Why Your Instincts Are Lying to You
There's a moment that happens in every market cycle. The news gets worse. Geopolitical tensions spike. Interest rates move in ways nobody expected. And suddenly, everyone's instinct is the same: hold cash, don't do anything until things settle down, or worse, sell everything off.
I've been through this multiple times. I've watched it happen in 2008, 2020, and in plenty of smaller shocks in between. And I've learned something that most people never figure out: waiting is the riskiest move you can make.
Here's why. When you wait, you're still making a bet. You're betting that things will get clearer later. You're betting that prices will drop more. You're betting you'll have better info tomorrow than you have today. But markets don't work like that. Info doesn't show up in neat packages. Prices don't move in a straight line. And by the time things feel safe again, the best opportunities are already gone.
The people who build wealth in rough times aren't the ones who see the future perfectly. They're the ones who know what to do when the future is unclear. They have a way to make decisions even when they don't have all the answers.
That framework has five moves. And if you understand these moves, you can get through almost any market environment.
Move 1: Shift From Public Markets to Private Markets
Let me start with something that might sound backwards. In rough times, private markets get more attractive, not less.
Here's why. Public markets move fast. Everyone sees the same info at the same time, so prices change almost instantly. That means the edge is small. You're going up against millions of other investors with the same info. And to keep it all the way real, the big players have better info than you, more money than you, and can move faster than you. So they're always in a better spot to win.
Private markets are different. Info moves slower and not everyone has the same picture. Because of that, prices are slower to change, and the gap between what something is worth and what you pay for it can be much bigger. You get rewarded for being patient, for knowing more than the next person, and for going where public market investors won't go.
In rough times, that gap gets even wider. Public market investors get scared and pull back. But private market investors who understand what they're looking at keep it moving. They see the opening and they act on it.
I've seen this play out in real time. When COVID hit in 2020, public markets dropped 30% in just a few weeks. Private market valuations barely moved. Why? Because private market investors were looking at the actual businesses, not the fear. They were asking: does this company make money? Will it still make money in six months? If the answer was yes, they kept writing checks.
The move is simple: start building a private market portfolio. Angel investing is where I'd start. You're buying into real businesses with real potential, not betting on how people are feeling that day.
Move 2: Focus on Cash Flow, Not Valuations
When things get rough, valuations start to look like made-up numbers. And honestly, they kind of are. A company's valuation is just a number that two people agreed on. It's not real until someone pays it. And in rough times, people stop paying those numbers.
What's real is cash flow. Cash flow is money that moves and lands in your account.
The same idea applies to angel investing. The old way was to chase the story. Find the founder with the best pitch, bet on the vision, and hope it works. That can work when things are good. But in a rough environment, it's a gamble.
The smarter move is to look for companies with real numbers behind them. Companies already making money. Founders who have real skin in the game and aren't just raising money to raise money. Companies where you can actually trace a clear line from what they earn today to what they could earn tomorrow.
I've looked at a lot of startups over the years. The ones that make it through tough times aren't the ones with the best story. They're the ones where the founder can show you exactly how the business makes money right now.
So when you're looking at a deal, ask one question first: does this business make money today? If the answer is no, then ask: when will it, and how sure am I about that? If you can't answer that clearly, pass.
Move 3: Diversify Across Asset Classes, Not Just Stocks
Most people think having different stocks means they're diversified. Apple, Microsoft, Google, Amazon. Different companies, same type of asset. That's not real diversification. That's just owning different pieces of the same thing.
Real diversification means owning different types of assets. Stocks, real estate, private equity, angel investments. When one area gets hit, the others can hold up.
Think about 2022. Public stocks dropped hard. But private real estate held up. Commodities went up. If you were all in on public stocks, it hurt bad. If you were spread across different types of assets, you felt it a lot less.
In rough times, this matters more than ever. If you're 100% in public stocks and they drop 30%, you're down 30%. If you're spread out, you might be down 10%. That's not just math. That's being able to sleep at night. That's being able to keep thinking clearly instead of panicking and selling at the worst time.
The move is to build a portfolio that includes angel investments alongside whatever else you already have. You don't need to be an expert in every area. You just need exposure. Different types of assets move differently in different environments, and that spread protects you.
Move 4: Invest in Founders Who Solve Real Problems
When things get hard, companies solving "nice to have" problems struggle. Companies solving real pain points survive and often thrive.
Think about the last big downturn. Companies making social media a little more fun? Most of them died but companies helping businesses cut costs and run leaner actually grew. Companies solving problems that couldn't be ignored became essential.
This shows up even more clearly in places like Africa. Founders there are solving problems that people can't live without. Payment systems that don't exist yet. Healthcare that people can't get to. Education that families can't afford. These are survival problems, and the founders building solutions to those problems are building real businesses with real customers who need what they're selling.
I've invested in founders across different countries and the pattern is usually the same. Founders who have lived the problem they're solving build better companies than founders who just spotted a market opportunity. A founder who grew up with no access to reliable banking understands that problem in a way that can't be faked.
That matters in rough times because those founders have already dealt with hard conditions. They already know how to build with very little. When the market gets tough, they don't panic. They just keep going.
When you look at a startup, ask what problem they're solving. Is it something people truly need, or something that's just convenient? Did the founder live this problem or did they just read about it? Founders who lived it build better. Put your money behind those founders.
Move 5: Own Your Wealth, Don't Rent It
This is the big one. In rough times, people who own assets come out ahead of people who don't.
If you own real estate, inflation works for you. If you rent, inflation works against you. If you own a piece of a business, you get the upside. If you work for someone else, you get a paycheck that might not keep up or worse it might stop. If you own stocks, you own a piece of real companies but if you just hold cash, inflation eats away at it.
The pattern is clear. Ownership wins.
This doesn't mean you need to start a business or buy a house tomorrow. It means your whole investment approach should be built around owning things. Angel investing is ownership. Private equity is ownership. Real estate is ownership.
I've seen people build wealth two different ways. The first is through a job. Good salary, save money, put it in index funds. That doesn't work as well and its super slow and fragile. Lose the job, and everything stops.
The second way is through ownership. Build a collection of ownership positions. Angel investments. Real estate. Businesses. It builds faster. And when one thing doesn't work out, you have others. When the market drops, you still own assets that will come back.
Take a look at your own situation. How much of your financial life is based on ownership versus a paycheck or cash sitting somewhere? If it's mostly the paycheck, that's the thing to fix. Start shifting, even in small amounts. Every angel investment you make is a step in the right direction.
The Real Reason This Matters
Rough times separate the people who understand money from the people who are scared of it. Fear makes you freeze but if you know how money actually works, you keep making moves.
You don't need to be perfect and you don't have to predict the future. You just need to understand these five moves and start using them. One at a time. Building as you go.
The people who come out ahead over the next five years won't be the ones who waited for things to feel safe. They'll be the ones who understood that uncertainty is exactly where the real opportunities live.
Cheers,
~Abdul
About Our Chairman
Hey Hey… I’m Abdul I’m the chaiman of Ajo Angels and Shujaa Capital and I’m on a mission to introduce angel investing to 25,000 black folks over the next five years. I’m doing this with the goal of narrowing the racial wealth gap as well as trying to close the billion dollar funding gap for black founders.
This article reflects personal perspective and experience, not financial advice. Every career and investment path involves different risks and opportunities. Make decisions based on your own circumstances and goals.