Thursday, October 9, 2008

20 Reasons NOT to Panic During the Current Economic Crisis

Everywhere I have been in the last week--from board meetings at a multi-national companies and government agencies to board meetings at small non profits to overhearing conversations at the local grocery stores--the only thing being talked about, usually with voices tinged with a bit of panic, is the economy. Mostly, people are talking about worst case scenarios and scaring not only themselves but everyone else. Panic seems to have a ripple effect and even those who haven't been directly impacted by anything negative will send themselves into a tizzy of panic and when people take actions based on fear the result usually isn't good. Here's some reasons why you shouldn't panic over the current economic situation:
  1. Now is a great time to invest in stocks. Even though the market is tanking, many companies that provide things people NEED such as food processors, fuel, cell phones, etc. are still going to be profitable.
  2. Now is a great time to hold stocks in the companies listed above. As we saw after the Great Depression, the stock in solid companies was once again valuable after the market rebounded.
  3. After bad times, things get better.
  4. If you don't experience bad times, you don't appreciate the good times.
  5. Challenging times allow you to change things. Maybe you had a job that was driving you to an early grave; after a layoff you can actually look at some jobs that fit you better without the pressure to keep a job that wasn't right for you.
  6. Challenges are fun. Always having every thing just so puts you into a rut and things get B O R I N G. Even though times are tough, the challenge of living through them shows you what you (and your family) are made of and you appreciate your ability to rise the the occasion of any challenge that comes along.
  7. People are getting back to reality. Reality is not living on credit cards, reality is not having a 3500 square foot house with an interest only sub prime loan, reality is not driving a BMW on a lease when you can really only afford a used Toyota. After everything shakes out, people will be living in reality instead of a fantasy land.
  8. Businesses are getting back to reality. Does it make sense to give someone with a $30,000 a year income a credit card with a $10,000 limit? Does it make sense to make a car loan to someone for a brand new car who is way upside down on their current loan--just rolling over the debt has to end sometime and that time is now.
  9. If you get laid off, you get to spend more time with your kids. This is critical for raising good kids, yet with two income families being the norm, kids are often given little attention (other than cash to buy the latest video game). Kids would much rather have their parents play a game with them, take them to the park, help them with their homework, or just talk about their dreams with them instead of having a brand new car, huge house, and stressed out parents.
  10. It's all about attitude. I couldn't believe a recent news story about a man who killed his entire family and himself just because of money problems. So what if you lose everything? If you've made it once you can make it again and if you have a family with you, you have the best support system possible.
  11. This is an excellent time to explore your own backyard. I have been all over the world yet there are at least 50 famous tourist attractions in my own part of the country that I've never seen. I'm making up a list and will be hitting the local tourist sites over the next few months.
  12. There are always opportunities for new ways to make money. During tough times, new writers who focus on money saving books and articles can make lots of money selling their ideas to the public. People will repair their shoes instead of buying a new pair thus giving work to shoe repair shops. More people are looking for bargains so discount stores and garage sales see a surge of shoppers.
  13. Priorities change from work, spending, family, health to health, family, work, spending. The latter makes more sense.
  14. If you are alive you have hope. I get to see people whose children, siblings, friends, and spouses have been killed. Dead means there is no more hope. Alive means there is hope. If you are reading this, there is hope for whatever situation you currently happen to be in.
  15. Maybe people will get healthier. If you can't afford a car, walk, ride a bike, or take a bus. If you are home instead of working at a desk maybe you will play with your kids more and get more exercise. If you are cooking at home more instead of eating out, maybe you will eat more nutritious food. You get the picture...
  16. People always dream of a simpler life. Now they will have that opportunity.
  17. Job loss, the stress of change, hard times in general are humbling experiences. Humbling experiences are good for the soul.
  18. Our economy, while having some major problem areas, is also basically sound. People work, people spend money, people have businesses, people like their iPods...this is the stuff of an economy.
  19. You can lead the pack. People are afraid to do things differently because they are afraid of what their friends will think; now you can make radical changes, blame it on the current economic situation, and people will think you are a genius on the cutting edge.
  20. Nothing stays the same. Continual change is the nature of life so you can't stop change anyway. You can embrace change or get run over by it--you get to decide how you will react to it.

Anyway, even in the midst of really horrible times, panic is the very last thing you want to do. Keep your wits, courage, creativity, and good attitude about you and things will be fine.


  1. That's a good list there.

    I think it was Ben Franklin who said "You can't control what happens to you, but you can control how you react."

    Good site

  2. I recently stumbled across your blog while researching an article I was writing. I really like your 20 reasons not to panic. I agree!

    In business school, you're taught that a down cycle is a natural part of the cycle, and will inevitably occur at least every 7 years. When there are good cycles, you plan for the bad. It's just that simple.

    This applies to life, too (if you ask me). The problem is that Americans are notorious for not saving, and for borrowing, and for being greedy. But maybe fear and a good sound kick in the financial pants will help people get back to the basics.

    Thanks for such a positive post in a world of fear-mongering.

  3. One should never panic, but if people have not been paying attention to the real economy, this should make them think more deeply. This is place where knowledge is your best preparation.The only analysts who called this market collapse do not think that we have come close to the bottom. In fact many of them are calling for a bottom between 6 and 7K. With the type of volatility that we now have and the amount of uncertainty, markets are uninvestable, but quite tradeable (though that is not my game). As for stocks rebounding after the depression, you need to check your facts. It was several decades before the stock market returned to the same real value. Furthermore, with an economic downturn, most of the PEs out their are way off, as the PE is always a lagging indicator. Do not tell people to buy stocks right now unless you really know what you are talking about. Otherwise it sounds like you are just repeating the same old jargon, that the so called experts keep giving us.

  4. I don't know what the market is going to do. I hazard to guess that the experts don't either. People should always do their own research and discuss their issues (financial, medical or otherwise) with their trusted advisors. What I write about is what I do, however my circumstances are probably very different than that of others. Everyone should make choices based on their own situation and study all aspects of their decision before taking action.

  5. Thanks for the bright side! My husband lost his job in construction in June and my business in green building supplies has made a dime since August. We assumed that we would be happy in new jobs by now, but every month another 100,000 people are laid off- and the jobs we apply for don't come through.
    I have done just as you suggest, taking this time to cook healthy foods, start doing yoga- get into the healthy routines that I claim to never have time for when business is busy.
    I don't think our modest way of life really needed simplifying- living on a quarter of our income doesn't mean we trade the BMW for a Toyota and stop charging vacations. It means we sell the Toyota and stop charging our groceries. I don't say that for pity, but to illustrate that its not all about greedy Americans who just can't say no.
    I try to remember that even if we loose our house etc., we have family and we have each other. Life will just look different and we will have to find happiness in different places. And we will. And as you say- new opportunities are always being created, and our up-swing will come, sooner or later.
    Thanks for the encouragement.