Nothing Gets us Going Like a Financial Horror Show — but don’t Fall for the Thrill. It can Cost You Your Future
Nothing gets us going quite like our very own financial horror show. Pretty much the kind it feels like we’re going through right now!
What with 2 banking collapses in the space of 2 days and now Credit Suisse (that’s now trading below $2 btw) needed a bailout thanks to its liquidity crunch and UBS comes to the (forced) rescue!
Small banks are hanging by a thread thanks to the fed’s (overly) aggressive rate-hiking cycle. All this smells like a crisis to me. And one that smells a lot like ‘08.
All this doom and good is giving the chance for the (way too many) pessimists among us to really shine and show us what they’re made of.
Because no one sounds smarter than a pessimist in a crisis.
They sound like they’ve fully accounted for the risks, they’re aware of all the uncertainty and are pretty much waiting for the other shoe to drop. Telling us it’s soon.
But it can be hard to argue with a guy telling you the entire banking system is about to collapse (because, c’mon — look at the signs!) while the inner optimist in me wants to yell back “IT’S GOING TO BE OK!”.
Optimists vs pessimists
But us bunch of optimists on the other hand come across somewhat naive, if not downright dumb.
Like they’ve not possibly thought about all the risks and they’re just going for it on a whim.
That they’re ignoring or are even blissfully aware of the financial carnage.
But guess which bunch will get rich?
The optimists!
Because we know that markets will always recover. It’s a question of when not if.
So they continue going about their business and aren’t selling their stocks. No way.
But that’s really hard to come to terms with when literally everyone is telling you the exact opposite.
And you don’t even need anyone to tell you anything, just look at the run on SVB we had a few weeks ago and the scale of panic that sent — read here why SVB went bust in under 36hrs and why you should care.
Our bag of financial troubles is getting heavier by the minute
And right now, we’ve got plenty of financial horrors to give us that thrill to last for years.
Not that we needed one though!
What with covid then the war in the east and inflation hitting crazy levels but anyway, here we are.
The fed (and pretty much every other central bank) brought rates from their slumber party on the ground all the way to above 4%. In the short space of 12 months.
The problem is, the entire financial system became so addicted to the drug of QE and low interest rates that getting us all off it is a lot like weaning ourselves off of drugs.
There’s bound to be some (if not many) nasty side effects. After all, our (finical) bodies became so addicted to the stuff and became so used to it that not having it feels like not being able to breathe.
We were used to stocks going up for no reason other than the fact that rates are low and banks are practically being paid by the fed to lend out money.
What QE did was print money ($3trn of which got unleashed during covid!!) to buy gov bonds and other financial assets to make sure money was being lent out.
This, with historically low interest rates, meant that asset prices found themselves in the loveliest bubble ever.
But this has popped now that the drug is being taken away.
For how long though? We’ve gotta wait and see!
Nothing lasts forever. This too will pass
We’ve been through a gazillion crises and guess what? The system bounces back. And we bounce back. Every time.
But each time we go through a crisis whether it’s the banking crash of ’08 that feels eerily similar to what we’ve got now or the more recent crash of March 2020, everyone thinks the world’s coming to an end.
And in that one moment in time, that’s exactly how it feels.
But if you have the stomach to hold on tight, you’ll be rewarded.
Selling on the way down made no one rich.
The trouble with financial trouble is that if you listen to those miserable guys yelling “SELL, SELL, SELL” you’ll never have the courage to buy.
It’s not easy to keep on investing (or investing at all!) when almost everyone else is doing the exact opposite and especially when everyone seems to be saying the same thing: that the entire system is gonna collapse.
Hmmm. Where have we heard that before? 2020, 2008, 2001, 1987 and so on.
Whenever things turn ugly in financial land, that’s when everyone brings out their crystal balls, telling us about its near demise.
Though Chat GPT predicted that the market will crash on 15 March, and it did.
But don’t get too excited yet. Apparently it just tells us what we wanna hear. Great. So much for an unbiased bot!
As compelling and utterly gripping that it is, you’ve gotta ignore it and keep on buying.
The trouble with listening to all this fear stuff is that you might sit on the sidelines, covered in cash (read here why that’s never a good idea) waiting for the ‘perfect’ moment to deploy your soldiers.
Slight snag: it’s never gonna be a perfect time to invest.Sorry, it’s never gonna feel like the perfect time to invest!
Waiting for the perfect moment is like waiting indoors for Prince Charming to sweep you off your feet. Trouble is, he’ll never have the chance to see you if you don’t get out! Being invested is how you’ll win.
You’ve gotta be in it to win it.
But so many of us worry about investing too soon. Worrying that the market will fall further.
Since no one can time anything, it’s better to be early in the market than risk being a latecomer and miss out on the market’s 10 best days. That will cost you.
The media is full of pure and utter fear-mongering. Everything seems to be breaking news these days but if you fall for it it could break your future.
Fear it but do it anyway because if you give into the thrill of the financial horror show we’re watching from the front row you’ll never give yourself the chance to invest and have the life you deserve.
So block it all out. You’ll be richer and happier for it.
Disclaimer: This is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment
This article has also been published on my website: https://kneadyourdough.uk/
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