7 Tough Lessons For The Next Generation

Lesson #6. Bad Times Are Not ALL Bad

Most people think of me as a “gloom and doomer.” I’m not. In fact, the true pessimists are those who think our country will continue to muddle along with huge, burdensome debts and federal deficits, stumbling from one crisis to the next without ever resolving the problem.

I think there’s a light at the end of the tunnel — and it’s not an onrushing locomotive. Despite its depth and duration, the next phase of the crisis will not destroy America at its core.

Despite the pain, I can tell you from personal experience that economic crises also have some long-term benefits.

During the Great Depression, for example, most bad debts were wiped out — liquidated and written off.

Old technologies were cast aside in bankruptcies, paving the way for new technology to be put into place.

Americans became more willing to accept an austere standard of living and to work harder. So they were able to trump other countries and dominate world trade.

I don’t know if this country will do as well after the next crisis. But even if the recovery is half as strong as it was last time, it will provide some excellent opportunities.

Lesson #7. Be Patient With Friends and Family

In the first phase of the market’s decline, most of your friends and family will stubbornly refuse to take action. Some will say they can’t afford to take a loss. Others will say they can’t afford to take a profit (because of capital gains taxes).

If you’re concerned for their financial well-being, negotiate a compromise: “Get half of your money into safer investments now. Work on the second half later.”

Later, when the economy and markets decline, you will have the opposite problem: Many — whether owning stocks or not — will sink into depression. You can help again by simply reminding them: “This has happened before, and it was not the end of the world. We survived it, and so can you.”

Still later down the road, if the nation sinks into another recession or depression, you will hear many voices bemoaning the “downfall of America,” the “death of capitalism,” even the “end of civilization.”

Don’t be fooled! No matter how much material wealth is lost, I’m confident that America’s wealth of knowledge and know-how will remain intact, paving the way for a real recovery — provided we learn some of the tough lessons of history.

Martin D. WeissThis article is brought to you courtesy of Martin D. Weiss

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