After three years of fighting the pandemic, the global economy has suffered an unprecedented shock, and many industries have been hit hard. People had hoped for a full economic recovery after the pandemic, but the reality was a further economic downturn. Many people are facing wage cuts, job losses, and the reduction in income has a direct impact on spending power, leading to a decline in living standards. During the boom times, people tended to enjoy life ahead of time by increasing their debts, but now they have to face the pressure of repaying their debts as the economic situation turns. Although interest rates have fallen, the interest savings on large loans such as car loans and home loans are only a drop in the bucket. Especially in the face of declining incomes, the debt burden is particularly heavy.
Historically, recessions have tended not to be gradual, but sudden. For example, the Great Depression in the United States in the 30s of the 20th century and the bursting of the economic bubble in Japan in the late 80s both occurred after a period of prosperity, and the cycle of debt expansion suddenly stopped, and entered a period of debt contraction. In Japan, for example, after the frenzied growth of the 70s and 80s, the debt leverage of corporates, individuals, and ** reached its limit. These debt problems became particularly acute when economic growth slowed, resulting in a 30-year repayment period for Japan.
The fluctuation of the economic cycle is the natural law of social development, and a long period of prosperity often makes people forget about the risks. There is a saying in China: "Feng Shui rotates", implying that the economy cannot maintain growth forever. In times of economic prosperity, people tend to seek to get rich quick and ignore the risks. However, when the economy is in a downturn, these problems come to light. The United States, Japan, and Europe have all gone through this process, and it is a necessary path for mature economies to develop. Only through booms and busts can economies become more stable.
In the current economic climate, people may blame **or** for life's difficulties, but this emotional expression does not help solve the problem. Rational analysis and response are the key. Losses in the investment market often stem from a lack of understanding of the market, neglect of the fundamentals, misjudgment of market sentiment and lack of financial knowledge. When investing, you should be aware of the risks and not blindly pursue stable returns.
For investors, whether in a bull market or a bear market, they should remain rational, understand the basics of the market, and avoid blind investment. When making investment decisions, market sentiment, valuation levels, and economic backdrop should be taken into account, not just short-term market volatility. At the same time, investors should learn to look for objective reasons in good times and subjective reasons in bad times, and avoid becoming conspiracy theorists or skeptics. Only in this way can we move forward steadily on the road of investment.