Market Shock

by Buchholz, Todd G.

• ISBN13: 9780887309502
• ISBN10: 088730950X
• Edition: 1st
• Format: Paperback
• Copyright: 2000-04-06
• Publisher: HarperCollins Publications

Summary

In "Market Shock," leading global economist Todd G. Buchholz analyzes nine trends that will turn America's economy on its head. For the unprepared, these tremors may bring about financial ruin. But for the savvy investor, these widespread changes offer tremendous opportunities to make money.Using this book, investors can anticipate these trends, not just avoiding the coming crisis but making money by moving assets to sectors of the economy that stand to benefit from these cultural and economic shifts. Filled with lively "news flash" scenarios, plentiful examples, and helpful advice, Buchholz pinpoints the issues that will affect investors and consumers over the next several decades. This book--insightful, impeccably reasoned, and eminently readable-could not have come at a better time.

Table of Contents

Preface	ix
Introduction	xi
Going Gray	1	(38)
The Leaning Tower of Technobabble	39	(30)
Kaboom!	69	(26)
Red, White, and Black, Yellow, and Brown	95	(26)
Rising Sun, Rising Stocks	121	(25)
Europe Uber Alles	146	(27)
Hold That Tiger	173	(32)
Lock 'Em Up	205	(30)
No Sweat	235	(27)
Conclusion: Into the Breach	262	(3)
Source Notes	265	(20)
Index	285

Excerpts

Chapter One

Going Gray

How America's Aging Can Shake Your Portfolio and Bankrupt the Government

Harrisburg, Pennsylvania

Hannah Barker picked up the knife and plunged it so deep into the turkey that her husband thought he'd have to phone 911. Ted was truly frightened of her whenever those stress lines showed up on her face looking like the off-ramps of the Pennsylvania Turnpike. He did what any normal, red-blooded American would do on Thanksgiving Day faced with a wife on a rampage: He ducked into the TV room to fill the pretzel bowl while his father-in-law watched the Detroit Lions play.

"Ted," she called from the kitchen, "would you please open the can of cranberry sauce! I can't do everything. " And she certainly felt helpless today. Her bony, fifty-year-old arms shook as she carved the turkey.

Her husband cautiously reentered the kitchen.

"Ted, I can't let them do it. I just can't. If my parents move to Florida, they'll expect me to hop on the plane every week, just to take them to the podiatrist to get their toenails clipped. They think they're making it easier on me by moving," she said, while pulling the string bean casserole out of the oven, "but it's impossible. Besides, who's going to pay for all of my trips to St. Petersburg? We can't afford it, not with Becky in college."

"Can't they pay for the trips?" he asked.

"With what? Old green stamps? That's about the only thing they saved up over the years. "

"Hannah, you better talk to them tonight, before they sign the apartment lease. "

"Fine, and what'll you be doing when I tell my seventy-two-year-old parents that I'm going to treat them like irresponsible children?" she said while wiping her eyes with her apron.

"Me? Oh, I'll be hiding the carving knife.

Newsflash

The President today warned that IRS agents, along with Alcohol, Tobacco & Firearms agents would be storming the headquarters of the "Just Say No Brigade," a taxpayer rights group that has sparked a nationwide strike against paying taxes. In a spoof of the Boston Tea Party, the "Just Say No" leaders, cheered by Nancy Reagan, threw tax forms off the roof of the John Hancock building in downtown Boston.

"We're mad as hell, and we're not going to take it anymore!" shouted Hal Phillips, a thirty-five-year-old accountant, who declared that Congress should have cut Medicare and Social Security payments to old people, rather than confiscate the incomes of the young.

The White House is in a state of siege, surrounded by angry college students, a situation not seen since Lyndon Johnson became a captive of Vietnam War protests....

If you are like me, you have attended too many weddings and funerals where the preacher quoted Ecclesiastes, reminding us that there is always a season, a time to be born and a time to die. If the preacher did not say it, then the wedding disc jockey played The Byrds singing it instead. But it is not so simple as the homily makes it sound. Unlike the summer season, which blankets a whole town in the same sunshine and warmth, the time to be born and the time to die is different for each of us and can even pit one generation against another. The United States, which always prided itself as a youthful republic, is getting old fast. Our national priorities are switching from the schoolhouse to the nursing home. For the first time in history, we will have more old people than children. It is September, and the crinkled orange and gold leaves are falling, in a country that has only known spring.

The turn of seasons does not mean that we are going out of business, or that depressing books like Paul Kennedy's The Rise and Fall of Great Powers are proving right. I am an optimist. We must, though, reinvent our economic policies as a nation. As individuals, we must reinvent our investment portfolios to protect against disaster while taking advantage of the change ahead. Retiring baby boomers will remake the market for retail goods and the service industry, just as generations X (born between 1965-75), Y (born 1976-90), and Z (born after 1991) are putting their stamp on the economy. Ecclesiastes reminds us that there is a "time to get, and a time to lose." With due deference to the Bible, there is no time to lose in preparing your portfolio against losses and setting it up for gains.

The Problem: The "Me" generation of baby boomers will be retiring in massive numbers over the next twenty years. But the country cannot afford it. Unlike their parents, who sacrificed in the Great Depression and World War 11, the boomers have been raised on "having it all." Can the "Me" generation learn to live with less? Will they give up the absurdly generous promises of Social Security, Medicare, and the traditions of job seniority? Or will their children have to wrest it from their soon-to-be-wrinkled hands?

Today's anxious class of twenty-something workers would have to give up most of their future earnings just to meet the government's obligations to their parents and grandparents. That would leave virtually nothing after paying for shelter and food. Forget about paying back school loans! Generations XYZ will "just say no" to these burdens, and granny could find herself scraping by on the paltry savings that she has socked away. Unfortunately, the average family today has just over $10,000 in savings.

This threatening scenario should force you to take a crucial first step: Figure out how risky your financial predicament is. How much savings do you have? What is your net worth? I suggest you take a piece of paper and add up the value of your bank accounts...

(Continues...)

Excerpted from Market Shock by Todd Buchholz Copyright © 2003 by Todd Buchholz
Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.