Morning Folks!
Yes, you heard me right. We are on the doorstep of a huge
economic boom. That is the really good news. Now for the other side. After that
great boom that we are about to experience, I expect a collapse rivaling this
past spring with a little more pain felt throughout the population. I expect
the pain to actually begin. The pain for the common man.
So this is what I expect. The common wisdom is that the
market will collapse in October and that it is soon time to get the hell out of
the market. That thinking should lead to a September meltdown. Not October.
Then I expect online ad spending to be at a pace that we
have never seen before. It may be the last gasp for many. They are going for
broke. They have nothing to lose at this point. Their business models are collapsing and so why not go for
broke? If they declare bankruptcy in January, what exactly are they going to
lose? The only ones that will lose are anyone extending them credit.
But that is good news for us, even as short lived as I
expect it will be. The payouts should really start to move up as bidding begins
to heat up. We are a market. If you don’t see payouts go up, and you see the
buys increasing, then you know we are getting hosed.
The experts as I have said are no experts at all. They will
continue to be surprised because they have lost or never had what it takes to really
understand what motivates movement in any direction. They guess and they are
usually wrong.
So get ready for a wild ride. This fall will not be boring.
The antics will be off the chart. The question is will the consumer respond or
will they save? When Christmas comes and folks give $100 gas cards as a
present, that does not count. Those are dollars that are going to be spent
regardless. So if Christmas becomes a Christmas of necessities, then there
is no fuel added to the economy.
If you are a seasonal business in the northeast USA, chances
are you had a terrible summer season and making it through to next year is
going to be tough if not impossible. I can’t even estimate how many of those
businesses won’t be back next year.
There are some dollar$ flying around and there is some
decent activity fueled by the stock market. But this may be pretty short lived.
The fundamentals, the deficit, the weak dollar, the high unemployment, problems
with states and other municipalities could complicate things. Could strangle
any recovery. That is before we even talk about the unexpected.
Bottom line, even tho there has been more economic activity,
it is because inventories were very low and at some point you are forced to
buy. The problem is with each passing month the “Burn rate” for both business
and personal is getting more and more serious for a larger segment of the
folks. There is a breaking point. The beginning started just a few weeks back
when the first group of 140,000 people had their benefits for unemployment
stop. By this time next year that number will grow from the 140,000 to several
million. 5, 10 million. A really huge number. A really big problem. Compounded
by the fact that many of these millions of jobs lost are never coming back.
Meanwhile you can make a lot of money in this turmoil, in
this crisis, in this great period of opportunity. Life changing opportunity.
Isn’t that what it is about? Isn’t that why you read this blog and others? You
can’t chase yesterday’s opportunity and find success, you can only recognize opportunity for now
and tomorrow. The best way to do that is to have a working assumption of how
things will unfold and proceed. Make adjustments every step of the way but
never lose the way.
Have a GREAT Day!
Rick Schwartz
Tia Wood
Thank you, Rick. This gave me something to think about.
Morgan Linton
Great post Rick! I think you are completely right here and appreciate your posts about the economy. As Domainers it is easy to get stuck in our bubble and forget that there’s a whole world going on around us.
Your posts always remind me that focusing on external economic factors is important to know how we can best grow our own businesses.
Keep them coming – you’ve been my economist for last year and so far you haven’t led me wrong!
Rob Sequin
What do you suggest with regards to financial protection and/or taking advantage of opportunities.
Sell now and raise cash for later?
What are you doing that can give us some guidance?
What are you waiting/looking for?
Thanks.
jeff schneider
Hello Rick,
The coming reality check in the capital markets is an affirmative. I never thought of the consequences and its ramifications in the way you have presented. Thank you for your creative manifesting and your sharing of them with us.
Gratefully, Jeff
ShaneCultra
I appreciate your opinions, you always make them exciting. I do feel that failure is easy to predict as it usually comes on its own. Pointing out long term opportunity and success is the more difficult task. One thing that never changes is that opportunity will ALWAYS be there despite what the economy is doing. Caution is never a bad thing and if your rant keeps people cautious then it’s a good thing
Mike
Very interesting post! I’ll keep this in mind over the next few months. Thank you.
Mike
Bob Walsh
Thank you Rick,for being so generous in sharing your thoughts with us.I never even met you,yet you constantly shower me with your educated opinions on all subjects,relating in any way whatsoever.with the Domain world.Not only re:what might happen in the economy,but also how to react to these situations.Heck,some people I’ve met,wouldn’t even share with me…the correct location of the washroom…in case they might want to use it soon themselves.
Thank you Always Rick.
Paul F.
Just read this press release before reading this post…
“Buyers choosing clicks over bricks” – GrantThornton predicts 10,000 US retail closures by year end:
http://tinyurl.com/mclozq
Kevin
I don’t know where we’re going, but one thing for sure, it’s going to be a rollercoaster ride for many years.
There will be lots of opportunities to prosper, but you’ll need to work harder than ever to stay ahead of all the other entrepreneurs looking too.
Risk assessment will be more important and I don’t see any asset class that won’t have it’s risk factors impacted by all the change happening in the economy worldwide.
This is a fantastic time to acquire undervalued assets. But do your homework and know what you’re buying if you go into industries outside your field of expertise.
Stay lean. Stay optimistic. We have brilliant minds that will get this financial mess sorted out and fixed.
Steve C
Listen to Rick for he is a wise man.
The Internet is the most promising new opportunity in these times. People with money will continue to buy dot coms as a investment in the future.
The prices for sales may wobble with the economy but the value of dot coms will only rise.
Stephen Douglas
I’m with Rob Sequin on the questions, yet to be answered by Rick.
Rick?
Dave Wrixon aka Rubber Duck
Absolutely correct, but I think we will hear a lot less about the Dollar being a”Safe Haven” this time around. In the short-term you are probably right that that there will be a rush for English domains, but after that expect other language to increase in value quicker, even if individually they are never worth as much. Although, they do say never say never.
Dave Wrixon aka Rubber Duck
Rob Sequin,
If you are going to hold cash, don’t hold dollars, and don’t buy into Wall Streets phony Bull Market. Housing isn’t going anywhere fast either. It really is going to be hard to invest wisely and good solid domains will outperform most asset classes, but this the mass domain market has been a bubble for a long time and is probably about to crack.
jeff schneider
Hello Rick,
Talk about a canary in the mine take a look at this link
http://www.bloomberg.com/apps/news?pid=20603037&sid=aguVgp1QqgEU
I dont think I have to say more. Of course there will be people that will still be in total denial after reading this. It is my professional opinion that there is serious structural damage to credit driven capitalism, whose ramifications are directly ahead.
Gratefully, Jeff