The last ten years or so have been widely referred to as the “lost decade.” In many ways this term does accurately reflect our economic and financial market struggles since the year 2000. We have experienced unthinkable terrorist attacks, painful stock market declines, ongoing wars in the Middle East, and the worst financial crisis since the Great Depression. No argument here that the last 10-12 years have been an extremely tough environment for many Americans and a very frustrating and challenging time to be an investor.
Despite all these struggles, there have been some very positive developments over the last decade that may provide better economic growth ahead. One of the most important achievements during the last decade has been the extraordinary growth and maturation of the emerging world economies. Today’s emerging economies like China, India and Brazil have gone through a significant transformation the last decade. No longer are their economies totally reliant on exports. They are evolving into more self-sufficient contributors to world economic growth. This is being driven internally by the growing middle classes who now are able to buy all the nice things that we take for granted here in the U.S. Back in 2000, the Gross Domestic Product or GDP (a measure of total economic output) for the emerging economies of the world was only 60% of the U.S. GDP. Today, emerging economies GDP has grown to represent 130% of U.S. GDP.1
Another positive trend over the last decade is the incredible technological and productivity gains here in the U.S. This “tech boom” has lead to record profits for U.S. companies. We have also seen worldwide growth in the popularity of capitalism during the last 10 years. Technology has allowed the world to become smaller and more interconnected. For many around the globe the increased connectivity with the rest of the world has lead to a realization that capitalism and free-markets, although not perfect, are the best way forward. This in turn has promoted the fall of dictatorships and an increase in individual economic freedom for many people throughout the world. The end result is the most diversified global economy ever seen.
So maybe the last decade was not a total loss? Our investment decisions going forward are going to be greatly influenced by the dynamic changes taking place all over the globe, particularly those over the last ten years. Now more than ever investors must embrace a global mindset when making plans.
- Wells Capital Management, Economic and Market Perspective, 2-2012
Damien helps individuals invest and manage risk. He is a Certified Financial Planner™ professional and a principal of Walnut Creek Wealth Management. These are the views of Damien Couture, CFP® and should not be construed as investment advice. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Not all recommendations are suitable for all investors. Each investor must consider their own goals, time horizon and risk tolerance. Your comments are welcome. Damien can be reached at 925-280-1800 x101 or damien@WalnutCreekWealth.com”