Are We Heading Into A Recession?
With the recent development in job markets worldwide, are we headed for a major recession?
Hi there, I am Adam Khoo, founder of Wealth Academy™, Asia’s Most Powerful Wealth Creation Program, that has transformed the lives of thousands of individuals financially since 2004. In this short 3-minute read, I will briefly share with you my views about the economy and what you can do to protect yourself when a recession does occur.
The State of The Economy
So, on to the million-dollar question, “Is a recession about to occur?” Here’s my take.
Although I can’t predict with absolute certainty when the next recession will occur, I believe that there are developments in the economy right now that are similar to those that happen right before the start of a major recession.
Multi-National Corporations Are Starting To Downsize
First off, if you have been keeping abreast with the news, you would have noticed that a number of multi-national corporations have already started to down-size their workforce. Standard Chartered bank for example, has already axed 15,000 jobs globally. Global bank, Credit Suisse has also announced that they will be cutting 4,000 jobs worldwide.
Normally, when companies start to reduce the size of their work force, it is a usually sign of weakening demand in the market and this serves as catalyst for a recession to occur.
Increase In The Level Of Bad Loans
Secondly, usually before the start of most major recessions, bad loan levels tend to be at an all-time high. Bad loans are those where the borrowers are unable to repay the loans during the stipulated time.
As of last year, the bad loan levels in Singapore had risen to a six-year high. In China, bad loan levels as of the end of 2015 had also hit a decade high.
Another troubling issue that happening in China is that companies in China are finding it harder to collect payments from their customers. In recent report, the accounts receivable of the China’s public firms have increased by about 23 percent over the past two years to about $590 billion, exceeding the annual economic output of Taiwan.
These developments are indeed worrying as it signals that companies are having trouble paying what they owe.
Stocks Markets Are Currently On A Downtrend
Thirdly, at the brink of major recessions, the price levels of stock markets would have already declined substantially from their high and reversed into a downtrend.
If you have been keeping up with the postings of my Wealth Academy team and I, you would have realised that most major stock markets have already declined from their all-time high and have reversed into a downtrend about 6 months ago. (when you come to my free introductory workshop, I will share with you how you can determine whether the stock market is on a uptrend or downtrend.)
What You Can Do About It
While most average Singaporeans are busy worrying whether their jobs would be secured during a recession, savvy Singaporeans are already starting to pick up new skills in order to secure their current source of income and/or generate another additional source of income when a recession occurs.
So what are some of the ways that you can protect yourself financially during a recession?
For one, you can start to acquire skills that would add value to the job that you are holding right now. By doing so, you have a higher chance of being retained by your employer, should a redundancy in your company occur.
However, a better way to is to be proficient in generating an additional source of income, that is not at the mercy of your employer or the economy. One such way that I know of, and have been doing for the past 20 years, is investing in the stock market.
Indeed, as I recall, the times when I was able to generate significant amounts of income within a couple of years were those when I invested in the stock market during the financial crisis of 1997, 2001 and 2007.
If you would like to learn how I was able to invest successfully, then do check out my upcoming 3-hour complimentary Wealth Academy workshop where I will be revealing what you need to know to invest in the stock market successfully.
See you soon and to your financial success!