The new crisis is just around the corner: 7 lessons from the previous crisis (as a preparation for the next one)

Inflation is off the scale and setting anti-records, price tags in stores are skyrocketing, and geopolitics is "feverish.

The already difficult situation is "aggravated" by the continuing logistics and energy collapse, forcing factories and production companies to suspend their work.

All of this will definitely not "go away" without significant consequences - a new crisis is clearly brewing in the global economy, which promises to be very strong and prolonged. But now is not the time to panic! Now each of us should prepare our family finances for the inevitable encounter with the inexorable impending crisis.

 Seven lessons from the previous crisis (which will help you be well prepared for the next one):

1) The Japanese crisis as a cautionary tale

The collapse of markets can last much longer than it has in the past.

On average, bearish trends end in 6-24 months.

However, there are exceptions to every rule - for example, the Japanese market has "bottomed out" since December 1989 and is still 40% below its peaks of 30 years ago.

How do you deal with this?

Read on!

2) You can't treat the unlikely as impossible

That's why your financial plan must include the ability to "sit on siege" long enough.

And one cash "stash" is not enough here, no matter how big it is.

You need to prepare in advance a number of "emergency airfields" and scenarios for your behavior in case you lose your main source of income (including the search for options for additional income, regular updating of your professional competencies, etc.).

3) The easiest way to fool yourself

Sometimes it seems to us that we have "steel I", and that "any sea is knee-deep".

But when the economy crashes, panic sets in and we unwittingly succumb to mass psychosis and get out of long-term investment positions.

WHAT TO DO: Build up a very large "financial cushion" so you have nothing to worry about. Yes, it will slow down the capital creation process, but "nerve cells don't recover," and they are much more important in a crisis (since they are the ones that ensure you are making informed decisions to get out of difficult circumstances as quickly as possible).

4) Even the most reliable bonds are falling in value

Which is what you and I are witnessing right now.

Make sure you have a sufficient number of safe assets (preferably fixed income) saved for a rainy day.

This could, for example, be investment funds investing their clients' money in rental properties.

5) A well-thought-out plan is your "lifeline

Investors who abandoned their plan during the crisis "on emotion" receive significantly lower returns than those who continued to strictly adhere to their developed investment strategy.

Yes, the shares you acquired (let me remind you that the best way to buy them is to invest your money in index funds) can seriously "sink" in quotations.

But that's no reason to exit your positions. It's an excuse to take advantage of the decline to aggressively buy good assets at sharply reduced prices.

6) Dividends and REITs "break even" in a crisis

Don't use dividend stocks and REITs (real estate investment trusts) as a "financial cushion."

In a crisis, the prices of these instruments fall along with the entire market.

FOR EXAMPLE: In 2008, the Vanguard High Dividend Yield ETF fell 32%, and the Real Estate fund fell 37%.

7) Even smart people sometimes make mistakes.

What separates them from fools, however, is that they draw conclusions from it.

Emotions and money are NOT compatible - always remember this.


A well-thought-out anti-crisis plan of action will allow you to survive the next crisis calmly, while getting a good night's sleep and enjoying the financial prosperity you have.


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