I thoroughly enjoy watching the Olympics. The drama, hurdles, triumphs, and family stories of the athletes from around the world keep me on the edge of my seat, whether I am in the stands or in front of a screen. Unlike so many situations it all unfolds in real time right before our very eyes. No one can tell who the winners are going to be but the work that it takes, often for a life-time, to be so well prepared to compete can make all of the difference in the world for the athletes to be well remembered and well employed for the rest of their lives.
Many Americans like to boast about our ‘American exceptionalism’. As a country we spend a lot of time and resources to compete in sports, including the Olympics, but when it comes to our math and science skills we are not at all exceptional. Here are the 10 smartest countries based on math and science, “Singapore is the smartest country in the world, followed by Hong Kong, South Korea, Taiwan, Japan, Finland, Estonia, Switzerland, Netherlands, and Canada rounding out the top 10,” according to Business Insider on May 13, 2015. The statistics are the conclusion of the Organization for Economic Cooperation and Development (OECD), a think tank that ranked countries’ school systems based on test scores for students in math and science. The report, which was presented at the World Education Forum in South Korea shows, “Of the 76 countries ranked, the top half is largely dominated by Asian nations, the BBC reports. European countries take up a majority of spots 5 through 30 in the rankings, and the United States sits at the tail end of the top third, tied at 28th with Italy. The bottom half of the rankings feature mostly African and Latin American countries.”
Complacency can be costly.
Now I want you to understand my SAT scores reflected strong English skills, but only a slightly better than average capability in math. I say this to you because I believe we can all do better. But we have to put forth the effort to achieve the desired results. Unlike failure, success needs no explanation. My job here is to do all things possible to be proactive in getting you ready for the situation(s) no one can see, time, or name. As I pointed out in my last article, “You cannot imagine how you would feel if you woke up to a real estate loss of 67 percent on top of a stock market loss of 90%.” So to make it easier let me do this math for you. To get back to even after a loss of 67% requires a gain of 203%. Now notice how the job becomes even more daunting when the loss is about 50% greater. After a loss of 90% it takes a gain of 900% to get back to even. If you are like me and you don’t like those odds please take the time while you have it to see in advance what you can do to limit your losses in preparation for the next time the grits hit the pan. In all of our examples here we are assuming no withdrawals were needed.
Thanks to Yahoo Finance, the DOW closed at 12,463 on 12/31/06. On 10/9/07 the DOW closed at 14,043, enjoying a gain of 13.55%. On March 9, 2009 the DOW closed at 6,547, showing a loss of -50.80%. Did you learn anything the last time that might make you better prepared for the next time? Or are you just too busy? Just because you don’t think it could happen again doesn’t mean it won’t. Mid-day 8/816 the DOW was at 18,529. Let’s be ridiculous and suggest that the DOW could see 6,574 again, which was the close on 3/9/09. That’s a loss of -64% that needs a gain of 177% to get back to that high. Just imagine having $500,000 invested that became valued at $1,000,000 about 5 years later. Then imagine waking up to a value of about $108,000. There’s that 90% loss. “The market would not return to the peak closing of September 3, 1929 until November 23, 1954,” according to Wikipedia.. That’s 25 years. Assuming no withdrawals and stocks were held for the long haul. How long might it take you to get back to even? Remember it you spend any money from that account the correct answer may be never.
Never is a long time.
Harry Dent had this to say on 8/8/16, “In the late 2007 ‑ early 2009
stock crash, almost everything went down. The bubble was bursting and
trying to reset all financial bubbles back to more normal and sustainable
levels. Kind of like a bad cold that makes you feel miserable for a few
days so you can be healthier again after getting rid of some major toxins
or imbalances in your body.
Well, massive QE put an end to that bubble burst and debt deleveraging, just like a strong cold medicine with enough codeine will stop a cold in its tracks – to your short-term relief but longer-term disadvantage. Now we have greater bubbles in most stock markets, and many real estate markets. But we also have the lowest long-term Treasury bond yields EVER… and Harry Dent points out, negative yields in $13 trillion of sovereign bonds around the world (a number that continues to rise)! Basically, we have a bond bubble that’s been feeding all of the other bubbles. Lower, risk-free rates raise the value of all financial assets from stocks to real estate, to bonds to commodities. And eight years of endless QE and zero or negative interest rate policies have created a third and even larger bubble in stocks and in most financial assets, despite subpar growth and now declining earnings.
There’s just one MAJOR problem: bubbles always burst. There’s no other way this ends… ever!”
On average our 554 strong Team USA athletes will finish just fine in the Olympics. What’s more, those who become Olympic athletes can go particularly far on the Rio 2016 road to riches. The world’s best swimmer, Michael Phelps, for example, has a net worth of $55 million before the games began. Also from thepostgame.com, we see the world’s fastest runner and the most famous Jamaican man, Hussein Bolt’s net worth is $60 million. May these points inspire you in your individual quest for financial success.
We are on a mission to save your assets.
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HS Dent is an economic research company that uses various techniques to study the potential impact of various changes in demographic trends in our economy. No one person or strategy can accurately predict market movements.