Since times immemorial, crises have come with golden opportunities.
You would be surprised how many millionaires and billionaires were made during recessions.
For some however, a recession is bad.
In fact, three words resonate more often in times of crisis. They are death, default and divorce, the 3 d’s.
Death becomes a natural consequence of increased wars and crimes.
Sometimes, it is caused by viruses, like in the 1918 recession, when a third of the world population lost their lives, and also currently with COVID-19.
Moreover, when you lose your job and default on insurance payments, it gets difficult to have the proper healthcare if you are, for instance, battling a terminal illness.
Defaults on debts, bills and mortgage payments are also prevalent in recessions. And when financial problems take over a ménage, divorce becomes, more often than not, a possibility.
Certainly, a lack of funds has its way of magnifying every problem, those in the bedroom included.
One might then ask the question: What could be worse than an economic crisis ?
In the 2008 recession only, many lost their life's work. Such was, back then, the motivation for some suicides.
The worst of it all, we never usually know how long a crisis might last.
How many more months, for instance, till we find a vaccine against COVID-19 ? Difficult to say, indeed.
The ordinary mind is thus set to panic in such times of turmoil. However, as a great man, Martin Luther King, once said:
“The ultimate measure of man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy”
That’s indeed what defines you, how you think and respond in times of crisis.
While some today spend most of their time complaining, sleeping, drinking, smoking and wishing for better days, others seek to take advantage of the recession...
Warren Buffet, for instance, once said: “I just hope I see a lot of recessions .”
He meant that an economic crisis comes with great opportunities in investments.
Ronald M. Shaich, the founder of Panera Bread, said: “The best time to grow is in a recession .”
In fact, when you think about it, Groupon, as an example, started during the peak of the 2008 financial crisis and spread to more than 300 markets in no less than 35 countries , within just 2 years.
I think it ‘s fair to say, a recession is a golden opportunity for some, and a turmoil for others.
So we might ponder: How to take advantage of the COVID-19 crisis ?
One thing is certain, you can benefit from any economic crisis if you have already built up capital and credit.
In other words, you should always avoid spending and getting into debt, unless you are investing.
When the inevitable crash happens, you always want to be the one with deep pockets, and a good credit score, ready to take advantage of the low interest rates.
1- TAKE ADVANTAGE OF LOW INTEREST RATES IN TIMES OF ECONOMIC CRISIS
A characteristic of every recession is the low interest rates.
Yes, that was the case in 2008 and in every other major economic crisis.
Interest rates are low right now as many fear borrowing and having to default on debt.
Also, governments are providing stimulus packages, thus, decreasing reliance on traditional lending institutions.
The lending market is indeed subject to the dynamics of supply and demand.
You should take advantage of it now.
In the words of Warren Buffet: “Be careful when others are greedy, greedy when others are fearful”.
In brief, if you are not a practicing muslim, christian,or jewish, if you do not care much about usury, then you might take advantage of the low interest rates.
Such opportunities do not arise often.
2- INVESTMENTS IN THE STOCK MARKET
Nobody knows what ‘s going to happen tomorrow in the stock market.
Even the most astute brokers and investors are just guessing.
Not even Warren Buffet knows if stocks are going up or down tomorrow. If there are things we know for certain, it ‘s the following:
a-) The market will always crash once in a while
Stocks will be on a downward spiral at some point. It ‘s evident.
The market follows some sort of cyclical pattern, crashing every once in a while. This has always happened and will always continue to happen.
Using some data science and machine learning, you can manage to better understand this aspect of stocks.
b-) The market will always bounce back
That the market will always bounce back is evident.
Too much of the world’s economy is at stake, and sooner or later, it’ s in the interest of every world leader to ensure the market bounces back, whether as a consequence of a vaccine being created, or whether in the form of economic and political plans, sooner or later, things will go back to normal.
Now, armed with these two fundamental principles of the stock market, given you do not care about usury, your goal should be to stock up as much capital as possible and follow the news.
The day you hear about a working vaccine for COVID, buy stocks that are always high performing.
Indeed, the stock market will improve, and high performance stocks will skyrocket when the economy gets better. The more capital you will put in, the more money you will make.
This is one of the basic principles of money: the more money you have, the more you can earn.
So, focus on volume, and you will make a lot. EASY !!!
Other investment opportunities will arise, for instance, with the company that ends up discovering the vaccine, as they are set up to make billions in revenue, selling to the entire world.
So, buy stocks of the company that ends up creating a working vaccine.
Remember, an economic crisis is nothing but a transfer of wealth from 1 group to another.
DISCLAIMER: I am not an investment advisor, you should consult a professional. I am just sharing my thoughts and they are not to be considered as professional advice.
2- BUY BUSINESSES AND UNDER-VALUED ASSETS
In the 2008 crisis for instance, properties lost their values. People panicked and sold their real estate.
Increased supply in the real estate market, coupled with small demand, drove prices low.
Some people, who could not otherwise afford some real estate, took advantage of the situation. They bought properties, which appreciated over time, with good opportunities for recurring passive income.
Even now, during this COVID break, you should try to buy some currently undervalued assets.
You should seize this moment to acquire some underrated brick-and-mortar businesses, should they interest you, especially if they provide opportunities for current or future passive income.
3- CREATE A STARTUP AND TAKE ADVANTAGE OF THE NEW TRENDS
What are some new habits and trends developing in the wake of COVID-19 ?
Which of such trends are likely to last in the future, even after the virus is eradicated ?
It seems we are getting more and more used to food delivery.
There is currently an opportunity for new delivery apps for everything, not just for food and groceries but also for house supplies, tobacco products, edibles, hardware stuff, you name it.
What about masks as part of style and fashion ?
Wearing masks has been prevalent in many Asian countries, even before COVID.
Today, with the Coronavirus, there is opportunity for new niches and markets for masks as elements of style and fashion.
Worthy of note is that muscle memory develops after every great crisis. Some of the new habits might become a part of us, forever.
Home fitness, for instance, is becoming more and more widespread. So are distant learning and remote tutoring.
Americans are coming to their senses as they discover that higher education is overpriced. Paying more than $60,000 a year is too much, when the alternative, e-learning, is reasonably cheap.
Indeed, college tuition is ridiculously expensive, when you cannot even attend commencement or participate in some on-campus activities, as is currently the case.
As most value add-ons of higher education, like real-life interaction with faculty and classmates, are currently non-existent, the veil on exorbitant college tuition has been lifted.
It seems now that higher education is merely a luxury in the US. A sort of caste system, in which your alma-mater defines your social class.
There is, hence, an amazing opportunity for disruption in higher learning.
On the corporate side, companies are getting used to remote working. Virtual teams will become the norm, as some businesses notice savings that would have usually been wasted in office maintenance costs.
One booming industry might then be, supplies for home offices, or apps to permit more coordination for remote teams.
No-touch products and services are also desirable. Today, no one wants to touch a door. No one wants to get near an elevator button or a handle.
It is important to remember that any opportunity you can provide for people to work better at home, and to indulge in their mundane activity, while staying safe, will create value.
In a few words, crises come with opportunities. You should take advantage of them.
Serial Entrepreneur and Blogger