The Party’s Almost Over, ‘bout Bloody Time

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I’m over it.

I’m over hearing about the inverted US & UK bond yield curve. The warning signs of such an event occurring have been apparent for months now. And yes, I’ve seen the same, regurgitated retort about it predicting every major recession in the past 30 years…

I’m still over it.

I’m over hearing about the trade war, too. Neither side is going to compromise until they really, really have to. All Trump and Xi really care about are there egos. It’s beyond ridiculous now; we’re at the point where Trump agreeing to delay — not revoke — tariffs actually sent share prices higher.

I’ve been over this for the past year.

What about interest rates, unemployment, inflation or any other cherry-picked statistics? Oh, I’m definitely over that. It’s almost as if the media are shocked that central bankers have no goddamn clue how to solve the mess they created. We’re on the road to zero now people!

We should all be over that.

More than anything though, I’m over waiting. All of this upheaval has been drawn out for far too long.

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The next recession, crisis, downturn, collapse — whatever alarmist title you want to give it — is coming. It’s not a matter of if, it is simply a matter of when. And right now, it’s looking closer than ever.

But rather than put on a brave face and bear it (no pun intended), idiots everywhere just keep postponing it. It’s as if the economists, the analysts, the politicians, think they know better than all of their predecessors. Somehow they think this time it will be different, that the cycle can be broken.

Oh it’ll be broken alright, the festering policies and decisions of recent times will see to that.

We just have to accept that the party is winding down. It’s time to call it quits, for everyone’s sake. Because the longer we wait, the worse this economic hangover is going to be.

Rip off the band aid

It seems pointless to me to argue about how we arrived at our current destination. No doubt questions will be asked and answers required, but right now isn’t the time for that.

Hindsight always offers a clearer picture than the present. Let the future historians sort out who to blame and where to point the finger.

Right now, our concern should be the cycle. Economies have and always will have ups and downs. That’s simply a result of the way money works. We lend, we borrow, we save, we spend.

You don’t have to be an economist to understand this. What you do need to do is look at the bigger picture.

If all you focus on is your day-to-day finances, then you’re not going to see the cycle. How you earn and handle your money is going to be very different to how I earn and handle mine. And that’s perfectly fine.

Understanding cycles though, is a great way to ensure your day-to-day finances are as stress free as possible. No one plans to fall victim to a credit crunch, but you can plan to do your best to avoid it.

The longer and deeper they are though, the harder they become to endure. Which is what I, and many others, are concerned about. Ensuring as many people come through the next downturn in relatively good financial health should be a top priority.

I’m not seeing a lot of effort towards that cause at the moment, though…

So, bring on the pain I say. Because if we’re not going to dampen the blow, we may as well make it quick.

The other side of the crisis

Now, if you’re still reading and I haven’t completely spoiled your Saturday, then here’s the good news. After all, I’m optimist at heart.

See, no matter how bad the hangover is, eventually it will fade. By the next (figurative) weekend you’re ready and raring to go again. The cycle begins anew!

How you approach the cycle is up to you. Everyone has different needs and objectives. Just have a think about it, and the best ways you can achieve your goals.

If I were worried about maintaining my wealth, then perhaps I would need to be more guarded. If I was looking to grow my wealth, perhaps I could explore investments that perform above average during a downturn.

There are always avenues to make or retain money during tough times. More importantly though, once they’re over, the good times can start again. And once the hardship is behind us, it usually doesn’t look all that bad.

Don’t believe me? Let me show you.

Money Morning

Source: Google Finance
[Click to open new window]

I’ve highlighted two of the biggest share market and economic rorts in the past 20 years. Look how insignificant they have been in the grand scheme of things for Amazon’s stock!

These two major financial events barely make a dent at all. In fact, the tech sell-off late last year looks far more menacing, and this is purely because it was more recent.

Keep in mind, not every company is going to be an Amazon. Some won’t survive a downturn, and that’s fine. This is all part of the risk and reward of investing.

But, that’s exactly why I’m excited for the current party to come to an end. Because the next one is going to be even bigger and better!

I want to see what the next Amazon looks like. Companies that could be as life-changing as the ones we have now. Not just in terms of generating wealth, but also in reshaping our day-to-day lives.

That is what I’m excited for, and that is what I’m looking forward to. And I think you should be looking forward to it, too.

But in order to get there, we’re going to need to sort out our current predicament. Hopefully sooner rather than later.


Ryan Clarkson-Ledward,
Editor, Money Morning

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About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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