By Jamie McIntyre
What are the best ways to fight through an economic downturn? Jamie McIntyre explains a set of rules that demand financial stability beyond the GFC.
I've been saying for over a year now, that the world is heading into a serious recession and there's a 50/50 chance of a depression and a financial crisis on par with the Great Depression, particularly in America.
A year ago, people thought I was overly pessimistic. I don't want to see that things are better than they are, like overly optimistic people, nor worse than they are, like pessimists. I just want to see what is and then devise a gameplan around that.
These are the same people that believe we will have a V or U shaped recession: a fast recovery. If it does happen it would be considered a nice bonus, but unlikely. For mine, we are going to suffer an L shaped recession, or possibly with what's happened with the share market recovery since 9 March, a W shaped recession.
Meaning an upturn ahead of another downturn before any real recovery occurs.
So is the worst of the Global Credit Crisis over? I'd say no. Fundamentally the US and world economies have a long way to go before this problem is solved.
So what is a good game plan to survive and thrive in the Global Credit Crisis rather than just hoping the markets and economies will miraculously recover? The first rule is to survive. To win the game of business and investing you must stay in the game. Just surviving means when there is an upturn you are in the game still and can prosper.
his means a hard review of expenses and overheads and major cutbacks.
Now that you are able to survive because of lower expenses and overheads, you should shift the focus from fear of the doom and gloom to becoming creative and figuring out how to thrive in the recession.
So one of the new rules is to accept what may have worked in the past may no longer work in today's world.
Also focusing on what industries or strategies work best in a recession.
One should no longer expect the share market and property markets in western societies to always rise. Right now I'd be focused on cash flow from real estate and shares, not capital gains, for instance renting shares has never been more profitable and makes money whether or not the share market goes up.
With low interest rates and affordable housing, now more than ever, good rental returns can be gained, whether you get any capital gains or not doesn't matter as you are still profiting.
Your rule should be... Capital gains in shares and real estate are a bonus.
I want to make money regardless and if they rise in value as well, then great. If not, I'm still going to use strategies that make me money in a flat market or depressed market, so I can profit regardless.
I'd also suggest developing your internet skills and building a second or third income online to diversify your income, so you'll soon be asking others... what recession?
Actually, I was talking to one of my business mentors recently, Richard Branson regarding how the cynics were criticising him for starting 'V Australia' during a Global Credit Crisis.
And he rightly said...
"If I waited for a perfect time to start a new company, then Virgin would not exist today, as it would never have started."
Jamie McIntyre is founder of 21st Century Group of Companies. www.21stcenturyacademy.com
