 1963 have been only lightly better than returns on low-risk Treasury Bills.

What about compared to stocks, then?

Over this more than forty-year time period, real compound returns to stocks outpaced realty, averaging 5.95% versus returns of just 1.35% to real estate after adjusting for inflation.

So, if you took a dollar and invested it in the 1963 stock market it would have “compounded to $12.36 by 2006.”

But, the same dollar invested in real estate would have grown to just $1.79.

What about those higher appreciation regions on the coast?

On the West Coast. Golden Gate Bridge. Courtesy of http://www.burningwell.org/gallery2/v/Objects/100_5478.JPG.html

Even the highest appreciating regions of the country, the Northeast and West Coast, only realized real returns of 2.35% and 2.49%, respectfully, and underperformed the returns on bonds at 2.74%.

Don’t they say past performance isn’t a guarantee of future performance?

Still data are data.

Home values have underperformed stocks and bonds in terms of average annual returns over every five- and ten-year period from 1963 to 2005, but have only been slightly above the returns on treasury bills.

Why bother, then?

Part Two: Five Options for Unlocking Equity

An excerpt from Book Four in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Rocky Mountain State.

But that happened over several generations and centuries. We are going to see that kind of upheaval in many industries in half a generation.

“The results can have a tremendous impact on our understanding of how the immune system functions and how the incidence of some of the most serious illnesses, including diabetes, cancer and Alzheimer’s, might be avoided,”

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Turbulent changes in the current of our life – its pace, pattern and scale – challenge our notions of what is real.

Since beginningless time people have wanted to know where life will take them.

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Will we fall into another recession? Absolutely. Will you be ready this time with future-proofed strategies?

Get an early handle on the potential for a major recession, consider the potential impacts on you, your career, your organization and respond sufficiently ahead of any expected economic downturn.

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“Why swim upstream, if the current is moving everything in the opposite direction, right?”

Using economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.

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If you review the 2009 to 2014 timeframe, the financial experts suggest a simple investment strategy. Find the stocks that performed horribly, lagging far behind the market leaders.

“You want to buy stocks of the companies where that extra income is going to be spent. That could make technology, for one, a big beneficiary, as well as healthcare and entertainment.”

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So, the forecast remains turbulent with plenty of volatility

Harry Dent years before even predicted the “Mother of all Depressions” lasting well into the decade beginning in 2010 and lasting until 2020.

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California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals.

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“Buy land, they’re not making it anymore.” — Mark Twain.

Figure out if you should unlock that equity for investments.

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