If you have some cash lying around, why not buy something in this market.
Prices are cheap, and while they may get cheaper, you can get a good deal on most companies listed on the market. If you are looking to get rich quick, then stay on the sidelines. But if you are looking to pick up some equity in your favorite companies and hold on to those shares for a few years, now is the time.
Consider the following when doing so:
Pay no attention to macroeconomic trends. You cannot possibly predict the future.
Stick to your “circle of competence”. Buy companies that you understand.
Try looking for managers that treat their shareholders money as if it were their own. Mangers that might have bought back their company stock in this environment. People interested in creating value.
Study prospects and competitors of a potential investment. Who else is in that space?
When you are convinced that a company is a good company and meets this criteria, why not buy it?
Believe it or not, these are some of the basic and core principals Warren Buffet lives by. Although it’s unlikely that you will ever come close to his skill at dissecting businesses, prices are cheap enough that you can get away with finding a good deal.
You scope out industries, look at the highest paying jobs, somewhat consider the associated quality of life. Ultimately, you want a job that will make you a lot of money.
If you did this sort of exercise a year ago, or if you are still doing this exercise now. STOP!
The world is completely different now than it was a year ago.
Ty this exercise instead:
Scope out emerging or exciting industries, look at the most rewarding jobs, completely consider the associated quality of life. In the end, you will find a job that you are much happier with, and ultimately, you stand to make a whole lot more money because you will be doing something you are passionate about.
In the 80’s Gillette and BIC battled out market share for the disposable lighter. They each had their own product, and each tried to outsell and out perform the other.
Gillett’s solution to compete with BIC was to completely stop making lighters. Let me repeat. In order to make more money, they would make less product.
So what happened? BIC reallocated their resources into this new, non-competitive landscape, while Gillette reallocated their resources to their disposable razor product. The disposable razor blade market was much greater the than the disposable lighter market.
Gillette: 1st move
BIC: 2nd reactionary move
This thought process is called Gamesmanship and there are 3+ orders of thinking:
0th order: You do something because you want to, without considering what your competition might do.
1st order: You do something while thinking about your competition.
2nd order: You do something to try and manipulate your competition.
3rd order: You do something to try and manipulate your competitors against one another.
There are all sorts of great ways to think about this stuff and even associate real value with a move you might make. See Alex Van Putten.
With the economy declining, one thing is certain: Innovation will lead to good products and services, and good products and services will lead to revenue. This could not be more true in the technology world.
It doesn’t matter what you are doing, as long as you continue to innovate and prove value in a market (good or bad), you can and will succeed.
This is a great presentation that outlines the harsh reality of our current economy as it relates to technology. Financials meet Tech. Great stuff.