Newsletters
1st Quarter 2009 Newsletter
Market Negativity - Opportunity for Some
Every hour from all directions we are bombarded with negative images. If it's not the evening news, it is a peer who's been laid off, or your neighbor's business closing. It might be your friend from church who is laying off 40% of his staff and predicting another round of layoffs. On a national level, the pessimistic statistics are staggering and broad reaching. There are few sectors of our economy, not to mention world politics, which are not in apparent turmoil.
This consistent, prevalent flow of glum information eventually takes it toll. The sheer volume and diversity can easily color our perspective black.
Didn't we see this coming? If we were willing to watch and evaluate, the answer is a resounding "yes." Think for a minute about how many years our economy has rolled with tremendous growth. In my particular industry, commercial real estate, one could argue we experienced over seven years of robust expansion. This was a long up- cycle. Have we become so prideful or naive to think we would never see a down-cycle? When the economy was strong for so many years, did we truly believe a recession could last only mere months?
What were the leading indicators? Historically the stock market, poor restaurant sales and residential markets led the way. These aspects of our economy plummeted and numerous other market failures followed suit. We have the reports to prove it.
Indulge me and apply a historical perspective here: In the recession phase of market cycles fear takes over. Negativism consumes the masses and the majority overreacts.
There are a certain few that overcome this tremendous pull. As others run for cover, opportunities abound for the non-emotional investor. These patient market leaders will keep perspective. With impressive composure, they will find tremendous talent to hire where none was to be found twenty-four months ago. Within their particular industry, they will seek merger opportunities. As investors, they will purchase at spectacular discounts.
The point is simple yet profound: Control your emotions and take full advantage of the opportunities. Fortunately for us, commercial real estate lags the economy. Commercial property performance trails the rest of the economy and provides much time to prepare and predict accurately. Our firm and its partners are storing up. We are reserving cash to deploy into investments. The possibilities today far outpace those of the past seven years. There is little competition, many motivated sellers, and growing delinquencies.
Be one of the few. Take perspective with these unprecedented times and seize the day.
