You don’t know how tough it is to get across a recession until you’re in it. So I want to encourage everyone, especially the most vulnerable, to stop using the word crash and start seeing opportunities during a correction!
We have more to lose and we don’t get second chances.Īnd because of this, I think women and minorities are more stuck in the mindset of “stock market crash” than wealthy white men.
One more thing: the truth is women and people of color are particularly vulnerable to fear. By simply calling it a correction instead of a crash, we stop exaggerating and start seeing opportunities, which is truly what a recession is according to Warren Buffett. A correction turns recession from panic to optimism: recession is a great time to invest!Īgain, we’re not changing facts, we are simply changing perception. That’s right, a stock market correction.īy changing this one word, you reduce panic, align with reality, and set yourself up for behaving rationally.Ī correction is also rebirth, which is an opportunity. If you don’t call it a crash, what do you call it? I recommend that you call it a correction. A crash is a temporary thing, not permanent. Let’s adjust our words to match reality and recalibrate our perception of what a recession really is: a recession is not a crash, it is just a temporary decrease that’s always bounced back. If people had just kept their money in the stock market and kept investing, they would’ve not only survived but thrived big time through every recession that ever happened to us. In fact, by this definition, we’ve never had a stock market crash in the history of the United States because the stock market has always bounced back since its inception in the 1920s. It sounds terrible!Įxcept that’s totally not reality. If we define a crash that way, then, of course, we’re going to panic during recessions. A crash might even kill you, like how a plane crash would. Crash implies total damage.Ī crash is irreversibly bad, and it should hurt a lot. What does the word “crash” mean to you? A crash means a total collapse, a complete loss. Recessions are always temporary because when prices go down, they always go up eventually.īut people think of recessions as stock market crashes. Note that the official definition of a recession has the word “temporary” in it. What is a recession? It’s a period of temporary economic decline during which things measured by the GDP go down for at least 6 months. How does this apply recessions? We often use words to make recessions sound a lot worse and in fact, inaccurate from what recessions are. Using extreme words like “always” and “never” not only exaggerates a situation, making it worse than it really is, these extreme words completely distort reality. Psychological Hack #1: Redefine the Recession Definitionĭo you know people who tend to use the word “always” and “never” a lot? “The world is always bad, and I never get what I want.” If you want to learn more about what a recession is, check out my complete analysis of why the stock market crashes. While you can’t predict when a recession is coming, you can still plan for it by anticipating how you will behave and behaving to win. If you try to time the market, you’ll lose. People get paid millions of dollars to predict the recession and most of them get it wrong. Regardless of when, just know that you or I will very unlikely guess it right. And it always does.īut nothing felt fine back in 2008, and today, I am scared that I’ll feel that way again. Of course, everything turned out alright in the end. I was 25 years old, totally clueless and scared out of my mind. Then, half of the senior executives at my company got laid off, and six months later, I was laid off too.
And within a few weeks, Lehman Brothers collapsed and my money went to $0: *poof* gone! In 2008, I bought a few thousand dollar shares of Lehman Brothers, the premier investment bank at the time. When you’re in the middle of a recession, it feels like the world had ended and there is no bottom to how bad things could get.