December 8, 2021

If you take the financial news media too seriously, you might think we were on the edge of economic catastrophe. With unemployment at record lows and consumer confidence high, I’d dial back the pessimism a bit. Things still look pretty decent to me.

Yes, there are some uneasy signs in the economy. The latest story giving support to economic fear-mongers was the inverted yield curve. This is a financial phenomena where the interest rate on long term bonds drops below the interest rate on short term bonds. The standard story is that when investors are willing to buy long term bonds at such low interest rates, it means they expect low growth over a long period of time. The implication is that a recession is coming.

Statistically speaking, of course a recession is coming. We’re currently in the longest continuous economic expansion in US history, and it’s silly to think it will last forever. When will the downturn actually arrive? Anybody who says they know is fooling themselves.

When a recession finally does come, it won’t be the end of the world. I’ve seen 7 or 8 of them in my lifetime, and we’re still doing pretty well. As a professional investor, I can say with confidence that there are always opportunities available. The Alliance team is ready to take advantage of the profitable real estate deals that often crop up during volatile and uncertain market conditions.

Those deals usually come at the expense of people who panic. While acting from fear is a great way to lose capital, investors who stay calm and play the long game will ride out the storm. Today’s low interest rates are also helpful when it comes to financing new opportunities.

The American economy has been the most dynamic and steadily-growing economy in the world for a very long time. Ups and downs are a normal part of the business cycle, and they’re really no cause for panic. So beware of people who seek attention with stories of impending doom. If they knew what was going to happen, they’d be busy making their fortunes trading.

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