Over the last 10 years the world has not seen growth in individual or corporate earnings and in fact staring into recessionary conditions. If there has been little growth anywhere, it is without job creation. In fact, technology seems to be the only driver to growth like the new Amazon Stores, is without creating additional jobs. People have lost faith in the existing governance across the world and are choosing to take radical decisions. To top it all terrorism has made life even worse.
People have got tired of the existing establishments and are willing to change the system with radical decision making, such as BREXIT or election of Donald Trump in US. It seems that such changes will continue to happen, thereby showing a revolt against the failure of current political systems. Protectionism in economies, changes in employment pattern, breaking up of the free global trade are some of the changes that we will see.
Companies, Countries and Individuals are all immersed in heavy debt at record levels. We are all in a vicious cycle of high debt, low earnings and accommodative monetary policies. As a consequence, with low growth levels, debt reduction seems impossible and also unserviceable.
US and Europe have shown some signs of green shoots in their economic activity. Stock Market Indices such as Dow Jones (US Index) and Dax (German Index) are near their life time highs which looks irrational. Sooner than later, Stock market cycle would fall in sync with the Economic cycle and correct to realistic levels. Given these conditions we should not be overexposed to equities and rather be invested in fixed income securities with low risk.