The US economy seems to be at an inflection point and heading downward. Inflation rates are reaching levels we have not seen since the late 1970’s. The US consumer, which accounts for two-thirds of our domestic economy, is struggling to keep up with the cost of living. The easy money policies of the American central bank are coming home to roost. Many experts including Elon Musk are calling for a recession.“This will probably be tough for some, and this might go on for a year, or may be 12-18 months.” Cryptonewmedia.
Instead of hiding from the storm, now is the time to create a plan for investing before the recession begins:
Dance 1: Keep your powder dry.
Now is the time to start paring back on non-essential purchases (this does not include Fine Wine for those wondering). Call for a family or company meeting and discuss ways to cut back and start allocating money to a “rainy day investment fund.”
Dance 2: Choose your dance partner now.
Sam Zell, the king of commercial real estate, made his fortunes in down economies. In his article, the Grave Dancer, he illustrates the eerie similarities of today and the high inflation environment of the early 1980’s, real estate oversupply and a short term infusion of capital into the markets. Do your research now to align your interests with investment managers who focus on opportunistic areas of real estate. As the markets begin to stress, opportunities will begin to materialize. When there’s blood in the streets, that’s the time to buy. Recentric is in the process of exploring an investment fund to capitalize on distressed market conditions, should they arise. Stay tuned for more information.
Dance 3: Move those inflated investments to gold.
While gold may have lost its luster to the cryptocurrency industry, no other form of currency has as much of a history as a tried-and-true medium of exchange and store of value. For example, during the Great Recession, the value of gold increased dramatically, surging 101.1% from 2008 to 2010, according to a report from the Bureau of Labor Statistics. Be sure to consult with your investment adviser before making any decisions with your stock portfolio or any other investments.
In my April 2022 newsletter article, Control What you Can, and Plan For What You Can’t, I explained that you can create a plan for things you can’t directly control. We have seen this movie before, as recently as 2008, and we know how the movie ends. If we know we are going into a recession, you might as well not hide from the storm, but instead dance in the rain and when the clouds clear, you will be in a better financial position.