Nobody who runs his or her own business needs to read a newspaper to know that the economy is weak. Some firms have seen sales and/or profits decline directly due to an exhausted American consumer. Others, presumably lucky to avoid falling with the first or second wave of dominoes, have seen their cash flow dry up as vendors keep stalling for time.
I don't time things I price them. So I'm the last person to predict when this will all get better. What I do know is that as far as credit bubbles have played out throughout history, this one was as typical as any of them. So typical in fact that the only thing that ever changes are just the names they give the loans. All of the rest ingredients - cheap money, misperception of risk, hubris, and inflated future expectations - we're all there.
But, like each and every credit bubble "movie" replayed throughout history, we're in the 3rd Act of the play - the deleveraging act - and that means we're closer to the end of the movie then we are to the beginning. Sure, they'll be some new regulation and government involvement in private business. But the world as we know it will not end. This is a cyclical process and it just has to work itself out.
Like I said I don't predict the direction of the markets. The only market "prediction" you'll ever get from me is the only one I believe wholeheartedly: one day, probably sooner then most people think, the economy will turn around again. How can I be so certain? Because I'm really not making a bet on the economy, the market, interest rates or currencies at all. I'm making a bet on human nature - a bet that human nature will stay virtually the same it's been for the past 25,000 years.
That's why I'm as bullish as I've ever been on America's future. If our system of government has proven anything this year it's that it's remarkably healthy and it works. And in a functioning meritocracy, nothing could stop money from seeking opportunities for high returns. As long as humans are designed to compete for resources and our meritocracy enables that to happen you could bet the farm we'll be fine.
That is, of course, unless human nature does fundamentally change in coming years. In that case all bets are off - I'd need to find an intergalactic real estate agent pronto!
So...given what we know. Given the fact that the same movie with the same ending is on again the question I think business owners should be asking themselves isn't How do I survive this downturn? It should be How do I capitalize on the greatest opportunity since the great depression?
We'd love to hear from you: Have You Thought About How You Want Your Business to Look When this Downturn is Over?
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