Anyone who calmly says large swings in the market are a non-event probably doesn’t own a lot of stocks, or manage an equity portfolio for a living. But those that do can be led by the bombardment of headlines into a form of shell shock, one that leads them to attribute too many consequences to those wiggly lines on the chart.
It’s not that we’re complacent about near- term downside risks. Animal spirts count, and we entered 2018 at elevated US earnings multiples. At a chief economists panel in early January, we didn’t predict an outright drop for the year as a whole, but warned that with the good news on growth largely priced in, to paraphrase Truman, the big bucks stop here. That said, US 2018 earnings are being revised up (Chart), and that, combined with a drop in the index has made valuations look attractive, setting a floor for equities at some point.
For Canadians, a national leader calling for a major infrastructure program has a familiar ring, as it was a feature of the Harper government’s response to the recession, and Trudeau’s program to make up for oil price weakness in the 2016 budget. With the bene t of some hindsight, these experiences offer some lessons for us in anticipating the economic impacts of a Trump plan to follow down that path.
First, forget about making adjustments to your 2018-2019 outlook for US GDP growth, materials demand, or equipment needs. Canada’s parliamentary system can move faster than Washington’s split executive/ legislative structure, and even here, getting infrastructure dollars out the door has taken a lot longer than anticipated. The 2016 budget’s construction windfall is still mostly to come, hitting the economy when it has already reached full employment in most provinces.
Let’s re-cap the first of our 2-part blog about the 6 paths of retirement.
According to retirement authority Nancy K. Schlossberg1 (co-president of TransitionWorks and professor emerita at the College of Education, University of Maryland), there are six psycho-graphically distinct retirement groups: Continuers, Adventurers, Easy Gliders, Involved Spectators, Searchers and Retreaters.
- Continuers stay connected to their former work and their former identities while developing on new fronts.
- Adventurers see retirement as an opportunity to pursue an unrealized dream or try something new.
- Easy Gliders have worked all their lives and decided that retirement is the time to completely relax.
- Involved Spectators still care deeply about their previous work. They are no longer players, but receive satisfaction from staying involved.
- Searchers are retirees who are looking for their niche, often through trial and error.
- Retreaters come in two versions. Some disengage from their previous routine, taking time to figure out what is next. Others get depressed and become couch potatoes.
While there is likely to be some overlap between these groups, the distinctions between them are not always sharp. Defining who you are and what you want to do is, what we believe is the key to a successful retirement financial planning.