We Should Invest Or Not In Time Of Crisis General ?

November 3, 2010

When a crisis comes, usually the first reaction of Senior Management is to reduce costs, downsizing, shrinking product lines and taking conservative measures. Are these actions correct? The answer will depend on the ultimate goal pursued by the company faces a crisis as a defining crisis of the following: significant loss of market share, falling prices, falling sales volume, income from foreign or stronger competitors, consolidation a local competitor and / or loss of customers strong. What is the impact of measures taken quickly to the crisis? Include: permanent loss of market share, loss of credibility with customers and suppliers, loss of major human resource and loss experience of new business opportunities. But we do face a crisis? Many are surprised when someone tells us if the market is depressed and its business is in crisis: you should invest.

It’s an expression we can counter it by saying: Are you crazy? Want to invest today I am in difficulty to lose more? No, my dear reader. When a market is in crisis not only affects you, affects the other competitors, so the best strategy to develop the Crisis will survive and win the market. (The only exception is if you or the administration, and decided to go out of business). Mention some alternatives and recommended actions in a crisis: 1. Do not stop investing. Do not say you spend a lot, just that you should not invest. Do not stop upgrading machinery, updating systems, procurement of equipment for new products or projects.

Saving is Simply Not Good Enough

October 4, 2010

Most people begin to think about investing their hard-earned dollars when they have a few extra. Almost everyone understands the importance of saving: putting away a little bit each day/week/month until a sum has accumulated for some specific purchase or need which was anticipated, like a new bicycle which a child might save for, or a college education that parents will save for their child.

The problem with just storing away a little money periodically is that the modern world is a world of change and a certain amount of unpredictability. Very often inflation will eat away at the value of the money you have saved. For instance, when a child is born we can assume that a fund for college will be used in about 18 years. If a college education costs about five thousand dollars a year for four years, that’s 20 thousand dollars which will be needed. All the parents need to save is about $100 each month to meet this need. But what happens if that same $20,000 education costs more like $100,000 after 18 years have passed? This is exactly what has happened to children who were born 20 years ago today.

The solution to this dilemma would have been for the parents to have invested their money in a fund whose value increased each year, hopefully keeping up with the inflation that caused the college education to rise in price so dramatically. This is the value of investment, and why ordinary people should try to invest their savings whenever possible.