This story is about a man who once upon a time was selling hotdogs by the roadside:
He was illiterate, so he never read newspapers.
He was hard of hearing, so he never listened to the radio.
His eyes were weak, so he never watched television.
But enthusiastically, he sold lots of hotdogs.
He was smart enough to offer some attractive schemes to increase his sales.
His sales and profit went up.
He ordered more a more raw material and buns and use to sale more.
He recruited few more supporting staff to serve more customers.
He started offering home deliveries. Eventually he got himself a bigger and better stove.
As his business was growing, the son, who had recently graduated from College, joined his father.
Then something strange happened.
The son asked, "Dad, aren't you aware of the great recession that is coming our way?"
The father replied, "No, but tell me about it." The son said, "The international situation is terrible.
The domestic situation is even worse. We should be prepared for the coming bad times."
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV.
He ought to know and his advice should not be taken lightly.
So the next day onwards, the father cut down the his raw material order and buns, took down the colourful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic.
He reduced his staff strength by giving layoffs.
Very soon, fewer and fewer people bothered to stop at his hotdog stand.
And his sales started coming down rapidly, same is the profit.
The father said to his son, "Son, you were right".
"We are in the middle of a recession and crisis. I am glad you warned me ahead of time."
Moral of The Story: It's all in your MIND! And we actually FUEL this recession much more than we think …
It's a nice feel good story and may make one wonder what really is going? Surfing the net I have come across various posts which are "in denial" of the fact that we are in a Slowdown (aka "Recession"). These are posts & folks who generally would go on to say "It is all in the mind, if you think you in a recession you are if think you are not, you are not!" like the parable above.
Nice story but here is a proposition: If there were 100 hotdog sellers and the economy slow down and all of them did NOT have educated sons then would they forever go on adding staff, selling more & more hotdogs and be happy in the ignorance of current affairs? Given that a few or a large part of their total customers (the public!) would have to choose between the bun or the sausage in a Recession, how many hotdog sellers would still have good business / reduced business / to shut down?
Sentiments, experiences and opinions at an individual level can give one a very skewed view of the overall condition but that doesn't take away from the fact that the overall condition is what it is. So whether its hotdogs, real estate, jobs, auto sales or whatever, the FACT is: we have a slowdown, jobs have been lost, stock markets & real estate have fallen, gold has gone up, etc etc etc ... and it will be while before we recover.
At the end of the day, there is a really really nice saying in the markets, one that I appreciate and value more and more every passing day of the last 5 years that I have been actively involved in the financial markets and that is: NUMBERS DON'T LIE. If we can really learn the value & meaning of numbers then a lot more good stuff would and a lot of bad stuff would not happen! But alas, Numbers are Numbers, the Interpretation of Numbers is what really throws lay folks (and nowadays experts too) off track; for who is to say that my interpretation is more correct than your's for the exact same number?
Yesterday, 10 Feb 09, the Govt of India released statistics that India is likely to grow at 7.1% this year. Now if a slowdown from 10-11% to 7% feels so "bad" then what will a Recession that fits the classical definition of "2 quarters of negative economic (i.e. minus growth) in India feel like?
Wishes & Riches,
Musa
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The author, Dr. Musa R Kaiser is a Bangalore-based doctor, equity investor, derivatives trader, investment advisor and most importantly, a financial educator who is passionate about supporting individuals and families achieve their dreams. He is the founder of http://www.bangaloreinvestorsclub.com