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Getting Robbed at the Bank, Part II

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Last week, I talked about Getting Robbed at the Bank - how today's Low Interest Rates (0.1%!) combined with High Inflation Risk make this one of the worst times ever to build wealth via savings.

Thankfully, this may also be one of the best times to invest, as never before have there been so many well-performing alternatives.

Start with Housing: 95 of the 100 largest US Metropolitan areas have seen housing prices rise since last year, with CoreLogic’s much-watched Home Price Index showing an average 10.5% Year-over-Year increase.

This has mirrored a solid rise in the Public Stock Market, which despite its extremely Poor Long-Term Performance, is up 5.5% this year.

And for those that can still remember the 2008 talk of Doomsday and of the collapse of our financial system, it is heartening to note that the S&P is up an amazing 189% since its March 2009 nadir.

And as good as the news has been in the Housing and Stock markets, it pales in comparison to this Golden Age of technology and venture investing that we are currently experiencing.

Almost every day comes barely able to believe valuations on technology company financings, acquisitions, and public offerings.

From last week's news of Open Table being purchased by Priceline (itself once an incredibly high flying Internet darling) for a whopping $2B, to transportation service Uber commanding the highest pre-public technology company valuation ever, to the fantastic and quick riches made by the early investors in companies like Nest, Occulus VR, and WhatsApp, the list just goes on and on.

And while it is human nature to feel more than a little jealous of those lucky enough to be the Founders and the Early Investors in these companies, what we really should feel is gratefulness for their roles in helping to right our national economic ship.

Start with jobs - unemployment went from a very impressive low 4.4% in 2007 to a very discouraging 10% by October 2009.

But with the addition of another 217,000 jobs in May, Unemployment now stands at a very manageable 6.3%, and there are now more people with jobs in the United States than ever before.

And when asset values go up, when purchase and sales transactions occur that result in huge capital gains, when people are working and earning good wages, Tax Receipts increase too.

And, in turn, the National Credit Rating improves.

After being embarrassingly downgraded in 2012, S&P now says that they are prepared to increase the rating back to AAA as the ongoing evidence of the economic good times (and Congressional Good Behavior) continues to build.
 
So for investors, this is as good as it gets. Real Estate, the Stock Market, Technology and Private Equity, Jobs, the Deficit, and more.

All that is lacking now are those “psychological” final pieces of the puzzle: Optimism and Confidence.

There is still a holding back, an unwillingness to believe that all of it is real and not a mirage.

And as a result, when it comes to those very precious dollars that we do not spend, that we put away for the future, we are still saving too many of them and investing too few.

Yes, we must proceed carefully and deliberately - because investing always involves risk - but we most proceed.

Leaving money in the bank is not a viable option anymore, not when interest rates are so low, not when the threat of inflation is so high.

And certainly not when the investment pickings are so good.
   
To Your Success,





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