THE NEXT RECESSION: EVERYTHING BECOMES LESS EXPENSIVE The way I see it – even though one person might think: “This is a bad time to invest…my stocks are down 30%” – a WEALTHY person would see this as an OPPORTUNITY to buy those exact same companies…for a 30% discount. LESS COMPETITION The fact is, when times are difficult – companies scale back, they fold, they conserve cash, and they play it safe – but this opens the door for more aggressive, smaller companies to stand out and take their place. MORE OPPORTUNITY. In a way, a recession is the markets way of “Weeding out the weak,” giving opportunities to newer, smaller people and businesses to develop. AFTER EVERY BEAR MARKET…COMES A BULL MARKET.
As Yahoo Finance points out, “historically, the S&P 500 has fallen an average of 29% around a recession with a median drop of 24%” – but, once stocks have found their low…the average return the following year is 40%…and, within two years…the market has increased by 58%. In terms of what to do: One, Scale Back on Your Expenses. This means that you track your income, cut back on the unnecessary spending, and operate “lean” while you continue re-investing on a regular basis. It should also include a plan to outline what you would do if your income dropped 20-50%, how you would make up that difference, and if you can take preventative measures – AHEAD OF TIME, to protect yourself from this happening. Two, Hold Some Cash. I’m a firm believer that, even though your money is statistically BEST OFF invested as soon as possible…there is the peace of mind of having a cash position, at all times, to take advantage of any opportunities that may come up. Three, Protect your career. This, at the end of the day, is going to be your BEST HEDGE against whatever happens…after all, your worst-case scenario, financially, isn’t a market going down…
it’s a market that goes down, during a time where you lose your job, and can’t afford to hold your investments long enough for them to recover. NOW is the time to IMPROVE yourself, learn new skills, double down on everything, and use that your advantage. Four, ONLY INVEST LONG TERM Generally, it’s best not to invest any money that you might need in the next 5 years…and, preferably, even longer. The best course is action – when it comes to investing – is not to do anything different and carry on as usual. Its shown dollar cost averaging, or the practice of buying into the market at regular intervals over the long term – is the most profitable investing strategy. So, stay in the markets…and continue buying in. And Five, DIVERSIFY YOUR INVESTMENTS. If you personally can’t handle a 20% drop in prices without panicking…then, maybe, you’re invested too aggressively. For instance, if you’re completely in US tech stocks, look into adding large cap and international stocks into the mix. Or potentially look into investing in real assets, gold and silver which have maintained value over the years. We have seen American Silver Eagles go from 18 dollars in 2018 to now as high as $50.00 dollars per coin. Gold historically has stayed the same and hasn’t moved much over the years, but because it’s 1,800 per oz many people are priced out thus why silver is gaining momentum. This is one-way investors can use the 2023 Recession to potentially Get Rich and maintain wealth.
Silver American Eagle (BU)
Disclaimer: we are not financial advisors, and this piece is opinion only, buying any stock may result in the loss of your entire investment.