Don’t Panic!

If you’ve been watching the news, listening to the radio or reading newspapers during the past couple of weeks, chances are you’ve heard at least one financial adviser warning investors at large that panic is not a sound investment strategy. Of course, it’s not easy to watch your portfolio lose so much of it’s value in the blink of an eye. And when you’ve already lost so much the thought of losing the rest can leave you feeling hopeless. But pulling out while you’re down eliminates you from the chance of recouping your losses when the market recovers. And while I’m no expert in matters of global finance or economics, I can say with a certain degree of confidence that the market will bounce back with force. And hopefully we will have learned a valuable lesson about what got us here in the first place so that the necessary checks and balances will be put in place to avoid a similar situation in the future.

Whether you’re an individual who has lost a big chunk of your savings, a business owner experiencing a slump in sales or a consumer wondering how you will do your holiday shopping on a limited budget, chances are you’re become increasingly worried about the future. In a time like this, though, it is perhaps more constructive to take a look at the past. Think about the many crises that the U.S. economy has recovered from over the past hundred years: World Wars I, II and a handful of others, the oil shock of 1973, the terrorist attacks of 2001 and the list goes on and on.  We keep hearing that this is the worst financial crisis since the Great Depression. We can be sure that since the Great Depression, though, the U.S. economy has become much more important to the rest of the world’s economic success insofar as failure in the U.S. inevitably results in a domino effect of failure elsewhere.  So, because so many countries are facing failure at the same time, the force behind U.S. economic recovery is much stronger than it was in the 1930’s.  We recovered then and we’ll recover this time as well.

So if you’re a business owner, instead of shutting down operations, buying lots of canned goods and locking yourself in the basement until things start looking up on Wall Street, try moving forward into the holiday season in the spirit of long-term growth. You might not make as much money as your did last year at this time, but if you pull back your marketing budget and isolate yourself from consumers, you’re sure to make less. And you’ll also be missing out on capturing new customers whose lifetime value could have the potential to grow your business for years to come. What has happened with the economy over the past couple of weeks doesn’t have to determine the fate of your prosperity. But the wrong reaction to the crisis certainly will. So whatever your strategy is, make sure it isn’t  panic.