In this episode, host Brandon Laws takes a deep dive into the current market with guest Chris Cubbage, Founder of Retirement Advocates. Chris provides listeners with an in-depth market analysis, covering topics such as investing, housing issues, workplace productivity, financial literacy, and everything in between. If you’re wondering what’s around the corner and how to prepare for your financial future, this is the episode for you.
GUEST AT A GLANCE
Chris Cubbage is the Founder of Retirement Advocates, a retirement consulting and wealth management firm. With a degree in Economics from Claremont McKenna College and extensive experience in the financial space, Chris is passionate about helping others grow in their understanding of the market, investment opportunities, and preparation for their financial future.
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THE SHADOW OF ‘08
So what’s the current market environment from an economic expert’s perspective? According to Chris Cubbage, Founder of Retirement Advocates, it’s “challenging, to say the least, but to some degree expected.” We’ve been on a 15-year period of enormous prosperity. He added, “Anybody that owns a home or has tried to buy one or knows that the real estate market’s been incredibly robust.” But what we’re seeing now begs the question: “Have we met our reckoning?”
Chris went on to explain that we still live in what he calls “The Shadow of 2008.” The Federal Reserve policy and monetary policy — not just in the United States but globally — was the initiation of an unprecedented experiment that we’ve been living with ever since. But unfortunately, there was no real “exit plan.”
This “Goldilocks Period” has lasted for roughly the past fifteen years. During this time, the Fed “essentially rescued the economy every chance it got, and it worked because inflation was under control. They could do all of that and still meet their primary mandate, which is price stability.” However, now we find ourselves far beyond the standard 2% price stability range, and continued inflation looms. So what are we to make of the market? And is the future grim or is there light at the end of this tunnel?
EPISODE HIGHLIGHTS
Understanding What’s Happening
“We’ve had recessions in the past. But have we dealt with this type of environment? Probably not. There’s an old saying that history doesn’t repeat itself, but it rhymes. Every recession has similarities, but this time is different. This time, it’s unusual to come into recession — the unemployment where we sit today and some other factors involved are unusual —-but that’s to be expected given that the run we’ve had getting into this was a monetary experiment that we’d never really tried to manipulate before.”
Finding Connections
“As the old saying goes, generals are always fighting the last war. So we’re already looking at this sort of like 2008. And actually, we’re kind of looking back to 1980 from the hyperinflation of the seventies because we’re kind of trying to find the playbook for this scenario. And it’s probably a combination of all of them. We’re not the only economy that has gone through something like this. I mean, there are countries all over the world that have gone through hyperinflationary periods.”
A Recipe for Disaster
“When you look at the $4 trillion that the Fed kicked in [to the economy] at the beginning of the pandemic, that was unprecedented. But if you think about it now, it’s almost a ‘duh moment’ in the sense that I look at that and say, ‘Gee, constrained supply of products and services coupled with massive money printing?’ That’s literally like the day you show up for Econ 101 in college. That’s the recipe for inflation, you know?”
Emotional Decision-Making
“It’s funny, I always look at stock investing or investing in retirement plans. It’s the one place where our emotions are counter to everything else we do. You know, when the local department store, Nordstroms or whatever, has a sale, and it’s the sweater you’ll own your whole life, you buy two of ’em. When the stock market goes down, instead of people buying more, their first reaction is ‘I gotta get out’ — they panic. And then on the other side, when it’s going up in value dramatically, it’s our fear of missing out that makes us think, ‘I gotta get in. I gotta buy.’ And it’s totally counter to the logic. […] And that’s the interesting part about retirement plans. Like if I looked at it today, for most people, this is an ideal time to get in.”
Finding the Silver Lining
“If you’re feeling the pain in the labor market right now, there’s something wrong with you. You know, we’ve got 11 million open jobs in this country — that number may have come down a bit in the last six to eight months — but there is such an incredible demand for labor at this point. That’s my silver lining in all this. Hopefully, if people stay fully employed, an economic disruption like this is an opportunity.”
Having More, Working Less
“Our prosperity is a function of our productivity. And so if we don’t want to remain that productive or grow that productivity, we have to accept a lower standard of living as an economy as a whole. As long as everybody’s cool with that, that’s fine. I just think a lot of people […] want all the goodies but don’t want to have to work as much for it. That the math doesn’t work.”
A New Perspective on Immigration
“Like Japan, we’ve got a large number of people that are of older age that are more demanding of the social safety nets and systems that we put in place. It’s putting a real strain on our economics, for sure. People are always like, ‘What are your thoughts on immigration?’ I’m like, ‘We need about 30 million working-age people to come to this country because we need the labor, we need the productivity, and we need young people to support the older people. […] If you’re not having kids who will replace the aging population leaving the workforce or dying, you have to have migration from other countries.”
On the Other Side
“I remain fairly positive about what we’re going to go through here with the markets and the economy and everything else — because we’ll come out the other side stronger, more courageous, ideally harder-working, and more robust as a function of that.”
LEARN MORE
Check out Chris Cubbage’s company, Retirement Advocates, a retirement consulting and wealth management firm committed to putting their clients’ interests first.