Clients not breaking down my door looking for help
Last week I looked at why, when the stock market is performing well, there is a dearth of prospective clients coming through my door. Today, as part of my 20th anniversary series, I want to look at why, when the stock market has been doing very badly, there is a dearth of prospective clients coming through my door.
In the previous article I mentioned that when the market was doing exceptionally well, the number of people coming into my office slowly ebbed. I determined that it was because they figured (correctly) that with the market soaring to new heights every month they didn’t need my help to make money. And make money they did…until they didn’t. The reason? At the end of a sustained bull market there is often a spike (back in 2000 that was provided by the tech bubble) and then a crash.
What I didn’t tell you (I ran out of room) was that after the crashes such as what we saw in 2000-2002, and more recently in 2008, people didn’t start pounding down my door. Instead, what had seemed painfully slow during the boom slowed down even more.
It makes a guy like me take it personally. No not really, but you’d think that if a market doing nothing but going up caused folks to start doing things on their own, a market plummeting would have the opposite effect. Nope, instead, investors hid like children under a blanket during a storm.
And really, who could blame them?
In 2000-2002 they witnessed the tech bubble burst, 9-11, and a recession, along with the first time since the Great Depression that stocks had three consecutive years of decline. And in 2008, they heard predictions of a second Great Depression…or worse…that was around the corner. In that kind of environment they didn’t think, “I don’t need anyone’s help,” rather they thought, “no one can help.” Things looked so hopeless that for many the choice was to panic or to be frozen in the headlights of despair.
Panic is usually not a good response in most any circumstance, but freezing can often lead to survival. Back before some of you were born I was somewhere under the Atlantic on a submarine operating the electrical generation and distribution grid. During my early training to do such things I was taught many dozens of emergency actions to take if things went wrong. But I was also taught that if stuff is happening that I didn’t understand, or my actions seemed to be resulting in more chaos, I should take my hands off the control panel and wait for things to settle down.
Freezing in your tracks mimics this behavior. Yes, it means that you won’t be fixing the problem, but it also means you won’t be making it worse. Although I was initially upset that the slowing economy didn’t cause droves of people to my door for help, I now understand why, and it helps me prepare for both the future of my business and for my current clients.
This article was published under the title "Freezing can mean financial survival" in the Wichita Falls Times Record News on October 19, 2014.