What is your 10 - 20 year macro view and why?

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000
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What is your 10 - 20 year macro view and why?

Post by 000 »

I'll go first but am curious to hear others' views. I think stagflation is likely the long term direction due to an already struggling real economy and innovation saturation coupled with major asset holders being highly levered. My view on the short term is much weaker though: I don't find the arguments of either deflationists or inflationists particularly compelling.
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Re: What is your 10 - 20 year macro view and why?

Post by ronno2018 »

dsasdg
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Re: What is your 10 - 20 year macro view and why?

Post by dsasdg »

Stag(de)flation
TheDoctor91
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Re: What is your 10 - 20 year macro view and why?

Post by TheDoctor91 »

Ah yes time for some pointless pontification :)

Stocks will go up, GDP will go up, we will struggle to hit 2-3% inflation. SP500 will be at 16000+ in 20 years.

US will grow faster than Europe. Emerging markets will grow even faster. China and US will battle for supremacy on the world stage.

There will be some natural disasters, there will be some wars, people will die and be born.

Some countries will default on their debt from COVID spending. Global warming will worsen, there will be lots of tech innovation and things we can't imagine will exist in 20 years and the world won't look at all the same. Tech will continue it's trend of taking over the world.
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Re: What is your 10 - 20 year macro view and why?

Post by thenextguy »

ronno2018 wrote: Wed Apr 21, 2021 9:45 pm I am with Paul -- https://www.nytimes.com/2021/03/22/opin ... mulus.html

So true. I’m having serious flashback from all those predicting runaway inflation again. I’m like, didn’t we just do this 10 years ago?
protagonist
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Re: What is your 10 - 20 year macro view and why?

Post by protagonist »

My view- I don't have one.

Why- the economy is a complex nonlinear system. Within that time range noise will surely overwhelm any signal on which I would base my assumptions.

What was your macro view 20 years ago? Did you guess bank interest rates near zero and tripling of the DJIA ? (If so, you were lucky.)

According to this article, in 2015 John Bogle predicted 4% annual returns over the following decade. https://www.marketwatch.com/story/john- ... 2015-11-05

The S+P and Dow have both approximately doubled since he made that prediction. I guess, if you believe in the validity of expert precictions, we are in for a rough four years ahead, eh? Better sell all your stock now.
Last edited by protagonist on Thu Apr 22, 2021 10:25 am, edited 2 times in total.
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Re: What is your 10 - 20 year macro view and why?

Post by Astones »

I don't know how much politics I can include, but anyway

--In the closer future, I believe that the inflation that is already happening when it comes to the price of stocks will slowly start being relevant also for consumer goods as we get back to normal. This should not be a long term issue, and I expect the time scale for this to be front page shall be less than 3-4 years.

--China's GDP should pass US' GDP in about 10-12 years, so something between 2031-2033. There will be increasing tensions but hopefully the economy will be global enough for military conflict to be avoided, and so US might just see their hegemony harmlessly fading away.

--we will go paperless

--the main issues that are going to lead to enormous social dilemma, disorders, news and controversies will be of course climate change, but also automation and the fast development of genetic engineering. The latter in particular is going to revolutionize our concept of human identity.

--the emergence of automation, together with similar issues challenging the structure of the workforce, will stimulate a political uprising that will lead to FDR kind of reforms in US, including higher corporate taxes (maybe even at the global level, as Yellen was suggesting).

--I don't exclude that a more efficient cryptocurrency might actually start to be effectively used as an actual currency and not just a speculative asset class.
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Re: What is your 10 - 20 year macro view and why?

Post by hi_there »

There is a common bullish argument, since it seems likely that technology is going to lead to substantial productivity improvements. Coronavirus really led to some profound shifts in the way people do business and live their lives. Many more people have turned to e-commerce at an accelerated pace. Flexibility to work remotely means that people don't have to waste as much time and resources in transit, and will able to deploy their time and capital in more desirable ways. More freedom to disperse workers geographically will save costs and boost earnings for every company that isn't a commercial REIT.

In terms of policy, we have what might be an unprecedentedly dovish commitment from the Fed, plus probable deployment of more stimulus packages on the fiscal side. Normalized US diplomacy means there is less risk to the global supply chain. Strong stock market returns that are outpacing inflation already anticipate all this, and will continue if these scenarios materialize further.
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Re: What is your 10 - 20 year macro view and why?

Post by JBTX »

ronno2018 wrote: Wed Apr 21, 2021 9:45 pm I am with Paul -- https://www.nytimes.com/2021/03/22/opin ... mulus.html
This kind of makes sense. Moderate inflation in the near term that will feel higher, but back down to lower numbers. We can't / won't keep running multi trillion annual deficits.

We could see a real economic surge if/when we get back to normal, but followed by a pretty significant recession/correction, etc.

There is a fair amount uncertainty in terms of long term fiscal situation, plus geopolitical environment, both domestic and abroad. But on the flip side we may be on the verge on some pretty monumental technological advances.

In other words, nobody knows nuthin.
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Re: What is your 10 - 20 year macro view and why?

Post by Cycle »

Africa will be a big growth area, and China is positioned to do well there.

There are still a lot of people living in poverty globally, which means there's a lot of people that want what you have and there will be significant growth to get everyone their clean water, flushing toilet, minisplit ac, and daily protein of choice.

Hopefully this growth is done as sustainably as possible. I think it's likely most people will be eating lab meat in 20 years.

Most other millenials I know aren't having many kids, ie 2 or less. If the US population doesn't grow, that could change gdp growth expectations.

I expect stocks to do well over next 20 years
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Re: What is your 10 - 20 year macro view and why?

Post by Wannaretireearly »

I don't get how poor performing companies being kept alive by all the money in the economy & feds can be sustained.
When was the last big bankruptcy?
Just gotta imagine this will come home to roost in one way or another next 5 years. One thing we know is there's always a trigger for the next major downturn. Keeps me placated with my stock/bond AA
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Re: What is your 10 - 20 year macro view and why?

Post by Ocean77 »

I predict that in 20 years, this forum will discuss how much to allocate to international stocks, when will small cap value stocks finally shine, are bitcoin for real, how to improve upon the 3 fund portfolio and if we are in a bubble.
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Re: What is your 10 - 20 year macro view and why?

Post by gubernaculum »

Tech will rule. That is why VITAX are my stocks and VTSAX are my bonds.
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Re: What is your 10 - 20 year macro view and why?

Post by anoop »

in 10 years s&p500 will be at 20,000, and in 20 years at 100,000. interest rates likely go negative some time in the next 5 years and stay there until there is some kind of reset if there ever is one. lots of pain for the middle class. lots more intervention from the fed and congress.

why? there is too much debt in the system and the only way to deal with it is to take on even more debt.

remember how we had/have perpetual qe since 2009? we are now entering perpetual stimulus, with high likelihood of some form of ubi eventually taking root.
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Re: What is your 10 - 20 year macro view and why?

Post by btq96r »

If the last 10-20 years have taught me anything, it's that a 10-20 year time frame can contain a lot of events. The economic cycles are moving faster for a lot of reasons, so we will probably see a few boom/bust/boom cycles during the time the OP asked for a macro view.

Some predictions that are worth what you paid to read them:

1) Overall we'll continue to grow the markets at a pace ahead of inflation. I worry that consumer prices will rise faster than median and especially below median wages. This could lead to some choppy waters as companies adjust to consumer capacity to spend, but we've all been through some mood swings in the market over the last 10-20 years this would bring. But it will drive the usual allotment of "should I sell" threads with a lot of "stay the course" replies.

2) The housing market will cool off, but not regress. People looking to use real estate as a value build might find themselves with unfulfilled expectations, but those just wanting an affordable monthly payment locked in through their mortgage instead of being subjected to inflationary rises in rents will be fine. I feel the housing market is not serving the population by being another speculation venue, so I admittedly welcome this possibility.

3) Disruption from AI, automation, anything where a company can replace a person will be a bumpy ride. In some areas it will help with efficiency and staffing instead of being a threat. Working in the radiology field, having AI potentially triage and prioritize a radiologists work list isn't a threat to the radiologist, it's an enabler to their workday if done right. Self-driving vehicles and drone delivery are very much a threat to those who spend their day behind a wheel to make ends meet, and could have notable socioeconomic impacts. Goes back to point #1, really.

4) China will become the world's largest economy by GDP, and it won't matter as much as you think. As long as the US has a high enough GDP per capita, we'll be fine.

5) This is my out on a limb prediction....the internet will have a currency with an official exchange rate to all other legally recognized currencies issues by nation states. This will come closer to the 20yr mark than the 10yr one, but there's too much momentum for it not to happen. The real questions will be over control and regulation. We'll see a Bretton Woods level event to hash it all out, but everyone will realize it's in their best interests to have a hand in how this happens rather than leave as is and let the current crypto speculation drive the bus.
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Re: What is your 10 - 20 year macro view and why?

Post by Forester »

I think there is an financial asset price bust similar to 2000 & 2008/09, at the end of this year. Housing is there, especially in Canada & Australia, many parts of the stock market are there. The level of comfortable speculation is obvious, buy the dip has always been rewarded and the global market cap of crypto is over $2trillion; about the same as the combined stock markets of Taiwan and South Korea.
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Re: What is your 10 - 20 year macro view and why?

Post by Stormbringer »

For planning purposes, I am making the assumption of a market top in the next few years, followed by a "lost decade" or so where the market drops and then doesn't get back to the inflation-adjusted peak for 10-15 years. We've seen peaks like that in 1920's, 1960's and 1990's:

Image

My view is that sequence of returns risk is high and rising for anyone nearing retirement. Hopefully I am surprised to the upside, but if not my planning accounts for disappointing returns should things play out that way.
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Re: What is your 10 - 20 year macro view and why?

Post by Stinky »

Equities will continue to outperform bonds.

So I will continue to be equity-heavy, even as I go deeper into my retirement years. Gotta build that legacy for the kids, grandkids, etc.
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Re: What is your 10 - 20 year macro view and why?

Post by Ed 2 »

Nobody knows nothing. Personally I don’t know and I don’t care . My 10-20 year investment plan- tune off the noise , keep investing, staying the course. Only I can believe that S&P 500 in 20 years will be at 15K levels. But anything can happen
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Re: What is your 10 - 20 year macro view and why?

Post by Ivygirl »

The limiting factors to growth at the macro level are the same as they have always been: things that come out of the earth.

Big tech will not continue to rule. It's a bunch of mostly useless stuff built on illusions. Real things will rule again. Whoever controls those will be the boss.

I was subjected to one of the silliest motivational speeches I have ever heard in my long work-life this week. It was about how every one of us is a leader and it's not anybody's job to do the dishes. Uh-huh. The whole world would be filthy and falling apart if we were all too good to do the dishes. Who says stuff like that and gets paid big? It's peak illusion. Illusion don't do the dishes.

Time to come back to earth.
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Re: What is your 10 - 20 year macro view and why?

Post by z3r0c00l »

Stormbringer wrote: Thu Apr 22, 2021 3:47 am For planning purposes, I am making the assumption of a market top in the next few years, followed by a "lost decade" or so where the market drops and then doesn't get back to the inflation-adjusted peak for 10-15 years. We've seen peaks like that in 1920's, 1960's and 1990's:

My view is that sequence of returns risk is high and rising for anyone nearing retirement. Hopefully I am surprised to the upside, but if not my planning accounts for disappointing returns should things play out that way.
I agree with this prediction with two caveats:
  • We could see another 100% return before it happens and missing that could hobble your investment career
    I have limited confidence in our ability to predict this especially with the way government has been reacting since 2009
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Re: What is your 10 - 20 year macro view and why?

Post by Exchme »

Unpredictable events happen and we muddle through.

Because that's what humans do.
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Re: What is your 10 - 20 year macro view and why?

Post by z3r0c00l »

Ivygirl wrote: Thu Apr 22, 2021 5:23 am Big tech will not continue to rule. It's a bunch of mostly useless stuff built on illusions. Real things will rule again. Whoever controls those will be the boss.
You did just write that on a computer and sent it over broadband to the Internet, right? What tech do you consider useless?
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Re: What is your 10 - 20 year macro view and why?

Post by Ramjet »

1-3 years of economic boom-type returns due to low interest rates, stimulus, and economies opening back up

Followed by 7-10 years of mute returns, slightly better than a lost decade type scenario
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Re: What is your 10 - 20 year macro view and why?

Post by nisiprius »

Larry Swedroe's Final review of 2020 "Sure Things:"
Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors.... This was my 11th, and final, year of reporting on “sure things,” as the evidence has made the point that economic and market forecasts by gurus should be ignored. In the chart below that depicts the historical evidence, only about one third turned out to be true.

Image
For the details of the "sure things" for 2020, see the article.
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Re: What is your 10 - 20 year macro view and why?

Post by markjk »

The big investment houses all say lower than average returns over the next 10 years. They have a way more information, time and smarts to apply to this question than I do so I'll just role with their opinion. It sounds reasonable to me since growth over the past 10 years was incredible. Even a world wide pandemic and unprecedented global economic shutdowns couldn't stop the growth train. It seems time for the growth to slow.
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Re: What is your 10 - 20 year macro view and why?

Post by Ramjet »

Love all these contrasting views

Pure speculation of course

Fun to read nevertheless
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Re: What is your 10 - 20 year macro view and why?

Post by Ivygirl »

z3r0c00l wrote: Thu Apr 22, 2021 5:42 am
Ivygirl wrote: Thu Apr 22, 2021 5:23 am Big tech will not continue to rule. It's a bunch of mostly useless stuff built on illusions. Real things will rule again. Whoever controls those will be the boss.
You did just write that on a computer and sent it over broadband to the Internet, right? What tech do you consider useless?
Pardon me - I should have said mostly "worse" than useless. The internet is a vehicle for driving commercial traffic with gossip, manufactured outrage, and filler "articles" illustrated by stock photos. Tell me I'm wrong?

I remember in 1999 being earnestly assured by a techie friend that the internet would make us all free in our minds at last. And I said, no, once they use it to sell stuff that's the end, it will be all money. That was my macro view 20-some years ago. With my new prediction I'm going for twice right.

Limits of the natural world will bring big tech up short with a mighty jerk.
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Re: What is your 10 - 20 year macro view and why?

Post by Ramjet »

Ivygirl wrote: Thu Apr 22, 2021 7:46 am The internet is a vehicle for driving commercial traffic with gossip, manufactured outrage, and filler "articles" illustrated by stock photos. Tell me I'm wrong?
I can't
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Re: What is your 10 - 20 year macro view and why?

Post by dziuniek »

This decade - flat.
Next decade - up, up and away.

Just like the previous two.
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Re: What is your 10 - 20 year macro view and why?

Post by Stinky »

Ivygirl wrote: Thu Apr 22, 2021 7:46 am The internet is a vehicle for driving commercial traffic with gossip, manufactured outrage, and filler "articles" illustrated by stock photos. Tell me I'm wrong?
Except for this Forum, of course. :D
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Re: What is your 10 - 20 year macro view and why?

Post by Ivygirl »

Stinky wrote: Thu Apr 22, 2021 8:26 am
Ivygirl wrote: Thu Apr 22, 2021 7:46 am The internet is a vehicle for driving commercial traffic with gossip, manufactured outrage, and filler "articles" illustrated by stock photos. Tell me I'm wrong?
Except for this Forum, of course. :D
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Re: What is your 10 - 20 year macro view and why?

Post by secondopinion »

000 wrote: Wed Apr 21, 2021 9:17 pm I'll go first but am curious to hear others' views. I think stagflation is likely the long term direction due to an already struggling real economy and innovation saturation coupled with major asset holders being highly levered. My view on the short term is much weaker though: I don't find the arguments of either deflationists or inflationists particularly compelling.
I say that real returns are likely be lower for US stocks. Low interest rates, if they fail to take the intend effect, will likely result in low returns. The last maintained lower rates got the US going strong, but I doubt it will do it again with such vigor (especially when the expectations of companies has been placed very high in comparison to before).
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Re: What is your 10 - 20 year macro view and why?

Post by rich126 »

The big problem going forward for most countries is lack of population growth and that will cause problems since in many ways a number of things are almost a pyramid like scheme, especially pensions. Also a population growing in average/median age leads to various issues with medical services and needs for more medical personnel which will have to come from the few areas growing in population (e.g, Africa?).

Some people think "less people is great" and while there are some environmental benefits from it, economically it usually is bad.

Also returns will be more volatile. We already see it with some poster stocks like GME.

Inflation I don't think will be a big issue.

And lots of external factors can cause all kinds of "problems" such as wars, large scale terrorism, etc. which are virtually unpredictable. For many of us we can recall the exuberance of the fall of the Soviet Union and the wall coming down between East and West Germany and the end of the cold war but I think most had hoped for a different Russia than currently exists.

And I sure didn't ever consider/predict/plan for a pandemic.

I never plan 10-20 years out for investments too many things can change.
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Re: What is your 10 - 20 year macro view and why?

Post by Robot Monster »

Astones wrote: Wed Apr 21, 2021 10:43 pm --we will go paperless
Have you ever heard of the book The Myth of the Paperless Office? link :wink:
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Re: What is your 10 - 20 year macro view and why?

Post by watchnerd »

Stormbringer wrote: Thu Apr 22, 2021 3:47 am For planning purposes, I am making the assumption of a market top in the next few years, followed by a "lost decade" or so where the market drops and then doesn't get back to the inflation-adjusted peak for 10-15 years. We've seen peaks like that in 1920's, 1960's and 1990's:

Image

My view is that sequence of returns risk is high and rising for anyone nearing retirement. Hopefully I am surprised to the upside, but if not my planning accounts for disappointing returns should things play out that way.
For planning purposes (not a forecast):

Similar thoughts here, especially relevant given we plan to retire in 2025.

As this makes the SOR risk higher given current valuations, we're trying to chisel down our equity allocation, although it keep creeping back up.

The miserable paradox is that bonds are expensive now, too, so defraying the risk means locking in negative real returns.
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Re: What is your 10 - 20 year macro view and why?

Post by TheoLeo »

We will see a continued asset inflation for the decades to come. The S&P 500 will trade at a PE of 50 or more with low growth in earnings, maybe just keeping up with inflation. There will be multigenerational mortgages because houses are too expensive to pay them off in a lifetime. People will desperately try to find places to park their cash where they don't have to pay negative interest rates. This will lead to ghost towns, empty, unused land and bitcoin reaching a price of 1 million.
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Re: What is your 10 - 20 year macro view and why?

Post by 59Gibson »

Same as it always has..things will ebb and flow. Good and bad will happen. Climate change will continue as it has for eons.
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Re: What is your 10 - 20 year macro view and why?

Post by Astones »

Robot Monster wrote: Thu Apr 22, 2021 10:58 am
Astones wrote: Wed Apr 21, 2021 10:43 pm --we will go paperless
Have you ever heard of the book The Myth of the Paperless Office? link :wink:
Thank you ;)
Still, I think I'm right. I've recently gone close to paperless and I feel better. When few individuals start healthy habits, it takes a bit of time for the rest of the world to catch up. But sooner or later it usually happens.


Btw, I almost forgot:

Bold prediction: meat consumption will end completely before 2040.

Also, most of the kids born after 2030 will never learn to drive.
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Re: What is your 10 - 20 year macro view and why?

Post by watchnerd »

Astones wrote: Thu Apr 22, 2021 12:17 pm I've recently gone close to paperless and I feel better.
No offense intended, but what's still paper?

We haven't had paper anything for...I dunno...10-15+ years?

Taxes, bills, etc, it's all been electronic for us for so long I can't remember when I last did anything financial using paper.
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Re: What is your 10 - 20 year macro view and why?

Post by Astones »

watchnerd wrote: Thu Apr 22, 2021 12:22 pm
No offense intended, but what's still paper?
Actual papers to write on, when you take notes or have ideas.
Receipts when you go to the grocery store.
Menu in the restaurants.
Contracts to be signed of any kind.
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Re: What is your 10 - 20 year macro view and why?

Post by watchnerd »

Astones wrote: Thu Apr 22, 2021 12:29 pm
Receipts when you go to the grocery store.
I tell them to toss those or get email receipts if it's something I care about.
Astones wrote: Thu Apr 22, 2021 12:29 pm
Contracts to be signed of any kind.
It's all been Docusign for me.
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Re: What is your 10 - 20 year macro view and why?

Post by TomatoTomahto »

Macro view? I hope to be alive.

In other news: FaceBook and its ilk will ruin whatever is left of civilized discourse and thought.
I get the FI part but not the RE part of FIRE.
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Re: What is your 10 - 20 year macro view and why?

Post by Astones »

watchnerd wrote: Thu Apr 22, 2021 12:39 pm
Astones wrote: Thu Apr 22, 2021 12:29 pm
Receipts when you go to the grocery store.
I tell them to toss those or get email receipts if it's something I care about.
Astones wrote: Thu Apr 22, 2021 12:29 pm
Contracts to be signed of any kind.
It's all been Docusign for me.
That's great, it means you're ahead of the current times, and my prediction is that soon many people will follow.
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Re: What is your 10 - 20 year macro view and why?

Post by watchnerd »

Astones wrote: Thu Apr 22, 2021 1:10 pm
That's great, it means you're ahead of the current times, and my prediction is that soon many people will follow.
Actually, I feel behind!

Because I still use a computer for most of my paperless stuff -- I don't do much of my "paperless stuff" on my phone.

My Gen Z coworkers are the opposite.
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Re: What is your 10 - 20 year macro view and why?

Post by Random Musings »

China and many emerging/frontier countries will exceed expectations in GDP growth versus U.S. as they will have far less constraints in energy choices, labor choices, environmental regulations etc.

On the home front, what you say versus what you can do will be rewarded even more, which will help accelerate the China/EM trend. Financial equity will be pushed via tax reforms, disenfranchising many workers. Hence, those with the necessary capital or STEM skill sets may strongly consider moving to other countries, as they will seize this opportunity, by utilizing heavier corporate recruitment and tax incentives to extract talent and wealth.

Regardless, the extremely wealthy will remain extremely wealthy.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ
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Stinky
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Re: What is your 10 - 20 year macro view and why?

Post by Stinky »

TomatoTomahto wrote: Thu Apr 22, 2021 12:50 pm In other news: FaceBook and its ilk will ruin have already ruined whatever is left of civilized discourse and thought.
Fixed the tense of your post. :D
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Ramjet
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Re: What is your 10 - 20 year macro view and why?

Post by Ramjet »

Stinky wrote: Thu Apr 22, 2021 1:25 pm
TomatoTomahto wrote: Thu Apr 22, 2021 12:50 pm In other news: FaceBook and its ilk will ruin have already ruined whatever is left of civilized discourse and thought.
Fixed the tense of your post. :D
Haha, isn't that the truth
JD2775
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Re: What is your 10 - 20 year macro view and why?

Post by JD2775 »

dziuniek wrote: Thu Apr 22, 2021 7:58 am This decade - flat.
Next decade - up, up and away.

Just like the previous two.
I would be happy with that, as this is probably my last decade working/accumulating....then if it starts going up in retirement, perfect :)
namajones
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Re: What is your 10 - 20 year macro view and why?

Post by namajones »

Stormbringer wrote: Thu Apr 22, 2021 3:47 am For planning purposes, I am making the assumption of a market top in the next few years, followed by a "lost decade" or so where the market drops and then doesn't get back to the inflation-adjusted peak for 10-15 years. We've seen peaks like that in 1920's, 1960's and 1990's:

Image

My view is that sequence of returns risk is high and rising for anyone nearing retirement. Hopefully I am surprised to the upside, but if not my planning accounts for disappointing returns should things play out that way.
Whether it happens or not, the age old advice remains as relevant as ever: Hope for the best. Plan for the worst.
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