Anyone who looks around in 2024 could be forgiven for thinking that whatever world the stock market is living in, it isn’t occupied by most humans. In mid-May, I happened to watch an interview with former defense secretary and CIA director Robert Gates, who noted there were four separate wars in the Middle East alone. He wasn’t counting the deadliest, Russia and Ukraine.
Yet against this backdrop, the Dow Jones Industrial Average recently climbed past 40,000 for the first time. Fourteen of the world’s 20 largest markets, including those in Canada, Brazil, Australia and many European nations, also approached or reached all-time highs.
Research from market strategist Ed Yardeni, who predicted in the early days of the 2020 pandemic that this decade would turn into the Roaring Twenties, puts the U.S. returns in perspective. Since 1982, equities have climbed 40-fold while nominal GDP is up eight-fold.
That gain was matched by the market capitalization of the S&P 500, which rose “from $1.0 trillion in 1982 to over $40.0 trillion currently,” says Yardeni. This period of more than 40 years represents the working years of most adult baby boomer households. During that period, standards of living improved—these are measured by Yardeni as real personal income expenditures, which doubled from $55,000 annually to $119,000 a year at the start of 2024. What a four-decade bull market has done for expectations remains to be seen.
All this remarkable wealth creation hasn’t been accompanied by similar gains in the quality of life, however. In the early days of this 40-year boom, Americans got to see some tangible benefits from the early days of globalization, from the outbreak of democracy in South America to the fall of the Berlin Wall. Eventually, some negative trends emerged, too—hollowed out industrial communities and teens psychologically scarred by social media.
In this month’s cover story, contributors Steve Gresham and Suzanne Schmitt examine the opaque issue of financial wellness. Strong markets and a sound economy have left many clients feeling ready for retirement, but that doesn’t mean they are prepared to enjoy a life of purpose and meaning.
Advisors certainly can’t control developments like deglobalization, and they have only limited ability to help clients structure their non-financial lives. But, as Gresham and Schmitt write, they can make clients aware of the problems they are likely to confront in retirement and how some people successfully address them.
To prepare, one of the first steps clients can take is to draw up retirement budgets, a process senior writer Ben Mattlin dives into on page 49. Experienced advisors warn their clients not to underestimate the healthcare costs they and their families are likely to confront.
Attitudes toward education have also changed. There’s been a wholesale re-examination of the value of college, for instance, after the abrupt pause of in-class teaching during the Covid-19 pandemic, which happened at a time when tuition costs have been rapidly rising and many colleges are closing. Everyone has read about the protests over Israel and Gaza, which prompted some universities to return to virtual learning. But there are other problems hampering freshmen: On page 47, senior writer Jennifer Lea Reed examines the troubled revamp of the Free Application for Federal Student Aid, or FAFSA. Technical problems with the new form’s rollout have wreaked havoc for next year’s incoming class. According to college advisors, the picture for applicants isn’t any prettier than those on campus.
Hopefully as the year proceeds, the markets won’t be the only source of good news.
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