The world financial markets have all experienced a phenomenal bull market since the Great Recession. All major economies have shown stellar results from Europe to South America, and North America to Asia. Based on all the positive economic spin one would believe that the world is poised for another economic renaissance.
However, everyday realities in the world and especially in the developed nations suggest that the recovery is a recovery in numbers and not a recovery in the living standards of the average man. In the United States in particular, the economy has continued to transition from manufacturing to service sector industries despite attempts by the Trump administration to retain manufacturing. Developed economies are transitioning more to the production of intangibles, while depending on real commodities for survival.
In the United States the closure of retail stores is not only due to Amazon and other e-retailers, but also due to the fact that the average American consumer is losing purchasing power. The spread of dollar stores and thrift stores is usually not indicative of increased prosperity. Although, most consumers may not be aware of it, they are living in second world conditions in their prospective first world country. There are several financial indicators that would support this conclusion.
Although the financial markets are performing well, and may continue to surprise to the upside due to the disconnect with the real economy, the world is changing. The United States, Europe, and Japan are getting poorer, while China, India, and other developing nations are becoming relatively more prosperous.
Universal Basic Income is being mentioned by prominent entrepreneurs and politicians as a way to help individuals cover basic living costs. These individuals probably have a better understanding of what the future will look like for the bottom eighty percent and is preparing them for the change to come. As an aside, this type of welfare payment system has been tried before in the former Communist nations.
So the million dollar question is: As an investor/average individual what do you do?
Part II, will discuss strategies to hopefully help us weather the changes coming.