I have no crystal ball. But a sense of history, some basic
economics, common sense and just a dash of congenital optimism leave me
convinced that this one won’t be all bad.
Oh, sure, there will be layoffs like we haven’t seen since the Great
Depression. And you can expect to see a proliferation of empty
storefronts and a heap of broken businesses.
But why focus on the negative? Here are five good reasons why 2009
could, if you make the most of it, be good for your financial health.
1 This will be a good year to invest in stocks.
No one can tell you exactly when or where the market will bottom.
But most business-cycle experts agree that the bottom will be found
sometime this year, and that it probably won’t be too far below where
the market is today.
So a smart strategy will be to put some money in the market today,
and keep doing it over the course of the year. If you’re still shaken
over massive losses from last year, this may be hard advice to swallow.
But the biggest mistake you can make as an investor is to ride the
market down, lose faith, pull out and miss the upturn.
Even in the Great Depression, the market bottomed out in 1932, with
the Dow Jones Industrial Average at 41, down from a peak of 381 in
1929. By 1937, it had climbed back to a respectable 194. That didn’t
make investors whole. But for those who stayed in, it certainly soothed
the wounds.
2 It will be a good year to invest in real estate.
3 Americans will learn to live within their means.
4 President Obama will have a historic opportunity to reshape public policy.
Speaking at the Wall Street Journal’s CEO conference in November,
Mr. Obama’s chief-of-staff-designate, Rahm Emanuel, said the words that
have become his team’s rallying cry for 2009: “You never want a serious
crisis to go to waste. This crisis provides the opportunity for us to
do things that you could not do before.”
The Obama team is busily preparing a stimulus package that, when all
is said and done, will total between $750 billion and $1 trillion —
far larger than any fiscal stimulus in the history of the world. And
with the economy still sliding downward, it’s a good bet few
politicians will want to stand in the way.
That will give the new president an opportunity to do things his
predecessors could only dream about. Roads will be rebuilt, schools
will be refurbished, medical records will be computerized, and
windmills will be constructed, all across the land.
Will some of that money be wasted? Of course. But the sums involved
are so huge that there’s a good chance someone, somewhere, will benefit.
5 Your (federal) taxes won’t rise.
This, too, is unsustainable. A reckoning will come. But that’s a problem for 2010 and beyond.
In the meantime, enjoy the new year!