I, personally, have experienced at least ten recessions in my short seven decades of life. Some recessions lasted just a few months, others went on for years. One recession resulted in a 25% unemployment rate where I was living. I gained different economic
insights from each of those recessions.The value of a recession is what a person learns, or what a person becomes, as a result of the recession.
Those who comfortably weathered recessions in the past had one thing in common … they had cash savings, sometimes called “rainy day” money. In order to save “rainy day” money, they had to spend less than they earned. In order to make the sacrifices necessary to save money, they had to believe in saving money. Today, too many people, particularly analytical engineering types like me, have lost faith in saving money. Our reasons for not saving money … are quite logical.
If we put money in a saving account, our money grows slower than inflation, so we wind up losing money, not making money.
If we put it in the stock market … well we know what happens to stock markets. In my dictionary, the definition of “speculation” is on the same page with “gambling,” and Las Vegas is an alternate spelling for Wall Street.
Logically, we all sense that something about the economy is not working the way it should. Don’t you agree that … that which did work … no longer works … at least not to the same degree?Our logical minds complain that we should have been able to build a “rainy day” reserve using savings accounts and stock market investments. Unfortunately, saving accounts and stock markets are not working the way they have done in the past.
Stock markets and savings accounts used to work in the Industrial Age because they were economic tools of the Industrial Age. They are not working now because we have transitioned into the Information Age (or at least we have stuck the tip of our toe into that vast ocean). Because of the Information Age, the economy has changed.
We need economic tools that reflect our new economic conditions.
Rather than growing savings accounts by not spending money, we need to learn to create secondary income streams using time and money we are already spending. Secondary income streams function similar to the “script” programs that schools have been using for decades. In “script” programs, profits from sales are returned to a school. In “secondary income stream” programs, profits from sales are returned to the individual.
Could “secondary income streams” be the new “rainy day” money to replace the “rainy day” money that dried up due to inflation and economic changes? You decide. You can read the first two chapters on my eBook on this subject by clicking on this link www.symbiosis4u.us/eBooks/EntrepreneurDNA-2EZ.pdf (The first two chapters should only take about twenty minutes if you read 400 words per minute.)
Rather than speculating in the stock market, should we consider learning how to make money from the “back side” of the stock market? Perhaps we should learn more about producing dividend like income based on actual product volume for a group of companies rather than analyzing the speculative value of a stock portfolio for the same group of companies.
The “Back Side” of the stock market is similar to the way Warren Buffet invests. Warren Buffet doesn’t buy stock, he buys companies. He is not concerned with the increase in stock prices so much as the long term dividends (profits) produced by the companies he purchases. For example, he bought Mrs. Fields’ Cookies stock (all of it) in order to make money in the form of dividends, not increased stock prices. While we do not have Warren Buffet’s buying power, we can benefit from a similar process. That process is what I call the “Back Side” of the stock market.
On April 2nd, I will be speaking on how to make money from the “Back Side Of The Stock Market.” Stay tuned for more information as April 2nd gets closer.
Recessions come and recessions go. At least, that is what has always happened in the last century. Will that be what happens in this century? I don’t know. I do know that every recession has caused some changes, in some areas of the country, that became permanent. What will be the permanent changes resulting from this recession?
The answer to that question will make some people wealthy … and others paupers.
