Last Tues­day the 12th, I spent the morn­ing at the Vistage All City meet­ing.  Our speak­er was Bri­an Beaulieu, a respect­ed econ­o­mist from the Insti­tute for Trend Research.  Brian’s talk, The Future is Your Deci­sion, offered per­spec­tives for CEOs and indi­vid­ual investors based on his trend research. 

I found his infor­ma­tion use­ful and have sum­ma­rized his thoughts below. 

Overview

There are 3 mega-trends to be con­sid­ered when mak­ing deci­sions about your busi­ness­es or when invest­ing:

  1. Demo­graph­ics, the World and the US have increas­ing pop­u­la­tion. More peo­ple = eco­nom­ic growth
  2. Infla­tion, not hyper­in­fla­tion, but eas­i­ly 4.5% to 6%
  3. Tax­es are going up

2011 and 2012 will be peri­ods of mod­est growth, with con­tin­ued high unem­ploy­ment.  At the same time, it will be increas­ing­ly dif­fi­cult to fill cer­tain knowl­edge based posi­tions because our work­force is a) immo­bile due to being unable to sell their exist­ing homes and b) inad­e­quate­ly trained for the type of jobs avail­able.

2013 and 2014 will like­ly be a mod­est reces­sion­ary peri­od like the ear­ly 1990’s but not as deep as 2008. 

Com­mod­i­ty prices are on a tem­po­rary rest.  2012 will see increas­ing com­mod­i­ty prices on items such gold, cop­per, oil and agri­cul­tur­al prod­ucts.

The US rep­re­sents 26% of the world econ­o­my. While we are the largest econ­o­my in the world, our share of the pie is grow­ing small­er and oppor­tu­ni­ties exist in emerg­ing economies for invest­ment and doing busi­ness.  Think Brazil, Aus­tralia, and India. 

There will be ongo­ing weak­ness of the US dol­lar.

Hous­ing will no longer be  in reces­sion but will not be  in recov­ery. Over the next 5 years peo­ple will rent and not buy.

Inter­est rates will remain low and may creep up in 2012 and 2013.  A 2014 reces­sion may pro­vide a tem­po­rary restraint on rates.   Cur­rent­ly we have the low­est rates we will see in our life­time. Bor­row long term, tak­ing advan­tage of fixed rates now and repay with cheap­er inflat­ed dol­lars.

Remem­ber that nor­mal today is tomorrow’s abnor­mal.

For Busi­ness­es

Look for cus­tomers in these growth seg­ments:

  • Exporters
  • Alter­na­tive Ener­gy
  • Health care
  • Pro­fes­sion­al ser­vices such as law and account­ing
  • High­er edu­ca­tion
  • Over­seas in India, Brazil and Aus­tralia

Infla­tion will hit the labor mar­ket in 2012.  You will need a strat­e­gy to employ a mobile work­force.  Train­ing pro­grams are more crit­i­cal than ever, giv­en that you may not be able to find the skill you want in the work­force.

This is a good time to buy oth­er busi­ness­es.  If you have not posi­tioned your busi­ness for sale, you like­ly do not have time to do so before the next reces­sion.   The next good sell­ing sea­son will be 2017 and 2018.  Posi­tion now to be ready.

Do not let the pain of the past col­or your vision for the future.  Find a sec­tor of your busi­ness that is entre­pre­neur­ial and expand that seg­ment.

In peri­ods of infla­tion, met­rics and mon­i­tor­ing are crit­i­cal.

If you can­not raise prices, sell that busi­ness unit.  Raise prices more fre­quent­ly and in small­er incre­ments. Think 1% to 1.5% per quar­ter instead of 4% a year.

For Indi­vid­u­als

The stock mar­ket will con­tin­ue to be volatile thru 2011.  Bri­an is bull­ish on 2012 and then expects a lack­lus­ter mar­ket.  Posi­tion port­fo­lios to take advan­tage of the 3 mega­trends not­ed ear­li­er.

Invest glob­al­ly and posi­tion your port­fo­lio to include com­modi­ties and oth­er invest­ments that do well in peri­ods of ris­ing inter­est rates and infla­tion.

Refi­nance your home if you have not already done so. If you are young and have equi­ty in your home, con­sid­er bor­row­ing the equi­ty and invest­ing it out­side your home. 

Sum­ma­ry

Bri­an closed with a quote from Dr. W Edwards Dem­ing. “It isn’t nec­es­sary to change, sur­vival is option­al.”

That sort of says it all.  If you can’t love change, at least accept it and posi­tion your­self for it.  As with any of these ideas, it is best to a) run the num­bers for your per­son­al sit­u­a­tion and b) con­sid­er the impact based on your per­son­al goals.

As your Wealth Advo­cate, we are here to guide you and your busi­ness thru the com­ing changes.  If you have ques­tions or need our assis­tance, please con­tact me at Mackey@MackeyAdvisors.com or our team at 859–331-7755. 

May pros­per­i­ty be yours,

Mack­ey