Stay Occupied, My Friends

The stock market plunged 390 points yesterday. Are you surprised? I’m not, especially in light of the sentiment I’ve been sharing in my recent posts.

Our stock market is a gut reaction to what’s happening out there, and right now, that’s in Europe. The market is only as smart as the last person it talked to.

On Tuesday things were looking up because the Greek Prime Minister had agreed to resign.

However, since we weren’t sure what was going on today with fears that Europe’s┬ásovereign┬ádebt crisis was widening, we went into a market spin. Bond yields in Italy surpassed 7%, which means that it may be getting ready to follow in the footsteps of Greece, and of course this was most upsetting for our stock market.

Again, let’s not undermine the complexity of our markets and the systems behind them, but there’s a reason that I keep pointing all of this out to you. This is what it looks like when companies go through crises. Many of them – or at least their CEOs – become as smart as the last person they talked to and the last news they heard.

Learn from the example that international markets are setting for us – and the example of our own market as it reacts to the world’s problems.

Apply this lesson to your personal life, your personal finances and your business’s finances as well. While everyone is selling and reacting and worried, do other things. Go golf or scrapbook or play Metal Gear Solid or whatever it is you crazy kids are doing these days. Get a hobby, but make sure that hobby is not overreacting to the financial situation around you.

Studies consistently show that those who do not get mired in the day to day financial swings around them – and who learn to tune out the related noise – make better longterm financial decisions, are less stressed and are more likely to make their financial goals a reality.

Why? Because they’re not as smart as the last piece of information they heard and they’re not acting on everything! If you bought and sold as fast as the market swung you’d be nothing more than strung out, stressed out and broke.

Instead of the Dos Equis, “Stay thirsty, my friends,” I encourage you to, “Stay occupied, my friends.”

What do you do to tune out the financial noise and distract you from the market’s volatility?

How Greece and the Stock Market are Conspiring Against You

If you’re a news person or you follow finance then you’re no doubt already aware of the situation in Greece. That country is a mess. It’s debt is astronomical; it has no capacity to repay; the political situation is volatile at best; there are mass protests, and nobody has any idea what to do. That’s my definition of a mess.

Let’s Help or Face the Mess Ourselves

In order to prevent some kind of catastrophic ruin that affects the governments and finances of the rest of Europe – after all, Greece is on the Euro and its economy is intimately tied to the rest of the continent – European leaders have been working on some kind of deal to manage Greece’s debt (a large part of which they’ll just dismiss or fund) and get its economy back on track.

And Greece isn’t the only European country riding this roller coaster. It’s just got it the worst right now and is in the lime light. Spain, Italy and others are also going through quite a bad spot.

With the state of the world’s economic intimacy, we’re all affected by the situations around the world. Hardly a country is free from the ripple effects dealt by other members of our global union. But what’s fascinated me recently is the degree to which that intimacy is more emotional than logical.

Up and Down and Up and Down

As I’ve watched the stock market plummet and rebound over the past month, I’ve seen that movement tied disturbingly to our reactions to Greece’s economic situation.

When news came that Greece was tanking and talks were stalled, the market dropped. Last week, as news landed that Europe had reached an agreement on how to bail Greece out, the market rallied 340 points. Yesterday, the market closed down nearly 300 points. Here’s how CNN explained it:

“New fears about the fate of the European rescue plan reverberated through stock markets in the United States and around the world Tuesday. Following European markets, U.S. stocks ended sharply lower across the board. Bank stocks were hit especially hard. The bad news was propelled by Greek Prime Minister George Papandreou’s surprise announcement that he would put his country’s participation in last week’s European debt plan to a voter referendum.”

Now, I understand that the stock market is not merely a bunch of mercurial people making decisions but an enormous number of trades made on the backs of incredibly complicated financial equations and algorithms, but when it swings so violently back and forth at news about Greece, I can’t help but think that things are getting a little ridiculous. And this is just news, mind you. Nothing is actually happening in any of these instances. A deal was reached but no money moved. A referendum was proposed but no vote actually taken. These may as well be rumors for the bearings they should have!

Don’t Be As Smart As the Last Person You Talked To

This reminds me of the business leaders I’ve dealt with who change their entire course of action every time they talk to someone. As I pointed out in my 5 Foolish Faux Pas of CEOs in Crisis, some CEOs are only as smart as the last person they spoke to. That’s what our economy feels like: as though it’s only as strong or relevant as the last thing it heard.

And I don’t want you to be this way!

Making plans and sticking to them is an important part of being a good leader and developing and growing a sustainable business. It’s especially important when you’re in a crisis. You can’t be flopping all over the place in rough times. Of course you change course when things are going wrong and you actually take the time to evaluate the situation, but if you’re changing plans after every conversation your people will lose faith in you and nothing will ever get done.

How do you keep focused when things around you get topsy turvy?

The Old Dog May Not Learn New Tricks, But He Can Always Learn New Lessons

As I vacation in Italy, I find myself learning an important lesson – not one that I didn’t tacitly understand before, but one that became more pronounced in my mind over the last few days.

I’ve always said that in the business of turnaround you want to go with the gray-hair or no-hair guy. That means that you want the guy with the experience. People don’t just enter turnaround fresh out of business school. They get experience by being involved in tons of other businesses, transactions, organizations and the like – especially ones that have faced crises and big problems.

But two people (or groups) have taught me a valuable corollary lesson: you’re never too old to learn something new.

The first person who helped me see this was my wife. In preparation for our trip to Italy – a place we try to go often and that we plan on returning to in the future – my wife started studying Italian with a new language program. Though she didn’t have much time before we came, she loved learning it and has already put many of the phrases and much of her vocabulary to good use. And she’s learning tons more every day we’re here.

I was so impressed that in her mid-fifties she started learning a new language. It’s enriching her life, it’s helping ours, and she’s found that the act of learning a new language and subsequently thinking in that language is letting her look at the world – and especially Italy – in different ways.

Now, my lesson of “never too old to learn something new” does not come from her learning Italian at her age – she’s not old at all! It’s me learning that at my age I can still learn new things and gain valuable experiences.

The other place I’ve learned this lesson is from my partners. They’re a great group, but they’re not gray-hair/old-hair people. They’re experienced but far more youthful than I am. That makes me think twice about my favorite saying, since I learn a ton from them and value the incredible work they do. As excellent turnaround professionals, my partners have taught me that there’s always something new to be learned, and you don’t have to be bald or gray to teach the lesson.

So, as I explore Italy, I have a renewed sense of the value of new experiences and new knowledge and the ways those experiences can enrich my life and the lives and businesses of my clients. I may have seen darn near everything under the sun as it relates to turnaround and business, but every star out there is a sun so I suppose there’s a lot left to learn.

What new lessons have you learned?