Smart Tips For Uncovering Businesses

2017 Reality Check: How Your Business Can Survive Another Market Crash

In 2008, the economic crisis prompted the U.S. Federal Reserve to pump massive dollars stimuli into the market economy, that shifted pushed bond yields to their lowest point in seventy-five years. This forced many investors to shift from bond surrogate investments like real estate, high-yield bonds, high dividend paying stocks, and levered loans. The proliferation of these products has brought different risks to investors such as expensive valuations, regulatory changes and liquidity issues. The international and U.S. Banks have tougher capital rules introduced by governments, reducing the chance of bank failures in the future.

The average American investors can learn from the lessons brought about by the 2008 economic crisis and they can also be applied today to be able to survive another market crash if it does happen. It is important to be skeptical of the new products you are investing. The 2008 economic crisis was presaged by credit markets’ record set of innovations. What might have been a contained real estate correction in a larger financial collapse are magnified by collateralized debt obligations, increased leverage and sub-prime asset-backed securities. At present, we see a lot of new alternative products, asset classes and strategies, all with their own risks. It is important to plan ahead to prevent you from forcibly selling when market liquidity starts to dry up. In order to avoid selling securities at relatively fire sale prices, it is important to own high-quality investments and utilize diversified and effective high-quality fixed income investments which are mixed with appropriately priced stocks. It is also important to be aware of the impacts of debt levels because high levels of leverage or debt can adversely affect markets. Keep in mind that markets will recover and you do not have to sell if you have an adequate financial plan, and you do not have to panic and avoid selling securities if the outlook is not good. It is best to still look for warning signs in terms of market valuation and failure to appreciate investment risk.

The 2008 economic crisis serves as a reminder for American investors to embrace investment strategies that can withstand the test of time. It is critical for investors to learn from the lessons of history, creating a better portfolio, respecting the past, and opening great business opportunities of the future that can withstand the challenges of tough markets. Consult a fee only financial planner to get a professional advice on the best ways to make investments because of course, you don’t want to invest in a particular company just because of what appears to be net assets. Look at the board of directors of the company as well as upper level management. It is important to ask the person managing the financial aspects of the business you are planning to invest in. If managers are either less than above board or inept in their dealings, a company can quickly fail. Do not fall on different get-rich-quick schemes or overnight wealth schemes out there.

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