Market Beat: Is the glass half full? | SierraSun.com
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Market Beat: Is the glass half full?

Ken Roberts

Is the glass half empty or half full? That is an old cliché that is supposed to determine how optimistic or pessimistic a person is, by whether they see a glass filled to the midpoint as half empty or half full. Personally, I tend to be an optimist and view the glass as half full.

One thing that we’ve seen as a result of current monetary policy is a widening gap between the rich and poor and a shrinking middle class. This is a real problem and is partly because money created by the Fed’s QE program has flowed into the stock market and helped to send the Dow and the S&P 500 to record levels.

This has definitely benefited the wealthy more than the poor. Income growth has also been stagnant relative to inflation for many years and led to shrinking of the middle class.

Just how bad is it out there? Well, let’s look at some metrics and go back for a long period of time and see just how badly off people are today. One mistake is to use some of the golden years as a starting point, like 1999 or 2007.

In 1999, the dot com era was upon us, and in 2007, we were at the peak of the housing bubble. Those years were aberrations and should not be considered normal. Economically those were some of the best years in our history.

So, is there some data to be positive about? The answer is yes —people are living longer, healthier lives, working less and making more money than ever before. If you look at real compensation per hour, which isn’t just the wage, but includes benefits like retirement plan contributions and health care, workers are making more than ever.

In 1950, life expectancy was 68.2 years; by 2010, life expectancy had increased to 78.7 years. In 1880, 78 percent of men over the age of 65 were still in the workforce, and by 2010 that number had dropped to 22 percent.

According to data from the Dallas Federal Reserve, the average work week has dropped from 61 hours in 1870 to 39 hours today. People are spending three times as much money on recreation as they did in the 1950s.

According to the book, “The Rational Optimist,” of Americans officially designated as “poor,” 99 percent have electricity, running water and a refrigerator; 95 percent have televisions; 88 percent have telephones; and 71 percent have a car.

The list of improvements over the last few generations goes on and on. We really are living in good times despite what all the naysayers would have you believe.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information on his money management service can be found at his blog at http://www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.


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