Looking at why today’s inflated market is different than 2008 with Wealth E&P
July 12, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this past week.
We’re happy to report another great week in the market, with it still showing all-time highs and growth.
Looking at our Equity Income portfolio, last week was up about 1.25%. This is similar to the NASDAQ, with S&P just behind that and the DOW up about 71 basis points. We're going to try to keep that up, and we hope the market keeps running so we take advantage of it.
A lot of people have been asking me lately about comparisons to 2008, so I'm going to explore that for you. Debt levels are continuing to go through the roof, just like they looked in 2008.
Corporate debt has doubled since 2008:
But, the cost of that debt relative to market values is actually a third of what it was in 2008. It was 60% down and up to 20% now:
Personal debt was 13% in 2008, but it's about half that now if you fast forward to 2021:
Government debt (which is about 130% of GDP) is double what it was back in 2008, which is awful:
However, the cost of that debt (because interest rates are so low) is about half of what it was in 2008:
So, a much different environment, not because debt is lower than it was, but because the cost of the debt is lower. Do I like debt? No. Do I want to see it shrink? Absolutely. But as long as the cost of that debt is low, we're in good shape.
We still see some shiny skies ahead of us, so we're going to continue to enjoy it. But, we're going to watch for when that changes and we will certainly let you all know when it does.
If you have any questions for us, if you want a risk profile, or if you would like a retirement projection, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute next week!
At Wealth Enhancement & Preservation, we are here to serve as your financial advisor and source of support in the Alpharetta, GA, Cartersville, GA, and Charleston, SC areas. Our advisors are dedicated to simplifying the complexities of the financial world and as your advocate, we strive to learn about your most valued goals and dreams. From individual investors to entrepreneurs, our services are designed for your success.