The 2008 GFC took nearly everyone by surprise. Could it happen again in the not too distant future?
Unfortunately, some reputable economic forecasters think that it could.
I’m no financial expert and not in the business of giving financial advice. However as I got burned by the 2008 stock market crash and have no desire to repeat the experience, I have been taking an interest in what financial editors have been writing. In last six months the warnings of a worldwide recession have been getting louder.
As was the case in 2007/08 the big problem is the American economy, which is drowning in debt while the stock market keeps climbing to what many experts are warning, is unsustainable heights. Added to that is Trump’s trade war and countries like Turkey and Argentina which in serious financial trouble. It doesn’t help that the Australian economy is nowhere near as healthy now as it was in 2008, when we had a large surplus. So it’s likely that if there is another GFC in 2019/2020, we’ll feel the pain. Part of that pain will be a significant fall in the value of our super funds and other shares we hold.
I discovered another worrying issue when I started moving my meagre savings into cash and other “safer” investments. The super funds we looked at were still operating on a “business as usual” basis and offering “high growth” investment options, which meant lots of exposure to Australian and international shares and property – the sectors likely to suffer major losses if there’s a crash.
Surely the highly paid financial managers running these big funds would be aware of the danger signs and taking steps to protect members’ savings. Let’s hope so!
Now don’t just take my word for it. As I said, I’m no expert. However it might be a good idea to have a look where your money is invested and seek professional advice on how safe it would be in the event of a major stock market fall. It’s no good waiting til everyone else is trying to get out before you act.
I hope the warning is wrong and the experts warning of a recession don’t know what they’re talking about. But I’ve moved our investments – just in case.