Runt Rants - Making Good Business Decisions - Stupid Is As Stupid Does

AUTHOR: Ken Verrett is the owner of Acorn Appraisal Associates, a 22 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA

We are in the midst of another decline cycle in our economy that inevitably follows an expansion period. "Irrational Exuberance" coined by Alan Greenspan years ago is the perfect concise phrase to describe our collective state of mind during those times of expansion.

Stupid Is As Stupid Does

We see ourselves so smart, so invincible, so impervious to risk that we make what in hindsight are stupid mistakes. Of course, we are no smarter, no dumber collectively during the good times or the bad times. We are simply caught up in the moment. We experience irrational exuberance.

The trick in both expansions and contractions as a business owner is to keep your perspective, to see the big picture, and to make decisions regarding your business and your market that are the right ones, not ones based on false perceptions. It is when we make decisions based on bad data that we threaten our future.

Just How Bad Is It Today?

Currently we read that our economy is tanking, that we have several economic crises coming together.  It is certainly true that we have some challenges ahead. The sub prime crises caught many of us by surprise. The Cuomo Agreements caught many of us by surprise.   We may even be in a recession. 

Unfortunately we are also in a major campaign period where a battle for our minds and votes is taking place between opposing sides, each vying for a short term edge, willing to twist facts and level charges that they will quickly abandon later if necessary. Confusing times!

Appraisal Markets Are in Process of Change

Amidst all of this we in the appraisal profession have to deal with the declining markets in many areas of the country, the sub prime crises, and now the Cuomo Agreements. Enough to give us all collective heartburn!

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Here in Houston, the market is not bad. Job growth continues but at a lower pace; housing is slowing, but overall not too bad considering all the national press. Florida, California, Nevada, others are not so lucky this year.

When markets experience double digit growth in housing prices for several years in a row we feel invincible. We feel so smart as business owners!  Boy, we are good! Fact is, our businesses float on the same rising and falling tides as the rest of the economy. Fact is, double digit growth in any market is impossible to sustain for prolonged periods.

So now we are experiencing those downturns, market corrections that are inevitable. We should have prepared for this period in the good times. We should prepare now for the next cycle to come. But we shouldn't lose our perspective. It's never as good as we think it is, and it's never as bad as the medial tells us it is.

One place I frequent to help with my perspective is the Blog Back Talk. I've been reading the blog for many months and his perspective is quite unusual. The author describes himself thusly:

I am a professor at  a research university, a registered Democrat, a liberal by some measures, but  a radical conservative relative to the large majority of my colleagues.

How's that for an introduction? He doesn't trust the media. He maintains it is each individuals responsibility to decide for himself what the real issues in our society are, and to develop our own opinions of those issues based on factual research. No short cuts are possible in his mind.

That's very similar to my stated objective in Runt Rants; to present alternate views, sometimes not the most popular alternate. To cause the reader to think and be motivated to investigate the issues for himself and draw his own conclusions, and then decide for himself what is best for his business.

Recently Back Talk reviewed the US economy and compared it to other developed nations. Click here for his review. The article is rather long, so be prepared to send a few minutes there.  Good background reading for an appraisal business owner in 2008.

Remember: things are never as good as you think they are, and never as bad as the media claims!

AUTHOR: Ken Verrett is the owner of Acorn Appraisal Associates, a 22 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA