Meet.....The LINTs

The growth of mass media in America has long enjoyed the creation of generational, social and economic nicknames. The infamous “Baby Boomer” generation carries the flag for the most pertinent nicknames, with a massive trend-setting population that has been closely watched for decades. Within the Baby Boomer generation, the 1980s brought the Yuppies (Young Urban Professional), the DINKs (Dual Income No Kids), even the WASPs (White Anglo Saxon Protestant) need a mention in order to cover our basis. Cue the debut of the newest economic group, the LINTs – Longterm Investor, No Treasure.

So arguably the LINT trend came about in a hundred ways, but let’s focus on (1) less savings (2) investment losses. The 1980s is a good place to trace this epidemic, where the national savings rate peaked and started a freefall. The consumer savings rate in the US was 9% on average from the 1950 to 1985. The peak came and went in the 1980s, as double digit savings rate of 11%+ was achieved. During the subsequent decrease, yearly snapshots of savings rates include 1990 (4.9%), 1995 (2%), 2000 (1.9%), 2005 (-.01%). Yes that is a “-“ negative sign in front of the 2005 statistic.

And for investments, there have hardly been any places of longterm safety. Just look at the so called “Blue Chip” stocks – (whose name actually derived from blue casino chips, the highest in value) once equated with premium, now with the down-and-out GM, Citi, and GE. Gains were made as Baby Boomers and Generation X&Yers saw their stocks in the Dow roar from 2,750 Index in the early 1990s to over 14,000 in October 2007. Gains were made but was wealth accumulated?

People used stock market gains and home sale proceeds to boost themselves into higher quality lifestyles, but typically this was at the expense of personal savings and increased debt. The Dow has halved itself since then and home prices have fallen 20% off peak values with high levered mortgages, leaving even the most prudent investors stuck between a rock and a hardplace. Investments in 401Ks and your home suddenly seem a bit more risky...

Household debt as a percentage of personal savings also has seen a staunch increase, from below 80% in the 1990s to over 120% in the last few years according the US Bureau of Economic Analysis. These figures include credit cards and mortgages, showing that despite the valiant economic times of the 1990s, and the post 9/11 2000s - the money went heavier into consumer spending than into the bank accounts.

So thus as a society we helped to create the LINTs. For every well funded 401K and Roth IRA there were the stark adversaries of cheap debt, tech bubbles, and real estate deals with no money down – the temptation around the corner.

Let it be said that credit must be shared for the LINT acronym (if its deemed credit worthy) as the day it makes it to another blog, wikipedia, or Bernanke’s mouth is the day I reveal that two others helped me with the idea. (And the other reason is that NAWs – No Accumulated Wealth sounded terrible and ASAPs – Always Spending Always Poor – was already taken).

So whats the verdict – is there anyone with the answers? Currently the answer is no, but with another nickname in the arsenal commentators and experts worldwide can give attention and input to yet another trend of our generation.