Monday Mornings with Madison


There certainly is a lot of bad news out there, what with the turmoil in the financial and housing sectors, companies laying off thousands of workers, and hundreds of billions of dollars vanishing from mutual funds and retirement accounts. Most experts, however, believe we will emerge from this recession within twelve to eighteen months. The challenges will be significant but, at some point, this time of disruption and anxiety will become yet another chapter in the story of our country. No doubt the negatives will dominate in future retellings of the great crisis of 2009 but let’s focus on the positive opportunities that, right now, are hiding in plain sight.

First, let’s remember that 92% of American workers have jobs and are earning a living. Nine out of ten home owners are making their mortgage payments on time every month. Gas prices are 50% lower than last year. Thousands of people are buying homes for 30% to 80% less than their asking prices at the height of the housing bubble. And today, you can purchase shares in many blue-chip companies for up to 80% less than their stock prices of a year ago.

Of course, we have seen over the last twelve months some of the largest American companies either collapse or be brought back from the brink of collapse by large infusions of money from the federal government. And this is disturbing on many levels, not the least of which is that for years, many of those companies were symbols of job security and financial smarts. Their evident weakness raises questions about our basic understanding of the U.S. economy and its future. Aren’t companies like Lehman Brothers, Fannie May and A.I.G. supposed to be solid?

Back to basics
But if you speak to those who worked in many of our largest companies, they would be the first to tell you that the foundations there really weren’t so solid. Huge sums of money would get poured into pointless projects, and many employees contributed little to the bottom line. Meetings held for the sake of having meetings consumed endless hours, and entire departments were redundant or inefficient. And these were the relatively benign problems! Not so benign was the culture of greed and recklessness that also infected many corporations. These companies were big but their underpinnings were rotten.

Now we may actually be forced to return to economic basics: finding, producing and marketing real products and services that people need. This is good news for business people who are willing to roll up their sleeves and get to work. Today, a number of interesting opportunities are emerging as existing companies start to falter and fold.For example, if you look at large real estate investors in the nation, you’ll notice that some of them are using the current economic downturn to take advantage of opportunities that simply were not available in recent years. Some may be distressed residential and commercial properties that can be bought today at fire-sale prices. Managed well, these properties will become highly profitable when the market rises again. Remember, if you focus on long-term growth rather than short-term profits, you can build your business on a solid foundation. That is the real opportunity that’s always hiding in plain sight.

“The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”     Winston Churchill

© 2009 – 2011, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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