Are Times Getting Tough?
That depends. I think this question should be answered on an individual basis. If you just lost your job; times are tough. If you just got a raise, times are good: Donít let the daily news convince you otherwise.
However; things are definitely different that they were a few months ago:
- You canít buy a house with zero down-payment anymore Ė I would argue that this should never have been an option.
- Ninja loans are gone. N.I.N.J.A - No Income, No Job, no Assets - We have an acronym for everything! Only a government agency would create something like this!(1)
- The free market is being criticized.
- Washington has been experimenting with socialist solutions to solve cyclical problems Ė for over a decade.
- Banks are getting very stingy, though they wonít admit it.
If you provide a product that your community needs and you effectively get the word out;
if you serve your clients to the best of your ability, and encourage your employees to do the same;
if you avoid overly complicated business deals and investment products;
You will prosper in any free-market economy.
People still need food, clothing, shelter, entertainment, medical care, transportation, etc, etc,. That wonít change.
Many of the businesses we hear about in the news have been making very poor decisions for years. This isnít universally true, but itís true in a majority of cases. Here are a few thoughts and examples to illustrate this point:
Skybus went out of business when Oil prices skyrocketed, but Southwest Air made a ton of money in that same period:
SW understood that they were in the Airline business and in the Oil commodities market:
Skybus thought they were just an airline - They crossed their fingers and hoped fuel prices would remain stable, but they didnít do anything about it.
Warren Buffet made a killing in the market last year. Bill gates lost a ton. I used to criticize how conservative Mr. Buffetís investments were, but it seems he knew what he was doing after all. When everyone else started panic selling aggressive investments, he started buying. Now his portfolio looks pretty aggressive while everyone else is putting cash under their matresses or buying Gold.
Lots of people lost money in the stock market, but EM Trend Advisors' clients made money last year, as they did the year before. Every serious investor should have a trend analyst on their team. Yes, this is a shameless ad placement; but the claims are also true!
I know a young lady in her 70ís whose retirement nest-egg was reduced by 50% in 2008. Her broker insisted on keeping her in aggressive investments. I told her for years that she should get into something more conservative. I'm not a licensed advisor, so it's so suprise she didn't listen to me.
Her advisor should be taken to the wood-shed for keeping her in a portfolio that may take 5 years to return to pre-2008 levels.
I know a couple living with 8 kids in a 2-bedroom apartment - They lost their house. They seem to be the happiest people..... pleasant, fun to be around, quick to laugh. I donít know how they do it. Some would say they are delusional! I think their strong faith and their strong family support gives them reassurance and hope for the future.
As a final thought; Iíd like to share my favorite quote of all time!
Winston Churchill said this in a speech given a few years before he died:
ďNever give up! Never give up! Never, ever give up!Ē
(1) Low interest NINJA loans were compliments of Freddy Mac and Fannie Mae. Though they are technically private organizations, they were run like government agencies, right down to politically motivated appointments to key positions, and complete lack of fiscal responsibility.