Remember the 70s?

Where is the economy heading? I hear it all the time... My crystal ball has been broken for quite some time, but there is something strangely familiar about the current market conditions.

I remember! It feels a lot like the period of 1970-1980. There are uncanny similarities: 1) there was a war going on, 2) inflation was out of control, 3) the dollar was sinking, 4) there were political problems, 5) oil prices were very high, and 6) the stock market volatility caused many people to lose money.

What is really interesting is how different assets performed during this period of time:

If you had invested $10,000 in each of these assets in 1970, then 10 years later AFTER INFLATION it would be worth:

Stocks (S&P 500) - $9,870
Cash - $8,953
Bonds - $8,254
S&P Utilities -$8,090

All of these numbers assume you STAYED INVESTED and didn't jump ship when you got nervous or worried. If you did jump out, there is a high percentage chance that you lost even more money!

In all of the above examples you would have lost purchasing power because of the high rate of inflation, which averaged 7.8% during the 1970s. This is the template for how the current economic situation is stacking up.

If you had invested $10,000 in stocks (S&P500) on December 31, 1998 - a full decade ago - you would have lost -2.14% annually after inflation over the past decade. This is a real problem if you retired a decade ago and have been living off of your savings!

Alternatives to these traditional investments include real estate, commodities, raw land and timberland, among many others. These are called "real assets" because they are tangible assets that you can own to protect yourself from higher inflation and volatile markets.

Do your homework and you can beat inflation in the upcoming economic environment.