He lays out ways they can thrive in this crisis.
There are a plethora of changes constantly happening across many industries of the world, and when looked at in detail, they can all relate to one another. While a number of these developments have been on the positive side, many have also disrupted industries and how.
Tarek Naemo, the American/British real estate entrepreneur and economist, discussed with us today about bracing for the economic hurricane. The first question we asked was, "What exactly can investors do in a globally affected situation like the one we are facing now?". He emphasised investors to prepare enough for what's in store for them, as he liked to refer to it as an 'economic hurricane'. He expects that the US Federal Reserve would stop bond purchases faster and also keep the interest rates higher in an attempt to tackle this situation, between the inflation and the oil prices, which have seen a surge due to the ongoing conflict between Russia and Ukraine.
He says, "Investors need to be cautious and must avoid any unnecessary risks". Stating that inflation in an economy is a roadblock in terms of finances. "Money's value crumbles due to inflation, leading to a high cost of living." However, many investors have continued to invest in equity assets through mutual funds and exchange-traded funds, which he says is the right way to deal with the situation. The conflicts between Russia-Ukraine are still ongoing, pushing the prices further. Tarek explained to us how idle money all the more loses its value the fastest during such inflation. Hence, he advises people to put it in government bonds or instruments that offer higher returns than a savings bank deposit. This was a prime example of how to brace for the 'economic hurricane' ahead.
Tarek Naemo also laid out a few ways to unexpectedly thrive in this crisis, saying that people should take ownership of their current reality. "They should know about the numbers, calculate the break-even revenue and understand how to manage those numbers themselves. They need to assess the situation by first acquiring enough knowledge to understand the current global affairs, where they financially stand at the current moment and what their core capabilities are. They need to test themselves to understand what they don't know and identify if there is a need to develop a new revenue stream or modify an existing one for the better.", Tarek explained.
We discussed how the CEO of FedEx revealed that the planes coming back from China are now only half full. It was revealed to me that there used to be 99 ships from China sitting in the LA Harbor waiting to be unloaded, and there are now down to seven. The goods simply aren't coming out of China. This could be an explanation behind Amazon laying off employees and why Amazon has announced they are not going to build additional distribution centres while even going to the extent of closing some of their last-mile centres. It is global affairs like these that reflect the economy is slowing down.
Lastly, Tarek advised everyone to sit with themselves to set clear goals with actionable steps and deadlines. He pointed out that "the ones who survive and thrive in the storm are those with creative and construction determination".