Everyone is fearful of a recession happening. I keep hearing about the fear over on the FB group, through messages/emails, and on multiple other media channels. I can understand the fears… but are they justified? In my opinion, no… and I will tell you why:
RECESSIONS ARE PART OF THE ECONOMIC CYCLE.
Yes, they happen. Yes, they are NEEDED. It is just like forest fires folks… they are a bad thing, but they are NECESSARY for the health of the forest. They clear out the debris and junk. A recession is the same thing with the economy.
Our economy has been INFLATED with money over the past 3 years thanks to the irresponsibility of the FED and our government… valuations of everything have gone up, including garbage… Look at the valuations of cryptocurrencies, junk tech stocks, used cars, and so forth. It makes NO SENSE. Think about this: the valuation of companies like Snap Chat, Zoom, Rivian, Uber, and a multitude of other tech stocks were valued greater than established companies like Ford, Duke Energy, 25% of Microsoft, and so forth… It was STUPID. It made no sense. Those companies weren’t even generating profits! You really think Zoom is worth 25% of what Microsoft is? Come on… You think Rivian is worth what FORD is? Ridiculous… the company never even produced a vehicle during its crazy valuations!
This is what I mean by a recession being needed to clear the junk. It is unfortunate yes… People are losing money… It is awful for many people out there, but it is part of the natural cycle of our economy. It is what it is.
Personally, I like recessions from a personal financial standpoint… Why? Because significant WEALTH can be generated during times like this. Wealth is not generated in the market when prices are at an all time high. At that point, it is too late to invest… Folks, NOW is the time to begin investing when prices are dropping in the market. If you would have listened to my advice during the COVID recession, you would have made A LOT of money. But I digress.
The stock market is losing value rapidly. When will the bottom be? Who knows… no one can predict that, but we are seeing values that were seen before the pandemic started. We are getting back to “normal” so to speak. The wildfire is clearing out the debris. This is the time to begin making moves that could potentially accelerate your wealth.
What you need to be doing is something called DOLLAR COST AVERAGING (DCA) right now. What this means is that you invest in the stock market on a regular basis in small amounts. You are not timing the market, but you are investing regularly. If the market continues to drop, you are continuously investing on the way down. If it goes up a little, you invest on the way up. What you are doing is spreading out your risk and your returns. You are taking advantage of the sales! DCA is a fairly safe bet when it comes to investing during times like this.
Now on the flip side, if you are sitting on some large sums of cash either in your personal or business accounts, now would be the time to transfer that over into your post-tax brokerage account. Begin dumping chunks of cash into the market on a regular basis. This is what I am doing. Every 2-3 weeks I am throwing large sums of money into a few index funds (VTI, VTV, VDE, VXUS). I have been doing this since February when the market began to go down. I am buying stocks and funds at a discount. I expect to make a solid return WHEN the market rebounds.
People build wealth when they buy low and sell high. Remember that… NOW is the time to begin investing in the market as prices drops. You are buying discounted deals! You are buying low! I am confident the market will go back up. Why? BECAUSE IT ALWAYS DOES! It might take a few years, but it WILL go back up. It always has… If it crashes to nothing, then we have more important things to worry about than money… that means our society is in shambles.
Additionally, do not fear recessions if you own your own business, especially a cash practice. People will still have disposable income to spend on cash-based medical services. Why? Because many upper middle class and wealthy people have recession proof professions and are sitting on piles of money. These people will always exist, regardless what the economy is doing. There are a lot of people in your area sitting on money. I guarantee it. Don’t let naysayers tell you otherwise.
Also, did you know employment numbers are at all-time highs!? Layoffs are at all-time LOWS!? People will not be laid off in massive numbers… That isn’t going to happen this time recession. There are so many job openings right now!
This recession is being triggered by inflation, supply chain issues, and the war in Ukraine. If any of these things improve, then the economy will improve. If they don’t, then problems will likely linger for a while.
The Federal Reserve is currently increasing interest rates to tackle inflation. This will help.
Supply chain issues will continue because we don’t have enough workers… Energy costs are high… We have supply shortages in multiple industries secondary to world events. Look at China, they are still under lock downs secondary to COVID. When will these things improve? Who knows…
The war in Ukraine is a toss-up. Who knows when that will end.
Now, think about what YOU can control. Can you control any of those things? Nope, you sure can’t… So, why worry about it? You need to worry about how you are going to continue growing your business or how you are going to start it. The events in the world are out of your hands. Keep a cool head. Don’t let fear paralyze you from taking action.
SMART businesses that are in demand (a variety of niche and medical services) that are started during rough times FLOURISH. Why? Because everyone else is SCARED. It is the same thing as investing in the market during down times… people are SCARED.
People who started their niche practices during the COVID scare FLOURISHED while others who were too scared to start one are in the same situation today then they were back then. My men’s health practice doubled in business. In fact, I started my second men’s health clinic during that time. I know dozens of other nurse practitioners who saw similar results.
People who invested in the market during every single recession in history FLOURISHED. Ask around! One of my friend’s fathers who invested in every single recession over the past 25 years is now worth $10 million+. He was just a middle class engineer too! I talked to him the other day, he said “You need to be investing everything extra you have into this market! That is what I did I made a fortune.”
So, do you want to be paralyzed by fear and sit back and do nothing? Or do you want to take life by the horns and take advantage of the situation? Personally, I am taking advantage of the situation as much as I can. Like I said before, significant WEALTH can be generated during times like this. Take advantage of it. You won’t see me slowing down!
If you are too scared to invest or start a business, then that is fine. Save your cash because there are going to be amble opportunities for the astute nurse practitioner in the coming 1-2 years! But they won’t be as lucrative as the ones over the next few months!
I just want to say you are a wealth of knowledge and a blessing the NP community that had come to know you. Thank you for all the “free game” you give!
You are very welcome. A pleasure to help 🙂
What about buying a home. Do you think it is a good time or a bad time?
I think home prices are going to stagnate. I do not think we will see a crash in prices as demand is still high and supply is low. With rising mortgage rates, prices will either stay where they are at or go down a little bit.
Interest rates are only going to go up over the next year. So, if you are looking for a home, I would advise getting one ASAP. We are looking at a high interest rate environement for quite some time.
Thank you so much.
I am unfamiliar with the stock market, what would you suggest to use to assist with buying the right ones or would you suggest doing something else?
Thank you as always for your advice, you have been God-sent!
You really need a good understanding of the basics, and I teach that in the financial independence/investment course just FYI…
You could also hire a financial advisor, but it can get expensive. If you understand the foundations, then building a simple portfolio is a piece of cake.