She's On The Money - What is a Bear Market?

Episode Date: July 5, 2022

With the ASX having lost approx. 10% of it's value over the past financial year and investor confidence down, we are officially in a bear market! On this episode, we dive head long into the causes and effects of this current state of affairs and what may lie ahead. We look at what a bear market is, what it means for us, and why we are in one.Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine and She's On The Money are Authorised Representatives of Infocus Securities Australia Proprietary Limited ABN 47 097 797 049 AFSL - AFSL 236523.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money. She's on the money.

Hello and welcome to Shoes on the Money, the podcast for millennials who want financial freedom. Today, we are diving deep into the concept of bear markets, which, to be honest, is a term I only heard for the first time in the news very recently. And if I'm being frank, I don't really get it. Your name's Georgia, not Frank. Hey, good one. Thankfully, here to shed a little light and to explain what a bear market is, what it means for us, and how it compares to a bull market, it's Victoria Devine, of course. VD, welcome back from Europe. Good to have you. Oh my gosh, thank you. I love that just before this episode, we were having a chat and you were like, what is a bear market? Like, how does it work? Why is it called a bear market? What does

that mean? I'm like, it's legitimately a bear, like an actual animal bear, like a bear. And then the bull market is legitimately the bull. How many people just didn't know that? And they were like, oh, it must be this complex investing term. It's not. It's real cute. And that's what we're going to break down today. I feel like the most sensible place to start Is that the start? With the basics. What is a bear market? That is a very smart place to start it, George. But before we get there, let's just have a chat about investing markets as a whole. And I think we've seen it in the She's On The Money community a lot recently, right? Like last six months since Christmas, even before Christmas, right? We've seen so many posts in

the community. We're talking about the Facebook community here about, you know, oh my gosh, my spaceship account's down or someone's like, oh my gosh, my raise is down or I was looking at my portfolio and I'm still behind. And there's just been this consistent piece of conversation around our investments as a whole not doing well. And I think it started with like, oh my gosh, is it spaceship? And we're like, no, it's not the platform. It's the market as a whole. And we have been going in this direction down. Bear market spoiler is when the market decreases in value. And we'll get to that in a hot second. But if we look at the community and we look at the markets as a whole, I feel like we've all been really concerned about it and we haven't

really known what's going on. And obviously there's lots of implications. There's been war and COVID and, you know, after the bushfires, so much happened in Australia, but also in the wider world. And it now makes sense to be talking about it. Not that we haven't been this entire of time, but we're currently or now officially in what is known as bear market, George. A bear market, to define it really quickly, is when the market falls by 20% or more from its 52-week high. So many people say that it is typically a sign of negative investor sentiment, which kind of makes sense. Like we're all feeling a little bit apprehensive. We're more likely to, you know, stockpile some cash under the mattress because of the tumultuous times that might be

ahead, especially after what we've been through. But essentially, a bear market is where people are selling shares, getting rid of things, stocking away their cash in their mattress, and hibernating for the winter, which is where, I mean, there's a lot of hearsay around where bear came from, but we're going to define it as we're hibernating. So a bear hibernates. Cute, right? Sure. The opposite, bull market. You're not following yet, are you? No, no, I'm picking up little bits. The opposite is a bull market and a bull as an animal, really aggressive. Like you see them with

their little red flags, they'll go ya. But that is where the value of the market has risen by a minimum of 20% from the previous 52 week high. So a bull is buying shares and like charging at the market and a bear is kind of like stockpiling their acorns. Do bears eat acorns? No, but they do hibernate for the winter. So we'll leave it there. Does that make sense? Are you following me now? I feel like bear, it's also like kind of a double meaning, like bear market means like people, there's barely anyone there. It's a bit bare, people are treating, it's bare. Why didn't I think of that? That's, you know, I'm not always silly.

What's the sentient on bull? Don't need one, don't need one, let's move on. Let's not ruin it. You said official there before Victoria Divine. So has this happened very recently? Because I have heard it in the news, but I haven't been paying close attention. June, my love. So as of mid-June, we officially made it into a bear market, which means that the market has now officially fallen by 20%, which sounds really scary. And it absolutely shouldn't be at the same time as like, it is a good time to review your investment strategy. It is a good time to think about money, but it's also a good time to, and this is a quote that I have seen all over

the internet recently, purely because obviously the markets have gone down, but when in doubt, zoom out. So like when you're in doubt, obviously it feels really scary, but we have been through so many market changes over time. Like if we now look at a chart that shows us, you know, investment performance over time, those blips that we see on a market chart look really small now, but then you look at it and go, wow, hold on, zoom in. That's the GFC in 2008, 2009 that now looks like a very small bump. It went down and then it's obviously recovered and gone back. we're at one of those blips again. So it's going to feel really dramatic because 20%, nobody, like if I said to you, G, do you want to invest? You go, yeah, V. Then you lost 20%.

You're going to be happy with me or not? You're not going to be loving that. No. You're not going to be loving it. But if I took you back to 2009 and was able to show you what the future looked like and that the market would recover and it will be okay and you're actually well above and beyond what you were before, you'd be like, no, I want to hold on. But in the moment, it is really scary. And that's why on She's On The Money, we talk so significantly about behavioral investing. People often, especially in a bear market, they go, oh my gosh, everybody else is selling. The market's going down. I want to save my money. I don't want to lose any more. So they often crystallize their losses and pull their money

out. And they're like, no, no, no, I don't want to lose more. When in reality, that can actually harm you because you're pulling money out while it's worth less instead of just riding the wave and going, no, I know that this is how it works. We're going to ride that wave and it will rebound at some point in the future. So what's happening right now? Why are we in a bear market situation? Oh, because bears are real cute and everyone's like, oh, let's switch. Well, not as cute as a bear. But no, we're in a bear market right now, which is actually called a correction. So the market's correcting itself. It was flying and going up. And remember, there was just like so many people maybe like just pre-COVID talking about investing and being like oh my god investing

I'm making so much money like everyone was gloating on she's on the money how much they're making their spaceship and their race accounts and stuff remember that and then they were complaining about it because they're like is it spaceship and we need to remember that it's actually market driven not platform driven if the underlying assets that your platform own are you know really reflective of the market but essentially right now we're going through a market correction which has been going on for a while now. And it's actually due to one, inflation, which we're hearing a lot about at the moment. It's due to the ongoing impacts of Russia's invasion into Ukraine, which is still terrifying, still baffles me in 2022 that that is what's going on,

and the implications of that on global trade. So obviously, those things are really significant, but that is, from what all the economists are saying, is what is driving current downturn in the market. And when you say that, Vee, is this an Australian situation or is it global? Yeah, it's a global situation. It is a global situation. So, it's not something where it's like, oh my gosh, Australian shares. No, this is across the board. So, a couple of weeks ago, the inflation numbers out of the US came through and everyone was really scared, but they were higher than expected. And we know this because we've been talking about it in the community, but essentially it hit a four decade high in the US, not in Australia, of 8.6%. So

inflation in the US is now at a level that has not been seen since December 1981. So it makes sense that we're a bit like, what is going on? This is really scary. So we've seen a lot. And here in Australia, the Reserve Bank actually, early June, I believe it was like the 7th of June, an announcement came out that the Reserve Bank had the single biggest rise in the cash rate in 22 years, which is, again, scary. And Australia's central bank tried to quash inflation before it got out of control. And the RBA board, they have a regular monthly meeting, they lifted the cash rate 50 basis points. So it went up to 0.85. And if you follow us on Instagram, we posted about that. And that was much higher than what everybody expected. But essentially that happened because

we wanted to quash inflation. Like it's not going to stop it, but it's just stopping it impacting you as significantly. And then closely following that, we got the announcement that Albo had increased the minimum wage, which is obviously a really good thing. But I do think that was really driven by the fact that inflation is so significant right now. Like if you're a She's on The Money Regular. Hi, thanks for listening. But also you've heard Jess and I and George talk for weeks on the Friday drinks episodes about like fuel prices and how expensive things are. Like this is impacting not just investors, but everyday people who are just trying to get to work and put food on the table. So I think it's important to look at what a bear

market means, whether you're an investor or not. It's not just like, oh, if you're a serious investor, the bear market's really important to understand. No, it's not. It's important to understand if you're an individual who uses money. Full stop, end of story. Because inflation in the US has, you know, obviously been wild and not been seen that high since December 1981. Like, that's crazy to think that we're back there. And that's obviously then sent the stock market further into a bit of a panic, a bit of a frenzy, a bit worried. So I think it's really important to understand that our governments are doing a lot to try and curb this and put us in a position where it doesn't impact the everyday person as much. But if you're an investor, you're going to

feel this pretty significantly in your share portfolio. And as an investor myself, it is not that fun. Logging into my share portfolio, as you guys know, I'm a pretty aggressive investor. It's down pretty significantly. I don't like seeing that. Just because I run she's on the money doesn't mean I'm immune to feeling sick when I look at my investment. But like, I can't tell you, you never get over that. But what you do do is you educate yourself and you're like, no, Victoria, you can't, you can't sell your asset. Stop doing that. Stop thinking like that and go back to the advice you give everybody else. Yeah. It's a lot easier to give advice than it is to take it, George. Well, that's the thing. It sounds, to be frank, quite scary. It is. And my

mind is going well bear market stressful times recession that's like the the line that I'm drawing is that fair like are we heading down that road or is it not as dark as that no it is absolutely as dark as that I absolutely foresee a recession coming and it's because the market's in a way gotten away from us like and it needs to readjust it does mean that we need to be quite careful with our spending. I don't want to scare people. We actually need to, I guess, talk about here market corrections and what that means. And a lot of economists are predicting it and we will probably do an entire podcast on a recession and what that means and how that works. But we are young, George, and we're in that very privileged position where, you know, if you look at the risk

return chart, we have on our side time. And I've spoken to people in our community who are 16 and listening to the podcast. I've spoken to people who are 66 and listening to the podcast and we're all in different circumstances. To me, if you are, you know, a millennial and you're an investor, it is not anything that you need to jump up and down about and really worry about unless you have a very volatile employment situation, in which case I would always recommend an emergency fund, regardless of who you are or what you do. But from my perspective, these types of things really impact you if you're close to retirement. Where, you know, a significant downturn in your investment portfolio or your superannuation is going to mean that you're not retiring within the time frame

that you want to. It could also mean that, you know, George, let's say you own a home and you're like, Avi, I wanted to own the home for five years, but then a recession hits and it's not worth as much as you wanted it to be worth. So therefore your time frames on your goals have changed because we actually should push that goal out because I don't want you losing money by selling that property today and not getting what you needed from it, if that makes sense. So a lot of privilege plays into this as well, because during a recession, a lot of people are forced to do a lot of things that they wouldn't want to do, especially when it comes to money, which is why I think it is so important to go back to that emergency fund piece and talk about what that

means. But essentially with all of that in mind and the fact that inflation is so prevalent and such a big key point, markets are now taking that into consideration, hence the fall. That has been very well-timed, the fall in the market with when inflation was announced in Australia internationally. That's what is driving that this time. And as much as the economic news isn't great and it all sounds really negative. Let's flip this. Shares are on sale, baby. That's a good point. That's a nice spin. I love that. But prices falling means that we are looking at having more attractive investment options if you're in a position to invest. As an investor right now, I'm looking at the market going like, okay, cool. What are some things I might want to

pick up that are discounted that are going to be really solid players in my investment portfolio for the long term. Like it's really exciting. Like when you're out shopping and you see 20% off, you get excited. But when we see it in the share market, we nearly wet our pants, Georgia King. And we usually say don't get sucked into sales, but on this occasion. Not a bad opportunity. Spend a bit, baby. If you can, but also be really smart and have an emergency fund because we all want to be safe. But it's important to understand that this is not just one platform that's going to be impacted. It's not just your spaceship account or your raise account. Everybody across the market is going to be impacted. I'm a direct investor. I'm impacted. It's not something that

people are going to be immune from, but I think we need to go back to behavioral investing and understand that the behavioral investing chart has ebbs and flows. And Warren Buffett said it best, be greedy when people are fearful and be fearful when people are greedy. And that goes back to if the market's really high and people are really excited. Remember Bitcoin when everyone was like super stoked on it and every man and his dog was buying a Bitcoin. Not that you can buy a single Bitcoin because that is now worth way too much, but they were buying parts of Bitcoin and then it crashed and then everybody was really worried. Like that's the emotional rollercoaster that is investment. That is the investing journey. And I think we need to just be super aware of what

that means and how that works because we can get carried away and we can crystallize losses. Like how many people in the She's On The Money community have we seen George message us going, oh my God, my spaceship portfolio was down. So I just sold all my shares or I got rid of it. I'm like, oh my gosh, like I feel mean saying this, but have I taught you nothing? Sir, like I feel like a mum at the dinner table. Like I remember way back when, right. I was like at the dinner table with my dad, have no idea what I was talking about. But I was like, dad, there's this great thing. I did X, Y, Z. And he just looked at me and he's like, are you joking? And I was like, dad, I'm really excited. Like, why aren't you sharing my excitement for this obviously very

independent discovery? He's like, I have been telling you that for months. Hang on. Are you talking about investing? No, just in general. No idea. But like, I thought I'd discovered it for the first time. Gotcha. I was not listening to my dad. I feel like that's my community today. sure. I guess Vy, what I kind of wanted to bring up is that She's On The Money has been alive for three years. It was our third birthday last week. Wild, how cute are we? And for a lot of us, this is really our first test into a real market downturn. And this is kind of our challenge to take it upon ourselves to be like, what have we learned over the past three years? We hold on. Is that the message that you would say to the girlies?

Absolutely. And I think it's really important to remember that it's actually about education and the more educated you are, the more comfortable you're going to be going through this. And, you know, not to call anybody out individually, but if you have sold your shares because you've been really concerned about the falling prices, I think now's the time to go, why did you make that decision? Because usually that decision has been made out of fear and fear comes from a lack of education. The more educated you are about something, the less fearful you are of it because you're like, well, I know what that is. It doesn't matter what it is or how it works. Like people who are super educated on ghosts, George, not scared of them. Me, terrified. I love this. But it makes sense, right?

Like the more you know about a particular topic, our producer is laughing at us and I don't know if I can carry on. But the more you know about a certain topic, the more comfortable you are with it when confronted with it. Yeah, that's true. So I think it's really important to go, if I'm scared about making this decision anywhere in life, let's be honest, maybe I just need a bit more education. Maybe I need to read a blog. Maybe I need to read a book. Maybe I need to listen to the She's on the Money podcast.

Like it's not a bad thing. I think we just need to talk about it and what it actually means. And a bear market is not something to be scared of. It just means that the US stock price declined. It declined 22% from January. It peaked in January and share prices have been bouncing around for the last 12 months. And now we're seeing a term being put on that, but we all kind of saw this coming. We've been having this conversation. We've seen it. I've said before on the podcast, well, I feel like there might be a recession coming, like this makes sense. And then economists are saying the same thing now. And I'm like, yeah, this makes sense. I'm an educated investor though. And I want to be able to empower the rest of the community with that education so

that they have that confidence to feel like, okay, cool. Like let's reframe this. Let's see this as an opportunity because I'm young and I can create wealth and I can do this and I can do that instead of going, oh my gosh, everyone's talking about it being a terrible market. So your shares are on sale. Yeah. Yeah. Listen to your sisters at Cheese on the Money. Take it seriously, but zap out the emotion. Yeah, great. Let's go to a break. Let's do it. Let's put a little pause in. More bear market and bull market when we get back. Fabulous. Alrighty, guys, welcome back. Great to have you if you're still with us. Would they? Do you reckon they're still with us? We're talking about such dry content.

No, it's dry. But I think the way that you've explained it is genuinely so interesting and engaging. And as I said before. And bears are really cute. So why would you go anywhere? Well, they are. But as I said at the top of the episode, like I've heard this term, but I haven't understood it. It's kind of hard to grasp when you're reading it on a page. So it's really good to have you explain it. So thank you so much. V, you mentioned earlier the term market correction. I did. How does that differ from a bear market and what does it mean? I feel like I accidentally used those a little bit interchangeably and they're actually two different things. So corrections in bear markets are both defined, not defined, but they're both

associated with, you could say, falling share markets, so falling prices of shares. The difference between the two is, I guess, how big that fall is. So a correction or a market correction is typically defined as a share market fall of about 10%, so half of a bear market. And as we said before, a bear market is when we have a minimum of a 20% drop. And so in the month of June 2022, we saw the US stock price. So the S&P 500 index, which you can ask me in a hot second what that is, entered officially bear market territory when we had a 22% decline from its peak in January. So officially we're there, but a market correction is about 10% and then a bear market's 20. Okay. So it's, yeah, bear market's worse. That's good to know. Here we are. What

you said just before, S&P market, something? Oh, the S&P 500, which you've probably seen before, usually like in the really tiny text at the bottom of the TV when you're watching the news at night. And you would hear people being like, and the S&P index is up by or it's down by. You've heard this before, right? That feels familiar. So the S&P is actually called the Standard and Poor's 500, or simply put, the S&P 500. And it is a stock market index tracking the stock performance of 500 large companies that are listed on the US exchange in the United States. And it is one of the most commonly followed indices. So it is one of the most commonly used, I guess, measures of what's going on in the market. So if you ever hear S&P 500, it's actually not that complex. It's just

the 500 top companies that are used for us to measure what's going on in the market. Okay. Makes sense. All right. Sure. Sure, sure, sure. And as of today, George, if you Google S&P 500, I won't tell you what today's date is, but you can work out what date we recorded by this number. We are down 11.63%, which is 0.3% today, G. So back to recession chats. Love recession chats. The word recession is terrifying. It is, right? Why? Why do you feel like that's terrifying? What are your attachments to that

word. So my mind goes to the global financial crisis over in the US and visions of that for me, like people losing their jobs, everyone's selling up, just a really scary time. Like Great Depression kind of vibes, because that was also a recession. Yeah. And people like losing their homes and all of these really, really serious things. And you just said before that like a recession is coming. So how can we not be afraid of that? Like, is it as scary as that picture I have in my head or is it not going to be that bad? Look, a recession, honestly, it is really scary and it can be really scary and like, let's define it. But essentially, a recession is a significant decline in economic activity that lasts for months or even years. Obviously, the Great Depression is

a really good example of that. That was so significant. I mean, at the time, it wasn't called the Great Depression. They named it after that happened because you don't know what you're in for with a recession. You don't know how long it's going to play out for. Then the GFC, which as the global financial crisis, which we should do an entire episode on. I reckon that would be... From a financial advisor's perspective, maybe we should go out to the community and even ask them if they want this. But like, what is the global financial crisis? Why are people still talking about it when it happened in 2008, 2009? What started it? How did it work? But essentially, experts, they declare a recession when a nation's economy experiences negative gross domestic

product, GDP, probably heard of that before, rising levels of unemployment, falling retail sales, so people are shopping less, and contracting measures of income and manufacturing for an extended period of time, which I feel like we're starting to feel right in the conversations we're having. So lettuce. Lettuce. Which is? $12 lettuce. $12 lettuce. Petrol. Petrol. All of those things are indicators that all the lettuces and all of the petrols are indicators, but they're genuine indicators of recession because we are in a situation where our product and our ability to supply product to the masses is not able to keep up with demand. And so things become astronomically expensive and they become really limited resources. And watching this happening

is an indicator of recession, but you can also see how it might start to happen when there's global war and looking at what's going on in Russia invading Ukraine and how that's impacted the ability of like product to flow around the world. And you see it in our industry, right? Like I'm probably a little bit more privy to this at the moment because as a lot of you know, I'm trying to renovate my house and it is so expensive. I'm talking to my builder and they're like, look, V, we're going to be up for a minimum of 30% more because that's how much more product is worth now. So like timber, not that everybody else knows what this is, but timber prices have increased by a minimum of 30%. So now for me to build a wall, it is going to be 30% more.

That is putting significant pressure, one on my budget, but on everybody else's budget. Like think about the building industry and how many contracts have been signed to, you know, build your Metricon home, that's now costing them more. And there are these contracts where they're like, great, I signed this contract. It's now going to cost that business far more. That's going to significantly impact that business negatively. So it's kind of like a snowball and you pick up small things along the way and small things become big things and that big thing happens to be the recession. So it sounds like it's basically a perfect storm, right? We've had the bushfires to kick us off. Then we had two years of lockdowns, a pandemic that ended so

many lives and it impacted so many lives around the world. And now we have a war happening in Ukraine. It's insane. The world is insane. But essentially, and unfortunately, recessions are considered a very unavoidable part of business and of the business cycle. As we mentioned before, we have been through recessions before. We will come out the other side. But yeah, there are some negative things that are going to come out of it. And people are going to suffer through this because not everyone is going to get away with it scot-free. But essentially it's kind of like the expansion and contraction of the market and working out like if you grow too fast,

your bubble's probably going to pop and that's kind of what's happening here. Well, just on a light note, like when we do... Oh, there's no light note over here. I'm real negative. When we come out the other side, is it going to be like the flapper era? Are we going to all be popping on our dresses? I'm a club.

Gatsby's house. It's going to be great. That's where my mind's gone. It's going to be good eventually. Yes and no. It's going to be real good. Yes and no. Shut me down.

Sorry, sorry, Georgia King. I don't think we are going to be going into the flapper era again. I'm going back. Okay. Well, can I come to the party? Come on. Actually, I've recently moved into a rental property, as you guys know, perfect place to hold a flapper party.

Let's do it. Let's do it. It was my birthday. We haven't had a proper party. We will get on to that. Brilliant. But when we're talking about timelines, I think it's important to educate you on that. did you know that the average recession lasts 11 months? So if we look at the average lengths

of recessions from 1945 until 2009, cough, that was when our last one was, the average recession actually lasts about 11 months or let's call it a year. And that is kind of scary because we're not talking about like, oh gee, it'll just be a couple of months. Like 11 months is a long time. Like, that is longer than just making a baby. Is that a good measure of time? Sure. I feel like it's a good measure of time. It's a really good measure of time.

I literally use the time it takes to create human life as a measure of things. It is quite good. Like, if someone says, oh, three months, I'm like, oh, that's like not even a whole baby. One third of a baby is cooked. Yeah, literally. And if someone's like 10 months, I'm like, guys, that's so long. You could literally create an entire human in that period of time. Interesting.

It's not as long as I thought recession wise, but you saying that a recession typically lasts for 11 months, does that mean we can predict these kinds of things? If we understand that, like, why can't we, you know what I'm saying? Look, uncertain. So given that economic forecasting is uncertain, like I've said it before on the podcast, like if I could predict the share market, sir, I'd be rich and I wouldn't have to do this podcast. No, I do this podcast.

You do it anyway because you love it. I literally do. I did this when I wasn't being paid and now I'm being paid. I'm like, this is great, guys. But no, you can't predict it in a really easy way in the same way you could predict when you're able to see Mars in the sky, right? But there are a few things that were telltale signs and we've spoken about them. Bushfires, coronavirus, war, like all of these things add up to economists going, there's probably going to be a recession at some point. But there are some indicators or warning signs that can give you a little bit more time to figure out how to plan for a recession

or when one is coming. So the first, again, financial advisor hat is being put on, an inverted yield cycle. So a yield cycle is a graph that essentially plots market value or the yield. So yield is essentially how much money it makes. And when an economy is functioning normally, yield should be higher on long-term bonds and, you know, solid assets. But when long-term yields are lower than short-term yields, so when long-term cash coming in is lower than short-term cash coming in, it shows investors are a little bit worried about recession. So it means that they're, you know, not putting so many eggs in so many baskets. They're holding their cards a little bit closer to their chests. And this is like, quote, a phenomenon known as a

yield curve inversion. And as a financial advisor, I obviously look at this and I go, okay, cool, that makes sense. I read the textbook, but economists will look at that and go, hey, this has been something that has happened before every single recession that has ever happened. The next is declining consumer confidence. So consumer confidence is like how willing you are to buy stuff. Like right now, G, if I said, go out and invest, you'd be like, but the markets are down, like not sure if I want to do that. And this is able to be measured with consumer spending. So if surveys that are done on, you know, what Australians and what Americans are spending shows a sustained drop in consumer confidence, it could be a sign that we're going

into some economic trouble. So essentially people are spending less because they're trying to save more money because they're a little bit apprehensive of the future. Another is a sudden stock market decline. So we have just seen that and ours was a result of inflation. And then the other is rising unemployment. We mentioned this before, but it essentially goes without saying that if people are losing their jobs, it's a pretty bad sign for the economy. Like that ain't a good thing. And just a few months of pretty steep job losses is a pretty good indicator that there is an imminent recession because that is businesses. It's not because people are not willing to work and they're all going on holiday and not coming back. It's because businesses are being a

little bit more apprehensive and they're less likely to hire. They might go, gee, like I know we want to expand, but maybe let's put this off another quarter or another six months. So there's less jobs in the job market. In saying that, that's quite contradictory to the information that She's On The Money's been talking about, about the great resignation, right? Everyone's quitting, getting a new job and it's really great. But that is actually a really entitled view because that's for educated people, not for the workers that usually lose their jobs during a recession, if that makes sense. Yeah, yeah. So, V, back to the bear market situation where we currently are existing. Is there a particular type of stock that people are fearful of buying,

that they're pulling out, that they're losing faith in? Or is it across the board? I don't think people are losing faith in it, you drama queen, you. I mean, this is some scary shit. It is. But it's one of those things where I don't think people are losing faith, but they are less likely to buy things that are not stock standard. So this is where blue chip shares shine. And I've spoken about it before, but essentially a blue chip share is a share with a national or international reputation for quality, reliability, and the ability to operate profitably in good and bad times. And that's where people fall back on industries that are going to stand the test of time. Woolies, coals, banks, things that are

essential for the operation of our economy and less likely to invest in things that are a little bit more frivolous. So like people often end up pulling back on things like tech where they're like, oh, I don't need that so much, but I will invest in something that I know is tried and true. In saying that, something that I think you're going to find really interesting is the lipstick effect. Have you heard of this before? uh no no that was no i was trying to think of i'm assuming it means like making something look glossier than it is oh that's cute no but it's not it at all but like that's actually a really good analogy of it i thought you were going to be like v i don't wear makeup don't like lipstick

not gonna happen not wrong but it's quite interesting so the lipstick effect is the theory that when facing an economic crisis consumers and people are more likely to buy less costly luxury goods. So instead of like buying designer bags and shoes and stuff, like we're more likely to go and make ourselves feel better with small purchases like lipstick. And this is where cosmetic companies thrive during a recession, which I probably bet you didn't see coming. So invest in Mecca is our advice today. I will absolutely be doing that today and every day. In fact, low key, I'm a little bit salty, lost my level three. I don't know what that means.

Okay, well, if you know, you know. Just to be super clear there, don't invest in Mecca. Do it if you want, but we're certainly not telling you to because this is not about financial advice. Oh, no, no, no, I meant invest in the products from Mecca. Oh, yeah, well, that for sure. Nas for sure. Sheer glow.

10 out of 10. Chef's kiss. Stunning. Stunning. Back to it. We're about to wrap up. So I want to ask a selfish. Oh, you're going to wrap me.

I'm going to start playing the Oscars music. I'm going to end it selfishly. How does this impact me? personally. How does it impact people within the She's On The Money community? What does this mean? I mean, I could be really dramatic and be like, you're at risk of losing your job. Not you, Georgia King, because we will continue to make content forever. But unemployment levels are rising. And I think that it is important to be quite aware of that and quite aware of your education and what you're doing in case that job is not as sustainable or as stable

as you might think it is. So not only is our community, it feels so bad, but not only is our community much more likely to lose their current job, it's going to be harder to find a job replacement since more people are out of work and looking for a job at the same time. So it's a very competitive environment to be in if you're looking for a new role. So people who are keeping their jobs, they might see no pay rises. So as much as inflation's going up and we have this expectation that our employers will meet that level of inflation, they might not be able to afford to do so. And it might make it harder for you to negotiate further pay rises, which obviously at She's On The Money, we're always like, no, you're worth, but also let's read the

room and let's see how hard it is for our actual community, right? So it's going to be really dependent on the type of business that you're in. You might be thriving. You might get a massive pay rise. In a lot of industries, that might not be as possible. Investments like shares and bonds and real estate is probably going to be valued at less, which could be a blessing or it could be a curse. Like if that's your investment and you're looking at it going, oh my gosh, my share portfolio, it's worth so much less. Not a good thing. It will recover. It's okay. Don't stress. But it also could be a great opportunity if some people in our community have been hustling and hustling to get their home deposit together. And I'm hoping this is how it

works out for Miss Jessica Ricci. Property is going to be hopefully a little bit cheaper, a little bit more affordable, a little bit more accessible. Like, I mean, surely everybody's seeing that coming given avocados are what, $1.20 at the supermarket? I'm loving that. I'm loving that too. That's the highlight of this whole crazy thing. If we can afford avocados at that price, surely soon millennials will be taking over the property market. So that is going to happen. Obviously, when we see downturn in the share price, it means that our retirement savings are going to look a little less sexy. If you're in that situation where you are planning for retirement, definitely speak to a financial advisor or organize your financial affairs to

be a little bit more stable. Unfortunately, if you're in a situation where the prospect of losing your job is real, it might make paying bills really hard. It might make keeping the mortgage your payments up really challenging. And I think that that's where today and every day I'm a staunch advocate of an emergency fund. But I think now more than ever, it's just really important to have that in your back pocket. Or even if you're in the privileged position of being able to beef it up a little bit more, I absolutely would consider that because it's so important. As a business owner, I know there are lots of business owners in the She's On The Money community, because a little while ago we did a census and 20% of people said they were either a business

owner or a side hustler. Really? Really cool. And thankfully in Australia, we are in, again, a very privileged country where during a recession, our government usually tries very hard to support small businesses, but small businesses are more likely to feel the brunt of it purely because people are like spending less and small businesses are more likely to feel that because they're already harder to access, right? I think understanding what a bear market is and what preparing for a recession actually means. But I think that all of the things that I'm recommending are actually things we should be doing regardless of the economic situation to put ourselves in the best possible financial situation. So I don't want to end this on a, oh my gosh, everything's going

up the wall. Like this isn't good at all. Like it is what it is. We went through a market correction earlier this year when it went down by 10%. We're now at 22% and it's been labeled a bear market. it's not as scary as you think it is. The market always recovers. If you are in doubt, zoom out and have a look at the bigger picture and see what every other market recovery has looked like and how long that takes. But there is always light at the end of the tunnel. And this is just how economics works. Perfect V. Well, I'm feeling a little bit less frightened than I was at the start. So thank you so much for explaining it all, making it a little bit more understanding. I've loved this chat though. Let's do an

entire one on recession and the GFC and all of this. Do you think people want that? All of this exciting stuff. Slide into my DMs and tell me what you want us to do. I mean, also makes my content planning a lot easier. That's true. Thank you. Thank you. Boring but important stuff. Go for it, my love. Let's do it. All righty, guys. Please remember that the advice shared on She's on the Money is general in nature and does not consider your individual circumstances. Except for when buying Nas Shiglo. Correct. Ten out of ten. Ten out of ten. She's on the Money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and we promise victoria divine and shoes on the money are authorized representatives in focus

securities australia proprietary limited abn 47097797049 afsl 236523 and please guys join us in the facebook community if you're not there already especially if you're feeling really daunted at the moment it's the safest place and there's going to be a lot of girlies in there that are feeling the same way and we can all support each other. See you on Friday, my loves. Bye, guys.