Seizing the upside in market chaos: Learn how you can find opportunities during an economic meltdown! [Wednesday: The Independent Investor]
Miles Everson’s The Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Hello!
Welcome to “The Independent Investor!”
Every Wednesday, we bring you insights about the world of investing because we believe that this activity can help you attain financial independence through wealth creation.
Today, we’ll talk about how you can spot buying opportunities during a market crisis.
Excited to know more about today’s featured topic?
Keep reading below.
Miles Everson
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute
The Independent Investor
According to Forbes, the Great Recession of 2008 was the “worst economic downturn in the U.S. since the Great Depression.”
This is due to the fact that many fell victim to financial hardship and massive layoffs. Additionally, the markets took a major nosedive, and global trade was interrupted.
Given this context, it’s no wonder why many investors became excessively pessimistic about the state of the markets and became alarmed at the first hint of an economic downturn after the Great Recession.
Fast forward to today, investors have a great deal to worry about due to tightening credit, geopolitical instability, and a looming recession.
Given this gloomy outlook, it’s only natural for investors to be worried. However, this doesn’t mean they should be afraid of making moves in the market. After all, there’s always a silver lining in every crisis.
In 2008, at the height of the Great Recession, Professor Joel Litman, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research conducted a thorough review of the markets because he and his team wanted to help their clients navigate the financial crisis.
After carefully searching for opportunities, Professor Litman and his team had a hard time finding stocks that were poised to fall in the long run, despite the bleak economic environment.
With valuations taking a nosedive, companies were able to acquire smaller competitors at a discount, enabling them to strengthen their operations and become stronger as a result.
In the years following the Great Recession of 2008, that’s exactly what happened to Middleby, a firm that sold industrial grade ventilation systems, deep fryers, and dishwashers to restaurant kitchens.
Through strategic acquisitions, Middleby’s stock soared to more than 1,100% in a span of several years!
As a result, clients who followed Professor Litman’s advice to buy Middleby’s stock in 2009 profited a lot!
The example we highlighted above shows that there are opportunities to be found during an economic downturn. Financial crises like the Great Recession can spawn a unique combination of trends that enables those who recognize them to come up with profitable investing decisions.
Naturally, each market scenario differs and that’s why it’s only natural for investors to contemplate whether now is the right time to invest or if they should hold off until the market stabilizes.
For now, the best thing investors can do is to remain calm despite the news of a looming recession and tightening access to credit. Making financial decisions based on emotional reactions like panic and anxiety will only lead to catastrophic outcomes.
While stocks are chugging along for now, investors shouldn’t get too comfortable with the idea that this will last forever.
The data we’re seeing from the credit market indicates that a market crash will come sooner or later and when this happens, you should be prepared to capitalize on the opportunities that will present themselves.
There will always be opportunities in specific sectors of the market during an economic downturn. All an investor has to do is to conduct diligent research and be patient.
We hope you learned a lot from today’s “The Independent Investor!”
Remember: The ability to look for opportunities created by a crisis is what will enable you to thrive and set yourself up for long-term gains during an economic downturn.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”
To best understand a firm, it makes sense to know its underlying earning power.
In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.
LITERALLY.
Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.
Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.
We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.
Our goal?
To help you get on that path towards the greatest value creation in investing.
Hope you’ve found this week’s insights interesting and helpful.
Stay tuned for next Wednesday’s “The Independent Investor!”
Cheers,
Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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