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The Effective Executive – Episode 41
Executive Ignorance of an Economic Downturn
The Gurus of the Downturn
The Original Cassandra
Synthetic Thinking for Risk Management
[00:00:00] This is the 41st episode of the effective executive podcast and YouTube channel release. I do these every Monday, and this week I’m going to talk about something that I’m getting very concerned about and having a lot more conversations with people about, which is a financial downturn. So I’ve I’ve given this the title of organizational prepping for a financial downturn. Just a little back story. I have been following financial markets pretty much my whole career, and I invest on my own. And in recent years I’ve done more trading swing trading, which is kind of short term trading. And I wouldn’t necessarily court day trading, but sometimes it is in a day. But it’s something that really is a skill that not everyone has or or might not necessarily need to have. But at the same time, people need to be their own fiduciaries, meaning nobody’s going to be more interested in what happens to your money than you. And even, you know, you see all these commercials now, they’re going to do it for you and all that type of thing. I find I have found that to be a bad idea. You really only one person has the interest and you really need to understand the fundamentals of day trading, even if you’re not going to do day trading and swing trading and things of that sort. But the back story here is after the you know, I lived through the dotcom bust and I see similar things going on with cryptocurrency and things of that sort.
[00:01:58] And this is just coming from experience, you know, and I can hear it now. OK, Boomer. But regardless, this is something that if you have to lived through it, you really have no idea. What’s the most of the people I’m talking to today, executives, they only know that the market goes up. They kept the Federal Reserve has kept interest rates artificially low. And this has been a ticking time bomb. I’ve been watching for quite a while now.
[00:02:31] Back in 2008, the great financial crisis came around. It was predicted by very few economists, even though a bunch of them now take credit for it. None of them are on video or anything. But there are two that I really started following after that particular time frame, and that is Peter Schiff. And he was ridiculed by many mainstream media. You can look them up on YouTube and find videos where he was mocked by, you know, Art Laffer and different people out there who are all some form of Keynesians, which is a economic philosophy. And but I’ve been following him for quite a while. And, you know, he’s been warning that that things are getting worse now to accept that.
[00:03:31] Michael Burry, if if you haven’t seen the big short, then go see the big short because it explains about what happened in the 2008 financial crisis. Both funny, sad. I mean, it is a really good movie that I think everyone should watch. And Michael Burry was the one that bought up credit default swaps and made a ton of money for his investment firm. And he’s kind of a different dude. He is out there on Twitter and he warned of hyper inflation. Then all of a sudden he got kind of visited maybe or addressed by the SEC for warning of hyper inflation. And so he deleted those tweets and actually he’d been off Twitter for quite a long time, but he just started reposting some things and then he deletes them, which is really it makes it even more captivating from that standpoint. But he’s under a Twitter handle. He calls himself Cassandre, which is the Greek mythology character that basically she was someone that was a prophet, could predict the future, but was destined for nobody to believe her. And so that’s kind of his story. And he says, you know, I’m trying to warn people and people aren’t listening to me. So he dropped off of Twitter there for quite a while and say a couple of months at least.
[00:05:21] And to me, the original Cassandra was Felix Warburg, who in the 1930s during the Great Depression had predicted the Great Depression or the fall of the stock market.And he actually was able to save his own bank, but nobody listened to him. They were like, oh, no, this is all, you know. And that’s kind of the environment that we’re living in today. Everything is always going to go up. And, you know, it doesn’t. It will. And Marovic, I think this crash is going to be personally, I believe it’s going to be something bigger than even something that we had in the 1930s. But that’s me. So even after being you know, he’s Michael Burry has been investigated by the S.E.C. in matter of fact, after the big short, instead of, you know, government officials maybe coming to him and said, you know, how did you know this? And different things, he’s got audited a bunch of times. And that’s at the end of the movie, The Big Short. Please watch it. If if you have it, you’ll learn quite a bit.
[00:06:22] So the real question now is if we’re coming towards a financial downturn or in my opinion, a meltdown, is your company prepared? And most of the conversations having with executives indicate to me that they are not and they all have these risk management things, but they’re not looking at the right stuff, in my opinion.
[00:06:46] And they they need to be prepared not only for their organization, but for themselves. And I’m fascinated by the lack of understanding of how the stock market works when it seems like a lot of executives are paid off of, you know, options and and their bonuses and things of that sort. You know, if the if the stock goes up, they’re going to get a bigger bonus. And maybe, you know, for some of you, if I just do my job, I’ll, you know, I’ll reap the benefits of it. But, man, you can lose a lot of money by not really understanding how things operate in the stock market and what’s going on on a macroeconomic level. And so I’m going to be I’ve been contemplating this for some time or to be starting a second YouTube channel to to help individual executives just as an education. I’m not a financial expert by any stretch, but I’ve I’ve been through these cycles. I’ve seen what’s happening in organizations and have been able to tie some of the things that are happening in the economy to individual organizations. And that’s kind of my unique view, view or perspective that I bring to this type of thing. And I think executives need to be their own fiduciary. They work so hard to gain the money that they have and to have moved up in their organizations.
[00:08:13] And I just don’t believe that it’s something that you can outsource. And and, you know, you look at someone like Tiger Woods. Yeah. His coach. But can the coach beat him in golf? You know, so you have to have some level of knowledge. You can’t be a one hundred shooter. And even if you have a 70, you know, oh, just go manage it because money managers and and financial advisers have multiple customers and, you know, they don’t have time to look at yours every day. So you have to be actively engaged as an individual. So anyway, I’m going to put starting this channel. They’ll be I mean, for the most part, I like to keep my my videos under ten minutes. So that’s what I’m hoping to do for that. I have reserved a name for it. It’s going to be it comes from the saying don’t confuse brains with a or with a bull market. And so I’m calling it bringing brains and balls. And so I’ve got the website reserved and all of those types of things. So going back to that’s when I’m going to be doing for an individuals, but for organizations the way to mitigate some of the things that are coming in the financial.
[00:09:31] Downturn are going to be enhanced by your ability to be a synthetic Thinker to be able to look at your organization as a system. Now, normally I just look at the customer lens and the thinking lens of an organization and am able to help executives kind of get through understanding how their why their organization operates, the way that it does and the way that the customer sees it. And that is a huge step for for many organizations today. You need to look broader it it’s the systems that you’re part of. Customers are certainly a part of that. And you need to really dig down to know if you have a huge financial downturn. You know, if you’re in an exact business, let’s say, then the customer is maybe impacted. You know, hey, I can’t afford a new system. I may have to you may have to rethink what your business model is and what people can afford and, you know, the prices of things inflating and things of that sort. So you got to be aware of these macro macroeconomic issues. How are they going to impact your particular business? But beyond that, one thing I don’t really talk about enough are your vendors, your supply chain. And, you know, so I’m building these system maps for how an organization plays in in the broader context of the system that they’re and the macroeconomic level of things and what’s at risk. I mean, we see a lot of people with shortages and things, you know, with vendors and, you know, where do you stand? Are you ready? And again, I know a lot of larger organizations. They have risk management, but they seem to be looking at the wrong stuff, in my opinion. And, you know, they’re more concerned with things that they’re used to seeing and they’re not really macroeconomic thinkers or synthetic thinkers, either one.
[00:11:40] So. You know, being a synthetic thinker is going to make you, you and your organization perform much better and anticipate you can anticipate everything, I got it. But it will help you prepare for, you know, what’s coming. And and a lot of organizations who lived through some of the things that we’ve been through before have no here’s no data or anything. They’ve all you know, it’s it’s it’s, you know, real large organization. Yeah. Because they’ve they’ve they’ve kept some data, but they don’t haven’t gone back and looked at it. What decisions were they making? What were they forced to do, all these types of things to help inform what you should be doing as an organization. And for me, I believe economic risk is at the highest it’s been really since I’ve been alive. This, to me, goes beyond what happened with the dotcom bust in 2000. And you know, what happened with the the great financial crisis in 2008. So if your organization is in need of help and getting started in this, you can reach me at the ninety five method dotcom for its last. Let’s talk. I can set up a 30 minute meeting. We have a conversation about what’s going on, give you some things to look at and hopefully add value when you start to look at these things. So that’s what I wanted to cover this week. And you know, please do prep prep for your organization, prep for yourself, get knowledge about what’s going on in the macroeconomic level and how that might impact your organization and how that might impact your individual portfolio that you have.