Worldwide Success

These are tough economic times, but if there is a silver lining in all the gloom and doom around us is that there are always opportunities for those that are prepared to be successful regardless of the economic environment.  So how exactly do you thrive in the recession?  Here are some thoughts you may want to reflect upon.

Preparedness

First of all, in order to thrive in the recession you need to be prepared.  The preparation we are talking about is something you should have started way before the recession hit, but we believe it is never too late to do the right thing.  One of the most important things you should do to get prepared to deal with a recession is to reduce debt.  As discussed in the article Credit – Use It Wisely, credit can work to your advantage if used correctly but it can have devastating effects if not used properly.

The second most important factor in being prepared to deal with the recession is to have a strong cash reserve.  At a minimum you should have 6 months of living expenses stashed away in an ultra-safe cash account.

Last but not least, you should protect your primary source of income.  If you are a business owner, go the extra mile for your customer, reduce cost, increase efficiency, and use creative ways to increase sales.  Now more than ever you need to step up the effort to maintain your business strong.  If you are an employee, come in early and stay late every day, volunteer to do the things no one else wants to do, find creative ways to solve difficult problems and come up with suggestions to help your employer reduce cost.  By showing initiative and leadership you will have better chances of surviving a reduction in force.

Assuming you have the taken the right steps to be prepared to deal with the recession here are some areas where you can take advantage of the current economic conditions to your benefit:

Get a Great Deal on a Car

In October car sales in the US hit their lowest levels in 25 years, representing a 31.9% decline from a year ago.  Does that mean you should stay away from car dealerships like everyone else?  Absolutely not!  You should do just the opposite.  This is a great time to buy a car because dealers are hurting and they are much more willing to make a deal.  Of course you must shop around and use the tough economic times to your advantage by leverage the fierce competition among dealerships.

Many dealers are starting to bring in new 2009 inventory and they must get rid of their 2008 cars.  Therefore, they are offering great deals, sometimes below their invoice cost, just to get rid of inventory.  In addition, many manufacturers are offering loans with zero or low percent APR in order to attract buyers.  Assuming you have been taking the preparedness steps discussed above and that you have a high credit score you can now not only get a new car at a great price but also get a great loan.

Real Estate Bargains

There are many real estate bargains to be had out there, especially in states like Florida, California and Nevada where real estate prices got out of control during the bubble.  No one can tell exactly when the housing market will hit bottom, but houses are much more affordable now than they were two years ago.  And keep in mind that despite of the recent drop in prices, real estate will continue to be a good investment in the long run.

Whether you are a first time home buyer, someone looking to upgrade to a better house, or an investor looking to pick up rental properties, this is a great buyers market.  That means you get to call the shots and negotiate from a position of strength, assuming you can get the financing required to purchase the property you want.

Cheap Stocks

Stocks have dropped 42% from their peak in this recession.  Again, no one is calling a bottom, but there are a couple of things to keep in mind.  First, stocks tend to over-correct in recessions, creating a buying opportunity.  Second, stocks are always looking 6-12 months ahead.  The last four recessions lasted from 7 months to a couple of years, and if you consider that we may have already been in a recession for about 6 months, we may be getting close to a stock rebound in expectation of an economic recovery in the next 12-18 months.

The economics troubles we are experiencing today may already be built into stock prices, although there is always a chance that we may test new lows.   However, if you wait to get back in the market after things get much better, by the time you get in prices will already be high, and it may be too late to gain the most benefit from your stock investment.

As always, you should manage your investment risks through diversification.  You should also set your asset allocation based on your investment timeframe and risk tolerance.

Even in tough economic times like these, successful people can thrive.  The key is to be prepared and to look for the right opportunities.

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