Wow. Were the past 12 months that bad for you?
As I was reading the Wall Street Journal on my Kindle this week I came across an article that references a Wall Street Journal/NBC news poll indicating that nearly half of the people surveyed think 2008 will go down as one of the worst years in US history. Since 90% of the respondents indicated that the economy has gotten worse in the last 12 months I’m going to assume that’s the primary reason everyone hates 2008. I must say, as a young entrepreneur who has put everything on the line to buy a small business and move across the country 8 months ago, I’m a bit shocked…
Here’s why I’m a bit shocked that people think things are so horrible:
- I sold my house in Pennsylvania in about 3 months at a profit when I’d only purchased it 24 months earlier.
- I easily got financing (at 95%) for my new place in New Mexico.
- I’ve secured several commercial bank loans and still have access to low interest credit.
- My business is about to have the highest grossing year of revenue in its 60 year history.
- We’ve hired 3 new people this year and anticipate more growth in the next 12 months.
- I bought and resold a motorcycle in less than 2 months at 30% profit this summer.
- My personal net worth has increased more in the last 8 months then it has during the previous 25 years of my life.
Now the news isn’t all rosy:
- At last count my stocks, mutual funds, etc. are down about 33% this year. However that doesn’t really bother me since most of my money is invested in other areas. Now I have an amazing opportunity to increase my stock holdings and take advantage of severely discounted businesses on the stock exchange.
- I haven’t been able to sell my sports car. It’s a 2006 G35 coupe. Bright red. Not exactly the vehicle people “hunkering down” for a depression would be buying.
- My debt has increased more in the last 8 months then it has during the previous 25 years of my life. However, the right kind of debt isn’t bad as long as it’s used for assets and they are appreciating.
So what does this all mean to you? It’s very simple, are you bracing for a recession, depression, or worse? OR are you finding the opportunities that are now greater than ever out there.
Right now you can buy businesses, houses, stocks and mutual funds cheaper than probably in the last 20 years. Particularly with the housing market, if you have good credit, with the tightening restrictions on lending, guess what’s going to happen? More people are going to have to rent. Housing prices are down and rental prices are going to start going up (rental rates don’t seem to have changed much in my area yet). Is there a more perfect formula for residual income and profiting from rental properties then that???
As Brad Sugars pointed out recently – In Las Vegas, where the housing market has been particularly hard hit, he talked to a realtor who said he’s getting killed because no one is buying anything. Shortly thereafter he spoke with another realtor who said he has more work then he knows what to do with. With all of the foreclosures, banks are scrambling for good realtors to sell for them.
Which guy or gal are you? Is it all doom and gloom or are you picking out the opportunities that are abound?
The possibilities that are created in 2008 may be the ones that allows you and I to create more wealth more quickly than ever before. And what’s the worst that can happen? You could buy a business and fail? You could buy a stock that goes bankrupt and lose your investment? You could buy a rental property that doesn’t get rented out? Well, here are a few quick ways to minimize the chance of any of those things happening.
- Buy a business – Make sure it’s a staple that everyone will need no matter what’s going on in the economy. If you have few or no competitors, even better. If you already own your business, buy your competitors and/or complementary businesses that can benefit from your current facilities and customer list to spread overhead between several entities keeping costs low. What’s your company’s niche??? The most important part is the PURCHASE PRICE. Buy it cheap. Make sure you tell the seller that the economy is horrible and they better take your offer while it’s still on the table. 😉
- Buy a house – If you’re looking for a rental property and you’re not too worried about tax deductions, single-family dwellings are always the best to start out with. Young families and couples are abound so there’s always a need. And with the current credit markets those people will need to rent. Keep in mind, just like with a business, what’s unique about your property that will make people want to stay there? Again, the purchase price is the most important part. If you can keep your costs down with a low mortgage then your profits will be that much better. Make sure you tell the seller that the economy is horrible and they better take your offer while it’s still on the table. 😉
- Buy stocks – I’m not a big fan of mutual funds. I bought my first one when I was 14 and never had great success. In essence you’re paying extra to have someone pick stocks for you and put them in a nice, neat little package. Do your homework. Learn about the stock market and particularly business valuation. Read The Warren Buffett Way. Buy stocks that have more cash on hand then their current market capitalization and also have strong cashflow. If you want to be even safer, invest in ones that are still paying a dividend. Historically they generally fair the best.
Consider this for a minute – retail sales after Thanksgiving this year are up 7% over last year! That’s right, last year when the stock market was soaring and everyone was making money and unemployment was low we bought less stuff at Christmas sales then we did in this recessed year of 2008… Hmmm… are you seeing the opportunities yet?
Don’t be that guy who remembers when Buffalo Wild Wings and Netflix were trading for $21/share and if you’d have only put a few bucks into those stocks you’d be rich now… If you still think I’m a bit “off”, since the sky is obviously falling, check out what the greatest investor in the world, Warren Buffet, thinks about the economy.
To your success in making 2009 your most profitable year yet, Bryan