We’ve been in recession since February apparently, ending the longest economic expansion in American history.
The economy collapsed so rapidly that the National Bureau of Economic Research or NBER wasted no time in announcing a recession, a stark contrast to previous downturns when the body took upwards of a year to declare what most people already knew.
Social distancing requirements imposed to fight the pandemic have crushed broad swaths of the US economy, from airlines and cruise ships to restaurants and Broadway shows.
More than 42 million Americans have filed for unemployment benefits. Major companies including JCPenney, J.Crew and Hertz have filed for bankruptcy and economists are predicting GDP imploded at an annualized rate of 40% during the second quarter.
So what does these mean to you as an investor?
You need to take cover. Re examine your finances and prepare for the worst.
1- Re examine your financial fortitude How much do you really need to sustain your needs for an extended recession. Although this recession began suddenly, there is hope that it could be relatively brief. Economists are predicting GDP will turn sharply positive in the third quarter as businesses continue to reopen and Americans begin to travel again but preparing for the best is never really the right financial strategy.
You need to hope for the best but prepare for the worst. Go back to your books and determine how much you really need to sustain you and everyone depending on you.
Whatever excess you have is your risk tolerance. That’s what is safe for you to invest during this recession because there are opportunities out there in the market, business ventures, and other investments. Some opportunities may actually offer astronomical returns but like any investment, it’s always a risk.
Just don’t risk what you can’t afford to lose.
2- Secure not just your sustenance but your future using metals. Gold is predicted to hike up to $3,000 or $5,000, depending on who you are listening to.
It is currently hovering above $2000 now. If gold dashes towards $5000, that’s more than 100 percent gains. If you want to be conservative and assume $3,000, that’s more than 100% gains.
Don’t feel helpless though. The government is doing everything it can to help the economy recover.
The Federal Reserve is taking steps that make its response to the 2008 financial crisis look tame. The Fed has slashed interest rates to zero, promised to buy an unlimited amount of bonds and rolled out a series of emergency lending programs. The US central bank is even, for the first time, directing the purchase of corporate bonds, including junk bonds.
Until the economy is actually recovered, protect your investment.