There are still wonderful opportunities

Chicken Little is having a field day.  Everytime I turn on the news, there is something bad promoted.  One day it is the auto industry.  The next, it is the financial companies.  Stock markets around the world are being battered.  Jobs are being lost.  In short, the world is coming to an end.

Is it really that bad?  I prefer to take a bit of a different view of the entire situation.  Like everyone else, I have retirement money that is half of what it was earlier this year.  My income decreased this year as compared to last.  The prospects for some opportunities next year are going to be delayed.  Realistically, it is a different business environment than it was 6 months ago.

That being said, how can I possibly believe that 2009 is going to be the best year of my life?  The answer is because it will be.  I know it.  My certainty is going to make that manifest as a reality.  I will not accept anything less.  Overall, when I look at my daily life, things did not change all that much.  In fact, in some respects, things inproved.

To begin with, my retirement account is still safe.  My heart goes out to all those who were swindled by Madoff.  However, I was not one of them and my money, even if half, still can grow.  I invest regularly so my money buys more shares than it did 3 months ago.  Over time, this account can recover.  I have another 20+ years before I am even eligible to touch that money without penalty.  Thus, what have I really lost?

And that is the gist of what is occurring.  A recession is nothing more than a collective mindset.  Are things bad for some people?  Definitely.  However, the majority are doing just fine.  Those who are 10+ years away from retirement will see their accounts return.  Also, gas prices plummeted over the last 6 months.  This has a bigger effect on the average budget than any of the other economic news.  Finally, we are seeing a deflationary period where the price of everything is coming down.  This will only help those tightening budgets.

So what perspective are you looking at?  That is what will determine your success next year.  Everyone is worried about what will happen.  Well, stop worrying and start doing.  Success is guaranteed to follow with that approach.

One final example of how the media can skew your perspective: unemployment is usually around 5%.  Now, it is in the neighborhood of 6.5% with estimates putting it as high as 9%.  This leaves an increase of 4%.  How come the media always focuses on this aspect?  If there is a 4% chance of losing your job, that means there is a 96% chance of keeping it.  The odds certainly are in your favor.  Also, always remember that 5% of the population does not want to work anyway.  Therefore, it is a small minority who is going to be out of work.  The majority will still be employed.

Having the right outlook is crucial to your success.  Approaching the new year with this mindset will allow you to see opportunities others miss.  There are still many ways to succeed regardless of what the present circumstances are.  The United States will still have an economy somewhere near $2 trillion.  That is a lot of products and services sold.  A total collapse will not occur regardless of what the Chicken Littles of the media world say.

Share and Enjoy!

Chicken Little Would Be Proud

We know the story of Chicken Little. He was the one who was always proclaiming that "the sky is falling". The recent events with the financial situation reminds me of the children's story. Unfortunately, in this scenario we are not referring to a child's game. The crisis we are confronting is a serious and difficult one. It will take some navigating on the part of many to get through it.

Nevertheless, for the last week I heard from the political leadership that we will enter into extreme chaos if this bill is not passed. First, it had to be done last week and that delay would mean the end of life as we knew it. Of course, Congress did not pass the bill last week, one which we all survived. Then, we were told it had to be done yesterday. Again, we saw the same results. Congress does not act yet the world was still in one piece this morning. Each time demonstrated an over reaction.

How often do you make like Chicken Little? The reactions to the present circumstance teach us how important it is to step back and relax. Even when faced with a tough situation, knee jerk reactions rarely solve anything. Panic is a state that is best avoided if we want a productive outcome. Operating in a state of frenzy diminishes our capacity to rationalize through a series of problems. I believe we are witnessing this at a national (if not worldwide) level. The 778 drop in the stock market is evidence of how panic is taking hold. Fear is the primary motivation.

Can you keep your head while everyone else is losing it around you? We need to seek the calm in the middle of the storm. Here are some helpful reminders. Most people are going to come through this situation remarkably well.

Here are four things to consider:

1. The banks might be at risk; your deposits are not.

The FDIC insures all account holders up to $100,000 with the possibility that limit will be raised. This money is secured by the government and you are protected. Most people have accounts that are well below those limits.

2. Your 401K and IRA are still there.

These balances are being hammered. However, unless you are retiring tomorrow, there is time to get back what was lost. Anyone who is under 59.5 cannot touch the money without penalty and taxes being applied. For these people, the money is going to be there for another 5,10, or 20 years. There is plenty of time for it to rebound.

3. Stocks will come back.

If you are holding a stock in a good company, it will recover. The losses in the market recently are not company or industry specific. The market is being pounded by macroeconomic factors. Even if the stock is off 30%, that will be recouped in the next bull run provided you are in a good company. Anything you incurred is a paper loss that can be overcome with a bit of long-term perspective.

4. People are always in need of goods and services

The Chicken Little's will tell how the economy is about to collapse. While downturns will occur, the world will not stop. People all over the world will continue to need goods and services. Medical attention is always needed. So is food, clothing, and shelter. Lawyers, I am sad to say, will always be around looking to put in their two cents. We still need to prepare our taxes, fill our cars with gas, and put shoes on our feet. A multi-trillion dollar economy will not go to zero.

With each set back there is opportunity. Warren Buffet is on a buying spree. He is finding incredible bargains which will make him a lot of money over the next few years. We will rush to the local department store to buy all kinds of stuff the day after Thanksgiving because of the sales yet fret when the stock market goes on sale. That is consumerism logic at its finest.

There is no doubt there are some tough times ahead. However, do not compound them with thoughts of doom and gloom. This only makes recovering from it that much more difficult. Be wise in your decisions and you will prevail. There are fantastic opportunities at this moment for you to exploit. If you doubt that, consider that one of the most famous companies in the world got its start in the middle of The Great Depression. Look up the history of Hewlett-Packard to motivate yourself. Good times are ahead of you.
Share and Enjoy!