Every Threat is an Opportunity

Friday, April 10th, 2020


In times of great change there are both threats and opportunities. In fact, you could argue that every threat, looked at differently, can be turned into an opportunity. The loss of a job is an opportunity to start a new career. The closure of a business is an opportunity to start a new venture. A drop in asset values is a chance to purchase assets (property, shares, businesses) at a low price.

There are numerous examples of businesses that started operating during difficult economic times. Disney, HP and Microsoft are some. Companies who survive during tough times are the ones who adapt and maintain their profile so as to make a speedy recovery when the tide turns. Employees who use down time to retrain and adapt their skills to suit emerging businesses are well placed to find new employment. Investors who stick to their long-term strategy and use a drop in asset prices to purchase at low points make good returns when prices rise again.

Timing is everything when it comes to making the most of changing circumstances. There is a typical pattern of change when the economy has been subjected to a shock. Think of a calm pond into which a big rock is dropped. Initially there will be a gigantic splash and this will be followed by huge waves which ripple out from the point at which the rock entered the pond. Over time, as the waves spread wider, they become smaller. Finally, calm is restored. Initially, the waves are too unpredictable, but at the right point, they can be taken advantage of to create momentum. The energy of the waves can be harnessed. In investment markets, we refer to markets switching from being uninvestable to investable. Those who time this change right stand to make good gains

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