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With the global financial world in flux and stock markets seemingly falling off a cliff, what should an investor do? History has shown that the initial answer is pretty easy. Keep your powder dry and study. In this case I would suggest going back in history and looking at the major financial incidents of the last two hundred years.

J. Paul Getty of Getty Oil took advant age of the Great Depression to create one of the world’s great fortunes. Getty was a “wildcatter” but he was also a thoughtful man as his later books would prove. When the Great Depression came Getty didn’t believe the world was going to end, nor did he believe that profitable business would end. On the contrary, he bet on the strength of the economy going forward. He spent nearly his entire small fortune buying up business and taking stock position. This is the kind of action that builds fortunes.

Watch our current decline closely. The media will fuel it with incessant chatter about doom and gloom. They will make it seem even worse than it actually is, and it will be bad enough. When all the talk is done, the question is, what will the various countries actually do and what impact will that have on you?

Well, based on history and my own experience, I do not believe that the world is going to end. In fact, with the rise of the technologies of the information age and the many advantages that they give us, I predict that the world economy has such power that, while we may crash hard and fast, the issues will be worked through and will be mostly behind us in a couple of years. The next question is what kind of action should an investor prepare to take?

My own particular plan begins with Real Estate. I live in the States and the area that I live in has a strong tech-based economy. Real Estate will drop like a rock for a while and after that happens, people will be afraid to own it anymore. Take a $350,000 home and watch it lose just 10% a year for a couple of years and many homeowners will be so scared that they can’t think straight.

I saw this happen in the late 80’s and early 90’s when the Savings and Loan Crisis in the States precipitated a long hard drop in the Real Estate market here. I saw residential Real Estate prices drop 40 to 60 percent in a couple of years. At the end of those 2 or 3 years a Real Estate agent couldn’t pay someone to look at a home or rental property. There were many fortunes made at this time by those with the courage and foresight to buy. Our area entered a 10 year boom market after that.

Tomorrow I will look at the ways that we can all find profit down the road in the shadow of this trauma.

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This entry was posted on Tuesday, October 21st, 2008 at 6:21 am and is filed under Directory News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.