Don't Believe Everything You Hear or Read!

I had the opportunity to attend a Seminar presented by Investors Group last week that was very interesting and informative. The speaker, Bill Chornous is a CSA and Vice President of Investment Strategies for I.G. Investment Management Ltd. While this is not directly related to enhancing your business profitability, I think the information and concepts relate well to business in general, so I wanted to share the highlights. Read More

I think it is fair to say that as individual investors we have been very confused about what the stock market has been doing over the last year and in a quandary over what is best for our personal investment portfolios. As Bill Chornous explained, we have been dealing with tremendous volatility in the stock market that is fueled by the press and the politics of a number of governments around the world.

I am not a personal financial advisor, but basically business profits and the building of worth in companies is what typically fuels the stock market. In other words, the growth in the fundamental value of company net worth is what will result in growth in the stock market.

The problem is what we have been reading and hearing in the news are things like the stock market is down on renewed worries over the Euro Zone or the S & P 500 is down due to worries over recession concerns in the US and the list goes on. Investing is a very emotional endeavour so as Bill puts it, despite the fact there is no way the fundamental value of companies can change that quickly, we react to the constant barrage of bad news. The other problem is that we don't hear or read much about the positives, just the negatives. A case in point is every time the press writes about the debt crisis in Greece, the stock market usually has a substantial loss for that day. In reality, Greece represents less that 3% of the Euro Zone economies, so what is the real impact if they leave or are not supported?

The truth is that for the most part, profits and equity are up on average throughout the world economies and definitely in the US and Canada. Consequently, Bill's message is don't be sucked in by everything you read and hear. Moving your entire portfolio over to fixed income investments like Bonds to at least get a return will have a negative effect in the long term. You need a balance to grow in the long term.

What does this have to do with your business? One thing that drew me to Investors Group is their ability to gather information on my goals, risk tolerance, revenue stream and expenses and plug it into their modeling program to advise me on the most advantageous way to invest for retirement. In essence they built me a business plan that is my road map for the immediate and long term future. Despite the fact I do this for businesses, I am not naive enough to think I have adequate knowledge in the field of personal investing, so I leave it to the experts.

The same principles apply to business. Instead of listening to every Tom, Dick and Harry that are all too willing to spread doom and gloom, prepare a comprehensive business plan for your own company that is based on fact. Insulate yourself from the nay Sayers who would tell you it is not possible to make a reasonable profit in this economy.

There are a multitude of companies that have actually grown during these difficult times, because they are focused on ways to enhance their profitability, not the fear of what is happening in the economy. Goal setting and planning is your road map to lead you from point A to point B successfully without getting lost on the voyage.

If you would like a second set of eyes to review your business plan, contact me for a free consultation.

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