Warning: 5 Reasons the 2020 Recession Will Be Far Worse Than 2008

Based on historical and current data, we are on the precipice of one of the largest economical shifts any of us have experienced in our lifetime. There are a multitude of indicators and variables that I’m going to share with you that point heavily in that direction. It seems we’ve arrived at the eleventh hour before this economical shift comes to fruition.

But first, let me tell you what this article is not:

It’s not what you’re hearing about on the top news channels or radio stations.
It’s not what everyone else is talking about.
It’s not a regurgitation of hearsay rumors that are floating around the mainstream that have not been fact-checked.
It’s not financial, legal, or tax advice.
It’s not the be-all or end-all of information on how to position yourself to best suit your specific needs.
It’s not an opinion on whether things are fair or unfair.
It’s not an opportunity to blame anybody or point the finger.
It’s not to be taken lightly.

Here’s what this article is:

It’s a compilation of information I’m passing along that comes from top economists, currency experts, investors, hedge fund management, historical/economic cycle buffs, and bubble experts.
It’s educational information that you can use to fact-check and come up with your own analysis and viewpoint.
It’s information we can tie together to get a deeper understanding of where we are economically and where we are likely heading in the coming months and years.
It’s a possibility to become even better informed, so we can stay ahead of the game and protect our wealth.
It’s a chance for us to not only survive but also thrive, as well as provide massive value as this economic landscape unfolds.
It’s jam-packed with links to even more information, so you can further educate yourself. (Do it! Go down the invaluable rabbit hole.)

With that, let’s begin.

The State of Economy

In March 2020, it was declared publicly that the U.S. was officially in a recession.

The Bad News

Many of the most reputable economists, investors, cyclical experts, and billionaires are saying that a recession is “best-case scenario.” We are more likely to be heading into a depression.

Yes, that’s right—a depression. Some say it will compare to the 1929 Great Depression; some say it’ll be worse. More on this later.

The Good News

We still have time to reposition ourselves before the most dramatic economic impact is expected to hit. (More on this later, too.)

What? But isn’t everything going to go back to normal as soon as the “virus lockdown” is over?

I mean, this virus thing isn’t going to last forever, right? It’s gotta get back to normal.

I’m sure the government doesn’t want the economy to collapse! I’m just gonna focus on the now and hope that everything is going to be alright sooner than later.

Unfortunately, based on what I’m hearing from the general public, this seems to be the sentiment of many people. Their plan about how to best position themselves and prepare for the economic landscape is to wait and see how it unfolds. This really concerns me, as it indicates that most of the general public has no idea what’s really happening economically. They don’t know where this is likely heading.

Warren Buffett, Google, and Apple are sitting on a mountain of cash. One can only assume they are privy to understanding the massive economic decline ahead and the opportunity that lies within.

Buffett is not a gambler; he makes well-thought-out and historically wise investment decisions.

I’m going to provide a ton of data and links to more information below, as well as things we can do to best position ourselves.

But before we do that, let’s take a deep breath and have a quick practical “think” about what the domino effect will be (economically) given that most of the world has been shut down for a few months.

Much of manufacturing and production has either dramatically slowed down, changed its focus, or stopped. Companies have not only laid people off, many of them have also permanently shut down—never to open again.

China has had the largest decline in manufacturing ever. The port of Los Angeles (the largest container port in the United States) has seen less than half the quantity of shipping containers coming in. And this is not even current data, it does not reflect the recent impact in April.

The New York Empire State Manufacturing Index tumbled 56.7 points from the previous month to -78.2 in April 2020, the lowest level on record. It’s fair to say manufacturing is dramatically down at record rates worldwide.

Does that (I mean from a rational and practical standpoint) sound like everything is going to get back to normal as soon as the “virus lockdown” is over?

Don’t get me wrong. Normally, I’m an optimist. That doesn’t mean, however, that I disregard or ignore circumstances and possibilities.

In fact, as an investor, I explore all possibilities and evaluate them (aka do my due diligence). I evaluate worst, best, and probable case scenarios (further due diligence). Then, knowing that I’m in the position to handle the worst-case (evaluation of due diligence), I close on the deal and proceed to expect the best-case.

I’m putting this article together, not so we can explore all the possibilities of “doom and gloom.” Not so we can dwell on how deep of a hole we are digging and how bad it’s going to get economically.

Instead, my hope is for us all to be mentally, physically, and financially prepared for a large economic shift. We should all be open to new thought patterns, so we can be ready to help ourselves, our families, and those in our local, national, and global communities.

If properly understood, what is expected to unfold in front of us (and what has already begun to unfold) could be the most abundant opportunity in our lifetimes.

Unfortunately, most people won’t be in the position to be on the advantageous side of this—which therein lies the opportunity for us as investors to be creative and provide value by solving problems and filling the needs of those most negatively affected.

Again, I’m not an economic expert. I’m not giving financial, legal, tax, or investing advice. I’m simply passing on information that I believe is imperative to take into consideration.

Research what I’ve put together here. Do your own fact-checking (due diligence) and figure out what you think are the worst-case, best-case, and most likely scenarios. Determine on your own what makes the best sense for you (evaluation of due diligence).

We still have time to educate ourselves and prepare. However, top economists are of the opinion that the clock is expected to strike 12 in the very near future—likely within the next few months—at which point, those who were not prepared are unlikely to be in the position to effectively save themselves.

I wish you all well in the present, as well as in the near- and long-term future. And I hope you all get value out of this article!

How the Economy Works

Many of us understand how our asset class or niche in real estate works (micro). We can’t, however, say we are generalized real estate experts (macro), as there are so many different things to learn about and master.

Same goes as business owners. We can know the economics of our business (micro), but most of us don’t understand how economies as a whole work (macro).

To give you a little refresher (or to bring you up to date with the basic fundamentals of how economies work) please refer to this 30-minute video “How The Economic Machine Works” by Ray Dalio, billionaire and founder of Bridgewater Associates, the world’s largest hedge fund. Ray Dalio has a knack for giving basic explanations of complex topics.

In fact, Ray and his team predicted the 2008 financial crisis.

Ray predicts that what is to come in the near future is bigger than what happened in 2008. He believes we are heading into a depression more like, or worse than, 1929.

In recent interviews, Ray has spoken about where we are in our global economy currently and where we are headed. Here’s one such Bloomberg video:

Yes, he gives political two cents here, as well, but don’t miss the point. Focus instead of his economic commentary. Check out a couple other videos here and here.

For further insight, Ray has some books available on Amazon and some well-done informational videos on his YouTube channel.

Economic Downturns: Past vs. Future

We are about to look at some statistics from 2008 compared to 2020. Before we proceed, here are a few quotes to ponder:

“History doesn’t repeat itself, but it does rhyme.” —Mark Twain

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” —Albert Einstein

“You cannot escape the responsibility of tomorrow by evading it today.” —Abraham Lincoln

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” —Malcolm X

“Every financial worry you want to banish and financial dream you want to achieve comes from taking tiny steps today that put you on a path toward your goals.” —Suze Orman

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be a more productive than energy devoted to patching leaks.” —Warren Buffet (This will be relevant for many-a-folk in the real estate game.)

“Today was good. Today was fun. Tomorrow is another one.” —Dr. Seuss (C’mon, we can still have fun!)

How the 2020 Recession Will Differ From 2008

1. Statistics From 2008 Do NOT Compare to 2020 YTD

2008:

National Debt: $10 trillion
Unemployment: 5.8%
Quantitative Easing (aka “printing money”): The first round began in 2008 and created $2.1 trillion of new currency/new debt.
Interest Rates: The Fed slashed rates to 0% as a last-ditch effort to save the economy from collapsing.

When doing so in a recession, it can “save the day” so to speak, which it arguably did in 2008.

2020 YTD:

National Debt: $24 trillion and counting (Check out this real-time U.S. debt clock. Astounding!)

Yes, that means the U.S. has more than doubled in debt since 2008. With unlimited money printing, we can only expect to double this again by the end of this decade. That would put us at $50+ trillion by 2030.

Unemployment: 20.2% (and counting!!!)

There is much talk of extended lockdowns. Scientists keep saying this is only round 1 of a multiple-round coronavirus (aka we could potentially be facing longer and additional lockdowns). Think for a moment of how that will play into unemployment as we move forward.

Quantitative Easing: UNLIMITED (Yes, that means the U.S. can currently print unlimited amounts of money, which consequently equals unlimited amounts of new debt. OMG!)

Here is a quick video on quantitative easing. It’s chapter 10 of a 27-part free educational video series called “The Crash Course.” More on this course later in the article.

Interest Rates: The Fed slashed rates to 0% almost straight out of the gate as a frontline defense.

Typically, this is a last-ditch effort. Doing this so early in this economic decline means we are trying to run our engines on the last few drops of gas. There’s not much left in the tank once interest rates are at zero and once they are printing money like it’s going out of fashion.

The U.S. dollar as “the” currency could indeed go extinct in this decade and be replaced by a new currency. (More on this later.)

Jeffrey Bergstrand, professor of finance at the University of Notre Dame, Mendoza College of Business, said there are two notable differences with the way in which the Fed is responding now compared to the financial crisis of 2008:

“The Fed is acting more quickly to try to ‘ward off’ layoffs and is using all available channels to generate liquidity—Treasury, commercial paper, corporate bond, municipal bond markets—by buying assets across the board.

“It is the speed of the expansion across a broad array of assets that is unprecedented.”

We are only getting started here. Again, I ask: Do you thus far think everything going to get back to normal as soon as the “virus lockdown” is over?

2. Unlimited Quantitative Easing, Fractional Reserve Lending, & Loss of Purchasing Power

The 1913 Federal Reserve Act, signed into law by President Woodrow Wilson, gave the 12 Federal Reserve Banks the ability to print money.

Some say the creation of the Fed has given us stability within the economy; others say the creation of the Fed gave the major banks and major corporations a new and easy way to get bailed out. Regardless of your viewpoint on this, the ability to print money (along with fractional reserve banking, which we will dig into shortly), has contributed to the decrease in the U.S. dollar’s purchasing power.

On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold. This means that money printing can really start taking off.

As mentioned above, in 2008, the Fed started Quantitative Easing #1 (aka QE1), which sounded pretty soothing yet resulted in $2.1 trillion of new currency/new debt.

In 2020, the Fed called for unlimited quantitative easing/printing of money. This consequently means unlimited debt.

Since 1913, the purchasing power of the U.S. dollar has decreased by over 95 percent, and this is not taking into calculation the recent unlimited printing of money. The U.S. dollar purchasing power will most certainly decline further—and at an astronomical rate!

With unlimited money printing and the velocity of decline in the purchasing power of the dollar, I think it’s a fair question to ponder: “What does this mean for the longevity of the U.S. dollar and the U.S. (and world) economy?”

Let’s explore the word “hyperinflation,” its relevancy today, and some key takeaways as mentioned on Investopedia:

“Hyperinflation” is a term to describe rapid, excessive, and out-of-control price increases in an economy, typically at rates exceeding 50% each month over time.

Hyperinflation can occur in times of war and economic turmoil in the underlying production economy, in conjunction with a central bank printing an excessive amount of money.

Hyperinflation can cause a surge in prices for basic goods—such as food and fuel—as they become scarce.

While hyperinflations are typically rare, once they begin, they can spiral out of control.

Here’s a little more info on hyperinflation and countries recently affected by it.

I’m assuming most people in Germany, Zimbabwe, and Venezuela did not see hyperinflation coming. I think it’s wise as investors to be aware of these things and keep our finger on the pulse of our economy so we can best be prepared.

Look outside of the news that’s being spoon-fed to you. Forage for further information. Attempt to fully grasp what I’m bringing up here.

I’m going to say something that may shock many of you. It certainly shocked me when I first learned about it.

Our banking system creates money and credit out of thin air.

Yep, that’s right.

“Wait, money and credit can’t simply be produced out of thin air! Can it?!”

How Money and Credit Come Out of Thin Air

Step #1: The government creates glorified IOUs (aka bonds). This increases the national debt and puts the public on the hook to pay it back in the future (via taxation as mentioned in step #5 below).

Step #2: The bank swaps IOUs to create currency. The treasury sells these bonds to the banks. The banks then sell national debt for a profit to the Federal Reserve. The Fed buys this debt using blank checks and creating more IOUs on a checking account that has a $0 balance. The Fed gives these checks to the banks, then currency springs into existence. This process repeats and builds up bonds at the Fed and currency at the Treasury (and, of course, builds up debt). The Treasury then deposits the money into the various branches of the government.

Step #3: The government spends the money on public works, social programs, and military/war. Then, government employees, contractors, and soldiers deposit their pay into the banks.

Step #4: The banks multiply the money deposited by creating more IOUs by way of “fractional reserve lending,” where they lend roughly nine times the amount of reserves held in the bank (the multiplier varies based on the type of loans created). They lend this to borrowers by way of creating loans with interest, which creates even more currency. This new currency gets deposited in the banks, and the fractional reserve lending cycle repeats itself over and over, magnifying the currency (and debt) exponentially.

Fractional reserve lending is how banking works here in the U.S. and throughout most of the world. For more info on fractional reserve banking, here is “Fractional Reserve Banking Explained in One Minute.” Here is yet another video on it.

I highly recommend that you research fractional reserve lending and quantitative easing so you can understand how they work and how that affects the economy.

Step #5: The general public works for money, then gives a portion of the money earned in the form of taxes to the IRS. This goes to the treasury. Then, the treasury can pay the principal plus interest on the bonds that were purchased by the Federal Reserve with a check from a checking account that had a zero balance.

Sounds ridiculous, doesn’t it? How could this be possible?

As mentioned, I’m simply providing information here. You do the research yourself.

For a much clearer and deeper explanation of this money creation system, please see this 30-minute video “Episode 4: Hidden Secrets of Money” by Mike Maloney.

I highly recommend you watch the entire 10-episode series of “Hidden Secrets of Money” (roughly five hours), as it’s a very valuable look at how money works and how that affects us in current and near-future times. Here is a link to that video series.

A lot of the things the aforementioned series explains and warns us could happen either already has happened or is happening as we speak.

Whether the process outlined above is fair or unfair is not what we are discussing here. You can make your own judgment about whether or not it’s fair or ethical. The reason we are discussing this is because it’s one of the “rules of the game” in the U.S. (and many other major countries for that matter). We need to be aware of its consequences on the economy.

When currency is created, debt is created. And with fractional reserve lending, new interest (also new debt) is created. It’s a simple mathematical equation.

Once you understand currency creation, quantitative easing, and fractional reserve lending, you will understand that the debt we have here in the United States (and the debt in most countries in the world) can never and will never be able to be paid off with the currency we have in circulation—there is not enough in existence to ever pay it off.

Once we grasp this, it becomes clear that at some point, we will reach so much debt, the currency and economy will collapse, at which point it’s likely the currency will be replaced. (More on this later.) This is essential to know given our current debt and unlimited money printing. It simply cannot go on forever.

This has an astronomical effect on our economy. Many have predicted we are very close to the U.S. dollar being at the end of its workable cycle.

Equipped with the information you have attained thus far, it’s worthwhile to go back and re-watch “How the Economic Machine Works.” That way you can accurately gauge where we are in the economic cycle currently. This will allow you to better understand how the same tricks that were used to save the economy in 2008 simply cannot work for us in 2020.

If you want to take a deeper look at how the financial system works, who created the fed, and why, check out this book that’s jam-packed with information: The Creature From Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin.

Now, let’s take a deeper look and compare 2020 to the 1929 Great Depression.

3. Comparing 2020 to the 1929 Great Depression

1929 Great Depression:

Wealth Gap: In 1929, the top 0.1% of Americans had a combined income equal to the bottom 42%. That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all.”
Stock Market: Increased 4X in the 1920s
Warren Buffet Indicator: 141% (This measures market cap to GDP ratio.)
Dow Jones Industrial Average: Dropped 8%

2020 YTD:

Wealth Gap: According to Forbes, the top 20 wealthiest people in the world are worth $1.3 trillion. According to the Federal Reserve, the lower 50% of the entire world population (3.75 billion people) are worth $1.3 trillion. This shows the wealth gap today is even more extreme than in 1929.
Stock Market: Increase 4X since 2010
Warren Buffet Indicator: 141%
Dow Jones Industrial Average: Dropped 35%

Based on many statistics, it seems we are worse off now than in 1929. It doesn’t seem this is going to change anytime soon.

Adam Baratta says the economy “resets” (aka deflation/depression) every 90 years. Economy cycle expert Harry Dent says 80 years and Andrew Pancholi says (also a cycle expert) says 84 years.

Dent comes from a strong “doom and gloom” perspective, although he does have a track record of solid predictions. Yet (of course), he’s not right all the time.

As mentioned on Wikipedia:

“In the late 1980s, Dent forecast that the Japanese economy, then the darling of the world, would soon enter a slowdown that would last more than a decade. In the early 1990s, he predicted that the DJIA would reach 10,000. Both of these predictions were met with much skepticism, and yet both eventually came to pass.”

Robert Kiyosaki seems to think that Harry Dent is correct on 90 percent of his predictions. Here is an interview from March 2020 with Kiyosaki and Dent.

Dent has been writing books for a long time. Many are available on Amazon.

Robert Kiyosaki is arguably the most renowned real estate educators. His “Rich Dad” brand encompasses a plethora of educational real estate books.

Kiyosaki has released a ton of videos on YouTube over the last few months, talking about his expectations of what’s to come and things we need to take into consideration. Check out his YouTube channel here.

4. The Silver Tsunami, Stolen Pensions, & Millennials’ Sentiment

Baby boomers represent nearly 20 percent of the American public. By 2030, all baby boomers will be age 65 or older. This will have a significant impact on the economy now and in the following few years. It certainly will add a layer of complexity.

Here’s why…

Silver Tsunami

Due to baby boomers retiring, downsizing, and liquidating estates at the end of their life cycle, within two decades, more than a quarter of current owner-occupied homes in the U.S. will become available.

Let me repeat this: More than a quarter of current owner-occupied homes in the U.S. will become available.

Here is some data showing which markets will be affected the most by this.

Sounds good, right?

In some ways, yes, as it will likely be a buyers’ market. Having that said, the sentiment of millennials is significantly different than that of the baby boomers.

Baby boomers were hard workers, spenders, and homeowners, who bought medium to large houses and lived in a generally up-trending economy. Plus, in the U.S., there are more baby boomers than millennials.

Millennials are more drawn toward renting than buying. They desire smaller homes and prefer travel and leisure over work. There are less millennials than baby boomers in the U.S. We are not in an up-trending economy.

What does this mean?

When you match all this together, it’s hard to see how millennials will buy all these homes that will be sold by baby boomers. As such, there will likely be markets with large unsold home inventories.

The areas most affected by this are the areas with the highest concentrations of boomers and lowest concentration of millennials. Therefore, house pricing will likely plateau, potentially decrease, or best case very slowly increase. The next 10 years will be heavily impacted by this.

Baby Boomer Pensions

The above silver tsunami, of course, means mass amounts of baby boomers retiring and relying on pensions. The sad thing about this is, many of those pensions will be significantly smaller than expected, as many of these pension funds were invested in poor-performing assets (because of poor fund management). As a result, the money that is supposed to be there to pay out to pensioners is either not there or significantly smaller than needed.

This can be pushed onto millennials, as that generation can provide some of the compensation by way of taxes. The problem with this is it likely won’t be enough to cover what’s needed—remember, there are fewer millennials than boomers.

The recent unemployment increase is another straw on that horse’s back.

Robert Kiyosaki has a five-part podcast touching on this. He also wrote a book titled Who Stole My Pension?: How You Can Stop the Looting. His book explains why this has happened and provides some solutions and ways for retirees (or soon-to-be retirees) to best position themselves given the state of pensions.

This will affect all of us from all generations in the U.S. In fact, it’s a problem worldwide, too.

5. Additional Factors New to the 2020 Economic Landscape

Dead Cat Bounce

Dictionary.com defines the meaning of “dead cat bounce” as a temporary recovery in stock prices after a steep decline, often resulting from the purchase of securities that have been sold short.

The general public seems optimistic that things will go back to normal once the “lockdown” is over. Many economists predict that with unemployment insurance and stimulus package payouts, along with the ending of the current stay-at-home orders, we may see a brief spike in the economy (for roughly three to five months).

Directly after that? We are expected to head into the largest economical decline anyone has seen in this lifetime.

Lengthy Decline Likely on the Horizon

Here is a video of the potential way things could play out in this crisis:

The interesting part? The creator of this video came up with this in early 2000s. Watch closely, and consider we are—economically speaking—already at the point he mentions by time mark 3:15.

What Does It All Mean?

If the dead cat bounce and the coming economic decline come to fruition, this means we only have a short time (expected to be only a few months left) to sell off risky assets and investments (while real estate markets are still high) and position ourselves for the coming years of recession/depression ahead.

Best Case: If we prepare for the worst and the economy picks back up and ends up performing like sunshine and lollipops (highly unlikely), then at least we were prepared if it didn’t.
Worst Case: If we do experience this expected impending downturn and did not prepare ourselves, by the time it hits, it will likely be too late to prepare or sell anything off. Those in this position will likely sink with the ship.

Oil-Mageddon
Literally the day I penned this article (April 20, 2020), oil prices ended at an astronomical and historical low of -$37.63 a barrel (yes, negative). At negative $37.63 a barrel, this means those holding the oil are paying $37.63 for someone to take it away!

Ten years ago when Mike Maloney predicted oil dropping to $10 a barrel sometime in the next decade, everyone thought he was crazy. Here’s a quick video on the oil crash and what Mike Maloney has to say about it.

Countries where oil is a significant part of their revenue will be most affected by this.

Top oil-producing countries include:

United States
Russia
Saudi Arabia
Iraq
Canada
Brazil

We could almost guarantee this means massive amounts of money printing as a means to compensate for losses. Which consequently means more debt that—a simple mathematical equation can prove—can’t be paid off.

What will it mean for gas prices in the future? What if it no longer makes financial sense for trucks to ship goods due to massively inflated gas prices?

What does this mean for cargo ships and supply chains? Could it start a war or a revolution?

The irony of the latter comment is that Harry Dent has predicted an upcoming civil/political revolution based on the historical 250-year revolution cycle that aligns with the current day. He mentioned this in his book Zero Hour, which came out in 2017.

Would oil be that catalyst? One could only assume.

And one can only speculate the immense adverse effects that could stem from this historical oil crash.

Something we can say for sure is that this will most definitely contribute to the intensity of the economic downturn we are experiencing.

5,000-Year Record High in Gold-Silver Ratio

When the gold-silver ratio rises, it means that gold has become more expensive compared to silver, and the cheaper metal might offer better value. When the ratio falls, it means gold has become less costly relative to silver.

As a result, America’s top-known “silver guy,” David Morgan, predicts a worse financial crisis ahead.

What Now?

How is the United States (and the world) planning to mitigate all of this? There’s no set plan in place as of yet. But here are a few things that are being discussed.

Universal Basic Income

This is being proposed. Sounds good, right? Free money from the government! About time they took care of the people!

Some could say that. I chose to look a little deeper and question what might happen if the government were to pay the people for a given amount of time. What does that say about where they think the economy is going to be during and shortly after that time period?

We’ve seen it before.

They could say 12 months of compensation now, then in six months extend it to two or three years. If they told everybody up front that they would provide this for years on end or indefinitely, I’m pretty sure that would call attention to how severely the health of our economy is failing.

The fact is, they did not provide this in 2008, and this is a pretty extreme step—furthering the argument that we are not in circumstances anything like 2008.

Wondering how they’d afford to pay this?

Let’s refer back to the unlimited money printing. This is how they could pull that off (at least for a little while).

I’ll let you decide what universal basic income means for the state of the U.S., its people, and the economy. It’s fair to assume it will have a heavy impact.

Replacing the U.S. Dollar With a New Currency

With the aforementioned economic conditions and with what’s expected to unfold, there is much talk about a new currency to replace the dollar, which is only headed for the worse. Regardless of how or with what this currency is replaced—and if or when this takes occurs—there will for sure be a period of financial disruption and panic, which will only further impact the economy.

We can’t say this is happening for sure, although I think it’s important to take into consideration.

How Long Will It Take to Recover From This Economic Turmoil?

Following the 2008 Great Depression, we saw a V-shaped uptrend in real estate pricing, stock market values, and the economy in general. Basically, this means the market bounced back—and relatively quickly.

Every single economist and expert I’ve listened to discuss this topic has said that our economy is going to need to heavily re-correct itself after we hit rock bottom during this next expected downturn. It’s predicted we won’t even hit rock bottom until 2021 to 2023 and that rock bottom will last for about two years. Then, it will take at least a decade to come out of it—if not two decades.

What does this mean?

It means that if we are expecting fixing and flipping to be a top way to make money this time around, we will be sadly disappointed. House prices are anticipated to plateau for quite some time once they have sunken as low as they’ll go and to come back up at about the rate of inflation.

At that pace, we cannot bet on buying for X in January and selling for X in June at a significantly higher price. Remember the silver tsunami and it’s anticipated impact on house pricing?

This time around, we need a new game plan. This time we need to think:

Who needs help?
How can we help them?
What needs can we anticipate filling in the current and near future?

How Can You Best Prepare?

Look to Provide Value

Affordable Housing: This is going to be a critical space, this year and the years to come. New and creative ways to provide affordable housing will be of value. Mobile home park and self-storage will be good anchors during and out of this downturn.

Housing for Baby Boomers: Assisted living and alternative housing for baby boomers will be needed as they retire, downsize, and/or need nursing assistance.

Housing for Millennials: As the landscape unfolds, millennials will become an important demographic to cater to. What are their needs? What types of housing are they looking for? Figure out how to fill that gap.

Position Yourself Appropriately

It seems we have only a few months left to sell off risky assets/investments. We are likely at the top of the market, and this is not expected to last for that long. If/when the market drops, it could be too late to do anything to set yourself up for success (or at least minimal harm).

Make sure you and your family and friends are positioned to be able to weather a long winter ahead. Even if that doesn’t happen, it’s better to be safe than sorry.

Liquidity could be very advantageous when the market hits bottom. It will be hard to liquidate while experiencing a down-trending market, so consider positioning yourself now.

Take a look at silver as an investment and/or hedge against declining currency. Do your research, and determine what’s best for you. Demand for silver is very high right now. It may not be available in the near future due to extreme demand.

Stay ahead of the game. This is not like what we have seen in recent downturns.

Think of worst case, best case, and probable case scenarios. Are you positioned to survive? Or to thrive?

Are you mentally, physically, and financially prepared?

Grant Cardone gave a great and vulnerable interview recently on London Real TV. Cardone covered what he is doing to prepare for what’s to come, what he thinks is coming, and what we can do to get ahead of it.

I read a very interesting book a few years ago that spoke to how to best prepare and position ourselves for times of disruption or turmoil—times like we are experiencing now and times we will likely experience in the near future. It’s called Prosper!: How to Prepare for the Future and Create a World Worth Inheriting and was written by
Chris Martenson and Adam Taggart. The book is full of action steps and solutions. I highly recommend it, as it may help think outside the box.

As mentioned earlier, I suggest checking out the free online video series “The Crash Course,” also by Chris Martenson. It’s comprised of 27 chapters that are between three and 29 minutes in length. Altogether, it takes around 4 hours and 36 minutes to get through. This course offers real hope.

Looking for a quicker summary? He also put together an hour-long accelerated version.

Those who take informed action today, while we still have time, can lower their exposure to these coming trends.

Summary

Prepare for the worst, but plan for the best. The next few months may be your last chance to position yourself appropriately.

Don’t rely on others to tell you what to do. Do your own research, and stay ahead of the game. Only you can decide what’s best given your own personal circumstances.

It’s an ever-changing landscape, and the velocity of change is unlike anything we have seen before. Keep a cool head, and know that with crisis, there is abundant opportunity.

Think as this unfolds: what are people’s needs right now and how can I best provide solutions and value to address those needs?

I wish you all well, and I hope you have found this article to be helpful!

How will you prepare for what’s to come? How will you help those in need?

Join the discussion below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.