by Rick Durree
Boom-and-bust economies, financial cycles, bubbles – no matter what you call them, there have been ups and downs in economies since the world began. Tulip Mania, the South Sea Bubble, the bull market of the Roaring Twenties, the dot-com bubble and just recently the housing boom are all examples of violent instability in the market.
So, how do you take advantage of what you cannot control? You go along for the ride.
What else can you do? We are not going to redirect the market or stop its wild movements. No matter what industry you’re in, you’re gonna get rained on someday, meaning that business-ending calamity may strike at any time.
Even if you fight through and overcome all the wrenches that are thrown into your business, in the end, the time frame to make money in your market will eventually pass. While the sun is out and the market is looking bullish and people are wanting to spend money with you, take advantage of the opportunity and make your money. Sell, sell, sell!
The opposite is also true. The old wise man Anonymous once said, “Sell when the sun is shining, and buy when there’s blood in the streets!” That’s what I try to go by. It’s not pretty, but making money doesn’t stop with the easy buy in a bull market. The best entrepreneurs also find ways to make money when the market is bearish after a crash and then ride the bull wave back up. It’s not easy, and many people lose no matter which way the market heads.
But if you want to beat the market, here are three points to help you weather the volatile economic storms ahead:
1. Have excess liquid assets at your disposal.
2. Know when to buy and sell.
3. Don’t get greedy.
The real estate market during the housing boom was at its height before the bubble burst in 2008. Tons of real estate professionals and lenders made big money during the boom, but they weren’t prepared for the collapse, and many lost everything.
No one wins on all their investments, but if you can hang on to a reserve of cash, holding out till the worst of the crash is over, you’ll often come out on top. Old Anonymous comes through for us again with another pointed adage: “Cash is king.”
He wasn’t joking. Any time financial crises hit, those who are prepared with excess liquid assets do well.
Look at the story of Joseph of Egypt. Seven years of plenty to precede seven years of famine. When the world was starving, Egypt had liquid assets in the form of food to trade with. Today we have euros, yen, pounds, yuan and good old American greenbacks to do our dealing with. Have a stash of cash under the proverbial mattress for a rainy day. If it was good enough for Joseph, it’s good enough for you.
The great Anonymous also gave us this adage: “Time is the great equalizer.” Generally, it’s best to buy when everyone else is selling because the supply is greater at that time, driving down prices. On the other hand, you should try to sell when everyone else is buying because the demand is hot, causing prices to be in your favor. It comes down to supply and demand – who knew? (Kidding.)
Whether it’s a bull or bear market, entrepreneurs have to have guts. No guts, no glory!
My dad was my inspiration to become an entrepreneur. He always said he had a cast iron rear end, but I didn’t know how important that was until I opened my first store. He’d get kicked in it or fall on it, but either way it was iron, so no big deal!
Remember: It’s gonna rain on all of us sometime. How you deal with the coming storm is what defines you as an entrepreneur.
A self-made entrepreneur, Rick Duree launched four successful businesses and had four kids by the time he was 30. A professor of entrepreneurship, inspirational speaker and community builder, he founded the Duree Center for Entrepreneurship, where he actively mentors young creators ramping up their startups. He is also the author of “The Entrepreneur’s Bible: 52 Proverbs of Profit.”
Submitted 8 years 364 days ago