This Time Is Different…

Dividends Forever
2 min readJun 15, 2022

Leo Tolstoy said, “All happy families are alike, but every unhappy family is unhappy in its own way.”

The same applies to bear markets.

Every correction, crash, or downturn has a unique catalyst and affects stocks differently.

In 2018, there was a weird little “sentimental correction” where stocks became volatile without much underlying risk. This was followed by a huge bull-run in 2019, once investors regained their confidence.

During the Pandemic, everything tanked — only to rebound sharply.

The current crash is different. It isn’t hinged upon a singular, speculative event. This time, the sell-off is based around long-term economic issues like inflation and rising interest rates. I think the downturn will last a while. Months, or possibly even years.

Actionable Advice And Predictions

  • Right now, every sector and asset class is getting hammered. And if interest rates continue to climb, the sell-off will continues. The best short-term investments right now would be things you already need or use — non-perishable food, new shoes, a laptop, etc…
  • Geoarbitrage and growing / raising your own food are also safe investments. Depending on where you go or what you grow, you could easily cut your expenses by 10–20% while maintaining a high standard of living.
  • Quality businesses are on sale and dividend yields are up, too. As boring as this sounds, companies like Procter & Gamble are pretty safe bets if you’re looking for long-term income producing assets.
  • Speculative assets will most likely suffer more, since much of their success is fueled by cheap leverage. While debt isn’t necessarily a bad thing, in fact it is the fastest way to scale a business, expensive debt can really hamper a company’s ability to grow.
  • Well-managed companies with a low dividend payout ratio might be safer bets, but dividend growth might slow. Businesses that were compounding at 10% per year, might drop to 4–5%. This is just speculation, but it is something to consider.
  • Covered calls are a great way to earn extra cash in a downward market.
  • It’s always darkest before the dawn. All crashes seem cataclysmic when they’re happening due to fear of the unknown. This one is no different.

Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.

--

--

Dividends Forever

Providing you with detailed insights into long-term, buy-and-hold dividend investment opportunities.