Ups and Downs

We are all very aware that our current economic condition is not as positive as we would like. It seems that no matter how hard we try or what we do our hands are tied. Unemployment is up, prices are up, and investments are down. Thinking about this situation led me to investigate the state of our economy in the last 100 years to see if I could predict how long this would last.

Most experts agree that our financial system is cyclical; there have always been ups and downs. When we are down, like today, we can’t seem to remember the good times. When we are up we tend to believe that there is no down.

Look at this partial list from A History of American Agriculture 1776-1990. It exemplifies just what the experts have concluded. From the > on the list you can see that we have actually spent more time up than down, and we will be there again soon.

> 1909-18 Prosperity and war boom
1920-21 Sharp postwar recession
> 1922-29 Speculative boom
1929-1939 Great Depression
> 1939-45 Wartime recovery
> 1946-49 Postwar boom
> 1950-56 Korean war and postwar readjustment
1957-58 Recession
> 1958-70 Extended business expansion
1970-80 Inflation rates increased, while economic growth rates declined
1981-82 Recession
> 1983-88 Business expansion
1989-1991 Recession
> 1992-2000 Greatest economic expansion ever

The real lesson that we should learn from these patterns is fully ascribed in the Boy Scout motto—“Be Prepared”. If we planned and saved during the good times; we would be a lot more comfortable in the down ones. Living from paycheck to paycheck in the good times makes no sense. Any financial advisor will tell you that you should have an emergency fund of several month’s expenses for times like these. Even in lean times some savings activity should continue. It may not be easy, and it may not be very much money, but it is a good lesson in discipline that will serve you well, whatever the state of the economy.

Ready, Set, Learn

Most economists are predicting that the economy will bottom out before the end of the year. How are you faring? Some industries have been hit harder than others, like real estate and automotive while some seem to be striving, like anything green. My question is—what have you learned from this downturn and what permanent changes you have made to cushion yourself in the future? We are anxious to help you explore the possibilities so you can be better prepared and better able to avoid negative consequences.

It is important that you take advantage of every possible learning experience. You may be in a position to go back to school or, more likely, you can just spend some dedicated time on your computer asking questions and looking for answers. Either way, updated knowledge will give you the edge in any type of economic chaos. Study everything you can. You will be better prepared than the competition to stay the course. This suggestion applies to your business and financial life as well as your personal life.

You don’t have to embrace all that the younger generations are doing, but you should stay open to possibilities. Read their blogs, check out their social sites, like Facebook and Twitter, and listen to their music. While we have lessons to teach them, they also have lessons to teach us. These interchanges will help all of us grow.

Keep in mind that the “annoying” teenagers of today are going to be the leaders of tomorrow and very much in charge of our fate. Having an idea of how they think and operate in life will put you ahead of the curve and lead you to a more satisfying life.