Three Crucial Lessons from the Great Recession

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An old saying reminds us, “There’s no lesson in the second kick of a mule.” Once you have learned something the hard way, nothing can be gained by repeating the experience.

We all learned a lot from the great recession of 2008-2009. Given the tough times we’re facing in today’s troubled economy and markets, it’s worth revisiting that event and brushing up on the experiences that made us all a little wiser. We can apply the things we discovered back then. And if the financial forecasts are correct, we’re in for choppy sailing ahead.

On top of that, if have been in this profession long enough, you’ll come across people who are always talking about the next recession. These prophets of gloom never get tired of telling you it’s imminent.

One thing is certain, whether it is imminent or down the road: We will go through another recession. That’s the cyclical nature of our economy. Let’s look at what we learned during the last significant financial downturn and see what it can teach us today.

I gleaned three critical lessons from the great recession.

Adjust when steady. When the boat’s going down, hold on tight. When the boat is stable, that’s when we make changes. When markets are plunging don’t change your allocations. That’s not the time to sell.