Friday, October 17, 2008

Counter Intuitive Actions To Take At The Time Of Recession

tough nut
In my experience counter-intuitive actions almost always make sense. Especially because it is invariably a thought out process. While human intuition is good to hunt as a cave man, in a complex world intuition just does not work. Yes I know Blink is a best seller. But if you fall fro Blink you might as well guve up. The hypothesis behind Blink is that spot decisions could make more sense than very well thought out process. What is convenient to forget is that the spot/intuitive decisions are often manifestation of years of hands-on experience that the brain has internalised.

So what is counter-intuitive action to be taken about the present financial crisis? Before I answer that we need to understand one simple fact: like good things, bad things also don't last forever. So ...

For small investors like me ...

1) Do not sell shares. Unless you are sure that the company shares you are holding is sinking. Or unless you desparately need cash.

2) Do not stop your Systematic Investment Plan (SIP). Keep your monthly investment going. SIP will fetch you larger units right now. In any case SIP's are a long term investment.

For small companies ...

1) Go aggressive cost cutting. All those costs that you always wanted to prune but could not because of upsetting some employees. However, do not shed people. Hold on to them, whatever the cost. Focus on process reengineering to cut costs.

2) Hold on to your marketing expenditure. Don't reduce it. Tough! But look at the benefits. When everyone else is cutting back you will remain on the top of the buyer mind by using clever marketing techniques. This is your chance to beat that big brother.

For large companies ...

All what is said for small companies apply plus

Fulfil you ambition of overseas growth by buying property and companies in US and Europe. You will never get it cheaper.

When the tide turns, this effort will pay off tremendously.
The key is focused innovation.

Note: The photograph used here belongs to Cristina Miguel. To see more such photgraphs visit her gallery.

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