We are heading for a recession - guaranteed. FOX and CNN have both confirmed it :)
I am not sure what I am missing.
I live in a town of around 20,000 people. It’s a perfect size - large enough that you don’t know most people, but small enough that you always bump into a friendly face when running around town.
It’s a very active community - a Mecca for mountain bikers, rock climbers, kite surfers and general outdoor enthusiasts. Squeezed between the pacific ocean and the coastal mountains, the only road heading up from the city is aptly named the Sea to Sky highway. It’s as gorgeous as it sounds.
During the last 24 months, our best yoga studio shut down - then our second-best yoga studio. We lost our best sushi restaurant, our busiest coffee shop and then - the only cafe that had a menu of green smoothies.
Reading between the lines - you can guess that I noticed these bankruptcies because I was a frequent patron of the businesses.
But if you go off my immediate radar, there have been dozens more retail and service companies that bit the dust.
So when I hear the media forecasting the possibility of a recession coming… I honestly don’t know what they are talking about.
And I get it - while the real economy has been beaten down, the stock market has been hitting all-time highs - and as we all know, the market is nothing if not a direct reflection of the real economy…
I am a member of a few entrepreneurial peer groups. We often meet up to discuss key issues facing our businesses and share strategic advice. Lately, the conversations have become focused on recession preparation. Three times last week, I found myself in a room with a group of fellow business owners sharing our recession strategies and forecasts.
Regular readers know how much I love a good forecast :)
What struck me most about these conversations was the weight that the (highly successful) individuals put on the statements coming out from a variety of media outlets.
Here I was watching a group of business owners - with real skin in the game and real-time exposure to the commodities sector, the labour market, and consumer and corporate spending habits but yet - they were all looking to a handful of journalists to tell them what was happening in the economy.
The economy - which is just a silly word used to describe - the individuals in the room.
I am still trying to understand the irony of the situation - and I am not faulting anyone for looking externally for answers - I do it all the time.
Business journalists are rarely business owners. Market analysts are frequently not market participants.
They are spectators.
It is incredibly important for me to point out the danger of this situation. Journalists make forecasts. When their forecasts are wrong, they make new forecasts. But the individuals who took consequential action based on the forecasts do not have that luxury. They face the consequences.
Here is a parallel: The most important question I ask every CEO who comes on my YouTube channel to pitch their company is this: How many shares in this company do YOU own?
Ie: Do THEY have skin in the game? If they are wrong, I need them to hurt more than me. It is the only way I can have confidence in their dedication to success.
If you want to experience the other side of this conversation - all you need to do is attend some local martial arts or boxing matches. I've seen this countless times - two professionally trained fighters in the ring, counselled by their head coaches in their corner - but inevitably, fans feel compelled to yell advice such as “Keep your hands up!” “Use the jab!” - or my all-time favourite - “Hit him!”
I always thought how appreciative the fighters must be for these pointers... Yet for some reason I've never seen the fighter turn to the spectators and yell, “What should I do next..?!"
But yet - this is the same as a company owner turning to the Wall Street Journal to find out “What’s going on out there?”
So why do we do it? (And I say we because I have yet to build full immunity to this condition).
We do it because we crave certainty - and if we know that we don’t know, we want to believe that someone else does.
And if certainty is what the market wants, then certainty is what they will get: