The last 10 years have been an incredible stock market run. It is officially the longest bull run in stock market history. Ask anyone who has invested in the market during this time and they’ll be eager to tell you about their massive returns.
Most people, especially those who were young in 2008, don’t even remember what a recession feels like. But as we know, market corrections are just another part of the economic cycle and nobody knows when the next recession will hit. I repeat, nobody.
Despite the title of this column, even I don’t have a clue when the market will drop. Now, I am sure you can find 1,000 websites and “experts” who will tell you exactly when it will occur. Just keep in mind, some of these “experts” have been claiming that the stock market couldn’t go any higher for the last seven years. If someone would have listened to this advice seven years ago, they would have missed the opportunity to more than double their money.
Now, let’s get into what we do know. We know that the stock market is historically very high compared to our economic output as a country. That being said, it doesn’t mean that a correction has to happen any time soon. But it could. And because we have already settled that even the pros can’t time the market, it is not a matter of predicting the recession, but preparing for it.
Here are a few tips on what we can do to prepare now.
1. Save! Save! Save!
Right now, the economy is flourishing, and everyone is spending lots of money. While this is good for the economy as a whole, individuals must remember that it may not always be this good. They need to be getting out of debt, saving for a rainy day, and investing. Things always come up, whether that’s in the economy or in our personal lives. Prepare now.
2. Focus on the long term.
If your current lifestyle depends on the stock market to perform well, you are making yourself vulnerable to a lot of risk. People should be investing but they should only be investing money that they won’t need for a while. In the short term, no one knows what the market will do (despite what you read on the internet). Over the long term, however, the economy will continue to grow and flourish. You have to bet on the long-term health of the economy and not on the short-term emotional stability of the stock market.
3. Make sure you have valuable, marketable skills.
If you have spent the time and energy to acquire knowledge and skills that are valuable in the marketplace, a recession will make you even more valuable because companies will be desperate for talent that will help them get through the tough times. Often, the individuals that get laid off, are those that don’t have the skills to differentiate themselves.
Now, I am not trying to be a Debbie Downer and say that the economy will never be this good again. Like I said, I don’t know what the economy is going to do. All I am saying is that now is the time to take responsibility for your life and prepare for the future. That way, no matter what the market does, you are prepared to take on the next decade with confidence and grace. It is important to remember that just like the seasons, recessions will come and go, and it is up to us to prepare ourselves for them. Have hope. Work Hard. Make your life incredible today.