Volatility is coming! Volatility is coming! It's no secret that I like to talk about stocks, the economy, business, etc. I was watching one of the Sunday morning political shows and was surprised when they polled a number of Americans about their views of the economy. I could barely contain myself as there was consensus that the country is not headed in the right direction. I thought I was caught in the twilight zone as the panel which skewed older and maybe even a bit conservative could only complain about bacon?? I was having an Allen Iverson moment (are we talking about practice). Are we talking about bacon, seriously.
For a frame of reference, let's revisit where we have been. I've constantly written here that our economy consists of up and downs or "inflation" and "deflation" periods, if you will. I've been quoted by sharing that this cycle occurs about every 8-10 years. Preceding years of a booming economy, here are the historical crash moments of our economy:
1987 - dubbed: Black Monday (date: October 19, 1987). What had happened was: The dropped nearly 22% in a one day after years of excess
1998 some say 2000 - dubbed: Dot Com Bubble or Crash What had happened was: This was the bust after the amazing internet boom where EVERYTHING you bought seem to go up. Most industries were slapped with a .com, like Pets.com, and given "inflated" prices. Many companies went out of business during this time.
2008: - dubbed: The Financial Crisis What had happened was: Everybody and their mom was given loans to buy homes. Many with no proof of income. That ended with a resounding thud, and we were forced to bailout Wall Street because it seems like most banks were caught with their hand in cookie jar and owned some of these shitty loans.
Don't believe me just watch moment: If you don't believe me, you should take a moment and listen to my Billionaire Buddy, Ray Dalio. I've learned so much from Ray and he is a core mainstay of my Mansa Musa Network. I believe in facts, data, history, and strangely enough that life tends to repeat itself. Listen to Ray Dalio as he school's you on how the economy works:
Now back to our regular scheduled program. The response to these economic recessions if we as a country, people, and world try to reinflate things. We call it stimulus or printing of money so people are less afraid and get back to what makes our economy run...spending money. This happened after 2008, remember TARP, Cash for Clunkers, and I was even the receipient of the Homebuyers Tax Credit. History shows we had a nice period under then President Obama. From 2008 to 2016, the economy steadily rebounded and unemployment roared back. I wrote in 2017/18 the economy was frothy and due for a recession. Then we changed presidents and President Trump introduced business tax cuts that added lighter fluid to an already hot economy. My side hustle was rocking and under those tax cuts my business taxes were very low. I felt a recession coming in my bones and wrote about it repeatedly. It unfortunately came in the form of COVID-19. During this period, I know landlords that had 5 or 6 tenants out of work. The restaurant, tourism, and travel businesses cratered. If I recall, the airlines basically asked for a bailout. We REFLATED the economy and gave out PPP loans for businesses. Businesses came roaring back and my side hustle began taking off again. I even hired 3 Full Time employees. Most of us got child tax and stimulus checks and we all bought stuff: Cars, Homes, Yachts, Trips all hit record levels. I bought my second home in 2018 because interest rates were at record lows at the time.
So, when I listened to that panel indicate the economy was not improving, I had to call bluff like I was playing poker. EVERYONE I know is flush with cash. Many have changed jobs, got pay increases and work remotely more now than ever. If you're complaining about the price of bacon being higher, you're forgetting THAT IS THE PURPOSE of reflating the economy after COVID. You're forgetting people are back to work. I've hired 3 people in 9 months because I must believe business will continue to be strong or else how will I pay their salaries? My preference as I wrote was for the government to simply cut checks to people during COVID instead of businesses getting PPP loans.
I believe volatility is coming. The Federal Reserve has to raise interest rates because last year any stock you bought went up. Stop complaining over bacon, it will come back down. But I hope you saved for a rainy day and continue to work on your pillars...because after all this STIMULUS...I think we are due for a hangover. We can't keep printing money because no one will so be able to afford anything. Let me put things into perspective, my company car which was an executive lease was purchased by the company I own. I purchased my lease because my used car actually INCREASED IN VALUE. That is unheard of. So I'm here to tell you the economy is drunk and the volatility is like having a hangover. It's gonna be a bit rough from here on.
