Living in paradise has its rewards. Because Southwest Florida in the winter is a vacation destination, unanimous vote dictated that the Guerin family’s annual reunion be held here last week.
I’m already looking forward to next year, minus the tons of laundry! Fortunately there are wonderful memories to enjoy and photographs to cherish from our annual sunset professional photo-shoot at the beach. It’s a great way to document how the family landscape has grown and changed over the years.
One of the high points of having company is the opportunity to see our hometown through the eyes of others. Nothing beats looking out from the top of The Jolley Bridge as one arrives on Marco Island. It’s truly spectacular and offers with delightful views whether the tide is high or low.
We spent a lot of time near or on the water last week and particularly enjoyed watching the kids play at low tide. Watching them scavenger in the sand and tidal pools started me thinking about why there are so many more seagulls and pelicans around at low tide; it’s because the fishing is so much better when the tide is out.
Birds wading through the fruits of the sea at low tide where much more successful than those who waited for high tide. The analogy was too obvious to pass up; this might just be the time to selectively fish the markets too!
This is the 10th bear market in the last 50 years. The previous nine show that on average bear markets last about 384 days and decline roughly 34 percent from peak to trough. On average the returns during the following 12 months are quite powerful.
Here’s a short history overview of the past century showing patterns in the relationship between investment performance and economic, political and social change.
1914-1929 — The Early 1900s brought about the new concept of mass production as the norm. Inventions, capitalism and consumerism were on fire, until they weren’t.
1929-1941 — The stock market crash led to a collapse of the banking system and unemployment jumped from 2 to over 25 percent. The New Deal came about with increased government spending, the creation of Social Security and massive securities regulation.
1941-1960 — There was a World War going on which brought about The United Nations, international banking and exchange policies. There were put in place to help rebuild Europe. Back in the U.S. pent-up demand led to yet another rise in consumerism, and the G.I. bill helped create suburbia.
1960-1980 — Another war in Vietnam dragged on and baby boomers started to look for jobs. Recession turned into slow economic growth, high unemployment and inflation that pushed gas prices and interest rates sky high.
1980-2000 — Technology and the Internet became common place. It was an unusually long period of expansion and inflation subsided. Political and social changes were huge. Communism fell and globalization grew.
2000-? — 9/11 and a bubble popping of all sorts brought us into a bear market. Low-interest financing created the real-estate bubble which knew no borders. Domestic and global markets are continuing to recover from the U.S. mortgage meltdown. And on and on it goes, where it stops nobody knows.
Our journey through the ebb and flow of the markets over economic times shows how the themes and patterns repeat just like tides go in and out. Studying economic history can help point you in the right direction but there is no single period of 10, 20 or even 30 years in investment history that would provide sufficient insight into how to invest for the future. Watch for how patterns emerge during times of political, economic and social change and how they affect markets.
The Federal Reserve’s attempts to improve the flow of credit, the $787 billion fiscal stimulus package and the Treasury Department’s financial stability plan to put the nation’s financial system back on solid ground together constitute the government’s three-part effort to “fix” the economy — but it will all take time to work.
These measures won’t turn things around on a dime, and, so far, nothing has restored a sense of confidence in the financial markets, as bad news continues to feed on itself. However, as we wait for the economy to stop falling, there is hope for gradual recovery when the gears of these programs begin to turn.
Ebb and flow. I’ll put all those beach towels away and keep them fresh for the next wave, whatever that may be. Boom and bubble, toil and trouble. Or is that toil and trouble lead to boom and bubble? And so it goes!
Darcie Guerin, Financial Advisor & Branch Manager, Raymond James & Associates, Inc. located at 606 Bald Eagle Drive, Suite 401, Marco Island, and FL 34145 provides this article. If you have questions please contact Darcie Guerin via e-mail at Darcie.Guerin@RaymondJames.com. Phone (239) 389-1041, toll free (866)-343-0882 or at RaymondJames.com/Darcie. Past performance may not be indicative of future results.