Arnold Brown, chairman of Weiner, Edrich, Brown, Inc., a strategic-planning and change-management consulting firm based in New York City. He is coauthor of four books, including Future Think: How to Think Clearly in a Time of Change (Prentice Hall).
In the midst of today’s economic turmoil, Martin Edelston, founder and chairman of Boardroom Inc., which publishes Bottom Line/Personal, gathered eight of his most trusted advisers for an economic roundtable.
He asked them the questions that are on everyone’s minds. How long is the US economy going to struggle? How should we respond? Where should we put our money? How can we protect our careers? When will real estate values recover? The discussion touched on everything from the stock market’s history to consumer psychology.
After the roundtable, he asked each expert to provide his/her best piece of advice for weathering this economic storm. Their answers…
There is no bold action we can take today that will prevent the damage already done to our savings. Unless you own stocks on margin (using borrowed money) or need to sell shares to pay your bills, just wait this market out. Things will get better.
From: Arnold Brown, chairman of Weiner, Edrich, Brown, Inc., a strategic-planning and change-management consulting firm based in New York City. He is coauthor of four books, including Future Think: How to Think Clearly in a Time of Change (Prentice Hall).
Wait until at least 2009 before increasing your stock position, and avoid big bets on any single stock when you do.
When you find a stock that you like, decide how many shares you want to buy, then divide that number in half. Submit a “limit order” (that is good until canceled) to your brokerage for a price 15% lower than that day’s current price, so you buy shares automatically if the stock falls to that price. With current market volatility, odds are good that the shares eventually will dip to this lower level.
Once you have these shares, reconsider whether you still think it is worth buying the other half of the shares that you originally wanted. Are there more attractive opportunities?
From: Dan Burstein, managing partner of Millennium Technology Ventures, a venture capital fund, New York City. He previously served as senior adviser at The Blackstone Group, a merchant bank. He is author of several books on popular culture, including Secrets of the Code (Vanguard).
From: Edward Nash, president of TeamNash, Inc., a direct-marketing consulting firm based in New York City. He has taught direct marketing at New York University and Virginia Commonwealth University and is author of several books on marketing, including Direct Marketing: Strategy, Planning, Execution (McGraw-Hill).
Today’s politicians and Fed chairmen make mistakes, but they are unlikely to make mistakes anywhere near as costly as those of the 1930s. In the 1930s, the Smoot-Hawley Tariff Act crushed America’s international trade by raising US tariffs to historically high levels… the government launched dozens of expensive make-work programs that did little to stimulate the economy… FDIC insurance did not start until 1934… and perhaps most important, the nation’s money supply was allowed to contract dramatically. As a result, the markets took 25 years to recover from the Crash of 1929.
The bear market of 1973–1974 (the worst America has endured since World War II) is a better gauge of what we can expect now. The S&P 500 fell by 48% in that slump and took 64 months to recover all of its losses. That’s a little more than five years — a long time, but a far cry from the Great Depression.
From: Sheldon Jacobs, founder of and contributing editor to The No-Load Fund Investor, an investment newsletter. Based in Arizona, he is working on a book about money and investing.
From: Mark N. Kaplan, an attorney and member of the Corporate Finance Group at Skadden, Arps, Slate, Meagher & Flom LLP in New York City for nearly 30 years.
Join your industry association, and take part in meetings and panels… give speeches at industry events… and/or write articles for trade publications. The more people in your sector who know your name, the easier it will be to network and find work later.
From: Edward Mendlowitz, CPA, a partner with WithumSmith + Brown, an accounting firm based in New Brunswick, New Jersey. He is author of The Advisor’s Guide to Family Business Succession Planning (American Institute of Certified Public Accountants).
Buyers should not feel rushed to buy. Unlike stock market rebounds, which can occur very suddenly, real estate rebounds tend to happen slowly.
From: Barbara Stevens, PhD, president of EcoData, an economic consulting company based in Westport, Connecticut. She has taught real estate economics at Columbia University Graduate School of Business.
Offer adult children loans. Your money isn’t earning much in bonds or CDs now, so it won’t cost you much to lend money to a family member in need. If you charge a competitive interest rate, everyone wins — you earn a small profit, and your loved ones gain access to cash in this time of tight credit markets.
From: Sidney Kess, CPA, JD, who writes and lectures on tax topics, New York City. He was a partner at KPMG Peat Marwick and national director of taxes at Main Hurdman. He was selected by CPA Magazine as the most influential practitioner in America.