Gain valuable financial wisdom from insights on bear markets, recession resilience, and decision-making. Navigate your financial journey wisely.
I was listening to an interview where the guest was Sam Dogen who runs Financial Samurai (July 2022 edition of Impactful Financial Insights).
There were three important things I think he said, and a couple that I disagree with after working with my financial advisor for years which has allowed my wife to retire pretty early in life. (No, I don't plan on retiring anytime soon, I'd go stir-crazy watching Hallmark movies and HGTV shows...)
1. The average bear market is a year in length and goes down 35%.
- this is the one I agree with and it's important to keep the markets in their proper perspective, which is a long-term view. I've been around for a lot of years, and thought the internet bubble, 911, the Great Recession, and the pandemic were "unprecedented" and was a cause for concern long-term. As you know, although there was a lot of pain, the economy recovered quite nicely after each of them. Of course, this isn't a guarantee of what will happen in this crazy inflationary environment, but you get my point. Unfortunately, my youngest son does not...yet...
2. The way to outperform in a recession is to continue to live your best life.
- this is partially true, but I'd say from a business perspective, you've got to allow your clients to live THEIR best life. Continue to provide more and extra value to them. Understand and help them achieve their goals. Zig Ziglar said,
"You can have everything in life you want, if you will just help other people get what they want."
Work in your strengths as much as possible and hire out the rest, as this will allow you to live your best life and still have your business meet the needs of your clients. (See our HireMyVA White Glove service).
3. Decision making- make a decision when the probability of you being right is 70% yes and 30% no, and realize 3/10 times you'll be wrong.
- This is WAY too general of a statement. When you're making a decision, you've got to think about the cost of being wrong. For example, when you buy a house, you need to be more into the 90% range as the cost of making a mistake here is alot (although this does depend somewhat on your financial situation). Same with your choice of spouse. Same with your choice of business partner.
- Yet there are other decisions that have much less risk and many fall into this category, and likely you'll be fine making decisions when you're only 51% sure of it being right. Like what article to write about, what external microphone to buy, will this be a good book to read, what to order for lunch, etc.
- So the important lesson here is to consider the impact of your decision long-term. As mentioned previously, buying a house has many long-term effects, so you have to be very wise, but what you choose for lunch today only lasts a few hours!
Well, hope you enjoy my musings here, but the important thing is to think about the advice people are giving you!
Until next time,