Herman School of Business
Opportunities Abound When Blood Is In The Streets
Once I was desperate for money to pay my bills and looking out the window was the answer to my problem. Of course, needing that money quickly also allowed for a golden opportunity for a buyer with cash.
There sat my 1976 Cadillac convertible…recently restored, including that sweet yellow paint and the cream colered top. It was a beauty that I actually bought under similar circumstances from the last seller desperate to unload it. For sure, I bought it low, then fixed it up and loved driving it. They didn’t make Cadillac convertibles for about ten years after that so it was a unique car. Being in a hard spot for dough made me easy pickings for the buyer. While the car should have brought several thousand more dollars if I had the right time to sell it, the buyer and I both knew I had no choice but to take his low ball offer, because he could smell that I needed the cash.
Over the years when we brokered hundreds of businesses for other desperate owners and creditors I always told my friends…it’s always good when times are tough, in fact it would be even better if people were selling apples on street corners to survive. Don’t get me wrong, the sellers got less money then they wanted, but that is exactly my point. This year will bring disaster to many business owners, and many property owners. You didn’t do this to them and neither did I. I used to say when I spoke with an owner up the creek, “I didn’t kill you, but I am here to bury you.” This is the system we live in.
If you want to make money you have to buy when there is blood in the street. Buy Apple stock now and you may have missed the boat…you should have jumped in last August when it got crushed in the market and went down to about $ 117.00 per share, it closed the year at about $ 200.00. Look at Citigroup Inc…was $ 55.00 not long ago, closed under $ 30.00 at years end. Which stock has the greater risk/reward for 2008? I like Citigroup’s chances of doubling more than Apple.
Richard asked why buy in a down economy and I say because that’s when the bargains are the biggest. You can buy dollar bills for seventy-five cents if you look hard enough. Some house owners will soon be very desperate, and buyers will pay far less than what the house sold for just one or two years ago. Bargains-o-plenty. And bankers leave bad loans alone when there is so much profit from other sources at the bank…but when that cycle comes around where they are losing here and there…then the banker sells out the owner and forces a sale of the business, small ones and large ones. Richard also asked if I have bought in down times and made money that way. You better believe it. Because a big chunk of money you can make in business is selling when the economy, or the business, is peaking. The profit you make running a business may not compare at all to the profit you can make when you sell it. If, you bought it at a bargain. I have bought houses and companies even when I wasn’t searching for one, just because the bargain was so good.
The pizza shop guy where you eat owes too much on his credit cards….ding-ding-ding…opportunity, your brothers’ next door neighbor lost his job and is divorcing his wife…ding-ding-ding…opportunity calling again. Listen people, you come here to learn and to make yourself think. Sitting on cash right now, and knowing the economy is tanking slowly, and soon will crash faster, only makes me salivate more about what opportunities lay ahead. If people want to crash Citicorp further I love it, the parts of that business are worth more than it’s stock value now, and when they finish taking their credit losses, and start restructuring that company, those who ran away will be back buying the stock as it returns to fair value…and ka-ching, ka-ching will be the sound of my cash register ringing. It may take six months, but I can wait that long, and by then I will find something else in trouble to buy at a bargain. Remember, that Apple stock I bought in August in hard times just returned a 70% profit, because I sold it, as now everyone wants it and they ran it up too high.
- Posted: 2 January 2008
- Comments: 0
- Category: Business success
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