How to Survive a Market Wide Crash
I had a landscape gardener come around to my place yesterday. The backyard is in need of some TLC. It’s a job that I could probably do myself…but would take weeks, maybe months, and a lot of time…like a lot of time and labour.
And it’s time I don’t necessarily have right now.
That means onto checkatrade.com to find a trusted local landscaper. He arrived at my place, we went through what I’d like done to the yard and had a bit of a chit-chat on the way out.
He asked what I did as I’d let him know I work from home. I let all tradies know I work from home. Just so they’re fully aware I’m almost always in. Call it a bit of a preventative security measure. And also, it’s true.
I explained to him I was a financial editor. That I write for a number of online publications and newsletters about finance and investing. That’s as simple an explanation I can give for what I do.
Inevitably the next question out of his mouth, as is the case with most people who ask what I do, was, ‘where should I put my money?’
Without going through the rigmarole of spurting out my disclaimer about not giving personal advice as a restriction of my ASIC and FCA licencing regime, I just said to him, ‘well isn’t that the million dollar question!’
Thereby the next question was, ‘what kinds of investments do you look at?’ Now I knew right off the bat that saying cryptocurrency was probably going to pin me down for a solid half hour. So I went with the other half of that answer and said, ‘stocks, all kinds of stocks from all over the world.’
He was quick-fire, following that up with what did I think about all this ‘Brexit mess’. I wasn’t sure if he was an investigative journalist or just chatty. I decided on the latter.
Internally though, I’m thinking, just gimme a quote mate. But also toying with the possibility this guy will be doing work at the house, so be kind.
But before I could spurt out the views of someone who’s view is just to get the bloody thing done, he quickly moved on to, ‘well I guess you’re at the right end of the equation anyway I suppose’, alluding to the fact that being in finance was perhaps advantageous in the mix of Brexit shambles.
But there I tend to disagree with my local, friendly landscaper.
And I was the one to quickly chime in next.
Plumbers of the investment world…
I explained to him that perhaps he was the one at the right end of the equation. Not only with the impending uncertainty around Brexit, but with all global geopolitical rumblings.
I said to him, ‘in the event that things do go pear-shaped with the financial system, will the trees stop growing and the weeds stop pushing through the grass?’ I asked him how much of the UK is green. He said 96%…but I thought I’d double-check that.
He’s wrong, but not that far off. According to a report in the BBC, in England 72.9% is farmland, 14.5% is natural and 3.8% is green urban. Just 8.8% of land is built on. In Scotland it’s more like 26.4% farmland, 70.7% natural, 0.9% green urban and just 2.1% built on.
The point is the bulk of the countries that make up the UK are ‘green’. And I made the point to him (based on his loose guesstimation) that he was always going to have business if he ran a trustworthy, reliable business that he worked hard in.
And it threw me back to something my Dad once said to me.
He loosely said when I was younger that maybe I should consider being a plumber as a career as, ‘everyone needs their s*** unblocked at some point’.
The moral to that gem of wisdom being that if you find something that people always have a need for, then rain, hail or shine (maybe not the first two if you’re a roofer) you’ll be in work.
It’s this kind of approach that you can also take into investing. It’s certainly a factor we look at when we’re looking at small-cap Aussie stocks or global revolutionary tech stocks.
And in a sense I guess we also could look at ourselves as a bit like the plumbers of the investment world.
Need your investment s*** unblocked? Then we’ve got the right ideas to put into play. Or maybe you’re starting a new build (just getting into the investment game) and we’ll help make sure your pipes are all in the right places that let things flow the way they should.
Or maybe I’m just being narcissistic.
The important point is that if you can identify opportunities that provides benefit in all kinds of markets, you’re onto a winner. That might be investing. Or it might even be beyond investing. It might be the capacity to drop it all and do something that others aren’t prepared to do to survive a potential oncoming financial catastrophe.
Don’t be like the masses
We know at some point in the future there will be another market crash. What we can’t pinpoint is exactly when that comes. And the other question is how bad will it be?
If that does come, how prepared will you be for it? Will you be ready to invest in opportunities in companies that have the capacity to outlive and outlast the crash? Will you even have the courage to invest at all in a falling market?
Will you have the foresight to invest in counter cyclical investments that are zero-correlated to the markets?
Will you even have the wherewithal to even shift jobs? You can invest in financial opportunities and you can also invest in personal opportunities.
As my landscaper explained, during 2008/9 his business grew at an astonishing rate.
As far as he was concerned there, ‘wasn’t no recession for me’. And as he very eloquently put it, his success wasn’t about skills. Anyone can learn the skills he said. No, the difference for him was (as he put his finger to his temple and tapped it several times) ‘what’s in here’.
Hard work and work ethic. 14 to 16 hour days. Work on public holidays, Christmas even if needed. On call, emergency call out. Happy to do it to not just to provide for his family, but for the 15 guys that work for him as well, so they can do okay too.
That was the difference for him. The desire and capacity to work — and of course doing something that’s always going to be in demand.
I’m not saying that if there’s an impending crash to up stumps and start a landscaping business. But it’s probably not the worst idea either. What I would say is that you should be ready to do the unexpected, both in your investment choices and your personal choices.
Buck the trend, don’t be like the masses. And above all else, be ready for what might be around the corner.
Editor, Money Morning
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