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What If Australia Crashes?

May 19, 2018


This is a question that was brought up recently.

Given a lot of my investing is based in Australia, this is clearly a concern.  I did answer this question very simply over on Reddit but it deserves its own article.

It’s important, not only for sharemarket investors, but property investors too.  For some reason, only the sharemarket investors seem to get worried about being invested in Australia only…property investors seem more than comfortable with this position.

Are sharemarket investors too cautious?  Or are property investors too optimistic?  Perhaps an article for another day!

Back to the question.  Here are some of my views on this topic.

 

What if Australia crashes?

It will.  I can guarantee at some point it will.

That’s just what happens from time to time.  When it happens is anyone’s guess.  The truth is nobody knows.  And if we try to be clever and think we know when it’s coming, we’re just fooling ourselves.

First off, usually our sharemarket crashes because the US/global markets have crashed.  So investing elsewhere may or may not make much difference.

 

Developed economies are reasonably correlated with one another.

The global economy still takes their lead from the US.  As the saying goes “when America sneezes, the world catches a cold.”

I believe this is true more than ever, with the addition of China.  Due to global trade, we’re more inter-connected than ever, so we all rely on each other to some extent.  Obviously, smaller countries like Australia rely on these global giants not ‘catching a cold’.

See this related study from Vanguard, highlighting the correlations between different countries’ stockmarkets.  They found that a recession and bear market (defined as a 20% fall or more) in US stocks, tends to correlate with a fall in other developed markets (that’s us), more than 70% of the time.

 

Stockmarket crashes usually follow periods of huge returns.

Although we can’t be sure of when a downturn will occur, we can get some hints.

Here’s a helpful chart showing Annual Total Returns for Australian Shares, going back to 1900, including dividends.  The figures are by calendar year and show that big downturns in stocks normally come after periods of out-sized returns.  (the share price decline from top to bottom is not measured here as it’s just year-by-year returns.)

Some of the worst periods were as follows:-

1929-30:  shares returned -31% over two years.

In the 11 years leading up to this decline, shares had returned 475%.  Yes, you read that right!  That’s a return of 17.2% per annum.

1973-74:  shares returned -44% over two years.

In the 6 years leading up to this decline, shares had returned 157%.  That’s a return of 17% per annum.

2008:  shares returned -40% over the year.

In the 5 years leading up to this decline, shares had returned 164%.  That’s a return of 21.4% per annum.

So I’m not surprised these crashes occurred.  When returns are as high as that, it simply can’t continue forever.

For investors focused on income, this means if we’re retired during a period of unusually strong dividend increases, we should strive to simply save some of it by not spending all that extra cash.  Any increase above inflation can be thought of as a bonus, to be re-invested into the portfolio.  Or if you’re feeling more cautious, added to the rainy-day savings account.

Just as it is with our everyday cashflow, if we save some surplus when times are good, we’ll have more tucked away for the not-so-good times.

 

We’ve never had more than two negative years in a row.

According to the chart of annual returns, there’s no period of more than 2 years in the red.

I had to check that again for myself, because it’s quite surprising.

Most of us tend to think of a ‘downturn’ lasting for many, many years.  What’s more likely, is the psychological affects hang around long after the bad times have passed.

It doesn’t help that many are obsessed with share prices and like to point out the dramatic top-to-bottom decline, while ignoring dividends.  Or the fact that nobody invests all their money in one day at the very top of the market!

Personally, I don’t see the need to ‘prepare for the worst’, meaning plan for 10 years of negative returns.

The reason I focus on the dividend income from shares is, it’s based on how much companies are earning, which is more in line with how the economy is doing, and not how popular the stockmarket is, as measured by share prices.

Dividends don’t fall anywhere near as much as share prices during a downturn, which is valuable in helping investors stick with their long term investment plan.

 

Large crashes are actually quite rare.

We’ve only had a handful of big declines over the last 120 years.  The US has been very similar.  We each have our turn, experiencing bigger booms and busts through the cycles.

A good article comparing the ups and downs of both markets, as well as returns going back to 1900, can be found here.

Australia recovered much faster during the Great Depression of the 1930s, because we didn’t have such a large speculative boom like the US did.  It tends to be – the larger the boom, the worse the crash.

 

But what if our economy goes into the crapper, and we turn into Japan?

So many discussions around sharemarket crashes seem to be based around the Japanese situation, where their economy has supposedly struggled since their almighty bubble popped in 1990.

Prices for stocks and real estate got to levels nothing short of insane and are mostly still below those prices today.

On top of this, Japan’s working-age population is shrinking, now making it harder to grow their economy.

As the rest of the world has seen this play out, most countries will do just about anything to avoid becoming Japan!

In Australia, our working-age population is growing strongly, faster than other developed nations.  And this bodes well for economic growth.  Also, our population is becoming more urbanised, which tends to make us more productive, boosting economic growth and leading to higher prosperity.

But despite some of the horror stories, here’s an interesting article on the misnomers about Japan’s economy and stockmarket.  It seems many assumptions are incorrect.

Company profits have actually been growing at a solid rate since at least 1997, only 7 years after the collapse.  And Japan has actually been one of the best places since the GFC, for dividend growth.

Bottom line:  Australia is not Japan, and I think it’s extremely unlikely we experience anything like their infamous bubble.  Also, the economic and corporate performance is nowhere near as bad as it’s made out to be.

Despite the doomsday comparisons, Japan’s companies are still growing their earnings and dividends for shareholders.

I dive into this topic heavily in my interview with Pete Wargent here: The Future Of Australia’s Economy.

 

But what if it does happen?

OK, let’s say we have a big collapse and for some reason it lasts for a decade or more.  Let’s say the Government and RBA does nothing to improve the situation.  What investments would save us?

Well, investing in property won’t help.  Property would most likely crash too, in a scenario that bad.  Without jobs, people wouldn’t be able to buy houses and many won’t be able to pay rent.

If this ran on for long enough, it would be basically widespread starvation.  We’d probably have breadlines and may even need international aid.

Depending on your outlook, perhaps there’s a good case to be made for buying baked beans and bitcoin.  But for most investors, adding international shares to their portfolio should help to alleviate this worry.

For me, I think this scenario is far less likely in the future than it was in the past.

 

The role of Governments and Central Banks

As the GFC was unfolding, it was declared capitalism is dead.  Apparently, the world as we knew it was over.  But now, a decade on, we can see that life is pretty much the same as before.

Capitalism simply morphs into a new version of itself over time, and has done this throughout history.

In the olden days, economies were basically left to languish and recover by themselves.  But these days, the Central Banks and Governments will do pretty much anything to stop that from happening.

It’s far too painful to have mass unemployment, companies collapsing and surging bankruptcies.

Nowadays, economic cycles are now longer, recessions are fewer and smaller – in no small part to the work that the Reserve Bank of Australia (RBA), and to a lesser extent the Government, does to manage the economy.

I know it’s popular, or even cool, to hate on these institutions, but I think they do a reasonable job.

Although it’s certainly true, we’re very lucky in Australia, having mostly avoided the GFC.  In fact, we currently hold the world record for the longest period of economic growth, 27 years and counting, without a recession!

Anyway, these global overlords have been coming to the rescue in a bigger way, each time there’s a hiccup in the global economy.  Whether right or wrong, they now see it as their duty to step in and pump up the economy at all costs.  And it’s more or less worked well.

The best modern example is in the US during the GFC, where the government and Federal Reserve (their central bank) stepped in with bank-bailouts and stimulus, amounting to trillions of dollars over the years that followed.

Luckily we didn’t need to go to that extent, as our economy recovered rather quickly.  But it goes to show you the level that governments and authorities will now go to, to avoid the economy sinking into a depression.  (it was suggested that if nothing was done in 2008, the global economy would collapse because our financial markets are so interconnected)

Although Australia didn’t have a major economic meltdown in the GFC, the Government still gave us $800 cheques to try and stimulate the economy with spending.  Remember that?

They were so frightened we’d fall into recession, they actually gave us money to spend!  This is called helicopter money!

Since our government debt is relatively low, compared to other nations, we arguably have more spending-power to pull ourselves out of the next recession.  Hopefully this gives us the ability to avoid a long-lasting downturn.

 

Conclusion

Maybe I’m a delusional optimist.  But the world seems to be getting wealthier and better managed all the time.

There’s always things to worry about, dodgy tactics from high-powered people and bad stuff to point our finger at.  We actually have to go out of our way to find all the positive changes occurring in the world.

The way economies are managed in modern-day capitalism means Governments and Central Banks will do whatever is necessary to minimise the damage of recessions and crises.  Some have even stated this ‘whatever is necessary’ message to the public.

After all, what’s the alternative?

For all the ups and downs of the economy over the past 100 years, we’re far wealthier as a country, and individually, despite the inevitable wobble along the way…

To paraphrase a book title, feel the fear and invest anyway!

And given there has never been a period of more than 2 years in a row of negative sharemarket returns, I don’t feel the need to build a decade-long economic decline into our future planning.

In general, the more you try to create a bulletproof scenario for yourself, the longer it’s going to take to become Financially Independent.

Related post:  Long Term Investing & Shrugging Off Sharemarket Falls.

 

Final Thoughts

I’m not saying nothing bad will ever happen.  We know from history it’s bound to, at some point.

But history also suggests it pays to be relatively optimistic, since the progress of humanity and increasing prosperity means our living standards keep improving in ways we can’t imagine.

Essentially, I’m pointing out that it probably won’t be as bad as many fear.  And the notion of a multi-decade decline or stagnation for Australia seems incredibly unlikely for the reasons stated.  Granted, there’s always people who think otherwise, and they should invest accordingly.

In my view, a downturn is only likely to last a few years as they typically have in the past.

But in any case, we go on living.  People still need to buy food and use services.  So most of Australia’s companies will continue to make profits.

Society simply won’t function if corporate Australia goes into permanent decline.  And that wouldn’t be a society you’d even want to live in!

Most importantly, as early retirees, there’s heaps of things we can do to see our way through a downturn which I’ll get into another day.

Now, enough of this scary talk.  Let’s keep investing!

31 Comments

31 Replies to “What If Australia Crashes?”

  1. “perhaps there’s a good case to be made for buying baked beans and bitcoin”

    Thanks Dave. I have never really grasped the concept of a plan B until now. But you have clearly put it into focus for me. Just invest in anything that starts with B 🙂

    1. Haha! I’m happy to stock up on baked beans, don’t know about the other one though…

  2. If you are in quality companies that will recover after a crash you dont have to worry, boring banks like CBA, NAB, WBC. ANZ will still be there and making money…CSL, WES., DLX, RHC, WOW etc etc, all boring but all needed for day to day living. Sure dividends might be cut a bit but at the end of the day these companies will still be there and recover back to where they were eventually.
    Common sense probably says have some money in cash, term deposits bonds etc and dont go to heavy on real estate ie REITs etc or anything that really bit the dust hard during the last GFC.
    The only problem I see is Australians are highly leveraged to debt and a few interest rate rises will see the backside fall out of the economy…we all know if the housing market slows down it has a follow on effect to a lot of other industries.
    I actually view Real Estate as the lynch pin to how hard we would crash and its a bit down the to the RBA and Government on we respond to increasing bond yields and interest rate rises in the USA…do we follow like sheep and raise rates or do we keep growing the economy and go easy on rate rises..

    1. Definitely agree that many good companies are likely to only suffer minor damage.

      The only issue for me there is that most crashes are usually not like the last, so REITs may well do fine because they’re much less leveraged these days and more conservative than before the GFC and banks may do worse. Banks may be hit harder than we think if there is a recession, given we haven’t seen one for so long. It’s all a guessing game, but life will go on and most companies will still earn a decent amount of profits.

      As for the debt problem – I don’t really think the RBA has a choice, it seems monetary policy is backed into a corner these days. Rates can’t go up too much or it will hurt housing, the consumer and the economy, causing rates to be lowered again. The debt effectively keeps a limit on rate rises. And actually saw an article the other day that showed our rate moves have decoupled from the US and we’re moving independently since the GFC. The government and RBA letting housing drop too much is virtually unthinkable due to the damage it would cause like you said. It seems likely they’ll cushion it as much as possible – it’s their job after all, and in the interests of the economy/nation.

      It’s all very interesting to think about and watch unfold!

        1. Sorry Todd I can’t find it, didn’t save it. I think the point was we don’t just raise rates purely because the US is doing it, but based on our own economy, as can be seen by rates steadily increasing in the US, with absolutely no sign of the RBA moving here. In fact, inflation is below target, wages growth is still low and housing is cooling off, so likely no moves for a while yet.

  3. Great article.

    The key words mentioned are “as early retirees”. Given that in the worst case scenario you can always seek employment if it all goes pear shaped it doesn’t make sense to hold excess cash. Hence the great threat to many typical age retirees being that of sequence risk doesn’t have anywhere near the same risk to young retirees.

    If you’ve invested only in Australia and it all goes to crap well being younger it’s less challenging to move overseas if the worst happens. It’s what happened in places like Greece, the young move to where there’s opportunity. Somehow I don’t think this situation will arise here for a very long time if at all. So as dividend investors the best chance of retiring early on same will result from investing in ASX.

    Investing for dividends with a couple of years cash buffer would appear to be all that’s needed. And of course common sense being that of living within your means depending on market conditions.

    1. Thanks Austing.

      That’s a good point about age, and something I think some planning early retirement ignore because they hope to never ever work again! There’s no bulletproof plan and we should be flexible.

      For typical age retirees they have access to the pension should their investments not last as long as they expect, so that cushions the blow to some extent as well I would expect. It’s not like they’re left with no assets and no income.

      I hadn’t really thought of a situation that bad, worthy of moving countries just to get work! We don’t really have many countries close-by with similar cultures like Greece does, we’re stuck on this big island 😉 Maybe grow some more food in the garden just in case?

      I feel the same way (obviously) about the effectiveness of Aussie shares for early retirement income! And I think it’s important to be flexible and knowing we can adapt, rather than worrying about all the things that may happen.

  4. i unforfunately haven t studied economy so wouldn t consider myself as one expert. but the level of debt accross the western world is outrageous.
    i m like you and consider that being optimistic and seeing the glass half full will help us. And it s proven that after decline comes growth.

    but man… we re living in a country with an entire generation has never seen a recession and high unemployment.

    while i believe too that australia would get back on its feet, when i look around and see all the level of debt of my colleagues and the living like there is no tomorrow… it might last more than a couple of years when the card castle falls

    1. I guess we can think of it as a scary thing – the debt and lack of recession. Or we could see it as a positive in the sense that our country is lucky and stable enough that we’re able to maintain relatively high levels of debt with low and stable interest rates for so long.

      Interest rates look set to remain reasonably low for a number of reasons, so as long as debt doesn’t keep growing faster than household incomes, it should be perfectly fine. And the regulators/RBA etc. seem to be working on that at the moment, trying to make borrowing levels less risky by enforcing more strict lending practices. It’s working so far with credit growth having slowed down quite a lot.

      The reason it looks crazy is because debt has grown so much. But interest rates have dropped so much, meaning we’re spending roughly the same amount each week paying interest – so it’s essentially the same cashflow wise, the numbers are just bigger.

      I’m no expert either whatsoever, just find this stuff interesting so I try to understand what’s going on 🙂 Still trying!

  5. Great article Dave, really enjoyed reading this. I’d say you’re more of a ‘rational optimist’ than a delusional optimist!

    That chart showing the annual returns of Australian shares since 1900 is amazing – really puts long term investing in perspective, and supports everything you’re saying here. Also enjoyed the motley fool article you referenced – there is definitely far too much weight towards negativity in the media.

    It’s an easy trap to get caught up in, wanting to second-guess if and when things will turn for the worse. But when you take a giant step back and see the really big ‘100 year picture’, especially for Australia, worrying about what might happen is just a waste of precious time and energy.

    Cheers, Frankie

    1. That’s great, thanks a lot Frankie!

      I was actually going to use the term “realistically optimistic” – pretty much the same as what you said!

      Yeah it’s super interesting that chart, not as scary as looking at top-tick to bottom-tick crashes…but much more rational to look at year-by-year returns I think. Why seek out the most dramatic thing you can find?

      The downturn/crash will be scary, and it will be painful. But life goes on, we’ll survive, and the longer-term picture will still be bright. The power of technology, innovation and human efforts will ensure we’re all living better over time. And the bulk of those efforts and new wealth will be reflected in the sharemarket.

      Well said mate, all that constant worry, for what reward? I mostly ignore the media – positive stories and calm rational discussions are not their specialty!

      1. Yes we will survive but might be abit hungry. I lived as a young adult through the early 90s recession. I owned a house and the mortgage rate went up 1% every month until it was about 17% interest rate. Lucky I was employed but couldnt get a second job because during a recession there are major job shortages.. We couldnt sell our house because it was now valued lower than our mortgage. It was tough. We had barely enough for food and bills. So I am ensuring if this is likely to happen then cash in the bank and stocking up on baked beans is a great idea..

        1. Thanks for sharing your experience Tracy. Certainly sounds tough.

          Given obesity is a problem here in Australia, I think for many of us going hungry may not be such a bad idea 😉

          But in all seriousness, having a cash buffer is very important, even more-so if one is retired.

  6. Well thought out article and gives us a good rationale to keep investing. The link to the charts of ASX performance since 1900 was particularly informative. Just a few thoughts.

    Investors in individual shares probably should fear more than investors in individual properties in the event of a decline. Big blue chip companies do disappear – think major overseas banks – whereas the humble residential property even without rental income should regain value and its income stream over time.

    Secondly, from historical performance, we should not be due for a major 20% correction any time soon as our Australian stock market has not been having overly exuberantly since 2008. Our annual returns have not been regularly over 15% in the past ten years. History does not always repeat itself but I am thinking that we are not at the over-excitable stage right now.

    1. Thanks Jon.

      That’s definitely true, individual companies can disappear whereas most real estate will always hold at least some value. I don’t think anyone should be holding just a couple of individual companies as a portfolio though – hence the value in LICs and Index Funds, holding 100-300+ companies so if one or two disappears we don’t even know about it.

      Yep that’s another good point, our market is not expensive at the moment, having not done much since the GFC (price wise). Earnings and dividends are increasing though which is more important, even if prices go nowhere 🙂

  7. Hi Dave, great article! I too have enjoyed the article from motley fool. It’s always good to be reminded of long term perspectives.

    Like you were saying above, the trouble with Australia is the interconnectedness between property (possible bubble) and the other main market sector (financial services and banks in particular) and, on the other side, the resource sector (highly cyclical). Unfortunately, unlike the US, the market is poorly diversified so I don’t know how fast Australia will be able to rebound once those three sectors are hit. Regards

    1. Cheers Jak. Yeah definitely, always good to step back and think about the long-term. Ignoring the media helps a lot with that I find, most of what gets churned out is short-term mostly irrelevant rubbish.

      It’s true, our market is not as diversified as the US market. It’s unlikely that all three of those sectors would be hit at once. Property + banks are tied together so that could occur, but our overlords will do everything in their power to not let that happen since it would be devastating for the economy as a whole, even for people who own no property or shares.

      To be honest, as we’ve seen in 2008, it only takes the financial sector to be hit for it to affect the whole economy. Which is why our banks were guaranteed during the GFC – the fallout of large banks collapsing is now unthinkable so it seems it won’t be allowed to occur.

      The best protection against our specific issues in Australia if someone is particularly worried, is international shares.

  8. I would always have at least a third of my equity investments in global or international corporations and bonds. I’m in the US which is a larger economy but I would not put all the eggs in a single basket. However I don’t think what you are doing is unwise at all, I just like lots of diversity. The way the world is linked together now it may not really matter. Interesting post!

    1. Thanks for stopping by and sharing your thoughts Steveark!

      More diversification tends to be better than less. Australia is just hard to resist for dividends and tax credits. International shares will be part of our portfolio later on. We’re definitely a little jealous of how nicely diversified your economy and stockmarket is 🙂

  9. I like Frankie’s title ‘rational optimist’ – I think this way too. Worrying about the short term isn’t all that helpful. You do the best you can to build a buffer and if/when a crash happens you look at the options and go from there. If it is so bad that zombies invade, or we get hit by an asteroid, then money will be the least of our problems 😉

    Being resilient and reinventing yourself are two of the most important traits to have.

    1. Thanks Miss B.

      Couldn’t agree more, rather than sit and panic, there’s tons of things we can do to optimise the situation, just like we do with our regular saving/lifestyle.

      Haha those bloody zombies. As long as they take out mortgages and shop at Woolies and Bunnings, our dividends will be fine 😉

  10. Great article!
    I just started reading your blogs, and you have really opened my eyes to the benefits of LIC’s!
    I am 27 and am building my second investment property in Perth, but being cash flow positive with houses seems harder than i first expected.
    Will keep reading, thank you!

    1. Cheers Hugh, glad you’re enjoying it!

      LICs are cool vehicles 🙂 They do have their faults though, and our index fund – VAS – is a great choice too.

      Cashflow from capital city property is generally about as good as interest from a bank…not very. It’s more of a leveraged growth play. Definitely more costly to hold and maintain than most people appreciate (that included me).

      Thanks for reading!

    1. Ferris, the second article does not include dividends, it’s price data only. That will be the difference.

      As for ‘indicating’ when a downturn will occur – I wouldn’t bother! The government, teams of economists and thousands of market analysts and participants would love to know when it’s going to happen, but in truth nobody has any idea, despite some people ‘predicting’ it for years, even decades. It can’t be worked out from past data, because it’s the future we’re talking about. Cycles vary even though the pattern roughly repeats. People have been calling the top of the market since it began recovering in 2009 – the call was for a ‘double-dip recession’.

      The point is, it’s going to happen at some point but we need to invest anyway. The market gives attractive returns over the long term despite the downturns, by trying to be clever and time it, we’re going to lose the game by watching from the sidelines.

  11. Very well written article Dave.

    The domestic v overseas allocation decision can be a personal one. A key point is whatever you choose just to be well prepared and researched about that path. I can tell you have read plenty about the pros and cons with this piece. Then you will stick with the strategy.

    Being a rational optimist makes sense I think. If you do run into issues one day I am sure you could slip back into the work force easily enough. I think people could appreciate that you haven’t been sitting on the couch all day! If we focus too much on the gloomy forecasts then we would all work a second job until we turn 90 years old to cover the “just in case” scenarios. Doesn’t sound like fun!

    Focusing on say a yield of 4% or so makes sense I think due to global historical returns. Some may look at the ASX / US market history and think maybe I can budget on returning 8% after inflation each year. An underappreciated fact is that Oz and the U.S. were almost the best markets of the last century. If a random person was dropped into the world in 1900 a fair chance they would not have picked these markets. Maybe UK or Germany would feature where returns are quite a bit less. Or others that have done even worse. So a more modest 4% after inflation return makes sense with an open mind about returning to work if needed. But be careful what the retirement police may say about that!

    1. Thanks for the great comment Steve.

      You highlight some great points. Haha yes the retirement police would already be up in arms – my partner and I have found ourselves earning income after just 1 year away from work. Surprising how much productive energy you have for other things once stepping away from full-time work, which was unexpected. Haha yes I’m certainly tired of hearing the doom and gloom which is peddled constantly. Eventually something will happen – so what – most people can surely adapt and be perfectly fine. The inflexible ones banking on permanent high returns will be the ones truly suffering.

      The US and Oz markets being among the best performers over 100 years is not something I’ve thought about much – good point. I believe returns after inflation for both markets were 6.5% since 1900. In today’s terms that would imply a return of 9% per annum – with our 2.5% inflation target. Probably prudent not to expect that return though, so I’m expecting something like 6-7%, for an above inflation return of 4-5%. Seems reasonable enough and quite a bit lower than history would suggest.

      And then of course a couple of backup plans or workarounds in mind just in case. Will cover that another day 🙂

  12. I stumbled up on this article when googling: “How does a stock market crash affect my job in Australia?”. Thanks for writing this article to help me understand what could happen if the stock market crashed. I have 2 questions: First, if the next impactful stock market crash is around the corner while we are also suffer a drought that is expected to last next 4 years, and we get hit with expensive water bills, how will we be able to afford to pay for the higher cost of grains, produce and meats, assuming we still have our jobs? Second, I work for an algorithmic trading firm that recently restructured and now categorise themselves as a “Family Office”. The only “clients” we make money for are the Directors, so if the stock market crashes, how do you see this playing out for our small “Family Office” operation?

    1. Glad you found the post helpful!
      I’m no expert, but if we have a drought and things get a little more expensive we can simply consume a bit less or adjust our choices to lower costs. Spending on basic food accounts for only a small part of household incomes, so we can likely cut back in other areas to compensate. It should be noted that we also have plenty of imported food options which won’t be affected.

      I don’t believe the world is ending, though clearly many people do. The world has crises and panics but we all keep living and eventually we move on from it. Governments will step in if it gets bad. Even in a recession, around 8-9 out of every 10 people are still employed. That’s the overwhelming majority. So it’s not like everyone is going to be out of work, should we hit a rough patch.

      People are always predicting the worst (every single year), but right now we have low inflation, wages growing slowly but faster than inflation, low unemployment, low interest rates, decent jobs growth and a growing population. All these are positives for our economy, but all we hear is doom and gloom. Things aren’t perfect, but it’s rarely as bad as it’s made out to be.

      Your second question is very specific to your job, which I can’t really answer. If you feel your job really doesn’t offer much in the way of value to society, then if the market crashes, then maybe it won’t turn out great, and the Directors will close shop. But if your trading systems are set up in such a way that you make money in down markets, then maybe you’ll be fine. Maybe it would pay to build up your savings and look at other job opportunities just in case?

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