As I listen to all the ‘news’ – congressional wrangling, S & P’s downgrade, new concerns over France’s economic stability, the stock market’s wild ride – what comes to mind is a line from the old movie, Meatballs.
In the movie Bill Murray plays a camp counselor for a rag-tag group of misfits. The annual contest between his camp and the ‘in-crowd’ camp across the lake is to be held the next morning. Murray’s camp has lost for more than a dozen years. Murray’s ‘pep talk’ lists all the reason why his kids are likely to lose and why the other camp will win.
During his talk, as Murray states each reason that the other camp should win, he repeats the phrase, “It just doesn’t matter!” Murray repeats it so often that the kids take up the chant, eventually realizing that the reasons aren’t as important as they think they are. That’s the message I’d like to leave with you today – none of these things matter. Just like the Meatballs kids, the only thing that matters is what we do. Oh, by the way, Murray’s camp won!
The reason they won is that they focused on what they could do, not on all the hype surrounding the contest. That’s what we can do as well. We can choose to buy into all the fear mongering or we can choose to ignore it and continue to do what’s in our best interests. We can sit on the sidelines waiting for something good to happen or we can make it happen. How?
Continue to operate as you would in good economic times. Spend on the things you typically would. By now most of us have adjusted our lifestyles to fit our incomes. It may not have been fun, but we’ve done it. Now it’s time to continue to operate as usual within the framework of that adjusted lifestyle.
If we stop spending, we’ll increase unemployment because businesses will have fewer dollars available to pay workers. Imagine a loved one returning to work because you did your part in spending as you would in good economic times.
If businesses stop investing in innovation, we won’t create any new jobs, nor will we open new markets to serve. Business owners, consumers are hungry for innovation. There’s been a paucity of it for over the past three decades because we focused our attention on cost cutting and low prices. Focus your attention on innovative ways to serve your customers and they’ll reward you with premium prices.
Oh by the way, let’s stop looking to the large corporations for innovation. With the notable exception of Apple, that’s not their forte. They’re great distribution systems for innovation, but they’re not innovative themselves.
Indeed, most of the innovation (as opposed to product enhancements) comes from people who’ve pulled out of these large corporations because they couldn’t get the support (funding) they needed for their innovative ideas. It’s only after these innovative ideas are successfully launched do the large corporations enter the scene to acquire the innovation and distribute it globally. That’s why I say that they’re great distributors, but poor innovators.
Don’t alter your investment strategies. Remember that more than 90% of the market activity on any given day is emotionally driven. The fundamentals don’t change that quickly. Most of the companies in my limited portfolio are making significantly more money than they were a year ago. I’ll bet that the same is true for the companies in your portfolio.
Many of these companies are sitting on huge cash reserves. Quite a few are using that cash to raise dividends, which by the way exceed the interest I could get on the most liquid forms of cash.
Virtually all of the largest publicly-traded companies are raising prices with some instituting their second rounds of price increases since 2009. That’s a powerful indication that consumers have adjusted their spending habits to their current income levels and are willing to pay more to get what they really want. For examples visit http://pricingforprofitbook.com/pricing-news-vs-media-theater#more-1702.
Job growth isn’t going to come from government stimulus packages. Typically stimulus packages, if they work at all, simply shift work from future years to the present leaving a gapping hole in future. We are the ones who have the power to stimulate growth in jobs, to spur innovation, to open new markets and, more importantly, to render all ‘news’ irrelevant.
The choice is yours. You can buy into the media hype and allow it to rule your life. Or you say “It just doesn’t matter!” and become a powerful force in creating a brighter future.
Whether you’re a private equity firm looking for ways to quickly generate higher returns and more investors…
…or a middle market company struggling to get funding for expansion, give Dale a call at 314-707-3771 to discover just how quickly he can help you achieve your goal.