Saturday, 5.10pm
Sheffield, U.K.
Businesses, as well as individuals with desired talents, however, will usually find a way to cope with monetary instability as long as their goods or services are desired by the country’s citizenry. So, too, with personal skills. – Warren Buffett (2024 letter)
Things can seem a little bleak right now. It feels like we’re heading into stormy territory.
Markets are crashing.
The wave of optimism of the last few years, driven by hopes of an AI boom and a bonfire of regulation, have been replaced by uncertainty.
Markets hate uncertainty.
And then there is war, the actual kind and the trade kind.
Increasing protectionism and coercive politics make conflicts more likely.
How will things play out?
The one thing we know is that it’s impossible to predict what’s going to happen next.
Things could get worse. They could stay the same. They could get better. Who knows?
So, when there is such uncertainty what should you do? What should we do?
There are three things that should be in your strategy.
First, it’s about the long term.
As Benjamin Graham wrote, in the short term markets are voting machines. In the long term they are weighing machines.
If you have a 20-year horizon things will be different. If nothing else the main pieces in the game right now will be replaced on the board.
Some businesses will struggle. Others will do well. As long as you have a position in the whole market, you should stay there.
Time in the markets, as the saying goes, is more important than timing the market.
Second, it’s about sticking to your knitting
In Warren Buffett’s 2024 letter he writes that people will be able to cope with instability as long as what they do is still needed.
Try and be needed. Do useful things.
Build your business to do something people need, something that is rare and valuable, hard to imitate, which you can deliver competently.
It is time to focus on value because people are getting nervous, and when that happens they stop spending on things unless they need them.
And that sets off a downward spiral that is hard to stop – confidence is a fragile thing and unfortunately modern economies are propped up by confidence rather than substance.
Third, have a nut
I assume the term “nut” is about being like a squirrel – have a stash tucked away for the winter.
You need to have something in reserve, something that you can use if things go bad.
Something you can rely on if you have to walk away from a bad situation.
The problem with coercive methods is that they appeal to people in power and sometimes the only course of action you have is to have the power to walk away.
You cannot be controlled if you are not willing to be controlled.
Cheers,
Karthik Suresh
Handcrafted insight 