The year 2007 has drawn to a close, and 2008 has begun. The markets have been
anything but normal. What can we expect from the year ahead?
Let's start by looking at what's happening today. The past year reminded me a
lot of 1987. I remember 1987 because it had a major impact on me and my
financial life.
Prior to 1987, the stock market and the real estate market were both doing
great. They were climbing. In 1987 the markets turned down and continued
falling.
Around 1990, Donald Trump--who was almost $1 billion in debt--said, "Stay
alive until '95." Trump knew that if he could keep his head above water until
1995, the markets would turn around and he'd be back in the money.
After 1995, the markets climbed to new heights. But in 2007, we saw another
downturn begin.
The stock market is very volatile. One day it's up 200 points, the next day
it's down 300. Because of the real estate subprime mess, it's been estimated
that 1.8 million families will lose their homes to foreclosure in 2007. And the
ripple effect of the subprime disaster will go well beyond those people and the
banks that hold their loans.
Some experts predict that the stock market and the real estate market will
reverse and begin moving up in the very near future, while other experts say the
markets will keep coming down sharply for the next five to six years. Me? I have
no idea what the markets will do. I do not have a crystal ball.
But there is one thing I do know, and that is this: In 1987 the market began
its downturn, and in 1988 my financial education began. That's when my husband,
Robert, began talking to me about what his rich dad had taught him about money
and investing. Robert said, "Now is the time to invest."
I didn’t know the first thing about money, much less investing. What's more,
the market was coming down, and everyone was saying it was time to get out, not
in. So in 1988, in the heat of it all, my investment education commenced. To say
I was nervous is an understatement. But in 1989, when the market was still
coming down, I bought my first investment--a two-bedroom, one-bathroom house in
Portland, Oregon.
Was I scared? No, I was terrified. I had to come up with $5,000 (which I
didn’t have) and put it into a property that I wasn’t sure would do what I
wanted it to do. Plus I was sure that the market would keep going down forever.
I purchased the property, rented it out, and every month--after collecting the
rent, paying the expenses and paying the mortgage--I put a $25 profit, or cash
flow, in my pocket. I was on my way.
As the real estate market continued to drop, I kept buying rental properties.
The more the market dropped, the cheaper the properties were and the more I
bought. Then, when the market turned upward, I did even better.
My point is this: The downturn that is occurring today looks an awful lot
like the downturn of 1987. And it was during the 1987 downturn that I got into
the game of investing. That's when I got smart about my financial future.
Now, coming out of 2007 and into 2008, the same climate is in place. This is
the time to get educated. This is the time to start investing. If you’ve been
waiting for your time to get rich, this can be that time.
When Donald Trump was close to $1 billion in debt, he knew that the way he
handled the down market would determine his future success. How you handle the
next few years could secure your financial future if you learn what to do and
how to act.
To me, true financial security and intelligence come from having the
knowledge and experience to deal with whatever is happening in the markets. It
doesn’t matter whether the markets are up or down because you have the skills
and wisdom to handle whatever comes your way.
Look at it this way: The stock market and the real estate market are having a
sale. What do you do when your favorite store has a sale? You buy. Same strategy
when it comes to investing. I plan to find some hot bargains out there.