I’ve been talking to my friends about the coming recession. In 2007, we had birth pains. Again, we find ourselves with overpriced commodities and weird monetary policy that has produced a zero-interest rate environment. It has only encouraged speculation and overextension in stocks.
The price of money is cheap and it finds its way to artificially driving prices up in the market. And things tend to correct.
From the passions of 2007 there are an enormous amount of people who thought their home was going to continue to climb in value. That is, until it didn’t. Being underwater on a mortgage from the hopes of real estate speculation is a real heartache.
It’s hard for me to watch people wait for crises before they change. But I guess that’s pretty predictable. Living in fear and false hope is a terribly desperate reality. But it’s a choice.
The reality is that we are never going back. The world has changed and it is marching on relentlessly with innovation. It’s why those who realize that uncertainty is prevalent and part of the new reality pivot towards a different mindset on what is an asset.
If you don’t know what’s around the corner and you’re not in control, but you still have an old mindset of holding onto albatrosses like your office space, homes, and other real estate, then when the down cycle comes, you may find yourself holding the hot potato.
Today, the great news is that technology has become cheaper.
While the price of housing, education and real estate has gone up disproportionately, the devices we use and the software we enjoy has become ever cheaper. The world of bits, not atoms, affords us immense opportunity to invest in a more modern day real estate.
This makes once risky ventures like starting a business low risk. It also makes staying in business much more viable.
The reality is that your real assets are your knowledge and your relationships. The enabler for leveraging these key pieces of your business and life is via technology, subscription software and virtual work relationships.
You can ebb and flow based on changing market conditions by moving to the virtual world, automating your business and eliminating fixed costs.
It does not take too much imagination to think there could be a sudden economic collapse. But it does take a vigilance and assertiveness to trade old real estate for the new.
So, here’s a question if you have straddled the fence between old success and new realities: If everything went down the tank right now, are you free? Are you invested in modern real estate which is virtual or old real estate which is expensive, obligatory and constraining?