Almost two years ago to the day, I wrote one of my first blogs about listening to an economist at the Denver CEO Forum. Dr. Beaulieu, Executive Director of the Institute for Trends Research, had many predictions about how we should invest/spend our money in the future as well as naming the pet industry as one of the top 10 industries for the future.
Fast forward to the 2011 Denver CEO Forum – same speaker, same positive outlook on the pet industry. Most of the predictions he had made two years ago were pretty darn accurate, save his prediction that real estate was at or near the bottom.
Much of his talk this year focused on how to keep your head above water over the next 6 or 7 years. It’s not going to be easy, and it’s not going to be pretty. In a nutshell:
- Are We In A Recession?: We are not currently in a recession nor does Brian feel we will enter one until 2013. He feels strongly that 2012 will be a good year, and he recommends business owners stay aggressive in their plans for growth through 2012. We will enter into a recession in 2013, which will last through 2014. 2015-2017 we will be “running on all 8 cylinders”, then 2018 and beyond we will fall into a deep recession unless the government fixes all of the structural problems that have been caused by the huge deficit created over the last few years. And he says everyone should be retired by 2028, because stuff is really going to hit the fan then!
- Where should I invest my money?: Commodity prices will rise, and some of the best investments right now are industrial and agricultural commodities, which you should hold through 2013. Owning bond funds as a matter of CREATING capital won’t work, because when interest rates finally start to rise, prices of bonds will fall. So only invest in short term bonds. Instead, buy dividend yielding stocks, especially non U.S. companies because they pay a higher %. And use ETF’s instead of traditional mutual funds.
U.S. Manufacturing: Companies are bringing manufacturing back to the U.S. after realizing that they are saving little to no money making their products overseas when incorporating the ever-increasing costs of transportation. Not to mention that Americans prefer to buy products made in the U.S.A.
- Interest Rates: They will stay low as long as unemployment is high because Ben Bernanke will do anything to get people back to work.
- Christmas Season: We will have a better 2012 then 2011 because of the change in money supply that will happen in the next year. There will be more cash available and more desire to use credit.
- Real Estate: With interest rates at all time lows (as of this writing, you can get a 30 year mortgage for under 4%), it’s still a good time to buy real estate. Brian feels that the ratio of home ownership to rental will continue to decrease and that putting your money in rental properties is one of the best possible investments. Try to buy a property with a view of the mountains or the ocean; people will pay dearly for a view. One of the interesting observations I had was that he told us that Texas was the healthiest state to do business in; it was #1 in many categories. But as someone who lived there for 31 years, I can tell you that there are very few properties with either ocean or mountain views in the Lone Star State!
Key Mega Trends:
1. There WILL be inflation in the next few years.
2. Positive population growth is critical for a healthy economy. He urged us not to put our money into Russia because they are experience significant negative population growth.
3. TAX INCREASES – there will be increases either in the form of broadening the tax base or raising rates.
4. BRAZIL is HOT. Lots of selling opportunities there.
Finally, these are the markets with the most opportunity in the coming years:
- PETS!
- Funeral Services
- Alcohol
- Health Care Practices
- Legal Services
- Green Energy
Carol Frank of Boulder, CO, is the founder of four companies in the pet industry and a Managing Director with BirdsEye Advisory Group, where she advises pet companies in M&A transactions and Exit Planning. She is a former CPA, has an MBA, is a Certified Mergers and Acquisitions Advisory (CM&AA) and holds Series 79 and 63 licenses. She highly values and incentivizes referrals and can be reached at cfrank@birdseyeadvisory.com.