GETTING YOUR BUSINESS READY FOR THE NEXT RECESSION
by Jon Robert Quinn (Released 10/30/18)
Back on February 2nd 2018, I filmed a short documentary about the current economic state and made a prediction as to what would happen in 2018. The documentary had very mixed reviews. Immediately out the gate, people were saying how dare I use scare tactics to sell advertising on my radio shows. That was never the intention. My intention was to make people aware of what was going to happen because even if I was wrong, at least you were prepared. I stated in the short film called Recession 2018, four things would happen. The first thing I said that would happen was the stock market was going to drop some 2000 points. The next thing would be that Bitcoin would dry up. Then I said interest rates were going to increase to high 5% or low 6% and I said all of this would happen around mid-July.
Well, I was wrong and right at the same time. Literally on February 5th, 2018, the Dow Jones fell 1,175 points in one day. That was the largest single day market fall in history. My prediction came just one business day after I made the prediction. Was it luck? No, I pay attention. The day I recorded the short film, the market had fallen 665 points. My next prediction was about Bitcoin. My prediction was that it would fall and be eventually be worthless. On February 2nd, 2018, Bitcoin was trading at $9,375. Today, it’s $6400. That’s a significant drop and it will continue. My next “assumption” was that rates would climb into the 5s. On February 2nd, 2018, the current rate for a Conventional 30-Year mortgage was 4.25%. Today, it’s 4.875%. My last claim was that all of this would happen around July of 2018. When you look at the trends, it was definitely mid-summer when the shift started occurring. So, what does all this mean?
The markets are shifting. The climate changes. Opinions change. Ideas change. Interests change. Why wouldn’t the economy? With an ever-changing economy comes warning signs and the warning signs are definitely there. So why is the market so volatile? I call it speed wobbles just like the handlebars on a bicycle when you go too fast. As soon as Trump took office, the market went crazy and has continued to go crazy and what goes up, must come down right? It grows and drops and grows and drops and eventually will fall hard and fast and in my honest opinion, I think it could be worse than last time.
I think the next recession will be a doozie for sure simply because even though the regulations changed last time preventing the housing crisis to happen again, the banks are still doing the same thing. CDOs or Collateralized Debt Obligations are still around. NINJA loans are now being offered to homeowners that shouldn’t have homes and greedy wall-streeters will always be greedy wall-streeters. The difference is that the market is higher today than it was ten years ago. And for those of you that don’t what NINJA loans are, they are loans for people with no job, no income, no assets.
So, how do you protect yourself? If you’re a small business owner, then quit spending. Get your money safely put away. Be smart with your business. If you’re building your business using the ESBI Quadrant, that is a great start. If you’re not sure what that is, then get a copy of my book Think and Grow Wealth. From there, start building your business using an asset to liability ratio of 2:1 or greater, meaning make sure your money going out is bringing in at least two to three times coming back. You cannot be losing money and survive. Ensure that you have several months of reserves set aside and that your debt is very low. I know this all sounds easy, but if it was so easy, then why do ninety-nine percent of businesses fail in five years? Because they aren’t doing this.
You have all been warned as to what’s to come. Believe me or don’t believe me, but either way, get prepared and make sure your finances are in place before the next shift. They say the cycle is seven to ten years and last the cycle was ten years ago, so get ready.