SRED and the Economy

One of the benefits of the current flu epidemic for SRED claimants is the government’s policy of getting money into the hands of business. No site visits are being done. Other means of assessing claims, and presumably assessing them speedily, from home no less, are probably being contemplated and explored. It is not a time to shy away from filing a SRED claim.

Get your hands on cash. A valid SRED claim is one way to do that. Cash is king now. It is powder to be kept dry for opportunities that will shape up for asset acquisition after the market has bottomed, probably sometime this decade. I was long expecting the bubble to burst, but I didn’t know what the pin would be. Now we know. Stock markets around the world are pricing the new reality, and probably have a lot further to fall. Don’t chase prices….let them come to you.

Real estate will probably take a tumble. Just going by memory here, but my recollection is that the 1840 stock market collapse was preceded by the 1836 Chicago real estate collapse. The 1926 Florida real estate bust was followed by the 1929 stock market crash. The 1984 real estate downturn was succeeded by the 1987 flight from stocks. But sometimes stocks are hit first, such as the 2008 drop being followed by the 2012 real estate bottom. My guess is that the market bottom will happen early in a presidential term, so maybe around 2025. If Trump is re-elected (not seeming as likely as it did before the current crisis), maybe the bottom will happen in the next couple of years. If Biden, he will want to delay it until his second term. But that presupposes that the President can do anything about it.

He may not have the suasion and the Fed may not have the resources to bail out the banks in the unfolding crash, even though they have undertaken to underwrite assets from banks without limit. In the late 90s, Wall Street bailed out the S&L industry. Ten years later, the Fed bailed out Wall Street. Now 10 years later, who will bail out the Fed?

Don’t let all of this obscure your focus. Get your SRED claim filed!