“Changes, Turn and Face the Strange Changes”
This lyric by seminal artist, David Bowie, seems to sum up the natural human struggle we have with change. My understanding is that by turning to face our strange changes we may be able to better deal with changes. Bowie, who recently passed away at age 69, seemed to embrace change by switching his persona and reinventing his artistic self at each stage of his creative life, and then finally confronting the strangest change of all, his death. Sadly, more recently, other musicians I grew up listening to, including Glenn Frey of the Eagles and Paul Kantner of Jefferson Airplane/Starship have also passed away.
These recent lifecycle events have helped me put the strangeness of recent economic and political events into perspective.
Over the past few months, there have been numerous observed strange changes, including:
• The price per barrel of West Texas Intermediate crude oil declined from $60 in June 2015, to a thirteen year low of $26.55 last week Crude Oil prices
• Chinese authorities admitting that their GDP fell below 7% last quarter, a decline of over 14% in 5 years
• A mishandling of Chinese stock market rules by authorities resulted in their market meltdown, leading to a global market sell-off, with the S&P 500 declining more that 10% in the first two weeks of 2016 (and subsequently recovering to a year-to-date loss of approximately 5%) China’s GDP
• There is a general acknowledgement by economists that the above factors are evidence of a global economic slowdown
• The above are also some of factors responsible to the stock market volatility we are currently experiencing
Perhaps even more strange is the current presidential election cycle with all the entertainment and drama provided by the candidates. Despite the gloomy outlook portrayed by some of the candidates about our personal safety and economic insecurity, I believe in the entrepreneurial spirit and resilience of the American people. Turn and face (and engage in) the strange changes.
The reality is that over the past 12 months, the US GDP has experienced an approximate 2% grow rate. Recognition of this growth was evidenced by the December 2015 quarter percent rate hike by the Federal Reserve Bank. However, we live in a global economy, and most of world, including China, Europe and India are experiencing an economic slowdown. So it is not unexpected that the US is experiencing a slowdown.
Along with change and uncertainty comes opportunity; mortgage interest rates remain near historic low rates, the US unemployment rate is at about 5% (which some economists consider as full employment), the market correction is a signal to review your investment portfolio allocations and make investment decisions to diversify your portfolio, taking your risk tolerance and time horizon into consideration.
When we turn and face our strange changes without a plan, then the changes may seem unsettling and foreboding. However, with a meaningful life plan, these changes are just part of the bigger picture.
As a Financial Life Planner, my role is to help individuals and families navigate life’s uncertainties, to weather economic storms and be a guide to smoother waters. In short, I am here to help you develop, review and modifying your life plan to give you confidence during times of change.