An effective Investment Strategy and sound Investment advice is a priority
For an effective Investment Strategy sound Investment advise plays an important role. There have been various incidents, which shook the financial world which include the Tulip Bulbs in the 1630's in Holland, the famous stock market crash in 1929 and April14, 2000 crash at Dow and NASDAQ are indicators to device a foolproof investment strategy.
Facts are Monday's activity does not mean much unless the market has dramatically risen or fallen. With these uncertainties a watertight investment strategy needs to be established.
In the last century, there was unrest when oil prices dipped 5 times lower. Beating it all are classic cases in the energy industry where powerful dynasties were built. Companies started with less then $1000 have grown to earn $445,000,000 in eight years.
To offer sound Investment advice, conventional wisdom does not score and the down market environment requires special skills. In fact, spending habits will be reduced with exceptions on alcohol and movies. Banks will toughen out and manipulate ratios as there would be a sizeable drop their valuation of top companies. E-Commerce will perish and companies with revenue will be the only ones financed. Financial institutions will cash in and make up for lost time.
As an Investment Advise, think through the concept, the financial model and current economic circumstances and work around it. Postponement and procrastination for the economy to stabilize is perilous. Financial institutions will require people with down market experience while partnership and JV clients will be elevated to a superior position as they have been there and done that.
From Dan Peña – "The Money Messiah" and Mentor/Coach for The New Millennium
Dear Friend and Subscriber:
IRA's – 401K's – HIGH TECHS – BEWARE
Having just put my "Litigation as a Business Tool" Newsletter to bed, I find it incumbent upon myself to put pen in hand (yes, I write these) and issue a bit of extremely important – in some cases, financial life and death – information.
The stock market, as we know (yes, all you pundits) is a leading economic indicator, i.e., the 1929 Crash was followed by a severe depression (and I don't mean the kind of depression you get when you gain 10 lbs.). I could give other examples going back to Tulip Bulbs in the 1630's in Holland, so suffice it to say, what happened Friday (04/14/00) in the Dow and NASDAQ indicates we could be in Big F—— Trouble in the days, weeks and months to come! Monday's activity doesn't mean much unless the market has a huge day – up or down or big volume.
I'm not a stock market guy (anymore), remembering I left Wall Street three decades ago. But I did build a formidable dynasty in the greatest depression in the energy industry known in the last century, i.e., when oil went from $41 per barrel to less than $8 per barrel. I grew a company from $820 to $445,000,000 in eight years.
Making money in a down market and/or down economy takes special skills. Conventional wisdom is your biggest enemy. I will write from time-to-time on this prevailing, awesome subject assuming the market continues to go south for the beginning of this New Millennium.
I will jot a few pearls of wisdom for you to ponder as you calculate the depressed value of your hopefully not too depressed portfolios:
- Spending habits will be reduced almost across the board. Exceptions will be (like in the Depression) alcohol and movies (which would include video and cable).
- Banks will tighten their grips and adjust ratios
- Valuations for new high-tech/dot-coms will be reduced. The existing ones, as seen in the NASDAQ market, have already been disseminated. For example, dot-coms with real trailing revenue, EBITDA and even earnings will rebound first.
- E-Commerce plays will perish and be extremely difficult to finance. Real companies with revenue, etc. will be the only ones that get financed. Of course, some of you know my own dot-com has $10 million in trailing 1999 revenue – last month (March 2000) we did $950,000. Expecting a drastic valuation change, in January we acquired a real B-to-B company with revenue and a track record.
- Financial institutions which missed the bubble by not investing or lending will be hungry to make up for lost time and initially perceived missed opportunities.
- If you still want to play the E-commerce/dot-com game, look for real trailing revenues with big B-to-B companies. If there's time, you can build your financial story around your intuitive knowledge you had vis-a-vis the market and over-evaluations – and now is the time to, yada, yada, yada!
- Think through your idea, financial model, etc. and adjust your presentation to the current economic circumstances.
- Move quickly! Don't procrastinate! Don't wait for the economic conditions to stabilize! He/she who hesitates is lost!
- Whatever you do, you still must be passionate about it – especially now.
- Financial institutions will want people who have succeeded in a down market. Partner or J.V. with experience that has been there and done that in a bad market.
To Your Quantum Leap,
Daniel S. Peña, Sr.
P.S. As this is being written, the markets are attempting to rally. If the rally isn't sustained, I may do a "Raising Capital in a Down Market" Seminar later this year.