Surviving Bad Times

I thought this was a pretty good artical and some might enjoy.

Bad time to invest? WRONG](
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I have lived through six previous recessions, but I only remember four of them. Bad economic times are downers, for the economy and our state of minds.

Even knowing those six economic downturns only lasted 1-2 years each, it always feels like we’re on the brink of doom when we go into one.

It doesn’t help that the talking heads constantly bring up the Great Depression, which lasted 10 years, and peaked with 25 percent unemployment.

I’m glad those commentators don’t know about the Long Depression, 1873-1896 that lasted 23 years.

I wonder how many people remember the survivalists back during the early 80s depression, when people bought land and guns thinking the end of civilization was around the corner.

It’s very easy for dark economic clouds to bring doom and gloom that make us all a little paranoid and crazy. What we need is light therapy for our economic depression.

My favorite movies were those made during the ten years of the Great Depression, including both the gritty social ones focusing on the bad times, and the glittery ones that help people escape their daily woes. Tom Brokaw’s book The Greatest Generation tells us how greatness came out of those bad times. If we’re entering into long years of hard times it might help to study that decade.

If we’re lucky, times won’t get that bad. And how bad are bad times anyway? The worst is losing a job and your home - check out The Grapes of Wrath for insight into that kind of bad times. I remember my parents and grandparents talking about the great depression and how bad it was, but they also had lots of fond memories from those years.

Things are much different now than back then.
We have social security, medicare, unemployment checks, food stamps, and all kinds of other social programs and charities to help people. I don’t think we’ll see hobo jungles outside our large cities, or hordes of men riding the rails looking for work, or long bread lines.
We are going to see a lot of people out of work.

We’ll probably see a lot of people sharing apartments and homes, and a lot of two family incomes become one.
I expect a fair number twenty-somethings deciding it’s a good time to move in with their parents awhile and finish up that college degree.

Back during the depression the number of people in a household was much higher than it is today, sometimes including three or even four generations.

We live in times when everyone wants their own house or apartment and that’s an extravagance.

Bad times cause people to band together and share expenses, and everyone learns to be frugal.

Of course, everyone suddenly concentrating on the value of a buck only causes more layoffs and worsens the recession and makes people talk about depression.

Recessions are psychological as much as economic.

If you’re afraid for the future you won’t spend money, but consumer confidence and spending is how we get out of a recession.

A recession is when the economy pulls back from a boom, and business and families decide to cut the fat and go on a spending diet.

Recessions are a readjustment period where we excise the excesses and get practical.

I expect a lot of people to cancel their $100 a month cell phone plans, cut their Netflix plan from 5 discs to 2 out at a time, trim a lot of cable television options, stop buying toys they just have to have but only use for a week or two before thinking about new toys, or rethinking $50 dinners that are wolfed down like fast food.

People who used to brag about drinking $25 dollar bottles of wine will now brag about the $12 great discoveries they are making.

Folks shopping at Target who have been loyal brand users will suddenly notice store brands have the same chemical compositions for dollars less. When people realize that $400,000 houses are really worth $150,000, they will start wondering about the value of a $50 video game or $10 movie tickets.

Women with husbands making six figures will strangely discover coupons and thrift shop clothing.

My advice is if you’ve been living paycheck to paycheck, now is the time to learn how to manage money.

But if you’ve always managed your money well and have savings, now is the time to be patriotic and go shopping.
If you’ve got money to spend, it’s a great time to do green remodeling. Read Hot, Flat and Crowded to get an idea of what Thomas Friedman calls ET economics.

Friedman predicts America could get out of this economic slump and create a world-wide boom by focusing on environmental technology, ET, that will rival the IT boom, caused by information technology.

I hope Barack Obama uses the recession to redesign the growth economy into a green steady-state economy. The NY Times is reporting that bad economic times is pushing global climate problems out of the news.

Reengineering our society to be green, will cost jobs and create them. Now is the time to remember that.
What I hate about recessions are the funding cuts to big science as if the quest to understanding reality is one of our most wasteful extravagances. How many jobs and spin-off technologies would be created if Congress took that $34 billion they are thinking of giving to the Detroit Big 3 and put it into the colonization of the Moon and Mars? Or at least starting a renewable energy industry.
I don’t know why I write these essays about economics.
They get no hits.

I think they are therapeutic.

We really could be on the brink of a terrible economic collapse and my writing Pollyannaish blog posts of hope help me get through the chills of economic ghost stories.

JWH 12/7/8

My wife just got her 401K statements for 2008. Lost over $30k. OUCH!!!

Hi. Linas; Hope you are hanging in there. My Wife works at JC Penney and her 401k has taken a beating.
My mutual funds were taking a terrible beating until a month and one half ago when I change Financial Advisor. He has stoped the bleading on mine and my wifes accounts. Not making money but not losing as much.
Hell, I made $500 two days ago and lost $350 today. I might have enough left to splurge and eat at McDonalds:mrgreen:

I have a Government regulated pension from the Union Laborers of North America. I retired in 2006 and started in this business. My wife is an RN and makes a good buck. We may be able to save enough to make it back to Maine for next years Lobster Fest :stuck_out_tongue:

Let me know in advance and maybe I could meet you up there somewheres. My wife likes that area.
It would be a pleasure to meet you.

Marcel :):smiley:

Well if recessions are truly psychological I will have to keep my health insurance paid up so I can afford copious quantities of happy pills. :smiley:

At least when I take them I don’t want to choke so many people anymore. :stuck_out_tongue:

so my analyst is helping you, too :cool:

Things are truly different, so different you simply can’t comprehend the scope without some history. For instance, up until the time of the Great Depression, the Gold Confiscation Order Of April 3 1933 and the formation of the Federal Reserve System, the United States really never suffered from inflation. Imagine being able to bury $1000 worth of gold in the late 1700 and then have your ancestor dig it up in the early 1900 and the value of what it could purchase was virtually unchanged. There is no investment vehicle available today that can perform this feat.

Today we are saddled with the fractional reserve banking system which literally means that all of the money in circulation was created through debt, a debt that can never be paid off. If you study The Crash Course you will learn that at some point the system simply grows so large that servicing the interest eventually overwhelms and prevents any future growth, we unfortunately may be at that point.

Hope this was helpful.

I intend to buy as MANY homes as possible in the next year, the prices may go down a few more thousand, 10G’s or so, but not less, Impossible, I hope to buy 20 this coming year with help from an investor friend, my aunt–::)))

This mornings inspection, $90,000.00 2300 sq ft, three bath 4 bedroom, not much of anything wrong, in a good location, very near Old Town Scottsdale…Hot area

This afternoons inspection, $102,000.00 4 bedroom, three bath, new Carrier in roof, all granite, completely remodeled 2 years ago with a Pool.

Take a look here for objective (vs. subjective) investing advice. It’s what I follow.

I would posit that success is all about what YOU do, not what you expect others to do for you.

My IRA (self directed) and other investments have not been gaining alot, you they have also not been losing alot.

That is because I do not rely on others to manage them for me, I manage they myself, with advice from others.

Likewise, my business is not run by others, but run by me. I try, always, to find, search out, new opportunities for getting jobs (thermal imaging, energy audits, water intrusion inspections, condo transition inspections and reserve studies, teaching, networking with other businesses (insulation, roofers, plumbers) and investing in new technolgies (thermal imaging, sewer and drain pipe imaging, “green” building standards and techniques) to help make my own market.

Sit and wait or get out there and beat the bushes for work.

Your choice :mrgreen:

Always is.

I happen to like artificially deflated bank stock. Toronto Dominion is one which I think will come back to pay good dividends.

Anyone else interested in stocks right now and whats your pick.

Johnson & Johnson at 28 & change with a +6% dividend looks like a no-brainer. :wink:

Dupont looks like a no-brainer… $25 & change with a dividend yield of 6.3%. Market appears to be trending lower once again, with any luck I’ll catch this one below $20 and pile on for a long term hold.