Blood in the Streets
Baron Rothchild, the famous investor, is credited with the saying, “Buy when there’s blood in the streets, even if the blood is your own.”
The good Baron had a point. The stock market often starts to rally exactly when the economy appears to auditioning for a part in “A Series of Unfortunate Events.”
I’ve heard several CEOs say that they can’t possibly be expected to grow their businesses in today’s economic climate: they don’t know what their health care costs will be, they don’t know how the economy is doing, they don’t know what the labor market will be like in a year, and so forth.
In other words, there’s blood in the streets and some of it is their own.
While I appreciate their concerns, let’s get real: retail stocks are up, tech stocks are up, restaurant stocks are up, and so on. More companies are trouncing earnings estimates than are missing them. In other words, those CEOs who are ignoring the blood in the streets and aggressively running their companies are seeing results.
Part of the problem today is that the 1990s were relatively easy. You didn’t have to be a very good leader to do well. Indeed, you had to be a pretty poor leader to not do well. Today, though, is very different. This is simply not as fertile an economic environment. If you want to lead effectively, you have to know what you’re doing.You also need to have confidence in yourself and in your team: if you don’t, you won’t be able to move forward. Trust comes from confidence, and without trust it’s impossible to depend on others. One might also argue that confidence comes from trust, which is somewhat true: they build upon one another.
If you don’t have confidence and trust, what’s left? The same thing that keeps many would-be investors (including some so-called professionals) from buying when there’s blood in the streets: fear.
The problem with fear is that it makes sitting and doing nothing seem so rational. It’s always easier to not buy stocks when the market looks bad. Perhaps if you wait, it’ll be more clear. Of course, you might also miss some major opportunities. There’s a reason Baron Rothchild was so successful when so many of those around him were not… By the same token, it’s always easier to blame someone else for your decision to not take action.
If you are unwilling to move, whether it’s because you blame the government or Zeus or little pink bunny rabbits hiding inside your computer, recognize that the solution is to take action. Make your company stronger. Build your team. If you don’t have all the skills you need, find someone who does and get them on board.
Because when the blood’s all been cleaned up and the streets are pristine, the party is over.
