Wow! This recession isn’t over yet and CNN Money is already telling us to prepare for the next recession! Considering that boom-and-bust cycles have been happening faster and faster, it’s good advice, but it’s still a bit of a downer. I agree with Moore (in the contained video interview) that a new economic order is likely needed, but it’s not going to happen any time soon, so we have to optimize against what we have.
So how do you prepare for the next recession? The article offers three primary pieces of advice:
- Make friends now with people you’ll need later.
For example, if the government gives you a chance to sit on task forces, send executives, not functionaries. It doesn’t look good when the CEO only shows up to lobby officials on a potential tax or regulatory change that would benefit his or her company. - Listen to unconventional wisdom.
No one wanted to listen to Jeremy Grantham when he said that real estate and asset prices had become insane. He’s still working when many fund managers aren’t. - Don’t go soft on evaluations.
The best companies, like P&G, are as rigorous in evaluations in good times and bad. That’s why they never find themselves with a roster of C players when the downturn hits.
It’s all great advice, and I’d heed it because you’ll do even better than your peers during the recovery if you do.