The Most Dangerous Financial Landscape in Decades

by Richard Young | October 6, 2012 10:00 am

The Most Dangerous Financial Landscape in Decades

Today my job of guiding you is much harder because we are forced to operate in the most dangerous financial landscape I’ve experienced in my nearly five decades in business. Jack Bogle recently called the current period the worst time for investors in his more than 60 years in business.

Before Jack founded Vanguard, he was a senior member of Boston-based Wellington Management. Back then, Wellington was an institutional client of mine and, in fact, all through the years, my favorite client. When Jack started Vanguard, I moved most of my personal accounts to Vanguard. I have been a powerful Vanguard supporter (with my own money and in print) for four decades.

When I started Richard C. Young, Ltd., our family investment management company, Vanguard became our first custodian. Had Vanguard not exited the custody business for advisors, we would be there to this day.

Vanguard & Fidelity: The Leaders by a Mile

I continue at Vanguard with my personal funds, and I also happily use Fidelity, our management company’s new custodian.  Like Vanguard, Fidelity was an institutional client of mine in the early ’70s. As such, I have had decades of experience with both of these fine, private, conservative custody firms and have advised you to join me at either or both Vanguard and Fidelity. You will be comforted in how you are treated as a member of the family.

As I have been warning regularly, the U.S. economy is on the wrong track. It’s a mess. Scope out these exhibits.

Display #1 shows how non-farm employment has cratered. The monster borrow/spend/print Marxist-tinged strategy of the Obama administration has barely moved the needle.

nonAgr The Most Dangerous Financial Landscape in Decades

Display #2 further drives home the abject failure of income redistribution economics and shockingly highlights the sad tale of unemployment weeks. The horizontal line tracks through decades of previous unemployment weeks peaks. Today? Well, we’re looking at more than double previous peaks. Do not be misled by the BS the administration’s PR team pumps out. The employment situation is ROTTEN to the core.

avgDuration The Most Dangerous Financial Landscape in Decades

Employment Picture Dim

Display #3 shows that even with all the massive borrowing, debt, and printing, my key average workweek indicator has already peaked for the cycle. That’s right, the good news, such as it has been, is now history for the cycle. The next major move will be down. OK, three strikes and you’re out on the employment front. Are voters paying any attention here? The big government spending/borrowing/printing redistribution model is a pathetic fraud foisted on uninformed citizens.

avgHrsWorked The Most Dangerous Financial Landscape in Decades

Display #4: How about conditions for manufacturers who provide jobs? In order to produce, businesses must first invest. Well, take a gander at fixed-capital investment construction contracts. Can you spot the mini-rebound? Look hard. It’s there. Well, sort of. How many jobs do you think can be supported off such a sorry base?

fixedCap The Most Dangerous Financial Landscape in Decades

Display #5 gives you the view from the manufacturing sector in the form of the trend in new orders. Oh, oh, the trend is down. The peak for the cycle may well be already past. I do not originate the raw data. It’s what it is. I simply chart the numbers, as I have done for decades, draw conclusions, and invest accordingly. The grade for the Obama administration: F.

ism The Most Dangerous Financial Landscape in Decades

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