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Back to Entrepreneurial Schools to Revive Flagging Stocks (Part 2)

30 January 2008 - Features - Editor

Back to Entrepreneurial Schools to Revive Flagging Stocks (Part 1)

The ER Approach to Critical Stock Recovery

Stock investment can be like medicine, because emergencies bring out the best in people. A crisis can quickly turn in to an opportunity for new and stable growth, whereas exuberant celebrations of transient success may hide precipitous falls! Skilled and experienced ER teams deal with frightening casualties, displaying professional calm, and can bring people back from the brink of death in minutes. A typical stock market is no stranger to frenzy, but the really important corrective, preventive, and contingent actions take place in management meeting rooms, well-hidden from amateur views.

Airways, breathing, and circulation, are the famed ‘ABC’ of emergency workers, who have to safeguard acutely threatened lives. Cash management, asset protection, and controls over liabilities, are similar priorities, when we come across stocks in trouble. The best managers know that the worst units can be turned around as rapidly as the blue-chips can crash! Investing in stocks which are in the dumps, and watching them climb thereafter, brings both joy to the heart and cash to the bank! We compliment risk managers for painting worst-case scenarios for stocks which perform well, but rarely listen to soothsayers who tell of how the dogs of today can become cash cows or even stars tomorrow.

Hidden Values of Stocks We Denigrate

Business cycles, optimization, and opportunity costing, are three business management phenomena that confuse rational stock investment efforts. Brokers depend on turnover, so this imperative must color their recommendations and pressures to buy and sell stocks. Finance professionals crunch the numbers of discounted cash flows, but do we often see stock market players talking in terms of IRR? Classic business management decisions involve sacrificing growth for margins, or for conservatism in deploying resources, but this is not the stuff which stock market poster boys and girls love! High risks may pay off at times, but that does not necessarily make them correct in stock investment terms.

Few stock brokers expect the second decade of the new Millennium to be the same as the first. What better time therefore for a whole new approach to stock investment? Identifying qualitative moves that can disrupt trends should form common bases for all initiatives to unlock stock value. What do you think? Do you have other concepts that can make for sustained and ethical stock gains? Please join our forum and let us have your views. We would love to hear from you!

 


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