EXTRA, EXTRA! Did you hear the news last week? The National Bureau of Economic Research declared that the Recession’s over—well that’s just great….how timely that it was determined that it ended in June of 2009—yes, that’s right, 2009. What can we glean from this lag in data—the greatest blog comment on the topic I’ve found, Mebane Faber’s World Beta suggests, “If I was an economist I’d just announce every recession was over about a year after it began.” I agree—and with that of the bumper sticker that started circulation some 6-8 months ago: “The Recession’s OVER Now Buy Something!”. On a more serious note, some interesting historical data on past recessions to see how this last one stacks up can be found here: http://www.chartoftheday.com/20100924.htm?T The data shows this last recession in 5th place for the longest in duration since 1900 and the worst since the Great Depression (1929).
How can you be different in the next economic downturn, in other words be the happy guy whilst all others are moaning? MAKE YOUR OWN ECONOMY—what does this mean you may ask. I encourage clients to continually create their own economy by bullet-proofing their own financial lives to provide some immunity to the surrounding world economy. HOW?
- Attitude: The glass must be half FULL or you’ll be thristy just like rest of the nay-sayers
- Cash is KING: 10-20% of your Net Worth in cash at all times—think of all the opportunities you could’ve considered in the last year had you had more cash in the bank; the stock market, foreclosures, helping a friend or loved one
- Never Get Comfy: When a job or business or relationship gets too comfortable, it’s time to grow and prepare for rocky roads ahead. Get ahead of the curve and be creative.