If your holdings are in equities then don’t be surprised that stocks will continue to remain near where they are now with nominal growth over the next few years. At least according to an article Foreign Investorspublished yesterday on cnbc.com.* According to the post, the slow economy since the recession officially “ended” will stay with us for years. Perhaps decades according to the paper collaboratively written by economists Etienne Gagnon, Benjamin Johannsen and David Lopez-Salido. And it’s not due to standard economic influences such as consumer confidence or commodity prices and more to do with simple demographics.


The article explains basic changes in our demographics here in the United States since the 1960s. In essence, the prospects for vigorous, long-term growth are dampened primarily by the number of baby boomers entering retirement and staying in retirement longer. Capital which was once available for investments is now used as retirement funds, taking active capital out of the markets, which also translates into lower long-term interest rates. Not everyone agrees with the assessment but it does make some sense and the only way to see if the argument runs true is to wait and see.

We’ve been in this current trading range for some time now and the Fed has kept interest rates effectively at zero for some time, with only a 0.25% blip a little over a year ago. GDP as a result will also stagnate, something it’s been doing for a decade. For those who invest in private notes secured by real estate, this isn’t much of a problem, as developers are always in the market for private funds to acquire undervalued commercial real estate. Yet for those who do not have any form of real estate in their portfolio, there are some rather convincing arguments that we are indeed in a new normal.

*cnbc.com Monday, October 10, 2016 by Alex Rosenburg “The biggest economic horror story is real