For movie fans, this is the season when all the good stuff is released. Good stuff means good stories. Stories that move you. Last weekend my wife and I saw “The Big Short”. The setting is the lead up to the 2008 financial collapse and start of The Great Recession. It is not a win-win story. Very well told, it is mostly about the recognition of greed and ignorance, and the opportunities brought by that recognition.
Unfortunately, you know how it ends. EIGHT MILLION American jobs were lost! I am willing to bet you or someone you know was affected and have some scars to prove it. I certainly do. Ironically, the same type of instruments that were the poison of the housing crisis and recession have re-appeared with different names. Instead of “Collateralized Debt Obligations” investors are lured by “Bespoke Tranche Opportunities.”
George Santayana famously said, “Those who cannot remember the past are condemned to repeat it.” So, here is what I have learnt from my experience and from the movie.
- Bet on Yourself
When the movie was over and my wife and I were back in the car, I looked at her and said, “that brings it all right back.” I got a little choked up. The “all” that I am talking about is losing my job, half my retirement, and some of my confidence. The sheer panic, the fear, the anger, the humiliation, I kept it nearly all within myself. Hey, I had a family to support who were counting on me. I was counting on me, too. After all, over the course of 40 years I had built a self-belief that I was an honest, loyal, smart, hard-working guy who treated everyone with respect. There was just no way that those qualities had become liabilities. And if corporate America didn’t value me, then I would go it alone. Be myself, work hard, and make it happen. I was willing to bet on myself.
- Do Your Homework
The characters in the movie were swimming up-stream, to say the least. It’s more like they were swimming up Niagara Falls. But they did their homework and held strong to their self-belief. Michael Burry (played by Christian Bale) spotted the imminent collapse of the housing market by looking at EVERY loan in an investment instrument. It was thousands and thousands of individual mortgages. Nobody had ever done that. When he peeled it back and saw all the defaults, he knew what was going to happen. Mark Baum, played by a fat Steve Carrel, sent his team to Miami to tour neighborhoods and talk to strippers that owned five houses. He wanted to know if it was “real.” There is just no substitute for making your own phone calls, visiting locations and understanding EXACTLY what you are getting into. When my clients are considering investing in a franchise in Washington, I coach them through a rigorous due diligence and research process.
- Circle the Wagons
In the car after the movie, my wife was quick to point out how well we had survived two job losses. Though the retirement accounts had been cut in half, we had worked hard to keep saving and managing our expenses. We never missed a mortgage payment, and we had bought within our means. Sitting in the title company office in 2005 signing our 30 year fixed mortgage, they kind of laughed at us. They said they hadn’t seen a 30 year fixed mortgage deal in months. Perhaps it was our upbringing, but it was the only thing that made sense to us. My wife is good at making me feel better about things. She wasn’t initially excited about my decision to not pursue another corporate management position. She liked the regular paychecks. But she could feel that there was no way I was going back to that life. I knew I could do something more independent, I did my homework, and I enjoyed her support and unconditional love. I was unwilling to be anything, but successful. Now, encouraging future entrepreneurs as a living is a great fit. I have never been happier or felt more useful.
I coach my clients, who are considering leaving a corporate job, to pursue their dream of owning a successful business in Washington to remember these things. Believe in yourself, do your homework and ensure you have your family’s support. The goal is to make the decision to become a business owner with complete confidence and clarity. And the right decision may be not to invest in a business of your own, at this stage. You may need more skills or money. If it does make sense and we find the perfect match together – maybe in a recession-resistant category, the only smart bet will be to go LONG on you and your business. I’m betting on you, too.