Categorized | General Stuff

Are You Prepared for the Next Financial Crisis?

Posted on 25 September 2015 by Andrei

Most of you know that I’m an economist “by trade” but unlike most economists, I do not pretend to be able to predict the future. I cannot. However, I do have hunches every now and then and in my opinion, we should be expecting a financial crisis somewhere over the next year or so.

I’m not expecting a financial crisis for just one reason but rather due to the fact that far too many things are lined up in a manner likely to generate a “perfect storm” situation, as Nouriel Roubini likes to call it. The weak global recovery despite massive injections of capital, the problems in China, the continous European Union drama, the Ukrainian geopolitical tensions, the seemingly never-ending Middle-Eastern situation, the irrational exuberance of stock markets and the disconnect between the financial world and the real economy, the list could go on and on.

My question for today is this: are you prepared for the next financial crisis?

If all of your net worth is in domains, then you aren’t diversified enough to consider yourself prepared.

If you’re in debt, you aren’t prepared.

If you’re in a weak liquidity position, in other words if you don’t have a decent enough cash cushion, you are not prepared.

If you haven’t been reading up at least a little bit about current economic events and don’t have at least some understanding of basic economics, you aren’t prepared.

The list could go on and on.

Again, I have no idea when the next financial crisis will occur. I do not possess a working crystal ball and therefore, cannot predict the future. What I am saying however is that there are more than enough indicators lined up to make us worried.

This is a domain investing blog and not a blog about economics, so I’m not sure whether or not there would be interest for a series of blog posts about the economy, about what might happen next and about how you could prepare yourself. If I see enough interest, I might refer to such topics every now and then because as domain investors, limiting yourself to complacently living in our own little bubble that we call the domaining industry would be a huge mistake.

3 Comments For This Post

  1. Mike Says:

    Have you ever heard of devaluation?
    Why do you think cash is the safest and most important type of wealth?

  2. Richard Cypher Says:

    Because cash is the most liquid asset. You still have to convert domains into cash for it to make sense.

  3. John Says:

    What are your main asset class investment recommendations for this?