Who Wins in a Downturn?

A downturn is upon us, but winners will always emerge. Here are seven ways you can be one of them

Winners know that recessions are not something to fear but are rather opportunities for those who are properly prepared. Even after the current economic situation passes, plenty of people will still emerge as winners.

It’s no secret New Zealand has had its fair share of economic trouble in recent years. The cost of living spiked, international tourists were barred from our shores for years and haven’t fully resumed, mortgage repayments rose with rising interest rates, and in many parts of the country, house prices fell. Job losses eventually reached the public sector, and it’s little wonder that many Kiwi families are doing it tough. It could be the Kiwi economy will get worse before it gets better.

Despite this backdrop, there is evidence many people are winning, and more will emerge. Below are the top seven characteristics of winners during such a time:

1. Positive, Energetic, and Innovative People Will Win

Winners will do what it takes to ethically increase and solidify their income and protect what they’ve built so far. This includes taking on other income opportunities to increase their monthly income, then invest the extra funds – including investing in themselves through professional development courses and qualifications.

Sometimes, it might be hard to see any good news and feel a sense of optimism. War, inflation, recession, talk of another global pandemic, global warming, and other issues all dominate the headlines. There are no easy solutions to these issues, however, winners have a purpose and stay focused on solutions.

Winners may cut out the mainstream media entirely, or be highly selective by only allowing news into their lives that is relevant to their personal situation. For example, business news relevant to their line of work.

Winners take action, even if that’s just staying the course. Winners won’t be waiting for the situation to change, waiting for handouts, or waiting for help from anyone else.

2. Cash Holders Who Are Willing to Put It to Work

Those who leave large sums in the bank are set for more punishment as interest rates will continue to lag inflation. Even before recent events, you might have heard us say that cash is trash.

Share markets (stocks) have fluctuated or fallen over recent years, and for some, this may be the first time in their adult lives they’ve seen the New Zealand property market track backwards, too. Smart investors with some cash to spare can win by investing more at times like these. Investing right now could be thought of as a necessary shopping trip when everything you need is on sale. This might take the form of:

• Investing a lump sum or regular surplus into the share market (either directly or through funds). The world’s wealthiest people often invest more than usual at times like this. For personal investors, the exact same principle applies.
• Property investors and first home buyers can also take advantage of the situation. When more normal economic conditions return, savvy investors who have a long-term perspective should be left with sizable gains.

3. Those With a Win-Win Mindset

Winners know that perspective and mindset are everything. The difference between a winning and losing mindset can be small, but it's distinct and incredibly important.

Does Winning Mean Someone Else Has to Lose?

Simply, no.

Despite what some people think, true winners don’t take a “win at all costs” approach. Winning at all costs isn’t winning – that’s usually just cheating or scamming people, and at its worst is breaking the law. Consider this:

A used car salesperson who sells cars hiding serious mechanical issues. In the long run, this will lead to bad online reviews, complaints and legal action. This will soon lead to the downfall of the dodgy salesperson – certainly not a win. On the other hand, a great used car salesperson would likely benefit from referrals from people who’d just purchased cars, and even from repeat customers who have purchased and may look to upgrade or change vehicles in a couple of years.

In short, part of the winning mindset is how winners look for win-win arrangements – the idea that all parties in any situation can end up with favourable outcomes.

4. People Who Stoke Their Own Resilience Will Win

Sure, the trials and tribulations of life might set us all backwards sometimes.

Resilience is our ability to adapt and bounce back when things don't go as planned. Resilient people don't wallow or dwell on failures or seemingly bad situations; they acknowledge the situation, learn from any mistakes they’ve made, and then move forward.

According to the research of leading psychologist, Susan Kobasa, there are three elements that are essential to resilience:

Personal Control

Resilient people spend their time and energy focusing on situations and events that they have control over. Because they put their efforts where they can have the most impact, they feel empowered and confident. Those who spend time worrying about uncontrollable events can often feel lost, helpless, and powerless to act.

Challenge

Resilient people view a difficulty as a challenge, not as a paralysing event. They look at their failures and mistakes as lessons to be learned from and as opportunities for growth. They don't view them as a negative reflection of their abilities or self-worth.

Commitment

Resilient people are committed to their lives and their goals, and they have a compelling reason to get out of bed in the morning. Commitment isn't just restricted to their work. They commit to their relationships, their friendships, the causes they care about, and their religious or spiritual beliefs.

5. Those With a Well-Developed Plan

“An idiot with a plan can beat a genius without a plan” – billionaire investor Warren Buffett.

Winners are fixated on where they want to be, and the practical steps they’re taking to get there.

As Warren Buffet suggests, above, a plan could be the single most important thing on this whole list. This is so important it’s closely related to the only guaranteed way to get rich.

When troubling times hit, people with a deliberate and carefully prepared plan usually sail straight through the storm. They have already considered and planned for the inevitable storms that life will throw at us all. They might not know a war would start or some other calamity was going to unfold, but they have read a history book or two so know that natural disasters, wars, famine, recessions, and other issues are normal events that can reasonably be expected to occur over the course of any lifetime.

This means they’ve probably already taken any number of deliberate steps to ensure they ride out the trouble, and not only that, make the most of a bad situation.

6. The Disciplined

During uncertain times, discipline is more important than ever.

Disciplined people have established routines, keep a level head, and can avoid distractions related to the current economic situation, the still-running pandemic, and the war in Europe. While others might be making common mistakes in a downturn, instead, disciplined people know what they want and can stick to their long-term proven techniques and plan to get it (or keep it!).

Without downplaying the very real human impacts of the Russo-Ukrainian war and the pandemic, along with the financial impacts on many households as inflation is spiking, those with discipline will be winning by staying calm and staying the course. For instance, even when further investment market turbulence occurs – which is quite possible – people with discipline will keep their cool and stay in control.

7. Winners Learn

Winners understand that continuous learning is essential to stay ahead in an ever-evolving technological landscape. They actively seek out opportunities to expand their knowledge and skills, particularly in emerging fields like artificial intelligence (AI) and other advanced technologies. By enrolling in online courses, micro-credentials, attending workshops, reading, listening to podcasts, leaning on professional networks, and so on, they stay updated on the latest trends and innovations. This all leads to insights and practical knowledge.

Winners are not afraid to experiment with new tools and technologies, understanding that hands-on experience is crucial for mastering them. By embracing continuous learning, winners position themselves to harness the full potential of new technologies and trends, driving innovation and achieving sustained success.

The Bottom Line – Who Wins in a Recession?

Recessions are challenging, but they also present unique opportunities for growth and success. By staying positive, being proactive, continuously learning, and maintaining the right mindset, you can not only survive but thrive during economic downturns.

Remember, the key to winning in a recession is not just about weathering the storm but emerging stronger and more resilient on the other side. Embrace the opportunity to innovate, adapt, and grow, and you will find yourself among the winners when the economy rebounds.