Did you know it was the Greek philosopher Heraclitus (535 – 475 B.C.E.) who is attributed with “the only constant is change”?
As the new administration takes power, effects policy changes and pauses (or reverses) at will or in some instances, by court order, we can all say that this adage is true now more than ever.
Business leaders and investors struggle to optimize long-term decisions related to resource-allocation when government policies shift dramatically in speed and significance. To sustain a long-term, thriving business (or investment portfolio, or even one family’s economy), it’s important to create a framework for decision-making. Those frameworks typically include what we know to be fairly certain (or more reliable) and what is less certain and more variable.
Right now, from lots of vantage points, the “less certain and more variable” side of the framework is growing.
Can we lean into uncertainty in a way that protects our well-being? Yes, there are things we can do.
- Avoid speculation. It’s good to scenario-plan, but self-check to be sure you’re not placing too much weight on scenarios that are highly unlikely. Making decisions on 1% statistical events might pay-off, but statistically speaking, it’s more likely a losing bet.
- Focus on the health-side of your well-being. Sleep, hydration, good nutrition and exercise go a long way toward maintaining clarity, energy and stamina to weather uncertainty that can also cause natural stress and anxiety.
- Focus on metrics. There was a year when l lost a job with an employer that I had had worked for 12+ years and I was blindsided by the decision. I felt extreme stress and anxiety (with two small children to support and a mortgage to pay). Once I dove into our financials, I realized we were on stable ground and had time to plan our next move. It’s a good practice to check feelings against things you can measure – like financial reports.
- During times of uncertainty, review your budget. Are there discretionary items that you can put on pause until the dust settles?
- Cash is King. Be cautious about taking on more debt (especially credit cards), don’t accelerate pay downs of loans with reasonable interest rates that have a long-term structure. This helps protect your cash flows.
- Potentially delay new, long-term commitments. For example, in an uncertain and volatile environment, a new business launch or venture might be paused until there is more clarity for planning and risk management.
- Reduce, pause or only take the minimum for retirement accounts. Larger distributions during market volatility are discouraged.
- Identify opportunities. If your income is on solid ground, your debt profile is low/reasonable and you have more than enough cash to cover your needs for several years, pull- backs in the market caused by policy changes (or disruptions) can create opportunities to buy into assets at more reasonable prices. I was able to do this during the financial crisis, when I found a new job with a stable company (after my lay-off) and was able to put extra cash to work in a couple of 529 Plans that are helping us pay college expenses today.
I’ve fielded lots of calls over the past weeks by clients and friends who are navigating through the uncertainty. Consistently, I’ve advised against dramatic (all-or-nothing) moves. Calibrated shifts can help de-risk and mitigate volatility, along with working the list above.
Great CEOs surround themselves with clear-headed, seasoned advisors and management teams, and be sure you have this too. Even the strongest of us can sometimes feel overwhelmed within a shifting landscape. When in fact, the only constant is change, how we hone our change-management skills can make all the difference.
Investment Advisory services offered through Equita Financial Network, Inc., an Investment Adviser with the U.S. Securities and Exchange Commission. Equita Financial Network also markets investment advisory services under the name AegleWealth. The foregoing content reflects our opinions and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. Along with the author’s views, the reflections above include contributions from Beyond AUM and ChatON AI.