There is an interesting article in Fortune this month about the coming recession. Usually, everyone is blind-sided by a recession, but there are enough talking heads foretelling its arrival that only the most stubborn of investors will be caught with their pants down.
Unfortunately, most businesses will be caught [and ruined]. Businesses are currently caught up in a tsunami of capital investment spurred on by cheap money and unsustainable demand – and they can’t jump off. Grow or die has been the mantra for the past seven years, and it is hard to accept that it will soon be replaced by slow down and save, but if you are NOT cash strong, liquid, and ready to pounce when the recession does hit – you will be splintered on the rocks as you crash into shore.
Every moron has made money in real estate and the stock market for the past seven years. This leads to a hubris that fuels every recession. Con artists think they are brilliant [especially the real estate con artists], and they have seven years of spectacular growth as their witness to their [supposed] magic. But when the storm hits, and the values drop, and the rents slow to a trickle – the mortgages and taxes still have to be paid. It’s a slow death, as opposed to a stock market crash that is swift and merciless.