- I've been around enough years to see many recessions.
So, here's some firsthand tips
on how to use the 2023 recession to get rich.
In the early 2000's, my businesses were booming.
It seemed like nothing could go wrong.
Then, in 2008, the banking crisis caused
the housing and stock markets to plunge,
and the economy was dragged into chaos,
but it didn't quite hit me all at once.
It wasn't until 2010
when I really started feeling the effects.
It was like someone just switched
off the customers overnight.
Sales completely dried up.
So, how could that be?
Well, one person's spending
is always another person's income.
Every time you spend money, someone else makes it.
Maybe you've heard the phrase
"A rising tide lifts all boats."
Well, when the tide falls, everyone is also impacted.
Against all the odds, I ended up coming out
of this recession bigger and better than before.
So, today I'm gonna pass on to you my tried and tested,
six part plan for thriving during recessions.
First thing, work smart and hard.
When the recession hit,
instead of hanging my head in defeat,
I decided it was time to double down
by working smarter but also harder.
I saw this as an opportunity
to leapfrog over my competition.
I started thinking of ways to reduce my prices
and offer even better products,
so, when the good times came rolling back, I'd be ready.
In life and business, it was the times of pain
that helped me grow the most.
I reflected on how I could become better
and focused on what opportunities were available now,
that weren't before,
because every time there's a crisis, there's opportunity.
The same thing happened
during the short-lived 2020 Covid recession.
Stock prices plummeted,
but I saw the opportunity to buy the dip
in things like airline stocks.
I even shared this in the first video I posted on YouTube.
As Warren Buffet once said, "When there's blood
in the streets, it's a buying opportunity."
I think when markets are on the rise,
people tend to overestimate the opportunity
and underestimate the risk,
and when markets are on the decline,
they tend to overestimate the risk,
and underestimate the opportunity.
In my case, I was able to buy inventory
and negotiate with my suppliers
to get my products at a much lower price
which led me to making more money later down the line.
I used the downtime and slower sales
to read up on financial literature, study books,
and look into tax law,
so that I could be better prepared when things improved.
To be honest with you,
when my businesses were running on full steam,
I was so focused on fulfilling orders left,
right, and center that I never had the time
to just sit in my chair and think,
how can I improve my income streams?
If it's too easy to make money,
then people don't feel the need to work
on their products and services,
leading to them deteriorating.
This is like what Charles Darwin refers to
as natural selection or survival of the fittest.
If I was to win in business and life,
then I needed to keep a sharp mind, razor-like.
Second, learn how to read the markets.
I wanted to understand exactly
what was happening in the economy.
I started educating myself by reading everything I could
about why markets crashed and what could be done about it.
Here's an oversimplified view of how markets operate.
Basically, the money supply
in most countries is controlled by a central bank.
For this example, let's look at the US
since the dollar is the world's reserve currency.
Remember when I said
that one person's spending is another person's income?
If everyone starts getting scared about a recession,
they start holding onto cash.
This starts a vicious cycle
because with no one spending money, people earn less
and get even more scared to spend.
Think of a world where the only job is babysitting.
If you babysat someone else's kids, you would earn a coupon.
Now, you can use this coupon
whenever you wanted someone to babysit your kids.
Let's say you had a hot dinner date.
Of course, I had loads of those back in my day.
Well, during a recession, people have coupons
but no one wants to spend theirs.
They just want to keep earning them,
but obviously someone has to be willing
to spend their coupon in order for those people to earn.
In economics, this is called a liquidity trap
and as any hunter knows,
there is always a way to get out of a trap.
The way to escape this one is of course, print more coupons.
As long as people feel they have enough coupons,
they'll go out and spend them.
That's why in 2008 and more recently, during Covid
the government handed out so much easy money
to individuals and businesses.
This cut the decline in market short
and caused the stock prices to jump to massive new heights.
It was just like a no-lose casino.
Now, there's a lot of debate about this
between two different types of people, doves and hawks.
Doves want to give free and easy money to people
while hawks are against it.
Each policy has its pros and cons.
For example, if you print too much money,
you could have inflation like we're seeing right now.
If you don't print more money
then the economy can completely shut down
for a very long time before the money starts flowing again.
So, it's always important to stay aware
of developments in the economy.
I'd also recommend taking the time
to study basic trading indicators.
Even if you don't have time to look
at the detailed economics,
you can still look at a chart
and try and figure out what the market is trying to tell you
by studying the trends.
As a caveat to this, while I wouldn't recommend day trading
or trying to time the markets, a basic understanding
of technical analysis can make you a smarter investor.
Thirdly, generate mass reliable cash.
Hopefully you saved up enough money
to get you through the hard times.
I always saved three to six months of my expenses
when I was building my wealth for rainy days,
as they always come,
but if not, you might still be able
to earn from a side hustle.
Granted, it's not as easy to earn money in this environment
but if you can find the opportunity,
a side hustle can be very lucrative.
I like to think of business like taking a pill.
Suppose you have a massive headache,
you might feel like you'd pay all the money in the world
just to get rid of the pain.
It's the same with the economy.
During recessions, a lot of people are in pain.
Maybe a side hustle that helps people turn
their unwanted items into extra cash would do really well.
I actually started to buy back used products from some
of my customers who needed the cash, just like GameStop do.
I knew cash was hard to get, and I used my savings
to buy products when they were cheaper.
Certain businesses or sectors do better
in a recession than others.
For example, the US businesses
Dollar Tree and Walmart do especially well
during a recession as people are hunting
for bargains more than ever.
Talking about bargains, public.com are actually
giving away a free stock worth all the way
up to a thousand dollars when you fund your account.
If you wanna pick that up,
I'll leave a link in the description below.
In all honesty,
your job is probably the best insurance against a recession.
Your boss will most likely be looking to lay off workers,
so it's not the time to be slacking.
You don't wanna end up putting money
into a business only to realize you can't get any bigger
and your income is capped.
Fourth, cut back on your expenses.
You probably know a few gym bros who get nice and bulky
only to end up on a vegetable and chicken diet
for three months in order to shred the body fat they gain
during their bulking phase.
Well, it's the same in life.
Now's the time to figure out what really matters to you.
I read an interesting fact that 80% of the results
in any business or produced by just 20% of the workers.
It's called the Pereto Principle,
and I found it fascinating.
During recessions, I would sit in my office
and think about things in my business
that weren't pulling their weight.
Products that never sold,
and people who were on the payroll but didn't contribute.
It helped me to really focus on the things
and people that matter to me and my business.
Nobody likes the idea of throwing away
or getting rid of things
but if you ask me, people need to.
How many things around your house
do you actually use every day?
We're always told to buy, buy, buy
but minimalists believe that having less is more
and they're actually happier because of it.
By making cuts in my business
and budget when times were tough,
it helped me laser focus and free up a lot of time.
So all-in-all, recessions
are the perfect time to trim the fat.
Fifth, diversify your investments.
Now, before I go into this next point,
if you are holding any stocks, crypto,
or anything else you believe in long term,
then it's important not to sell.
Right.
Diversification is very important
and I don't mean just spreading between stocks and bonds.
I made sure I had some gold, silver and real estate as well.
Ray Dalio created something called
the All-Weather Portfolio.
This is kind of like an all terrain vehicle
that can perform in snow, rain or shine.
During times of crisis, the Dalio strategy greatly
outperforms the classic stock and bond portfolio.
You can buy almost any commodity nowadays,
steel, oil or even avocados.
I read an article that said Bill Gates
was actually buying up farmland back in 2021.
Assets to produce something of value, like farms,
are almost always going to stay in demand.
Nowadays there's a lot of options out there
for retail investors that just
weren't available back in my day.
For example, fine art.
Did you know that historically,
contemporary art prices have outpaced
the S&P 500 over the last 26 years?
You see, in comparison to other asset classes,
contemporary art has a near zero correlation
with traditional equities.
So, when external factors like geopolitical conflicts
and inflation hammer your stock portfolio,
your art investment may be less affected
and with platforms like Masterworks,
you can invest in legendary art
without spending millions to do so.
And because we're discussing fine art investments,
Masterworks have kindly sponsored this section of the video.
I know, I'm no art expert
but don't just take my word for it.
The Bank of America says art remains
an attractive inflation hedge and can be an important part
of a diversified portfolio, especially in 2023.
Look at the data.
UBS reports import and exports hit record levels
by the end of 2022, with experts saying
demand is extremely resilient.
Masterwork files multimillion dollar paintings with the SEC,
splitting them into shares,
and I've linked all of their filings in the description.
With over 600,000 users,
Masterworks paintings have sold out in minutes
but you can get priority access
by clicking the link in the description.
Sixth, don't be greedy.
It's easy to think that when things are going well,
they'll continue to do so, but this is a huge mistake.
I have a lot of friends who reinvested their earnings
back into their businesses, hired more and more people
and try to expand as quickly as possible,
but then when the economy went into a slump
and their cash flow dried up, they got destroyed.
There's an old saying
on Wall Street that goes, bulls make money
bears make money, but peak gets slaughtered.
The last question I always ask
on my podcast, Strike It Big, is
- When is enough, enough?
- That is a good question.
- And the most common answer is.
- Never.
- Do you wanna expand on that a little bit?
- Yeah, I mean.
- Sometimes people take on way too much debt
to try and grow faster and faster,
but aren't prepared for what follows.
It's like if you're driving a Lambo
and suddenly slam on the brakes
and go flying through the front window.
That's what a recession can feel like.
Debt can help businesses grow
but taking on too much can be fatal.
If you want to know how to use a crypto crash to get rich,
then I'm gonna leave a video right up there,
but don't click on it just yet.
Make sure to subscribe if you want to grow your wealth.
Okay, (clicks tongue) I'll see you over there.