Don’t Believe the Dire Economic Predictions: CGO’s Take on the Road Ahead

Wall Street is warning investors to brace for an economic downturn. That’s understandable, given the changing U.S political landscape and the uncertainty of the Brexit vote. One well-known financial expert, Stan Druckenmiller, recently offered his dire prediction of the next financial apocalypse. In 25 years as a hedge fund manager, he compounded money at an annualized rate of return of 30 percent and did so without a single down year. With a track record like that, people tend to listen.

“When I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career,” he stated. Druckenmiller cites a rise in entitlement spending and changing demographics as reasons to worry.

  • Such outlays accounted for just a little more than 20 percent of annual government spending in 1940. Today, they constitute nearly 70 percent of the federal budget.
  • In 2030 – just 14 years from now – the average age of a U.S. citizen will be older than that of a Floridian today.
  • Since 1980, the number of people of working age has outnumbered those of retirement age (65 and over) by a margin of five to one. That ratio will drop to two-and-a-half to one by 2030.

Claude Ohanesian speaks for the other, calmer side of this particular discussion. As Founder and President of CGO Wealth Management, he’s weathered his share of storms while navigating economic ups and downs during more than 30 years in the financial field. He represents others who understand that, as an investor, you cannot control an approaching storm. After all, like a hurricane, it can always turn and miss the shore. What you can do is prepare your investments to brace for the financial winds and navigate through to the sunset of retirement.

First, do not panic. People often regret financial decisions made under a cloud of confusion. You just might regret a rash decision made when you were too emotionally invested in the outcome.

Keep a close eye on your cash. Closely track your spending and keep track of your expenses. Every dollar not spent today is another you have available for the future.

Understand your investments. Work with your financial advisor to know what is in your portfolio, what adjustments you should make, and the best time to make them.

Focus on the things you can control. When it comes to your finances, there are always going to be things over which you hold no sway. Do your best to be prepared to deal with them.

Do a stress test on your portfolio. Make sure you are meeting certain benchmarks with your investments and are prepared to deal with both expected and unplanned expenses, like health care costs.

For an honest evaluation of your portfolio and seasoned advice on ways to protect it, we hope you consider contacting CGO Wealth Management.