Shape of Economic Recovery on Your Finances

After Covid-19 is under control, the economy will start growing again. Businesses will figure out how to grow, and new businesses will open. How fast this happens affects your careers, pensions, investments and retirement. 

Economists describe V, U, J and W recoveries. Investors look for forward earnings to price investments like bonds, stocks, mergers, businesses and real estate.

‘V’ recovery assumes after a sharp drop, the market will quickly return to normal. This was the early market opinion, and you can see the quick rally that occurred.

‘U’ recovery assumes a longer period down, followed by fast growth. This assumption lowers the value of investments because of discounted future earning valuations.

‘J’ recovery (or Nike Swoosh) assumes after the drop, the recovery will be slow steady growth. The post 2008 recovery is an example where economic growth was only ~2% for several years. 

‘W’ recovery is the scariest when the market rallies on hope after a steep drop, then bad news causes more steep market drops. The Great Depression is an example. Eventually economies return to growing, but this assumes bear market rallies follow by more bear market drops.

No one knows exactly how the economy will behave, and reading the news is confusing and misleading. Best can do is give opinions based on observations and research. As always “your mileage may vary”. Not an expert.

After the depth of this drop on the global economy, we are starting from a Much Smaller Global Economy. Most small and medium sized businesses are able to handle short periods of lower earnings, but not long earning breaks earning nothing. A good number of businesses will not reopen. Not good for business spending.

1 of 6 workers are now unemployed. They are not buying anything but necessary goods and services. When these businesses return they won’t need all their previous employees with less sales. Eventually most will find jobs, but not necessarily at the same salary. Drops of 10-30% are possible after extended periods of unemployment. Does not help consumer spending.

Business recovery will be different by industry. Hair stylists will lose income this year because we only need one haircut to recover. Travel like hotels, cruise ships and airlines are going to be low and slow for 2-5 years. Small luxuries like Starbucks, meals ordered in or eating restaurants will recover much faster. Delivery services will have continued growth. Oil and energy will start growing from a lower user base. Durable goods will be smaller for a longer period.

Real Estate is going to vary by market: Strong demand for low income housing and apartments. Condos and housing will have lower prices with less qualified buyers. Commercial real estate will have more retail vacancies and lower office space demand with the growth of work at home.

What to Do Now? Decided at my age to lower my exposure to stocks from 40% to 30% in my 401K and hold more money market (cash). Also reduced International Bonds 10% moving to Domestic Bonds to lower my risk. Did not move completely out of the market, but made slight adjustments until think stocks are a good investment again. Investing is easier when you have a long term strategy.

Pensions May be Cut due to low returns. Look at your spending and see what can be reduced or deferred until you know how this will affect you. Do you have assets you can sell you don’t need? 

If your job is secure, the next year may be a good time to purchase a car or home. Major purchases are the most important decisions for your wealth.

I hope not to be laid off, but may have to change industries again. Time to update my LinkedIn profile and create a resume in case. Preparation will help if the time comes.

The Resilient Employee

Do you want an employee who over-reacts to provocation from a customer? How much business could you lose because of one overstressed reaction? No one really wants to find out.

Resilient people do good work on bad days. They don’t take it out on customers, nor on their co-workers. You can tell they are tired, you can tell they don’t feel well, but they still do good work with a minimum of drama. Tomorrow they are back at it, feeling better, listening, collaborating and doing good work.

Resilience comes from having survived tough times, coming back from events out of our control, and preserving through failures and bad experiences. It is a faith that we can make it through crazy customers, clueless bosses and co-worker visiting from outer space. Just another day folks, nothing to see here. (or is there more?)

Emotional strength and intelligence comes from knowing life is about more than you. Common Goals and values drive better behavior. It is taking care of others. Serving the public. Loving people. Especially when they don’t deserve it.

What do you do when your world changes? Where do you find your resiliency? Is it in your history? in your family’s stories? Your uncle who served in the war? Your neighbor who is always calming and interested? Or is peace something deeper. After all God is Love.

Developing Soft Skills

Businesses love to talk about the best leaders have soft skills. In short they work well with people to get the most out of their teams. They are often very respected and productive workers as well.

Starting out, how do you get soft skills? Where does this reputation come from? What soft skills would you like to have?

First, most people’s reactions are not about you. They think about what affects them. So do you, but you don’t think about that. When someone is losing their cool in front of you, wait until they calm down enough to talk with. Then ask questions.

The person who listens more attentively learns the most. Don’t think about what to say next when someone else is talking. What are they saying, and what is behind it? Often the most important part of the message is not said. It comes through their attitude and phasing. Ask questions about what they are saying to keep them talking.

Was very shy as a young man. Talking with young women threw me. I literally had to practice talking with people. To be less nervous, would talk with people who I did not know and could probably not help me. Often would talk with any woman of any age about any topic. When I met attractive women of datable ages, was no longer tongue-tied.

If you really want to excel with soft skills, CARE about people around you. Get your own ego out of the way. You can learn something from everyone, and you can help more people than you think. Praise people every time you see something you like. “They won’t remember what you said. They won’t forget how you made them feel.”

Study Servant Leadership. John Maxwell is my favorite author on this subject. Leaders aren’t there to make every decision. They enable their teammates to do more tasks better, and even excel at them.

I care about your success. Otherwise would I spend the time to write this? Start trying to listen to and praise people now. Does not matter how awkward it feels at first. You will start making their day and your day.

“If you could kick the person responsible for most of your troubles, you would not be able to sit down for six months.” - Unknown

How the Wealthiest Got Wealthy

The US Trust conducted a survey of 700 wealthy people of all ages. How do you think they got wealthy?

Inheritance? Only 1 out of 10 inherited their wealth. 3 out of 4 wealthy people came from middle class or poor families.

Own a Business? A common way, however a good number were executives. Over half of wealthy people earned their wealth in business. Earners often believe they work harder, were disciplined, and willing to sacrifice. They typically believe building a business builds wealth. Serial business builders were common.

The third way to wealth is Investing for more than 3 out of 10. Interesting most success came from smaller gains, consistent investing, and Buy & Hold produced the biggest gains. Half of investors invested in real estate, timber and farmland. Almost all wealthy people hold 10-25% in cash for opportunities.

Values the wealthy cite for their success?

1.     Hard Work

2.     Personal Ambition

3.     Family Values

What does this mean for you?

·      Does not matter how broke you start. Start.

·      More than one way to succeed. Pick based on your strengths and learn more.

·      Be patient, and keep your eyes open for opportunities.

Why should you build wealth? Because the wealthy Give Back to charities, invest in Economic Growth, and make an Impact in society. Good goals for anyone.

http://www.ustrust.com/ust/pages/insights-on-wealth-and-worth-2016.aspx

Happy 100th Birthday Boeing

The original Pacific Aero Products Company celebrates turning 100 today. Boeing is now a huge international company known worldwide. It was originally a few men who believed they could make better airplanes, and they did. From the original B&W Model 1 to the Clipper to WW2’s B-17 to B-52 to 707’s original jet age to 727 to the iconic 747 to the great F-15 to the amazing C-17 and F-18 to today’s 787, Boeing makes wonderful airplanes.

Boeing is the 3^rd company I have worked for with over 100 years of history. Celebrated Colt Firearms 150^th anniversary, and Sargent and Company dated back to 1864 making builders hardware.

What do these companies have in common?

• ·      Innovate great products and services.
• ·      Look out for their customers & end users. They care.
• ·      Always becoming more productive.
• ·      Adapt and adjust to market conditions.
• ·      Always learning, especially from failures.
• ·      Hire and develop great people.

Boeing has “The Incredibles” who built the first 747 in ~16 months while the factory was built around them. Supervisors would sometimes have to walk people out to their cars and watch them leave to make sure they went home for a break. (You cannot pay for performance like that.)

A lot of people will honor Boeing today and it is well deserved. Boeing people “Enthusiastically Tackle Challenges” through the decades, and do so today.

This is the best company ever worked for. What took me so long to get here?

Eating Like a Kid

I eat my peanut butter and jelly sandwiches with a minimum of peanut butter and ‘no such thing as too much jelly’. It is the way I like them, health benefits lost be dammed.

You might not think I am a kid being 6’ 3”, gray haired, glasses and well past 50. But that is how I chose to bring my daily lunch.

You wouldn’t know my choice from my sister likes triple peanut butter. She would have liked the way my wife who made them for me putting peanut butter on both sides, which I hated.

My dad loved open-faced peanut and butter sandwiches he grew up with in NJ. His open-faced sandwiches had a normal amount of peanut butter and jelly on one slice of bread.

The point you don’t know what any customer will want. Which peanut and butter mix are you going to offer? Typically we offer others what we like. Instead be prepared to adjust.

Understand your customer’s needs, desires, and fears as well as you can. Listen for complaints and idea. Offer great products and services.  Find customers who want what you do well.

To succeed, really LOVE your customers. Find people who want what you offer and take great care of them. Leads to much more success than being $.01 cheaper.