The next 15 years will not be like the last 15

🌐 The next 15 years will not be like the last 15

I got into the financial services business in January 2009.

Just after the mortgage meltdown that caused the Great Recession.

Interesting time to get started, right?

My feeling was that people would be looking for new advisors, so it was a good time to jump in. I had no idea what was coming.

The last 15 years

For those not completely versed in the financial world since then... the US government started it's Quantitative Easing program. They kept interest rates low to stimulate the economy.

Companies could borrow at low rates to grow. Investors were plowing money into the equities markets because they couldn't get yield anywhere else.

We saw huge growth in real estate values, private equity, hedge funds.

At the same time, smart phones were becoming ubiquitous. The global wireless data network was being built.

Billions of people were now able to connect without having a computer.

For the next several years, the FED kept interest rates low, afraid of what might happen with a correction. They also knew the dollar was so strong because of the massive wealth the US was building.

Technology Growth

We also saw projects like WeChat and M-Pesa facilitate peer-to-peer transactions, getting people used to most or all financial transactions performed on their phones.

Bank apps got much better, allowing for most payment, deposits, and other transactions.

The stock market didn't stop. Mobile networks got lightning fast. We all got rid of our land lines and cable in favor of cell phones and streaming networks.

So...that's the past 15 years.

Oh wait...there was that pandemic thingy

After years of printing money and keeping interest rates low, every country had to shut down.

The US government, along with other governments around the world, forced everyone inside and away from each other for months.

But they had to keep the economy from crashing, and keep people from losing jobs, going bankrupt, and losing homes.

So stimulus started, several times over. More dollars created since then than in the history of the country combined.

But the economy kept rocking along. We were a little surprised at how productive we could be outside the office.

We could work from anywhere, and still buy anything.

Then we started the post-pandemic world

We all went back to work, but not everyone went back to the office full time.

The shut-downs caused all sorts of supply chain issues, many of which still haven't been resolved.

And...there was much more money, but not in a good way.

The governments of the world, led by the US, created so much currency that was no longer translating to new production.

And that leads to inflation.

What's happening now?

So the FED raised rates for the first time in years. And again. And again.

Higher interest rates plus more work-from-home will have an impact on commercial real estate.

Plus, no one wants to sell their house with a 3% mortgage to move to a 7% mortgage. So home prices increase, pricing most Americans out.

An did I mention there's a tad bit of geopolitical tension?

• Russia - Ukraine

• Israel - Iran

• China - US

• Turkey, Argentina, trouble in the Suez

All to go along with a rise in political divisiveness here in the US.

But we do have new technology to help

AI burst on the scene with OpenAI, followed by countless other AI tools and platforms.

AI is being used and tested to read, write, analyze, and make movies. It will surely increase productivity, as the Internet did over 20 years ago.

It will also have its downsides - loss of jobs, and deep fakes to name a few.

Of course, I'm also going to talk about crypto and blockchain technology.

Ironically, Bitcoin was created about 15 years ago, and has been growing during this time.

So as part of the crypto discussion, we have the option of bitcoin as a store-of-value against the inflation mentioned above.

Going further, we see citizens of countries who have double-digit inflation, no trust in their government or banks, turning to bitcoin as a store-of-value and to transact.

Bitcoin begat Ethereum and other smart contract blockchains, which are growing into decentralized settlement and tracking databases.

We'll naturally move toward tracking data, including financial assets and dollars on blockchains (hereinafter referred to as onchain).

Blockchain technology is also changing our views on custody of assets - giving us more control. We're adding layers of transparency and speed.

Between blockchain technology, rising interest rates, and the need for diversification, we'll also see new investment opportunities:

• Private credit

• Real estate

• Fractionalized art

• Music and movie royalties

• Utility tokens

• Licensing arrangements

And those are just the ones I can name off the top of my head.

Last thing I'll talk about today is the great wealth transfer

According to Cerulli, we should expect about $84 trillion in transfers from Baby Boomers to Gen X, Gen Y, and Millennials in the next 20 years.

I'm still a little skeptical, with people living longer while healthcare costs are rising.

However, the transfer in earning capacity and power is definitely moving down a generation or two.

So what's the point?

It isn't to look at the world we see on social media and the news and get scared.

The point is to look at your situation. How will some or all of the factors affect you?

What will your expenses look like in 5, 10, 20 years?

Will AI affect your career?

You can't look at the past 15 years of economies and investing and assume we keep moving in the same direction.

• Can you adjust your portfolio?

• Should you learn some new technologies, or new skills?

• Do you prepare for different investment opportunities?

We'll continue to address the impacts on your future self, and talk in our community about ways to prepare.

Are you ready to start learning and preparing for your financial future?

Next week we’ll talk Stablecoins and their potential impact on the financial world, and on your life.

Have a great week

Adam