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Ronald Surz Positions For 2020: Baby Boomers, Protect Yourselves

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About: SPDR S&P 500 Trust ETF (SPY), Includes: BCI, BCM, CMDT, CMDY, COM, COMB, COMG, COMT, DBC, DDM, DEE, DIA, DJCB, DJCI, DJP, DOG, DPU, DXD, EEH, EPS, EQL, FAAR, FEX, FTGC, GCC, GSC, GSG, GSP, HUSV, IVV, IWL, IWM, JHML, JKD, LTPZ, OTPIX, PBTP, PDBC, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RJI, RSP, RWM, RYARX, RYRSX, SCAP, SCHP, SCHX, SDCI, SDOW, SDS, SH, SMLL, SPDN, SPIP, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SQQQ, SRTY, SSO, STIP, STPZ, SYE, TDTF, TDTT, TIP, TIPX, TIPZ, TNA, TQQQ, TWM, TZA, UCI, UDOW, UDPIX, UPRO, URTY, USCI, UWM, VFINX, VOO, VTIP, VTWO, VV
by: Ronald Surz
Ronald Surz
Registered investment advisor, ETF investing
Summary

Boomers are going to get hurt and don't know it.

The world debt crisis cannot be ignored.

The Fed is out of ammunition.

What do you expect to be the key driver of stock market performance over the course of 2020?

I believe the world debt crisis will finally "break the bank" in the foreseeable future. It's amazing that per capita world debt has surged above $200,000 (I wrote about this in SA last year). World debt is at the center of many current concerns, as shown in the following illustration:

As we begin 2020, are you bullish or bearish on U.S. stocks/your preferred asset class?

I'm bearish on stocks and bullish on real assets like commodities and some real estate. Also TIPS.

How does the political climate affect the risks and opportunities for next year?

It's been said, "It's a good thing we don't get all the government we paid for." Who can be happy with a do-nothing Congress that wastes our time and money with infighting and politicking for reelection? Bottom line: We each need to protect ourselves because our regulators will not.

What do you expect out of the yield curve in 2020, and what impacts will that have on the equity market and the economy in general?

I expect interest rates to rise. They are being manipulated and suppressed. It's not nice to fool Mother Nature.

In terms of asset allocation, how are you positioned as we begin the New Year?

I'm overweighted in cash and real assets relative to the 33/33/33 cash/equity/real assets rule.

What "surprise" do you see in the market that isn't currently getting sufficient investor attention?

Something will break. Call it a "black swan." So FOMO will turn to FOBO: Fear of missing out will become fear of bad outcomes

What role will the Fed play in the coming year?

They'll continue to try to delay the next recession, but they won't succeed because they've used up most of their tools.

What issue is receiving too much investor attention and/or is already priced in?

The consensus seems to be that the trade war with China will end well. Announcements of progress are not moving the needle anymore.

And my own final question: Who will be the biggest losers in the next bear market?

78 million baby boomers are in the Risk Zone as they transition from employment into retirement. Their savings are about as high as they will ever be, so losses will lower lifestyles and reduce the time that savings will last. The typical boomer is 60% in equities, an allocation that lost 30% in 2008. Boomers are taking way too much risk, but won't realize it until it's too late. The 60/40 Rule is just plain wrong for boomers.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.