Tag Archives: Financial recession

6 years since 2008 financial crisis

No one can forget the 2008 financial crisis. It’s been 6 years since then. Lehman was bankrupt. Major stocks went big time down. Home prices went down between 10%-20%. More than 2 million people became jobless.

Financial-Crisis

Financial-Crisis

There was a survey done on around 1000 adult investors and they were asked what they do differently. The question asked was what they think about money now vs. 6 years ago. And the findings are mentioned below:

42% of the adults are contributing more towards their retirement accounts or IRA. If you feel that you are behind in your savings, the best way to get this back on track is to just start doing it. Then you can set it up on an automatic basis. First you figure out an amount that you can easily save at the end of the month, and then set it up electronically. It is important that you pay yourself first.

Next 55% of the people feel that their retirement plan today is much better than the one that was before 2008 financial crisis. Why? They have done some good retirement planning. With good professional help, you can get a clear picture of how to fund your retirement lifestyle that works the best in your situation. You just need to set a budget and stick to it. You get a target rate of return that needs to be earned on your investments.

Another 42% of the people have increased their emergency funds. This is a kind of savings that can be used only during emergencies. This money is usually not invested for a long period of time. There are some people who will actually want to create an emergency fund before investing and keep on adding money towards it, before they actually start investing in shares or bonds. If you have not set money aside for emergency funds, you can do it now. You just have to shoot 3-6 months of living expenses in a savings account.

80% of the adults believe that they have a better knowledge about their finances now before the 2008 financial crisis. This is much better. Young adults are investing their time into learning, and this will definitely help them in making better financial decisions.

72% of the people believe that their debt amount is much less than what it were earlier 2008. It is important to know what you can and what you cannot afford. Paying down your debts is always good for your future. You need to identify the sources from where your money will be coming and use it to pay your existing debts. Also keep an eye on how much you are paying down every month. Sometimes we learn from our experiences. So the key thing is to use what we have learned and take actions.

Effects on the pharmaceutical industry during the 2009 recession

The world is going through extraordinary times during the recession period and this is like something not experienced since the world wars. Many business and industries are going through turmoil and uncertainty in the current financial market. There are many financial surveys to read but hard to digest. Many industries all around the world are looking for help.

The pharmaceutical and health-care industry have historically been relatively immune to economic turndowns, because there’s vacation period for illness. However, the financial support will be reduced during the ongoing recession. Therefore, like in other industries, it is expected that the most affected by the reduced availability in funding will be the early stage biotech and pharmaceutical companies who need funding. But is there more to come?

Some of the possible speculations are as follows:

There is a very good chance that things will get worst than before because of the present market being so uncertain and no help from any financial investors because of the probable risk factors, notably in regards to the early or short term investments. In such a scenario, all industries will be affected. Companies with little cash will find hard to survive, until the economy heals.

Investors are often reluctant to put their money into biotech and pharmaceutical companies because of the other very attractive industries such as buyouts and investments in resources (mines, oil). Opportunities for capital will continue to decline due to the present economic condition. Because of the present and well recorded risk factors in the biotech and pharmaceutical industry, investors are going to stay away and put their assets in other sectors where risk is less. Exit routes always play an important role. Unless there is a fast return, there is only one way for a biotech/pharma company to be profitable: through acquisition by a larger biotech or pharmaceutical company. The way these companies usually grow, its kind a tough to see something like this happens. Smaller companies who are unable to sustain their finance could potentially ask bigger biotech/pharma company to bankroll them, allowing the industry to survive and even grow.

The second hypothesis has already started taking place. Big drug companies are on the shopping spree. Acquisitions are becoming cheaper due to the tumbling stock market. Smaller companies that are struggling to find loans or capital are more inclined towards the bigger companies for help and survival.

Nonetheless, it is important to remember that although the recession has yield great merges and acquisitions by the bigger biotech/pharma companies, the biotech and pharmaceutical industry is also very affected by the economic slowdown, and many of them are cutting jobs and closing factories. The belief of pharmaceutical and the health-care industry immunity to economic turndown is now on hold, and so is the hope for new medicine breakthrough.

Employee and family stress during the 2009 Recession

There are very few people who have remained unscathed during the current financial 2009 recession. Many employees and their families are frightened to think about their future. Credit has tightened, housing prices have gone up, and investment portfolios are in tatters. Things have gone worse, but this is not the time to panic. Financial analysts unanimously agree that your greatest assets in troubled times is the ability to remain calm.

You have to keep your perspective during their financial recession and you have to think with a clear head. You will be making worse short term decisions if you are more dialed into the daily financial events. All your decisions are filtered by a cognitive bias called the “recency effect” which causes us to place greater emphasis and importance on our most recent experiences and project them into the future and in most cases it happens to go wrong in some ways or the other.

The way to beat this economic bias is to maintain a big picture, make a long term view of both the financial markets and your own personal financial goals. Things may looks rotten now, but history says that situation will reverse. The average recession lasts about one year and the average bear market lasts for 18 months approx., but this cannot be taken as guaranteed.

You have to plan for success. Since you are facing a tremendous financial beating, its time to do something. If you are approaching retirement, consult a financial advisor. Here are a few tips that will help to maintain both your sanity and your net worth.

• Keep your long term and short term goals entirely separate. Experts say that you should not invest that money in the stock market that you might need within the first five years.
• Accurate access your risk tolerance. You may have overestimated your stomach for wild swings prior to this current crisis. You now need to adjust accordingly for the future.
• Diversify your investments. This will help you to reduce risk and volatility.
• Don’t obsess over daily market fluctuations. Avoid checking your portfolio everyday. This may lead to impulsive decisions and anxiety.
• Don’t make a guesswork trying to time the market by continuing to make investments at regular intervals.
• Learn how to live on cash during emergencies, just in case if something goes wrong. You should have adequate arrangements that should last for at least 6 – 8 months. This will be quite a tough assignment for many people but you will sleep better at night and make better financial decisions knowing that you have that cash cushion.
• Make small and incremental changes when rearranging finances. When you buy and sell investments, do it in small blocks, rather than doing it all at once.
• This may be a very good opportunity to trim excess fat from your budget. Reining and spending will reduce most of your worries and help you regain a sense of control.