Last month we talked about the unprecedented reduction in global warfare activity and its impact on global prosperity and wealth. This month we will address another phenomenon that is equally unparalleled in human history, the slowing of population growth. This too will drive a host of changes in public policy and how we live. It will also help propel a vast increase in per capita wealth.
In July of 2019, the House passed a new bill titled the “Setting Every Community Up for Retirement Enhancement Act,” or SECURE Act.1 The Senate approved the bill on December 19, 2019, and it was signed into law on December 20 by President Donald Trump. This sweeping bill offers several adjustments to our current laws surrounding saving and preparing for retirement.
Next month we will return with the second installment on the two unprecedented changes unfolding in the world today that will have (and are already having) enormous impact on our lives and investments. Last month we discussed the cessation of global warfare and next we will address population growth. But as I write this on New Year’s Eve it is worthwhile taking a quick glance at 2019 and looking ahead a bit to 2020.
“This time it’s different” is an oft-repeated remark by economists and market pundits (and the title of a 2010 book by Harvard economists Carmen Reinhart and Ken Rogoff). In a literal sense it’s always true, each time is different; but figuratively, it is often false as “history repeats itself” and the next cycle looks a lot like past ones (the point of Reinhart and Rogoff’s book).. However, with respect to several dominant themes in the history of civilization, this time is different.
Last month we began a discussion about risk. Most of what we discussed was basic, which isn’t to say unimportant, and certainly uncontroversial. This month we take a deeper dive into “risk” and the conclusions might be more “unsettling”. Let’s think about risk in the big picture.
This month’s piece is the first of a two-part look at risk. Not just “portfolio risk” in the traditional financial sense but risk more generally, though we will address how investors should think about risk.