– Scott Reed
I was talking with my good friend, Mike Pettigrew, yesterday. He is the Commander of American Legion Post 49. The Post has been my neighbor since I was born. Mike and I were talking about the old saying in the military, “No plan survives first contact.” He was stating you shouldn’t take that saying to mean that plans are worthless. To the contrary, he said a good plan is critical in giving you a base from which to improvise, adapt and overcome.
Improvise, adapt and overcome is the unofficial slogan of the Marine Corps. It hit the mainstream in the movie “Heartbreak Ridge” with Clint Eastwood and was made even more popular when it became Rule #24 in my book, Top 40 Rules of Investing. Not much more popular, but slightly … I think.
The Marines know something that should be self-evident to all of us: Things go wrong a lot. Expect the unexpected. Don’t be surprised when the best laid plans go awry. Don’t spend a lot of time wishing things were different. Spend your time finding a solution.
We haven’t had a medical crisis that has crashed economies around the world like the COVID-19 crisis in over 100 years. 2019 was one of the best years you could hope for in equities with the equity markets rising over 20%. Unemployment was at a level that is by most experts considered zero. Corporate profits were high. Interest rates were low. And life was good … until it wasn’t.
In March, for the most part, all “non-essential” businesses were told to shut their doors and send their employees home. So many people were told to file for unemployment and wait until their businesses reopened. So many businesses tried to keep their employees even though they had no revenue. My brother, who runs our family clothing business said, “Nobody in business school teaches that a good business plan is to have no revenue for two months.” But that has pretty much happened across the country. What is your next step when something like this happens? It’s the same as when anything, good or bad, happens. You improvise, adapt and overcome.
• Improvise: Look at where you are and how that is different from where you thought you would be before the crisis. Be honest with yourself and find out what has changed in your original plan.
• Adapt: Come up with changes to your plan that will help you reach your new goals. You may need to put more money in your emergency fund because you are not working. You may need to take less risk with some of your investments in case you need them in the next year to make sure your business survives. You may need to extend your retirement date by a couple of years in order to have time to regain lost investment opportunities. Whatever the circumstances, adapt to your new world and set a course to thrive in it.
• Overcome: Implement your plan. You may be on the same ship, but you have changed your course a bit. Set your sails for the new course and don’t look back at where you could have been. Look forward to where you are going. Your life’s charted course will have many changes. This may be one of them.
Improvise, adapt and overcome and you will be fine, until the next time. Then you do it all over again.
