Are We In A Recession? What Are You Doing To Be Prepared!

113 Replies

Hi Everyone

I ran across an article from Grant Cardone, Mr. 10X.  I think you should all read it.  Let's be prepared this time for the downturn.

https://www.entrepreneur.com/article/273598

Do you think we are in a recession, and what can you do to prepare for it?  This is a great question for all entrepreneurs who rely on the consumer for their paycheck and for all of us real estate investors who are complaining about cap rate compression.

Thanks!

Gino

@Gino Barbaro interesting article and I have seen the signs myself. Personally I am tightening my spending to essential and trying to let some cash build. Nothing goes up forever and it always goes in cycles, so there will be a pull back, probably soon in my opinion.

The market dropping after a .25% raise to the fed fund rate and it not recovering until they threaten to pull future raises off the table tells me all I need to know. All they talk about is how other countries economies are to blame but I'm not buying it. The last 8 years have been the biggest monetary experiment ever and now that that took the punch bowl away, here comes the hangover. The true sign of failure will be if they decide to start QE4(yes...for the fourth time) or negative interest rates. 

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@George Smith

Hi George

I would have liked to have seen back in 08 if they let everything crash and reset without the monetary spending and shovel ready jobs.  This has created the 1% because they own the assets that are appreciating while the middle class worker is stuck with .1% increase in wages.  They create the problem and then say they are going to fix it.

Remember the guys who crashed the system were the ones who were set to fix it.  I just think it is an important discussion for all investors to have

Gino

@Gino Barbaro my local economy has not been hit by oil and gas, but the company I work for globally was hit bad. So in my day job all employees are taking the hit even though my job isn't in that sector. Essentially the whole company pays when one segment of our business is hit hard because of the diverse global nature of my company.

Our local economy is great and housing prices are out of control. I would say locally we are in the "too good to be true" phase. Economy usually gets crazy good before it drops off the cliff. The better it gets the worse it falls. Just my perspective over the last 20 years.

Looks like a doom and gloom marketing sales pitch to create a reason for people to sign up for his marketing university.

We are not in a recession. The gas and oil industry may be hurting but look at how many people are overpaid in that industry to begin with and now look at the huge "tax break" that the average american has received. We've gone from $4 for a gallon of gas to $2.  If the average family spends $150/mo to $200/mo for gas, thats a saving of 75 to 100/mo or almost 1k a year in their pocket.

I think the economy would be much better off with 99% of the population getting a 1k a year (net) infusion of cash as opposed to a couple hundred thousand oil and gas people losing their jobs. 

I see IT still being incredibly tight. And I see that most of the people that lost their jobs during the bust are now employed again and with decent jobs too - i.e. back to their regular pay or better.

I see construction finally picking up again in our area. Whats not to like?

You can call it anything you want. But in my mind I see tons of jobs even here in the midwest. And I see people a lot more confident in their purchases.

In terms of sub prime car loans going bad, what did these goofy lenders expect? And when will they ever learn? If the borrower isn't qualified enough for a regular loan, then how in the world do they come up with this crazy notion that they can raise the rates to double or triple the standard rate and somehow that ill-approved borrower is going to be able to make the payments then?

The logic is so flawed its ridiculous. These bankers should be put in jail for the nonsense.

So as far as I can see, that guy is off his rocker in his assessment of the economy. I don't see us being anywhere near some great recession right now. I see us slowly and steadily moving forward to a stronger economy. 

That view may very well be a truly regional belief though. But to me, the midwest and especially here in illinois where our politicians have run the budget into the ground, should be trailing where the rest of the country is in terms of economic standing. I would think areas like texas, georgia, florida are all even more rosy an outlook on their economy.

I think the guy is just doomsayer using cheap marketing tactics that "the sky is falling and he can save you" to get people to go to his GrantU or whatever nonsense that site is.

Thats my 2 cents (and then some) on what I think of that "article". B-O-L-O-G-N-A

You have to take a look within the subsets of real estate. I think the multifamily boom is due for a pull back in the next 24-36 months. BUT, that boom's higher prices is creating a need for entry level/starter homes. Yes be prepared. Don't get fat on just one sector of real estate. Educate yourself in different markets sectors and be prepared to capitalize on the subset cycles. 

I just skimmed it. Recessions are happening on local levels always and would not be able to apply on a national scale just yet. For Cali his past take and past forecast was not accurate. 

50% chance of recession is actually an improvement from a few months ago. Let's face it, this online source is not known as well respected in most financial circles and in some more serious circles, one would be laughed at for taking their articles as noteworthy. 

@Matt R.

Hi Matt

I wish I had his portfolio and brand.  Who cared what serious financial circles you are referring to.  Most financial circles don't know what's going to happen next week, all they do is predict with as much certainty as Grant, and when they're wrong, they are held to a lesser account than he is.

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@Gino Barbaro

Subsets such as land development, self storage, single family homes, retail, senior housing etc. Not all real estate goes up together and falls together- some are inverse. I agree, homeownership is at it's lowest but there a many factors that could cause an increase in single family demand (especially entry level) One factor being rental rates that are too high. We are seeing this in hot markets such as San Francisco. Here is a great Bloomberg article on the pent up demand for entry level homes. 

https://finance.yahoo.com/news/housing-busts-long-shadow-110004280.html

Originally posted by @Gino Barbaro :

@Matt R.

Hi Matt

I wish I had his portfolio and brand.  Who cared what serious financial circles you are referring to.  Most financial circles don't know what's going to happen next week, all they do is predict with as much certainty as Grant, and when they're wrong, they are held to a lesser account than he is.

 Right on. It is not a knock on Grant, the publisher lacks credibility. Maybe they have improved IDK but it was known in the past as purely a promotional rag not to be taken too seriously is all. Grant markets on there just like the rest and nothing wrong with that. If folks think it is a reputable business financial publication that's cool. 

"The oil and gas sector has been hammered hard which will cause tremendous damage to the banks."

Wrong.

"Automotive indicators show a consumer that is weakening, with auto buyers having to extend terms of finance to 84 months for consumers to afford a car."

Again, this isn't a recent event

"Talk to the everyday American consumer and you will find out they are strapped.

Since when have they not been?????

"Home ownership is at the lowest levels in fifty years.:

Has nothing to do with recent economic events what-so-ever, we didn't suddenly arrive at this in the last 2 quarters

That's as far as I could get through his article before it became just to mind numbing.

@Gino Barbaro I think financially successful people like Robert Kiyosaki and Harry Dent agree with you. If true, this is very positive for investors. But with central banks screwing around, you never know. They got the printing presses, unlimited money! 

http://etfdailynews.com/2016/03/31/robert-kiyosaki-and-harry-dent-warn-that-financial-armageddon-is-imminent/

Originally posted by @Gino Barbaro :

Hi Everyone

I ran across an article from Grant Cardone, Mr. 10X.  I think you should all read it.  Let's be prepared this time for the downturn.

https://www.entrepreneur.com/article/273598

Do you think we are in a recession, and what can you do to prepare for it?  This is a great question for all entrepreneurs who rely on the consumer for their paycheck and for all of us real estate investors who are complaining about cap rate compression.

Thanks!

Gino

I can't predict the market; so, I try to purchase cash flowing assets that do well in both up and down markets. My rental property values likely went down during the last recession but the cash flow did not change much...actually went up some during the period. I'd like to sit on the sidelines andthen  buy during recessions but the lost cash flow while on the sidelines is hard to make up.

Don't think we are in a recession, but do think one is coming soon to an economy near you, and it very well may be a long one. The fed is out of silver bullets and there is a full moon on the rise.

With regard to RE (at least in my market) I think it will likely peak summer 2017 if lending does NOT loosen up, or later (maybe a year or two) with a much more severe downturn if it does, but my crystal ball is just as fuzzy as everyone else's.  If my prediction comes true, I am prepared. If my prediction does not come true, I am prepared. Just a question of whether I am going to win big or win small, but make no mistake about it, the house always wins, and I am the house.

Originally posted by @Gino Barbaro :

@Matt R.

Hey Matt

I just like Grant, and I feel the economy has been marginal at best the past few yrs.  I have owned a restaurant and between competition, less disposable income and taxes, it is hard for the economy to get any traction.

 I think most agree the middle class is getting squeezed out in many places. There could be a reset coming of sort or perhaps this is just the new reality in certain locations.  Many restaurants think there is  not enough disposable income left after folks have to pay for housing and basics. Some other folks predict we should get used to that more and more vs any reset. The cycle will come and Dent and Grant will be partially right...one day, just maybe not yet or right now it appears. 

@Gino Barbaro @Jake Stenziano

Interesting that you would bring this up. I have a bit of cash ($100-200k) after a refi just sitting idle in a bank, which I am paying $7xx/mo. or so mortgage. I wanted to lend the funds to a flipper, but he informed me my funds would be tied up for 9-12 months, even though the 12% return would have been nice.

Would you say deploy the money into something NOW, or just wait until the market tanks and then buy something?

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