Not necessarily the triggering event, like a virus, but recessions and expansions have been happening for decades. Since 1854, the year the National Bureau of Economic Research started documenting the business cycle, we’ve had 34 expansions (averaging 40 months) followed by recessions (averaging 18 months).

This last expansion from 2008-2020 was 12 years – outside the average. But the fact is, something always triggers a fall after a bull run expansion market. Yet people act like they don’t know it will happen, and they don’t know what to do. Prudent investors learn to run with these cycles.

Positioning yourself in the marketplace with capital assets, businesses, or Real Estate, is where you can hedge and make opportunistic moves during these cycles. In Freedom Founders after 2008, we rode that next cycle up. With low interest rates, it was a great time to leverage assets pumped up by the monetary stimulation.

The Federal Reserve’s creation of dollars pumped into the marketplace increased these bubble prices. So in 2015 we didn’t stop investing or start hoarding cash per se, but we began harvesting our equity out of the equity markets and positioning funds at the bottom of the capital stack.

A prudent investor understands that connection to the capital asset market – not the financial market. The financial market is a game like a Vegas casino, constantly going up and down. And when you stop earning active income, you cannot afford to take those big hits on your investments. 

Repositioning in the markets is key to your longevity, and key for young people. They’re building their wealth and net worth, moving toward the freedom to not get beat up by those cycles.

The Federal Reserve is creating trillions of dollars in the marketplace, and that’s what’s holding up the markets right now. I don’t think they can keep it up, and we’re going to see the stock market drop even more.

Real Estate and the capital asset markets will take some drops. But understanding how to value these assets on predictable, sustainable cash flow, and having the right access points is how to become (and stay) wealthy.

Learn to ride the markets. Don’t get punished every time a recession hits, because this will continue on and on. Are you going to stay in the game and keep getting slaughtered every 40-50 months? 

Or will you learn to reposition yourself? This is what you need to do, and what you need to teach your kids and grandkids. To make it in this world, it’s critical to understand the business cycles, and how to play a new game.