Last week I celebrated my birthday and you may be shocked to know my age has a 5 in it…at the start not the end. I look at the difficult situation unfolding in front of us and although it is unprecedented my years on this earth have shown me that this too shall pass. So in this post, rather than focusing on wine, I wanted to talk about the previous upheavals I have experienced, how they felt at the time, and how I was able to get through them.
In my lifetime and I, along with many of you, have survived the following with their associated recessions:
- Stock market crash of 1987;
- The Tech Wreck of 2000;
- The Global Financial Crisis (GFC) of 2007/8.
Each of these were proceeded with exuberance, greed and the belief the good times would last forever. But each of them was undone by a “black swan” event…something that very few perceived or wanted to believe.
I graduated from University in 1991 into the middle of the ‘recession we had to have‘ following the stock market crash of 1987. There was high unemployment, especially for a fresh graduate with no experience. Times were tough. After my savings ran out I ended up collecting the unemployment benefit and sleeping on a mattress on a mate’s floor. It took six long months of networking, volunteering and applying for roles before I landed my first job at Deakin University in Geelong. I had to relocate to Ocean Grove but I was glad to have work. Things slowly improved and by the late 1990’s most had forgotten about the hard times – everyone was making money in the stock market again and the economic times were good. There was so much money around all you had to say was you were going to create a “tech start-up” and people threw money at you.
In 1999 I started my own company as a contractor, first with HP and then in 2000 with IBM. Soon after the “tech wreck” hit and the industry had a rude wake-up call. Fortunately I was working on a project that was designed to save IBM’s client money. I worked hard at adding value and followed other available work within IBM. I am very grateful to my mangers for supporting me rather than laying me off as happened to many of my colleges.
Times improved, the property market took off and the stock market boomed. Life was good. If you owned property you were “rich” and so many people withdrew on their house equity to fund their lifestyle and their toys. But that all came to and end in 2007/ 2008 when the property market collapsed taking the banking industry and global economy with it. Once again things slowly improved and by 2013 the stock market was back to pre GFC levels and the property market was recovering nicely. The good times were back and we’ve had almost 7 years of growth that would never end … until now.
So what does my experience with the last 3 global upheavals tell me:
- Things are going to get worse before they get better;
- People will lose their jobs and companies will go broke;
- There will be great opportunities for those willing to take risks;
- Things will eventually recover and will forge even greater highs;
- People will think the next boom will never end…until it does.
As Warren Buffet famously said “Be fearful when other people are greedy, and greedy when other people are fearful”. This is the time that those who are cashed up can make a lot of money. During the GFC we purchased an apartment in East Melbourne and everyone said we were crazy, that the market was going to get worse and might not ever recover. But we knew from experience that bad times don’t last forever – that apartment was, in hindsight, a great buy. Having said that I also knew I should have purchased Australian bank shares as they were guaranteed by the Government. But I didn’t. And I don’t plan on making that mistake again.
So my advice is be resilient – do what you need to survive at this moment whilst looking out for each other. Things will eventually improve and the trials we are about to face will one day fade into memory. And, in the meantime, drinking good wine will certainly help.
Cheers,
Tony.
