I don’t have a crystal ball or anything, but it kinda feels like a recession is looming this year. Not every aspect of a recession touches everyone the same way, but one thing I know for sure, is that it divides us all into two categories. You either become a wolf or a sheep.
My normal go to move to avoid being a defenseless sheep during a recession is to quickly build a treasure chest. Why? Cause recessions typically last about eighteen months on average,and the one thing you need to get through it is liquidity. To be a wolf means to become a buyer and/or a builder during a recession. To do this, you’ll need capital to hunt when everyone else is hibernating.
How do I typically build my treasure chest heading into a recession? I borrow as much cheap money as I can at the lowest interest rates possible.
However, as we are in the midst of an economic environment where interest rates are unattractive, I don’t advise taking on debt at super inflated interest rates. An adjustment is necessary.
What adjustment do I recommend? Ask yourself this. If debt is too expensive but you want to be a buyer and/or builder during a recession, what is another way to raise capital? The answer is equity.
If you can create something of value with the potential for a good rate of return on investment, investors who believe in you would much rather park their money in something with big upside in four or five years, then keep their hard earned treasure exposed in investments that get eaten during recessions.
Equity capital also has the benefit of giving you time to perform, without the pressure of paying 7 to 10% interest rates crippling your ability to grow.
I love investing in, and building start-ups backed by assets, during recessions. By the time I work out all the kinks and get them humming along, I have them well positioned to experience huge gains during the next bull run post recession. This is when consumers find their footing and begin spending again.
This is also when I get to honor my investors by writing them huge checks with fabulous R.O.I. for believing in me. I enjoy writing big checks to fellow wolves. Even better when I get to write one to a former sheep that I inspired to leave the life of being a defenseless sheep.
I encourage you to be smart with your money in the year ahead. Develop a strategy. Become a wolf, instead of a sheep. Astounding gains in wealth awaits you, if you can make this shift.
