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What makes the current time of economic uncertainty a particularly dangerous environment for investors?

Bob Wiedemer

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Video Transcript

Bob Wiedemer: Some people ask whether we really are in an Age of Uncertainty and I would answer that by saying let's look at one of the most certain investments recently and that's been U.S. government bonds. What could be safer? What could be more certain than government bonds? They have been doing very well over the last 10 years, 20 years, but yet in the last three months, or between September and November, we've seen bonds fall 15 percent. That's amazing amount of uncertainty in what was a certain investment. So, when people say, "You're in very certain times," I think the bond market tells you something very, very different. Even very certain investments can go down, thus, the need for greater diversity in your portfolio in an uncertain time, but sometimes we don't even recognize how unusual these times are. I think a great example is how much we've increased our money supply. People know we've been printing money. You know, you hear Central Banks around the world are printing money, but we've printed money before. This time is different though. We didn't just, since 2008, we didn't just double our money supply, or triple our money supply, or quadruple our money supply, yeah, we quintupled our money supply, in a very short period of time--that's amazing! It's less than 10 years. Quintupled our money supply, the United States of America, we've never done that before.

So when you think that we're in normal times or somewhere, you're seeing some normal growth or returned normalcy, keep in mind what very abnormal things we've done even to keep this modest normal growth, and it’s actually low growth, in the economy going. It is stunning! People tend to shy away from that because they don't want to see it, because they don't want to think that we've maybe got an underlying problem...and we do. With all that money printed and probably a lot more to come, you're making for an increasingly fragile environment for more typical assets like stocks, real estate, and bonds.