Capitalism Weekend – Omaha Bound

This weekend thousands of people will descend on Omaha, Nebraska for the annual Berkshire shareholders meeting chaired by none other than the legendary investor Warren Buffett and his partner the equally important Charlie Munger. Each year these two titans of investing get in front of approximately 30,000 shareholders to discuss everything from business decisions to the economy in general. The one topic that they will not discuss is the company’s succession plans for when they are no longer able to run the vast company. But we will not think about that right now as we are all excited for another opportunity to listen to these two legends.

Yes, capitalism is alive and well in America despite the politics involved these days. Regardless of if you are a Republican or Democrat the last six months have been extremely profitable when it comes to the markets. I know my accounts are reaching all-time highs and to be honest I am not certain as to why. I know American politics does have very little to do with the continuation of the bull markets. We have been in this bull market now for almost seven years meaning the economy is doing a little better than what most people think. Otherwise, the markets would have corrected themselves by now as that is what we can rely on. Them being fairly priced no matter what else is going on around us.

And if you need proof that we are better off now than say ten years ago, look past the markets to other areas of the economy and open your eyes. While GDP is not growing at a rate that makes most people happy it is growing and has been since 2009. Also, we have added more jobs since 2009 as compared to any point in the last 70 plus years. The deficit, while extremely large, has been cut on an annual basis in each of the last four years or so.
And back to the markets, we can expect a bear market every three to five years on average, and we are going on a seven plus year bull market. Does that mean there is a correction or a bear market in our futures? Definitely but there always are, and they are always followed by another bull market. It is the way of the markets just as they typically always price themselves in a fair manner, while not always in a rational one.

And finally, one of the reasons I know that we are not as bad off as most people think the real estate market has rebounded from its lows of 2009 in almost every part of the country. And in some places, it is even better than it was at the height just before the bubble burst. I know the value of my home is at an all-time high as I write this. And housing is becoming harder to find and afford in many areas as well. I know, there are parts of the country that are not doing as well, and that is indeed true. I know this because I have applied to jobs in other cities and I have seen that their markets just have not rebounded as they have here in Nashville. But there may be other factors that contribute to those reasons that go beyond the simple housing markets.

However, consumer spending is not what people think it should be and to the degree that is correct. People are saving more and paying down debts instead of making purchases. I think the Great Recession still has many people thinking that like all things, this too is a circle that is bound to repeat. And chances are it will at some point in time but for now let us enjoy what we do have going for us and our economy.

All I do know is I am still buying stocks and exchange traded funds as I always have. I am still contributing to my 401(k) plan at work and my individual retirement account. We are purchasing new appliances in our home because we are getting good deals on them and it is just time to replace some of them before they break. We are saving more than I did before the Great Recession and I am paying off my debts faster while not making any new debts in the process. As far as my paycheck is concerned, I am like many of you, and it has been stagnant since 2009, and while it is getting better, it will take a lot to get to where it should be. But by being smart my wife and I are doing extremely well for ourselves. Everyone has it in them all you need is a little help, and that is what people like me are here for. So have a good weekend, enjoy an economy that is better than you realize, and I will see you again next Tuesday.

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