Warren Buffet - New York Times Op-Ed - "Buy American. I Am". November 13, 2008 By Chris Massaro
It's tough to wake up each morning and face the day, as we're met with bad news everywhere we turn. It's gotten so bad, that I don't watch the news when I get home from work, and look forward to the excitement of getting back to my office, which seems to insulate me from the fire storm outside. As we watch our investments ride the roller coaster of the stock market, and watch every major news stations continuously recite the bad news on a 24-hour loop, it's easy to assume a position of paralysis. In times like these, it's apparent that many of the people we rely on for guidance, namely our government, appear to have no answers. Last week I saw a Today Show interview with Bill Gates, and this past week I read an op-ed piece written by Warren Buffet, and both men made too much sense to me.
Mr. Gates talked about how he feels he can’t do anything to change the things that are affecting our economy today, i.e. the financial meltdown, but this hasn’t changed the way he approaches his business. He stated that in times like this he continues to do the things that made him successful, hiring great and talented people, and creating new and exciting products that people and companies want to buy. The Buffet article talked about buying America, and investing in US equities. Mr. Buffet uses a great line that describes his investment philosophy “Be fearful when others are greedy, and be greedy when others are fearful”. He attributes much of his success to this philosophy. What I take from both of these men is that this market is rich with opportunity. This is not the time to pull the covers over your head, and wait for it to stop raining. It’s precisely the time for your company to look for new ways of making money, investing in new ideas and technology, creating partnerships with customers and vendors, and hiring the best of the best. I know these sounds expensive, and it is, however, choosing to do nothing will prove to be more costly. We see an enormous amount of partnership creation, merger and acquisition activity, and talented individuals entering the job market over the next few months. Understanding that cuts need to be made, it’s time to reduce your payroll by streamlining people and positions and reinvesting those dollars into new talent. Microsoft and Berkshire Hathaway are large entities, with vast resources, and many will say that it’s easy to take these positions with that kind of war chest.
Just as Warren Buffet states, that “Fears regarding the long-term prosperity of the nation’s many sound companies make no sense, and most major companies will be setting new profit records 5, 10 and 20 years from now “ The reason for their success will be their strategy to be greedy, when others are fearful. As Warren Buffet buys up US equities at bargain basement prices, so to should companies buy up top talent at reduced rates, and create incentive based comp plans to take advantage of the upswing that their abilities will bring to the company. Buffet uses another great quote, this time by The Great One, Wayne Gretzky: “I skate to where the puck is going to be, not where it has been.” Companies have a choice to make at times of crisis, do nothing or take action. You can chose to skate to where the puck is or watch a goal being scored at the other end of the ice.