“We learn from history that we do not learn from history.”
— Georg Wilhelm Friedrich Hegel
Making and losing money during the Great Recession
In 2007-08, the stock market dove. We entered a massive “Great Recession.” I had a measly amount in an investment account and sold every stock. I couldn’t afford to lose any more. The panic was great and I followed it.
I held mostly cash, but bought a dangerous ETF that shorts stocks at 2X investment. For every dollar down in the market, I’d make two. Although, for every dollar up in the market, I’d lose two. By buying the ETF, my future would be tied to the demise of the global markets. It felt sick, but I was making money seemingly every day in the tough bear market. As others clambered to secure positions, I was profiting. The demise of other’s portfolios meant I was in the minority, making money.
At the time, I kept telling my mom to sell out of a large, inherited position in AIG. The major insurance company was spiraling out of control, and the public would soon realize how much debt the company hid. I wasn’t prescient, but dead set on her selling much of the position. The wealth was directly tied to the most risky industry.
Her financial advisor asked her to sit still. His sentiment was simple: don’t worry, don’t panic, and everything will be alright. I remember urging her over the phone, “Mom, you’ve got to sell at least a bit. The portfolio isn’t diversified and could be destroyed by this market.” She followed the trusted advisor’s approach and held on to the position. She stayed with the stock until it was a small fraction of the inheritance, and AIG was unrecognizable to its predecessor — what it used to be.
A reminder of the Great Depression
My grandparents had their own economic tumult: the Great Depression. They were a product of a time when food was scarce, fortunes changed, and many suffered. Both my grandmothers — at separate times — would talk about this time of disparity. They seemed weathered and changed by this period.
The Depression had a lasting impact. In their adult lives, they saved nearly everything, invested, and were constantly frugal. Eating out was a privilege — a true rarity even when they had wealth. They got creative with meals, celebrations, and travel. They learned to travel with and for less.
Not everyone suffered, though. A select few — the richest elite — continued to enjoy the spoils of wealth. Robber barons, corporate titans in the 30s and 40s, held disparate levels of wealth. They suffered, but not like most of society.
It wasn’t until President Roosevelt, his new deal, and World War II that the economic despair lifted. A vision for the future came into the picture. My grandparents served bravely, and were able to cultivate a middle class life afterwards. They were never “rich,” but always well. Their goals weren’t for mass consumption, but for peace and calm.
Lessons from a time of scarcity
Just like my grandparents before me, this generation’s financial calamity changed me. The Great Recession permanently shifted my life and that of my parents. The following are a few lessons learned along the way:
1. Who you know counts, but gratitude is greater
I left high school at the height of the Recession, and graduated college in 2011, as things began to look brighter. Still, I applied to countless jobs and found nothing. I submitted applications to Starbucks, Target, Wells Fargo, and a host of smaller companies. No one answered. The jobs were scarce, and money was tight. Everyone — including companies — became more conservative with their money.
A dean changed my life and gave me a chance. She gave me a paid opportunity to study and prep for graduate school in counseling psychology. I considered the offer, realized I had nowhere else to go, and embraced the opportunity. I’m forever indebted to her offer and help.
Without that helping hand, I’m not sure where I’d be, how much I’d be making, or if I would be the man I am today. An age-old lesson for business people is to network unmercilessly, but for me, I learned about gratitude. It’s vital that we remember who helped us succeed.
2. Modest living matters, skip the material mementos
I saw countless Americans lose everything material in the Great Recession. Crying families on TV and in documentaries exclaimed how they had lost everything. They were leaving houses — foreclosed on by banks that “afforded” them way more house than is necessary.
Those with modest means and mindsets braced through the economic tumult, but usually were able to maintain their lives. Those whose lifestyles were paycheck to paycheck or near their means suffered greatly.
Living through this time cemented a new ideal towards minimalism and reduction of material worth. Now when I travel, I try to avoid “collecting” and taking physical mementos. When I get something new (to me or the world), I research everything about it and try to buy based on value.
Last year I was interviewed by USAToday on the topic of buying homes. I might be a kook, but I don’t believe I want to buy a house unless I have all the cash necessary to do so. This Great Recession taught me to distrust debt and mortgages.
3. Save like it’s the last day on the job
In struggling to find work and seeing others do the same, I’m uncertain about my ability to hold one consistent job in life. Employers don’t necessarily have the incentive that they once had for employee sustainability. Everybody seems to be replaceable in this new, globalized economy.
While the unemployment rate has recovered from the depths of the Great Recession, salaries have stagnated or decreased. People are employed now, but they aren’t making what they once made.
Whatever reaches my pocket today, I’ll fiercely protect. But protection cannot mean selfishness.
Despite the economic uncertainty that will forever be a hallmark of my adolescence, I refuse to believe that we cannot continue to help each other. Whether that means serving and giving your time, or scrounging for a few dollars to give to charity, it’s still important to give selflessly.