Wednesday, August 13, 2014

Return of the wall of worry

We’re clearly in the summer doldrums. Superimposed is a continuous litany of worries: Ukraine, Israel and Gaza, Libya, Iraq and other Middle Eastern shenanigans.  The weak European economy; weak growth in China.  Is there anything that goes right in this world?

Yes, there is still a lot of value in Calgary’s real estate market. And… we are soon at the start of the best stock market year of the U.S. Presidential election cycle – the third year -which is supposed to start in October or so. U.S. corporate 2nd quarter results were a gangbuster!  Of course the perpetual doom and gloom guru crowd is still scaring the cr-p out of the retail investor and everyone predicts the 10% correction.

So my guess is that the immediate threat of 'an overbought market about to crash' has severely diminished.  People who wait for a buying opportunity in the form of a significant stock market dip may be missing the boat – if you are not fully invested, today may be one of your last changes before the market turns completely euphoric and overpriced. Invest in well priced companies with growth potential.  Don’t be a dividend chaser because that game is reaching its end. Avoid auto manufacturing, a sector that seems to build a subprime loan business all by itself.

The world economy is structurally changing; we are on the threshold of enormous technical and medical progress as well as extensive automation.  The latter may create a permanent class of low-skilled unemployed. However technical progress may also completely change the education system with many more self-educated people without ‘proper certification’ but with the ability to adjust their skills on-line at neck break speed.  People that are not stifled by the ‘rigors of academic discipline’ and fear of entrepreneurship.
University and college education that promises careers for life are on the verge of becoming obsolete. Many academics whose job it is to train our children to become problem solvers, create only a bunch of corporate robots; conventional thinkers with a false expectation of high paying corporate positions and corporate stability. The new generation of university educated people have a high debt load and little sense of adventure. 
Those willing to stick out their neck and self-educate; those who experiment and make mistakes while building their own businesses; they will be the leaders of tomorrow. Guess what! If you want to share in their profits consider angel investing rather than stock market investing.
So get ready for an exciting 4th Quarter in 2014 and enjoy the nice summer weather rather than reading depressing investment blogs or sensationalized, over the top, newspaper articles that predict yet another end of the world.

Yes, this is the return of the wall of worry; look past it an you’ll see a reinvigorated bull market in stocks and real estate.  Oh… and start getting serious about learning angel-investing!

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