Therefore, let’s take some time to consider that, if things are good enough that the papers can’t think of a bad thing to headline, perhaps we should be cheerful. Perhaps no news really is good news. Perhaps we should relax.
Source: Will Dickey, Florida Times-Union via Associated Press
Or perhaps not. The best use of calm time is to look ahead and plan for the next storm. The photo above, for example, is inspirational: men working hard to save a home in the face of a hurricane, up on a roof with the wind blowing trees down. It is very impressive. But the question I ask myself is this: could that have been done yesterday—under blue skies, without the wind, before the storm showed up? Wouldn’t that have been easier and safer?
This is, in large part, my job and that of any money manager or financial advisor. That is, to make the best use of the good times to prepare for the bad ones. If the bad ones don’t show up, all well and good. But somehow they always do.
The good news today is that there is no bad news, at least on the economics front. The bad news is that bad news will be coming at some point, and we will need to be prepared. Now is the time to think about how we can board up the windows when necessary. Now is the time to ask, "How will we know when it is necessary?"
To help answer that question, we do have some leading indicators for serious trouble ahead, which we cover here on the blog every month in the economic risk factor update and monthly market risk update. They will give us, hopefully, advance warning of trouble ahead. Once we see storm clouds brewing, though, we then will need to start executing our plans to prepare for trouble.
Not thinking through what you plan to do if times get difficult is the same as thinking times will always be good. That may have been the thinking that landed those men on the roof in the middle of a storm. When the storm does hit, you have to respond—often in the worst conditions—and not knowing what to do won’t make things any easier.
The first step, then, is to have a plan, almost any plan. It doesn’t have to be either active or complicated; it can be as simple as “ride it out and don’t worry about it.” At least you know what you plan to do and why. That alone gives you a road map. It’s better to make decisions ahead of time, in an atmosphere of calm and with full consideration, than under stress and a deadline. That’s just common sense. Taking advantage of the good times just now to do that is, again, common sense.
My usual response, when asked how something is going that I have not actually started yet, is to say something like, “It’s about half-done.” No one expects to see it, and I don't actually have to deliver it. In that spirit, for those of you with a half-done plan, I suggest you take advantage of a period of calm to get it done. There really is a deadline; we just don’t know what it is.