We are experiencing turbulent times, and so I want to share some economic insight that will help ground you.
A few weeks back after the stock market crashed, I called up my financial advisor on a Sunday to discuss options.
I asked him the wisdom of taking some chips off the table in case the market dropped further. Deep down I knew his answer would be “No”, but I asked anyway wanting reassurance.
He said we should be buying, not selling, Because smart investors buy low, sell high.
I sighed, because I already knew this answer. I had given that same advice to a client just 10 days before!
My client was thinking of selling his business and had an interested buyer. I asked him with curiosity: Why are you selling and why is the other party buying?
He wanted to sell, to take some chips off the table (sound familiar?)— and yet, he was in the middle of fixing up his fast-growing business to make it more productive and valuable. His business value was starting to rise.
Why do I share this story with you now?
Because our economy is starting to go down, we are likely already in a recession, and before this is over it could “look” ugly.
In the great recession of 2008 the global economy dropped by -0.5%. My advisors “base” prediction is that the global economy will drop by 4 times that amount, to close to -2%
It will be a shock to the system, especially when the second quarter GDP results come out.
At some point people will tell you to “sell what you can” and run for the hills.
I am here to tell you that you should not be selling, you should be buying.
Assuming the virus peaks in April/May, the economic recession will make a hard “V” (a hard decrease, and then a hard increase within 12 months). That’s a best guess based on current information.
When everyone else is selling on that bad news, it’s time to buy: be it materials, service accounts, market share or great employees.
Your Challenge: Be inoculated from the bad news now, know it’s coming, and be ready to act on it when the opportunities show themselves.
In these uncertain times your character will be tested, your compassion will be needed, and your generosity will be remembered.
Keep one eye on the present helping those around you, while feeling assured that this too shall pass, and your clients and employees will need you to have a strong hand on the steering wheel.
