Debatable: What the long-term effects of lockdowns and quarantines will be. The role of government in relief programs. What percentage of the trillions of dollars spent in assistance programs was wasted by graft, corruption, and mismanagement.
Not debatable: When governments print trillions of dollars of money that they don’t have and throw it out of helicopters, payment will come due at some point. It doesn’t matter if the intent is well-meaning and actually provide a level of relief or not. At some point, the bill still has to be paid.
Right now, we are witnessing a stock market meltdown the likes of which have never been seen before. There are individual companies losing literally tens of billions of dollars a day. The seven largest cap companies have lost $2 trillion in their market capitalization since the beginning of 2022. The last time this happened was never. Credit is tightening and the cost is going up. Venture capital funding for new projects has almost disappeared. Inflation is heating up. Cryptocurrency, which in theory should have served as a refuge from fiat currency fluctuations, did nothing of the sort.
What we’re experiencing now can’t be called it a Black Swan event, because this type of reckoning was perfectly predictable. But I believe there are extenuating factors which are also producing a vortex of dramatic and unexpected unpredictability.
As is normally the case in times of extreme volatility, people look to the past for clues. But I don’t believe you’ll find the answers in Black Monday, 2008, or even the Great Recession. Because what we’re seeing now has never occurred in human history. Yes, we’ve seen all kinds of recessions and a depression, bear and bull markets, even pandemics. There are lessons to be learned from each. But what we’re going through now, and about to go through soon, is a “one of” scenario that has never happened before. Factor in the following elements:
Throw all these elements in the crockpot, let simmer, and you have the recipe for something devastating.
Winter is coming…
There’s no way to predict what’s about to happen. But it would be prudent to plan for some very damaging consequences. This might be the worst metaphorical winter we’ve ever seen. But winter is always followed by spring.
Every challenge holds the seeds of an equal or sometimes greater opportunity. Even the horrific pandemic was actually an economic boom for businesses like e-commerce, online meeting platforms, home exercise equipment, and streaming entertainment. The companies that were in a position to handle the growth prospered and others that weren’t disappeared. I believe a time like this calls for a back-to-fundamentals approach. Yes, there will be some once-in-a-lifetime growth opportunities. But they will be outnumbered 10,000 to one by monumental collapses. Tune out the hype and live within the realm of reality. I don’t give investment advice. But I will share some thoughts on what I’m doing myself to make prudent decisions congruent with the laws of prosperity.
1) Demolish Your Debt
One of the shrewd moves right now may be paying off credit lines and becoming debt-free. Stay liquid for the better opportunities ahead.
2) Boring is the New Sexy
Go back to the basics. Look for real products that solve real needs and add tangible value. Your brother-in-law’s restaurant is never going to 100X your investment. But if it’s well-managed and serving great food with excellent service, it could provide a nice place to park some money. Real estate is still real estate. Income producing property doesn’t get the sexy publicity speculating in NFTs does, but businesses built on the fundamentals can be a good return on your investment while the crazy shit shakes out.
3) Dial Down Dumb
It should go without saying (but won’t) – don’t buy status signaling items like jewelry, cars, or a too-big house to impress others. These are always stupid decisions, but much more foolish and possibly dangerous now. If you want to posture for everyone how wealthy and clever you are, the best way to do that right now just might be not having your house foreclosed on, or your Lambo hooked up by the repo man.
4) Rejoin the Physical Realm
I expect to be mercilessly mocked for this, but personally I’m staying away from all cryptocurrencies and NFTs for the foreseeable future. If we’re being brutally honest, Bitcoin has not brought any real value to the world as yet. The issues around security haven’t been satisfactorily resolved still, and it’s not serving as a store of value. At the moment, it’s simply one more potential high-risk, high-reward potential investment, but without any underlying product or service, and no regulation. At this point, I’m becoming extremely doubtful that Bitcoin is going to end up as the mass adoption cryptocurrency. (I’ll probably do a follow up post with how my rationale is evolving on this.)
5) Diversify Both Assets and Risk Levels
Don’t have all your assets in one currency. Don’t keep them all in one country. Don’t have everything in one category. Put 50 percent of your portfolio in low-risk/low-reward investments, 30 percent of your portfolio in moderate-risk/moderate-reward investments and 20 percent of your portfolio into high-risk/high reward scenarios. Even if the high reward options do great, don't take everything out of the other two categories. Pigs get fat. Hogs get slaughtered. Most people today shun the less rewarding but solid investments, and just want to chase the unicorns and 100X. But that’s why so many got wiped out with worthless NFTs and shitcoins like Dogecoin or Luna.
6) Take Charge of Your Own Prosperity
Governments – even the well-meaning ones – are inherently corrupt and mismanaged. They never create prosperity. At best, they can only facilitate it. More often they squander or obstruct it. Don’t outsource your prosperity to anyone, especially governments. Take charge of your own prosperity by developing your prosperity consciousness. And that is a mindset. A mindset driven by abundance, not lack. Not the fear of loss mindset that most people have, but a mindset of possibilities. Remember that every challenge presents a corresponding opportunity, often in disguise.
Dial down the media and social media influences. Go back to the foundation of abundance. All true prosperity is created by:
It may not seem like it on the surface, but you live in the greatest time in human history to be alive, and manifest prosperity. Make the most of it. You deserve it.
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