Photo courtesy Metro Creative
Anyone who’s been in this racket (I’m an industrial broker, 32 years’ worth) has suffered through similar phases, with a few differences in the rhythms depending on when they began. Those who started when times were good (most of us) have had a career something like this:
Phase 1: work like hell and starve for X months; Phase 2: a tenuous, but unsteady foothold; Phase 3: a shot in the chops with an economic downturn, and Phase 4: recovery to solid and steady ground for a long time.
Those who started during a recession had a Phase 1 that was 2X months if they even lasted. But their Phase 3, if they made it, was easier.
It’s human nature to want to enjoy the fruits of one’s labor today, especially in an instant-gratification society. It’s even more of a pull for those who never had much. And, of course, in an industry where youth is revered more than ever due to technology and being up to speed with pop culture, listening to – and heeding – advice from old war horses who have learned from mistakes – is often dismissed. And so, the same mistakes keep occurring with some, generation after generation.
In 2009, in an impromptu gathering of brokers after work one fall day (after the October meltdown), a talented – and cocky – young broker turned to the guy who mentored him, in front of all, and said, “You know, I feel sorry for you!” Caught a little by surprise, the senior guy could only say “Me? Why?” All heads were turned to the junior guy, who then said, “Well, you’ve worked all your life, and now you have half of what you thought you had!”
Actually, it was an astute and pertinent observation, not said with total malice, but definitely designed to be a zinger. The senior guy thought for a minute, then said, “You know, I appreciate you thinking about me, but in all honesty, my life really won’t change much. I have no debt, the kids are all through college, so a hit on paper at this point doesn’t really change that much. But what about you? I know you have three kids who are going to college; I know you just built a new house, I assume, with a big mortgage, and I think you have a couple of new cars that are financed. How will it affect you?”
All heads swiveled back to the junior guy, but the message was fairly clear. There wasn’t much he could say.
A year later, a few of the same people were having lunch together, and the junior guy was agitated. He finally blurted out that he was going to have to get out of the business. He was close to being in trouble.
Fortunately for him – and for his company, as he really was talented and a pretty good guy – things finally rebounded and he got himself back to economic health. He may be a guy that people listen to when we go through the inevitable next downturn.
A less pleasant example of someone affected by his industry downturn was a really talented, older industrial broker in my network. A highly respected guy, locally and nationally, in another city from me. He was a high flier. He made, during good times, more money than most, consistently, but he’d spend it, too. He had a second home; country club memberships; spectacular family trips; even an interest in a plane. And though it was never known for sure, it appeared that he wasn’t investing or putting anything away.
Again, this took place in 2009, which – in all fairness – was the most severe recession since the Great Depression – but still, one that should have been at least partially anticipated. This High Flier was caught, and it was like getting hit by a train. His income went way down. Sadly, he coaxed a signing bonus out of a major competitor, and he left his company, awkwardly. The signing bonus was merely a Band-aid, and soon his problems got worse. The pressures on him were enormous.
I wish there was a better ending to his story. He was a friend. He died suddenly at, by today’s standards, a pretty early age, and there’s no doubt that it was hastened by how he had boxed himself in.
So the lesson learned mostly by people who have gotten very wealthy over time, is this: anticipate a downturn, have a lifestyle that can live at the lower level comfortably, but if you really want to survive a recession – and even profit because of it – have a personal fund ready to take advantage of low equity prices, distressed properties, or even be part of a group buying a distressed enterprise that has great potential (but don’t let your heart get involved – it’s business).
….And be grateful that you can be part of an industry where you can make choices like these! I was shocked at the stories of people who were furloughed in the latest government shutdown who had nothing to fall back on. It’s a tough way to live! Often, it’s not their fault, due to illness, perhaps helping wayward kids, many of life’s obstacles.
But often it is.
Phase 1: work like hell and starve for X months; Phase 2: a tenuous, but unsteady foothold; Phase 3: a shot in the chops with an economic downturn, and Phase 4: recovery to solid and steady ground for a long time.
Those who started during a recession had a Phase 1 that was 2X months if they even lasted. But their Phase 3, if they made it, was easier.
It’s human nature to want to enjoy the fruits of one’s labor today, especially in an instant-gratification society. It’s even more of a pull for those who never had much. And, of course, in an industry where youth is revered more than ever due to technology and being up to speed with pop culture, listening to – and heeding – advice from old war horses who have learned from mistakes – is often dismissed. And so, the same mistakes keep occurring with some, generation after generation.
In 2009, in an impromptu gathering of brokers after work one fall day (after the October meltdown), a talented – and cocky – young broker turned to the guy who mentored him, in front of all, and said, “You know, I feel sorry for you!” Caught a little by surprise, the senior guy could only say “Me? Why?” All heads were turned to the junior guy, who then said, “Well, you’ve worked all your life, and now you have half of what you thought you had!”
Actually, it was an astute and pertinent observation, not said with total malice, but definitely designed to be a zinger. The senior guy thought for a minute, then said, “You know, I appreciate you thinking about me, but in all honesty, my life really won’t change much. I have no debt, the kids are all through college, so a hit on paper at this point doesn’t really change that much. But what about you? I know you have three kids who are going to college; I know you just built a new house, I assume, with a big mortgage, and I think you have a couple of new cars that are financed. How will it affect you?”
All heads swiveled back to the junior guy, but the message was fairly clear. There wasn’t much he could say.
A year later, a few of the same people were having lunch together, and the junior guy was agitated. He finally blurted out that he was going to have to get out of the business. He was close to being in trouble.
Fortunately for him – and for his company, as he really was talented and a pretty good guy – things finally rebounded and he got himself back to economic health. He may be a guy that people listen to when we go through the inevitable next downturn.
A less pleasant example of someone affected by his industry downturn was a really talented, older industrial broker in my network. A highly respected guy, locally and nationally, in another city from me. He was a high flier. He made, during good times, more money than most, consistently, but he’d spend it, too. He had a second home; country club memberships; spectacular family trips; even an interest in a plane. And though it was never known for sure, it appeared that he wasn’t investing or putting anything away.
Again, this took place in 2009, which – in all fairness – was the most severe recession since the Great Depression – but still, one that should have been at least partially anticipated. This High Flier was caught, and it was like getting hit by a train. His income went way down. Sadly, he coaxed a signing bonus out of a major competitor, and he left his company, awkwardly. The signing bonus was merely a Band-aid, and soon his problems got worse. The pressures on him were enormous.
I wish there was a better ending to his story. He was a friend. He died suddenly at, by today’s standards, a pretty early age, and there’s no doubt that it was hastened by how he had boxed himself in.
So the lesson learned mostly by people who have gotten very wealthy over time, is this: anticipate a downturn, have a lifestyle that can live at the lower level comfortably, but if you really want to survive a recession – and even profit because of it – have a personal fund ready to take advantage of low equity prices, distressed properties, or even be part of a group buying a distressed enterprise that has great potential (but don’t let your heart get involved – it’s business).
….And be grateful that you can be part of an industry where you can make choices like these! I was shocked at the stories of people who were furloughed in the latest government shutdown who had nothing to fall back on. It’s a tough way to live! Often, it’s not their fault, due to illness, perhaps helping wayward kids, many of life’s obstacles.
But often it is.
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