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THREAD: The 2019 global recession - why it will happen and how to prepare for it.
The next recession will start in the US around Q4 2019. It will generate a tsunami that will impinge the global market till late 2021. Here are the 3 reasons the US economy will recede in 2019.
1. We are overdue. The last two recessions were in 2001 - 2003 and 2008 - 2010. It's been 8 straight years of economic growth since the 2008 recession ended. We are already overdue for another recession.
2. Microeconomic factors. Two ticking time bombs in the US economy will blow up just like the mortgage crisis of 2008 - (A) the student loan crisis and (B) the government debt profile. Both are rising at an unsustainable rate.
3. Political uncertainty. Trump is crazy and chaotic. The economy responds negatively to chaos. 2019 will probably be the most politically chaotic year in American history. A recession will quickly follow.
How then should savvy investors react? Caveat: I am not giving legally binding investment advise. I am just stating my opinions in view of these realities. Please consult your investment advisor before making any investment commitments.
1. Cash is King. I will avoid stocks and exit long term investment instruments by mid-2019. Cash will be scarce and assets will be cheap by 2020. Cash holders will have their pick of tangible assets (especially real estate) by the end of 2019/early 2020.
2. Emerging markets currencies will devaluate. Naira, Cedis, Kenyan shillings, Rands etc will devaluate significantly. I would hedge my assets with a 60%USD: 40%local currency holding. Expect Naira to devaluate to 400 - 450/USD, Rand to 20/USD.
3. Middle managers will lose their jobs. Middle mgt, as a discipline, will be the first casualty of the pressure corporations will face. Every employee will be expected to perform a technical task while managing others. Only people with technical skills will continue to thrive.
Summary (asset). The most important thing you can do for your asset is to exit long term investments and focus on short term money market instruments. Hold off real estate purchases till 2020. It will be 20% cheaper. Prioritize cash for investment leverage during the recession.
Summary (career). The most important thing you can do for your career is to pick up some technical skills. Middle Manager will be the most dispensable roles in the next recession. You want to be the manager that also does XYZ. Learn your XYZ before the recession hits.
