The Promises Need to Change – Retirement Age Needs to Rise
The public discourse around the fact that the coffers are bare needs to happen. I’ve been saying here on Berman’s Call and in my presentations for the past decade the “unfunded liability” of the promises is a dire problem that will bankrupt governments. I now have the backing of the Canadian Institute of Actuaries that have obviously run the numbers like I have—WE ARE BROKE! And we had better start talking about it with the public. You can read their entire statement here.
In a Forbes article a few years ago they estimate the US government has an unfunded liability of over $210 trillion. I’ve said for the past decade this would bankrupt the US government eventually if the promises do not change.
Politically, in the US, you have the growth of Modern Monetary Theory. Basically printing money to pay for everything. Sadly, I do not see any other outcome because politically, austerity is not much of an option.
I’m doing a presentation this week at the Albany Club that looks at some of the policy issues related to generating economic growth without bankrupting governments. The presentation is called “Budgets Don’t Balance Themselves.” There are solutions for these economic challenges, it just requires a bold government and open public discourse.
Bill Morneau and the Liberal government commissioned a growth study a few years ago. While I’m a fiscal conservative and do not support running deficits in a strong economy, I applauded the commission. The chart is directly from their report a few years ago. It basically shows that demographics are the biggest challenge. Estimates for growth are lower in the future. It will demand that government shrinks it’s footprint as the tax base falls. Simply, we are getting older and living longer. So why then did the Liberals role Old Age Security benefits back to 65 from the target of 67 the Conservatives had started? It was just a vote grabbing promise that makes no sense.
Learn to Sleep at Night in a Bear Market
The previous Investor’s Guide to Thriving tour wrapped up on December 1st 2018. Aptly named “How Long Can a Bull Market Run?” we may have received our answer. The market printed the worst December since the Great Depression – bringing most of the major indices officially into bear market (-20%+) territory. Markets have rebounded in January as they always do after steep declines, but we are likely in the early phases of a bear market where average corrections are closer to 30% and extreme corrections are more than 50%. If this is case, we haven’t seen the last of market volatility and a downward pattern of lower highs and lower lows. Many people are surprised at this phase because it can take some time for the fallout to move from Wall Street to Main Street – showing up as a recession. Job markets are relative robust still and Central Banks are still talking about raising rates. Markets are forward looking and generally anticipate economic downturns, so even as rates continue to rise, employment appears to be strong, and many companies are still posting record earnings – you should be paying attention to the growing cracks in the system.
Larry will take the audience on a more detailed tour of past bear markets to see what we can learn about how this next one might compare. Will it be a gentle panda or a deadly grizzly? Can we hope for a soft landing due to aggressive government policy? How would we recognize a market bottom – when the next major bull market might begin? Why not go to cash or put all your money into a GIC right now? There are many questions to ask – and while (spoiler alert) we don’t have a crystal ball to give you the definitive answers, Larry can show you how to navigate a bear market so that you will use it as an opportunity rather than something to fear. Using some of his favorite indicators and techniques, you will learn how to use a tactical approach to trading, and strategic asset allocation (including the use of gold, real assets, and other non-equity vehicles), to help keep your portfolio within your emotional comfort zone – while avoiding costly emotional mistakes. Success in difficult markets is both a science and an art, so Larry will also discuss the psychological aspect of managing portfolios under stressful conditions.
You will take away from this live presentation a timely perspective on how to approach your investments in 2019 and beyond – along with actionable ideas to help strengthen your portfolio, and even a few tools and resources to use at home.
Click here to register for free and as always we ask for volunteer donations to one of our two favourite charities. Children’s cancer research at the Sick Kids Hospital and Alzheimer’s and dementia research at the Baycrest Hospital.