People who are in or approaching retirement today face immense challenges that those who retired in the years before them did not.
Simply put, we’ve been living in a bubble world since the 1980s, but the bubble popped in 2022.
I think most of us know this to be true. We can feel it. But this next chart tells the story quite well:

Here we can see the S&P 500 and the 10-year Treasury rate going back to 1980. The S&P 500 is the black line. And the 10-year Treasury rate is the blue line.
We’re using the S&P 500 as a proxy for US stock prices. And we’re using the 10-year Treasury as a proxy for interest rates. This chart makes it perfectly clear that the two are inversely correlated.
Interest rates started falling in 1982, and they fell consistently for the next 40 years. Meanwhile, US stocks consistently went up in value over that same time period.
But everything reversed in 2022. Rates started going up, and stock prices started to fall. We can see those moves clearly marked by the red arrows on the chart above.
I keep coming back to this image because I want to hammer the message home. The Age of Paper Wealth is over.
The question is – what comes next?
Continue reading “What to do about uncertain times…”