The Coming Recession?
September 18, 2019 | Uncategorized | No Comments
There has been a lot of talk recently about a coming recession. It seems almost like a switch was flipped and not only has the mainstream legacy media been united on delivering this message, but everyone in our day to day lives seems to be thinking and talking about this as well. Where did all this talk come from? What should we ultimately do to prepare ourselves for it? Well it seems to me that some people are always preaching doom and gloom no matter the weather, and on the same note some people are better off not listened to. Those of you reading this will remember the Great Recession nearly a decade ago. You probably have memories of family and friends struggling as the economic world seemed to collapse around us all suddenly and unexpectedly. People panicked and there was a rapid selloff of the stock market to accompany this economic down turn.
Above we can see a stock chart showing the change in value of the S&P 500 in the years leading up to and following the great recession. There are three things about this chart that really stand out to me. The sudden and rapid drop of 2008 going into 2009, and the slower gradual recovery, and most importantly the return to existing price levels in ~5 years. Looking at these charts and even if we go back further we can see that after all the worst crashes of our history such as the Great Depression the market will eventually not only correct itself, but exceed to even higher valuation levels in time. So what is the best thing we can do while the world seems to be collapsing around us? Keep collecting those sweet, sweet dividends and hold out for sunny skies. If you have built up your emergency fund ideally you won’t have to touch any of your investment capital and can continue reinvesting all your dividends into further purchases which will now not only be cheaper but will start with a higher dividend yield leading to a great initial return on your investment.
Stay cool, calm, and collected and follow the plan. It’s easy to panic and follow the herd… but is that really such a great move?
Questions? Comments? Have something you would like to see featured? Please write to me @ Reinvested@yahoo.com.