Don't Let COVID-19 Scupper Your Financial Ambition: 3 Reasons For Hope
When the COVID-19 pandemic hit the country, people went into panic mode. Cans of food flew off the shelves, and people fought in the aisles over the last box of toilet paper. The stock market crashed, and firms like Goldman Sachs issued internal reports that suggest that we were in for another Great Depression, maybe worse.
Fortunately, though, things didn’t turn out as bad as many expected. To be clear, things are still worse than they would have been. But as we move through this crisis, we see glimmers of hope, especially on the economic front.
The current public health crisis is a big problem for people who want to build their wealth. Economic turmoil is always bad news for building wealth. But as accountants and other financial professionals know, good things can emerge from bad times. Churn is necessary for a prosperous and stable civilization. And that’s ultimately what we want as long-term investors.
Here are some reasons for hope.
The Economy Was Excellent Before The Crisis
Going into 2020, things were looking very good indeed. The economy was growing at the fastest rate since the 1990s, and unemployment was at an all-time low. Furthermore, we were looking at a set of technologies that promised to utterly transform civilization and make us much richer in the process.
It is important to note that those technologies are still being developed at a frenetic pace. Artificial intelligence, blockchain, biotechnologies, and medicine are all going to transform our world in the coming years in ways that we can’t quite grasp yet. Productivity will boom over the next two decades because of the falling cost of transactions and machines' ability to do cognitive work.
The Stock Market Is Rising
A rising stock market isn’t necessarily a good thing. And cynics will point out that it is mostly the result of central bank money printing.
But so what?
Yes, stock prices should reflect the fact that 20 percent of people are out of work. But if the Fed is always willing to pump up equities, that’s good news for investors. It means that people like you who want to own capital can essentially get risk-free returns. The value of your assets rises, while the value of cash and labor falls. It’s not fair, but it is the pattern.
Regulations Are Reducing
Regulations are a blight on the economy. But we’re seeing a push back against the years of ever-tightening restrictions on business. This process is freeing up private enterprise to break new ground and develop new ways of working. People feel confident that the economy is going to improve in the future. So they’re making all the necessary investments today to make it happen.
So, in summary, don’t let COVID-19 scupper your financial ambition. It may seem like a reason to live for the present, but it is not. A couple of years from now, this whole thing will be in the rear-view mirror, and we will be focusing on the next problem. Now, doesn't that fill you with confidence?
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