In fact, we can't do anything when the financial crisis comes. Even if we can predict the financial crisis, we can only make some preparations to reduce the losses, but we can't avoid the losses.

The specific manifestations of the financial crisis are asset collapse, economic downturn, rising unemployment rate, and declining corporate profits. The assets we invested are all creditor's rights and equity, which basically covers everything mentioned above, which is why I say that losses are inevitable.

But if we make enough preparations, we can reduce losses, and if we have a good vision, we can even make money from the financial crisis. The preparation is simple, one is to reduce debt or even zero debt, and the other is to have enough cash.

debt

debt is a double-edged sword. Good debt can reduce the wealth eroded by inflation. Bad debt will erode your cash flow at any time without any return. Good debt refers to assets with stable cash flow return and value preservation, such as houses.

Bad liabilities refer to consumer liabilities. Liabilities arising from eating, drinking, buying a car, traveling, etc. are called bad assets because they do not generate cash flow and there are no preserved assets after consumption.

Before the financial crisis comes, bad debts have caused you a lot of trouble, but you can still bear it. However, when the financial crisis occurs, bad debts that usually cause small troubles will bring you closer to the abyss in minutes, so bad debts should always be kept at the lowest point. Sufficient cash

If we have some bad debts, cash can play a buffer role. Even if we don't have bad debts, we may have good debts (such as a good house for mortgage). Good debts need to be kept during the financial crisis and cannot be sold, otherwise it will be difficult to buy back after the financial crisis.

The main function of cash is to ensure the repayment of debts, so as not to let yourself sell assets in bad times. At the same time, cash can also buy some good assets that have been "wrongly killed" by the financial crisis after ensuring that the repayment of debts is enough.

Because many people can't guarantee the repayment of their debts during the financial crisis, they cut their meat and sell it to the market at a price lower than the market price. At this time, if you have enough funds, you can buy these "wrongly killed" assets on a large scale, and the winner will be waiting for the crisis to pass after the acquisition.