And the New Year Rings In…What?

Here’s the thing. I’ve been an armchair student of economics since my first day at the Wharton School of Business way back in, well, let’s just say disco was petering out at the time (thank goodness). Actually I was a real student of economics then. Now I have moved comfortably to the relative safety of the chair.

Those who actually call themselves economists and prognosticators of the stock market are all over the place. Some say the recession will be over in six months and things will begin to improve before the end of the year. Some also say the stock market will begin to head up almost immediately after Obama takes office, as future expectations are that the economy will soon begin to turn. Start thinking about getting in now, they say, buy real estate and stocks because we are near or at the bottom. I should note that real estate values in places like Phoenix and Las Vegas have dropped over 40% in just this year alone.

Others, well they are not so optimistic. Some are predicting a 3-5 year severe downturn like nothing we have seen since the Depression. A few have even used the “D” word and think nothing short of a new “New Deal” a la FDR will save us.

I must say that I have never witnessed, from my armchair, such disparate views on where our economy and stock market are heading. So the only thing everyone seems to be able to agree on is that everything is very uncertain.

In the transactional side of our law office, we are reasonably busy, all things considered. The PIPE market is active, and reverse mergers are indeed continuing to move forward, albeit more cautiously.

So how does one prepare for something between a six month and five year recession? The same way many of us got through the last few downturns. Hunker down, tighten your belt, prepare for things to be bad in terms of your overhead, staffing, personal spending, and so on.

And yes think about whether this is time to make big changes. I have always said that the depth of a recession is the best time to start a new business. So also make this a time of opportunity. We are talking to “rainmaker” lawyers whose business is way down and so are being shunned by their current firms. But we know that business will rebound, so we are talking. I am refinancing the mortgage on my home thanks to lower rates. I am driving more, thanks to lower gas prices. The news is not all bad.

Oh yeah, and as we cautiously optimistically welcome 2009, remember to focus on what’s really important. The people that matter to you in your life and those things that you enjoy doing. As I write it is already the New Year in Australia, so to the Aussies, and all my faithful blogees, a very happy, healthy and prosperous New Year….

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