In the era when the real economy is dominant, the economic crisis is actually reflected in the economic depression. However, the current economic crisis is mainly a financial crisis, which is what we call an asset bubble squeeze crisis. When the liquidity of the market suddenly increases, the flood of funds will gradually spread to some areas of production or living materials, causing CPI and PPI, which is the shrinkage of the so-called cash king situation.
Why "money is king" in an economic crisis?
In fact, it is also inaccurate to say that "money is king" during the economic crisis. The accurate statement should be "money is king" in the early stage of the economic crisis.
Because the stock market plunged in the early stage of the economic crisis, all types of assets depreciated, including the property market, stock market, bond market, and gold. Their initial performance was devalued. At this time, what we need to do is to "hold the currency and wait and see." Because no matter what kind of assets you buy at this time, they are devalued, and we do n’t know where the “bottom line” of depreciation is.
With the development of the economic crisis, the next hedging instruments or hard currencies began to turn into gold, means of production and fixed assets. Therefore, "money is king" is not to keep you "holding coins in hand" during the economic crisis, but to "wait for opportunities" in a timely manner according to the development of the crisis.
What should be the right approach?
If we can really grasp the arrival of the economic crisis, the first thing to do is to sell assets in advance and turn them into cash. Then wait for the crisis to come, and screen out the relatively high-quality assets, that is, some assets that should have been more expensive but were actually accidentally injured due to the economic crisis. Choose to buy these assets aggressively at the right time, and then wait for the time. The economic crisis cannot continue forever. After the crisis, high-quality assets will naturally return to their original prices, and then we can complete the counterattack. In short, the economic crisis is an opportunity for us ordinary people, seizing the opportunity can make you struggle less N years.
About how to fight inflation in times of crisis
This issue is more worthy of our discussion. After the economic crisis, prices will definitely rise, currencies will face depreciation, and asset prices will experience certain value fluctuations. In this process, it is difficult to maintain or increase the value of assets. , Can guarantee relatively little asset impairment, it is already a very good choice.
For example, the recent U.S. stock market has fallen by 30%, crude oil has fallen by nearly 40%, gold has even fallen by 15%, and currencies have depreciated by 5%. From these data, we can see that the depreciation of different assets is actually different. . But this is a dynamic change process. Even if the stock market has fallen by 30%, some stocks may have fallen by 50%, but some pharmaceutical and disinfection stocks may have risen by 30%. .
With the gradual economic recession, there may be some large changes in the depreciation of various assets, so in fact there is no one-size-fits-all way to ensure that investment in certain assets can withstand the crisis Inflation, we can only continue to adjust with changes in the market, or use portfolio investment to spread risk.
Therefore, from historical experience, cash is the king in a crisis situation, which refers to buying an undervalued asset when the market is adverse, and then using the panic brought by the crisis, you can discount and buy assets sold by others due to panic. Compared to the inflation caused by currency oversupply, it is often that deposits are subject to inflation, which dilutes the purchasing power of the currency, but for some undervalued assets, it is often possible to obtain several times the profit, naturally it is not necessary to consider the inflation Depreciation has affected.