I used to ride horses quite a bit. Now in the food chain, horses are naturally big prey. They survive by running from big predators or if cornered by kicking them. They are highly in tune with the herd.
If one horse panics, generally the whole group panics. If one horse looks like it's going somewhere important (better food) they all follow the leader.
Fear and greed motivate horses.
The job of the media is not to give us the news. It's to sell news. We all know this.
The financial industry is there to make money from us, not make us rich. This is why a lot of the analysis from the industry is naturally biased.
Fear and greed sell. People are also driven by strong survival instincts derived from thousands of years of evolution. We react strongly to group fear and we naturally seek to find the fastest way to ensure our comfort and survival.
When times were good, the media was telling us that the good times were going to continue. Now we are in a downturn and the media is telling us that it's the worst it has been since the depression, maybe worse.
But people have a gift that most animals don't. We have the ability to override our instincts by thinking for ourselves and making a conscious choice on a reaction to most situations.
Yet most people go with the flow in business and in investments.
Buy high, sell higher.
Then when things get scary, play ultra-conservative and sell off low to buy safe investments.
Business is the same. They react to a downturn by contracting rapidly.
However, when good times come again, they will have to spend an enormous effort and money building up capacity.
Now some businesses don't have a choice, you can't ignore your balance sheet or cash flow… and you need customers.
But if you have a choice, maybe you should be going against the herd… maybe you should be growing your business and positioning yourself for strong growth when the recession ends.
I stopped listening to the media. Hey, I read the news, I just take everything with a grain of salt and I am not reacting to the herd. I am not hunting per se. I am looking at where the herd is going and making a conscious decision as to where I want to go, not out of greed or fear but based on my goals; personal and business.
Yeah, I have to live in the real world, but I feel like growing and moving forward. I find challenge motivating (not depressing) so that is our plan.
