The title of this post is actually a famous quote attributed to the great ice hockey star, Wayne Gretzky. But the truth is, it was advice given to him by Wayne’s father Walter.
It’s great advice for hockey players and small business owners. We can’t change the past, we can only look forward. Here’s how to… interpret today’s market signals for tomorrow’s business decisions.
When you think about what a small business really is, it’s a series of cash flows from different clients. Each client is the equivalent of an investment in a stock or a bond. The small business owner is taking risk and expects to receive a return on investment for that risk. That seems simple enough. Except, it’s not.
We live in interesting times and the recent past may not provide enough visibility for making wise decisions in the future. The stock market looks like a bull, but heaves like a bear. Bond prices look buoyant, until you consider the specter of rising interest rates.
The housing market looks like it’s settled; but then we hear about more foreclosures than expected while unemployment rises.
How does one make sense of it all? Here’s a simple and easy answer. Bob Wiedemer and his colleagues have published an amazingly insightful book called “Aftershock, How to Profit in the Next Global Financial Meltdown”.
If you’re in business, you must read this book.
If you care about the United States Economy, you must read this book.
It is the sequel to “The Bubble Economy”, where the authors review why we’ve had so many boom and bust cycles in the U.S. in the last twenty years.
It’s written in plain English with a humorous flair that makes the bitter pill a little easier to swallow.
I spoke with Bob Wiedemer this morning to get his views on things like the value of the U.S. Dollar over the near term, the prices of commodities like oil and food stuffs.
He was a little more optimistic than I expected but only for the short run. That’s no reason to bet the farm quite yet because the time horizon is everything. Three years from now, he concedes the world will look very different.
If your portfolio manager or accountant is telling you just buy and hold, remember, this is not a normal market.
“Holding” might be the riskiest thing to do. If these are secular and not cyclical trends, like the authors say, then holding your current positions will put you in the high-inflation poor-house.
Pay attention to the trends on the price of gasoline and a gallon of milk if you doubt me.
The amount of debt held by the top nine U.S. banks in direct and derivative loans is mind-bending.
Why should you care? Because these trillions upon trillions of dollars of debt can never be paid back.
When the house of cards falls, like an “Aftershock” after an earthquake, there will be many outsized risks and opportunities in the marketplace.
You need to know what those are ahead of time. When the Aftershock hits, there won’t be any time to position your business and your personal investments. Busts happen overnight.
I was a trader for Pru-Bache during the crash of ’87 and know this first-hand.
As a small business owner, it’s important to know the ecosystem in which you’re operating. “Aftershock” is a quick read and probably the best analysis on today’s current economic situation I’ve read in some time.
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