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 An old sale's motto is people buy and take the most
action on fear and greed motivators. The 1980's had both fear and
greed. The 1990's was mostly greed. The 2000's was mostly fear. It
seems as if the better of the two for our economy (the lesser of the
two evils that is) is greed. So I hope the 2010's will allow us to
change our mindset from fear to greed!
We have a lot of repair to our mindset if we need to
change from fear to greed. Fear, stress and frustration have not been
as high as it is today than it was since the 1950's. Our fear,
stress and frustration actually spiked during the time of our
economic "recover". This can be seen through our
postponement of purchases and avoidance of risk. We have over 70% of
our GDP sitting in cash, we historically have around 35%. This
shows we would rather have our monies sitting in cash earning less
than 1% than to make a purchase or invest in anything.
If you believe Warren Buffet has some wisdom to share
and is an investment sage than listen to the words he boldly stated
during the implosion of our economy and stock market, "Be
fearful when others are greedy; be greedy when others are
fearful." The time to be greedy is right now! But don't be
foolish in your greed. First, spot
opportunity. Second, create a business
plan (written document). Third, create a board of
advisors and have them give feedback. Fourth, accept the feedback
and refine your plan and strategy. Fifth, execute!
Remember to be flexible in your business plan and
execution. The economic rules we have grown accustomed to will be
reversed in the coming years. For example, since the early
1980's interest rates have fallen, favorable tax treatment, favorable
fiscal policies, technology boomed and productivity has
increased. The result: bull markets in both bonds and equities;
we have grown use to moderate-to-low inflation; and have definitely
become too comfortable with low interest rates and credit expansion. With
long-term rates around 3% for Treasuries and 4% for mortgages, and
the US government printing money; rates will more than likely
increase over the next few years and potentially for the next few
decades. Increasing interest rates will cause a bear market in bonds. How
will this affect the stock market, business environment,
productivity, inflation and your business plan? Remember to be
flexible!
The seeds of the recovery have been planted. If
people relax a little the fear and frustration indexes will fall which
will help fuel economy; as people relax the 70% of GDP sitting in
cash will begin to decline to it historical average of 35% which
could help fuel the economy; as these two items fuel the economy
companies could begin hiring which will reduce unemployment which
could fuel the economy.
In the year ahead don't let fear and greed get the
best of you. By becoming a leader you can spot the opportunities,
make adjustments to your business plan and implement proactive
solutions; you can survive and thrive no matter what the challenges
are.
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