I’ve lived through multiple economic downturns since 1999. Bear markets and recessions can be scary. The uncertainty and fear can be exhausting. Currently we are in the midst of battling fears of record inflation, gas prices, an ongoing recession, interest rate instability, supply chain disruptions, insecurity in food, energy, and housing, along with surging debt and currency crises. This is all happening against the backdrop of war, climate crisis, and a world recovering from COVID with no end in sight. As of this writing, the NASDAQ is down 27 percent, having recovered 7 percent from its summer lows. Many of the FAANG stocks are massively down from their 52-week highs. Bitcoin hit a low of $18,661 earlier this month, and Ethereum is down from the all-time high of $4,800 last year. The question is: “When will we have more economic clarity, when will we have an economic rebound, and when will it be safe to invest in risk-on assets again?” Bear markets are defined as downturns of 20 percent or more, each lasting on average 388 days, with 33 days (2020) being the shortest, and 929 days (2000) being the longest. One of the main reasons why we have experienced so much economic instability over the last two decades is due to the shift away from an industrial (labor) economy towards an economy based on information and value (capital). You can see countless examples today where the infrastructure, paradigms, and institutions born out of the Industrial Age no longer serve us. At the core of the Information Age lies the Internet, one of the greatest inventions of the 21st century. The Internet has collectively unlocked more freedom and opportunity for billions of individuals across the world, and the blockchain will accelerate this process of value transfer at greater magnitudes of scale and velocities in the coming decades. As a result of these global tectonic shifts, economic insecurity is now the new norm. These effects were particularly magnified during COVID and its aftermath. While we should anticipate economic uncertainty, the decision to be financially secure is a choice. We need to approach our financial health with the same seriousness as we have with the other aspects of our professional and personal lives by developing adequate financial literacy and sound investing habits. Implementing basic investing strategies during bear markets can be some of the greatest opportunities to create generational wealth. Prominent historical examples occurred during the Panic of 1907 when JP Morgan acquired many distressed assets, or Joseph Kennedy amassing a fortune valued at $180 million ($3.56 billion equivalent today) after the Great Depression of 1929. Warren Buffett said, “to be fearful when others are greedy, and to be greedy when others are fearful.” Many of the greatest companies of today came out of the 2008 recession, and expect to see many more game-changing companies born out of COVID in the next few years, many in technology. Growing up, one of my mentors gave me some of the best advice: “Never let a crisis go to waste.” I took this to heart and have applied this advice beginning in 2001, after the housing crash in 2008, during the 2020 pandemic, and now in 2022 by staying focused, saving, investing, learning, building, and continually moving forwards. We can’t predict the future, but we can better prepare for uncertainty by choosing to prioritize our finances. Source
