Recession - swear word or opportunity

9/28/2009 1:05:31 PM

Question now that we are officially in a “technical” recession is what should I do and that has nothing to do with the definition but rather how it impacts on me – my life, my business, my job, my investments, etc.

Quote: “We’re not going to tell you where this is going to end – we’re going to tell you where your future is going to begin!”  and it begins when you take control of it ……!

It is all in your hands – Planning is the key word - the challenge is to determine

1. Where you want to go
2. How you intend to get there;
   
3. and How you will know when you have arrived. 

In other words

1. Know the purpose behind your plans;
2. Utilize the right resource for carrying out your plans;
3. Have the right focus for your plans; and
4. Seek guidance for clarifying your plans

So different perspectives associated (in brief) with a recession:

For Consumer (families):  has less money that purchase even less goods and services with an ever increasing risk of becoming unemployed

For Government:  getting less and less income through all forms of taxes with increasing pressures for social support of the masses – food, shelter, health, etc.

For Companies:  ever reducing demand for products and services with increasing pressures from staff for wage/salary increases due to increased cost of living while having to balance survival – solvency and competitiveness – but still retaining the critical skills required to support the economic turnaround.

For Investor: getting into the market at reducing costs and associated risks and opportunities with increasing upside for making extraordinary returns when the market does turn.

To quote Warren Buffet (one of the 10 wealthiest people in the world) – get in the market when others are getting out and getting out when other are getting in.

In conclusion, a recession is a great opportunity for the investor with a PLAN.  Statistics have proved that it is not about TIMING THE market but all about TIME IN the market.  Ride it out and get in now!  Make your plans – if your time horizon is short term – 3 to 5 years stay in Money Market as “cash is king” but if your time horizon is medium to longer term – 5 to 7 years and longer get into the market – equities as to you “cash is trash”.  Inflation and tax being the main culprit but that for another day!