By Erik W. Laymon
With 2020 well underway, we took a few minutes to review what happened over the last 10 years. Align Wealth Strategies is presenting our Decade In Review.
US Unemployment and Job Market: Unemployment dropped from 9.7% to 3.5%, and companies went on a hiring spree. The bottom chart showed that there once were 3.3 job seekers for every job opening. Today there are less than one. This means there are more jobs available than people seeking.
The US-China Trade Balance and Effect of Tariffs: Our top trade partners in order are China, Canada, Mexico, and Japan. The negative numbers you see in the chart below reveal that the US is importing more from these countries, than exporting. Balanced trade is the goal, but the trade deficit with China was worsening with no end in sight– until last year. With the completion of the China deal’s “Phase 1,” this administration reversed that growing deficit (for now). Only time will tell if balanced trade with China is achievable.
The Consumer Debt Crisis: Consumer debt has, by-and-large slowed down over the last ten years. Student Loan Debt had tripled from 2000-2009, but only doubled from 2010 to 2019. Mortgage Debt increased 2.5 times from 2000-2009, and remained level from 2010 to 2019, probably as homeowners decided to cash out and rent. Car loans and credit card debt remained relatively unchanged over this period.
Top Performing Stocks by Sector:
In 2009, who would have thought Netflix would be a top performer? Their transition from a DVD mail order service to an online streaming platform was very controversial. In the end, they revolutionized the way we watch TV. Another notable company is Align Technology (no relation to us). Their product is Invisalign, the invisible braces. Amongst such disruptors, we were surprised to see Sherwin-Williams, which creates paint and coatings.*This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Past performance does not guarantee future results.
S&P Total Return: Which Years were the Best/Worst? 2013 and 2017 saw the most gains, particularly towards the end of the year. 2015 and 2018 saw the worst years, with the last quarter of 2018 still fresh in our minds.
Long-term interest rates go negative around the world: Germany, UK, France, and Canada were accustomed to 3-3.5% interest rates on long term debt. But over the last decade, several of these countries moved to negative rate policies in order to encourage spending and to keep their economies moving. As you can see, the “spread” between these interest rates widened, leaving the United States on top. When it comes to debt, the United States is still the best place to be.
The Cryptocurrency Mountain: From Thanksgiving to December 2017, Bitcoin was making the news. While we couldn’t advise anyone on Bitcoin (or any other cryptocurrency) as it climbed to $20,000, it had all the hallmarks of an asset bubble in the making. It was compared more to Dutch Tulips than digital gold, and like Dutch Tulips it soon tanked.
Gas Prices were Virtually Unchanged and the Energy Sector Lagged: Gas prices at the pump are about where they were when we started 10 years ago and energy companies have been struggling. How will Electric Vehicle technology revolutionize the world?
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