The next 9 – 18 months will be rough for many. For others, it will represent a once in a 10-year opportunity to buy stocks and properties at great prices.
In every recession, there are new problems the world faces and new opportunities that come up. Ford, IBM, Disney, CNN, Burger King, and Microsoft all got their start during a recession.
While the coronavirus is new and unexpected and it’s unclear exactly how this will play out, now is a perfect time to remember that this isn’t the first time the world has seen crazy things happen. According to Fred Harrison’s research, this is the 13th mid-cycle slowdown, dating back to the 1800th century.
Each mid-cycle slow down works just like the last one:
– We get a massive bull market and overinflated asset prices.
– Then we get a triggering event (like the Corona Virus or 9/11) where people panic and sell.
– We then see declining stock prices and an unstable economy which sometimes flows into the property market.
– From here the banks and governments bail us out (like they are at the moment) and we recover within 9 – 24 months which moves us into the second half of the cycle.
It’s important to remember we got through:
– The mid-cycle slow down in 2001 – 2003 with 9/11 and the dot.com bust where the stock market dropped by over 40%.
– The 1980 – 1982 mid-cycle slow down with 15% interest rates and a stock market that dropped by over 40%.
– The mid-cycle slow down in 1961 with the Cuban missile crisis and a stock market that dropped by over 19%.
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