What if the Stock Market Went to Zero?
First of all, that is certainly not a prediction. I don't think the stock market could ever really go to zero. Why? Because the companies that make up the stock market own very real and valuable assets. Whether that's buildings or great employees or great ideas they've patented, or numerous other types of assets. Even in the face of severe systematic economic disruption, there's still value.
That being said, the last two decades have shown us our country's and globe's systems, including economic and financial, are indeed vulnerable. They've always been vulnerable, but we now have a clearer glimpse of those vulnerabilities. But, I don’t think it’s likely we'll see major systemic disruption in our generation. Perhaps we will, but most humans in history see things remain fairly stable during their lifetimes. The major disruptions hit the news and history books, so we imagine the pain and disruption such events caused, but it's not the norm.
However, it is a very valuable exercise to prepare for the worst. What if the worst actually came true? What if all of your financial assets lost all their value? All of your money in the stock market, all of your money in bonds, all of your money in CDs and in the bank? There would be widespread panic. Many of your friends and neighbors would be in anguish. You might consider options you never dreamt you would.
If we ever encounter such times, please take heart. Those who despair in those days will reap the fruit of their despair, but those who have hope will see that light can indeed shine in even the darkest days. But what is behind that encouragement? Empty optimism? Not at all.
Let me tell you about the single greatest asset that most of us have. Even many below the poverty line have this significant asset. It is the present value of our future income. That means that all of our future earnings have a value today. “Earnings” is just a monetary term for what’s really going on when good work is done: value is being created for others.
If the economy and financial and political system falls apart before our eyes there is one simple principle we can use to guide the actions of our days: relentlessly create value for others.
During the next stock market crash (whenever it will be) there will be many who tell me something like this: “I know the market does this, but I’m old enough that I don’t have time for it to recover like younger people. I feel bad for the retirees in our community that have money in the stock market.”
The only reason I would feel really sad for a retiree, or anyone else for that matter, is if they didn’t believe they could create value for others. If they don’t believe it, they won’t even try it. If the world starts falling apart, the ability to serve others and create value for them won’t only remain, but it will become more necessary and valuable than ever.
Why wait for economic or stock market collapse though? Why not get back to the foundations of what all thriving economies are built upon? Ask a family member or a close friend this week how they have seen you create value for others in the past. Ask them what ways they think you could be most valuable to others in the future.
And the best news of all? Even if getting back to working and creating value for others fails, there is an even greater assurance than that. A hope that can never be taken away. You may know what I’m referring to, but if not, please email me.