12-07-2021, 06:48 AM
Is the party coming to an end?
<!-- SC_OFF --><div class="md"><p>Just thinking "aloud" here. What can we expect in the coming years?</p> <ol> <li>Slower growth<br/> Stock market returns over the last 15 or so years are largely the result of boomers in their peak earning years, rushing to prepare for retirement (and recover from the '00, '08 crashes). This trend will come to an end soon, as the majority of boomers retire over the next few years, and move towards more conservative investments. Maybe dividend stocks will become interesting again. Don't expect tech stocks to keep crashing to the upside.</li> <li>Higher interest rates<br/> Inflation will force interest rates up, and the resulting increase in the cost of capital will slow corporate growth. This is a tricky one, because increased interest rates could make it hard to service the national debt, which is now over 100% of GDP - maybe they <em>can't</em> go up much.</li> <li>Higher taxes<br/> Because of #2, government will need more revenue to service its debt. Also, high interest will drive down bond prices, so don't buy those. We'll also need more taxes to pay for the boomers' social security and medicare, from a smaller pool working-age people (gen X).</li> <li>Lower housing prices<br/> Higher interest = lower housing prices. Also, the migration of high-earning professionals to the suburbs is decreasing demand - and supply of qualified buyers. But even if SFRs drop in price, they will still be unaffordable to the majority of people, so multifamily will likely not be affected much.</li> </ol> <p>So... with lower growth on the horizon, we should focus on income. Stay away from high-PE stocks, wheel the SPY, and invest the premiums in some dividend ETFs.</p> <p>I'm still expecting TSLA to keep crashing to the upside, because they're doing the right things at the right time: the transition to electric transportation and self-driving are as inevitable as the rise of the internet and smartphones, and they are years ahead of the rest of the industry. IMHO, they'll 4x in the next two-three years.</p> <p>Curious to hear other opinions/counterarguments.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/alpe77"> /u/alpe77 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/raml8o/is_the_party_coming_to_an_end/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/raml8o/is_the_party_coming_to_an_end/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Just thinking "aloud" here. What can we expect in the coming years?</p> <ol> <li>Slower growth<br/> Stock market returns over the last 15 or so years are largely the result of boomers in their peak earning years, rushing to prepare for retirement (and recover from the '00, '08 crashes). This trend will come to an end soon, as the majority of boomers retire over the next few years, and move towards more conservative investments. Maybe dividend stocks will become interesting again. Don't expect tech stocks to keep crashing to the upside.</li> <li>Higher interest rates<br/> Inflation will force interest rates up, and the resulting increase in the cost of capital will slow corporate growth. This is a tricky one, because increased interest rates could make it hard to service the national debt, which is now over 100% of GDP - maybe they <em>can't</em> go up much.</li> <li>Higher taxes<br/> Because of #2, government will need more revenue to service its debt. Also, high interest will drive down bond prices, so don't buy those. We'll also need more taxes to pay for the boomers' social security and medicare, from a smaller pool working-age people (gen X).</li> <li>Lower housing prices<br/> Higher interest = lower housing prices. Also, the migration of high-earning professionals to the suburbs is decreasing demand - and supply of qualified buyers. But even if SFRs drop in price, they will still be unaffordable to the majority of people, so multifamily will likely not be affected much.</li> </ol> <p>So... with lower growth on the horizon, we should focus on income. Stay away from high-PE stocks, wheel the SPY, and invest the premiums in some dividend ETFs.</p> <p>I'm still expecting TSLA to keep crashing to the upside, because they're doing the right things at the right time: the transition to electric transportation and self-driving are as inevitable as the rise of the internet and smartphones, and they are years ahead of the rest of the industry. IMHO, they'll 4x in the next two-three years.</p> <p>Curious to hear other opinions/counterarguments.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/alpe77"> /u/alpe77 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/raml8o/is_the_party_coming_to_an_end/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/raml8o/is_the_party_coming_to_an_end/">[comments]</a></span>Kind Regards R