Recession Doesn’t Last Long, Best of Opportunities Are Found in a Difficult Environment
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfil their religious and moral obligations towards charitable activities)
When difficult times come boys get separated from men. It is a time to be a lot more creative as it will take more time to research and analyze. So, before you start buying, you must weigh the pros and cons of each company that you’re considering buying, look at least at their history of performance before jumping on to the stakes. This will pay you handsomely.
Recession is a new buzz word in every other drawing room. The educated, the salaried, the retail shopkeepers, the industrialists and the blue-collar, all are worried about the onslaught of an upcoming recession.
Most link it to the rising commodity prices, particularly the prices at petrol pumps, and some link it to the uncontrollable PKR depreciation over the past many weeks. Some comment that the Russia-Ukraine war and the fight to become the superpower is plunging the world into a state of supply glut and demand reduction.
This environment is more of a testing time of nerves. For a commoner, the challenge becomes two-fold. Primary inflows tend to stagnate and the secondary source of income fizzles out.
Cost pressures continue to mount as prices spiral due to the input price hike coupled with supply line congestion. As recession deepens, we may see a reduced level of consumption, especially in consumer products, resulting in potential job losses.
Keeping in view the current economic fundamentals, how should an investor plan to allocate his funds is one of the most pertinent thoughts.
A prudent person, with cash flows higher than his current consumption and free assets available for investment, needs to take a deep dive to identify how to tread forward in these times of dire volatility.
My thought process would be to take a hard and tough review of the portfolio and undertake the following activities:
Available Funds: the aim should be to have three to six months of living expenses held in the liquid assets portfolio to ensure one has a solid emergency fund in place. (To be continued)
This article is written in collaboration with Walt Hommerding senior vice president investment of Wells Fargo .
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investmentadvisor, or certified financial planner. Mr Aslam does not have anything for sale.)
