I began this column many months ago by noting that I am an optimist, which mustn't be confused with "happy". If you've ever seen me on a Monday morning before my first cup of coffee, you will understand the difference.
Optimism is a key trait for many things related to how healthy you are and why some people survive layoffs, disease, bankruptcy while others never recover. It is, in other words, crucial to helping you survive a crisis.
Crisis is a loosely-defined term but the one I (and perhaps any optimist) prefer is "a decisive turning point". In economic terms, crisis refers to a sharp downturn in a business cycle, essentially a plunge into recession. In personal terms, it's when x hits the fan.
How both the larger economy and yourself survive a crisis says much about whether you stay mired in recession or debt, or whether you rebound.
Remember it wasn't too long ago Hong Kong sank into several crises, beginning with the Asian currency freefall in 1997. Then the property freefall in the late 1990s popped up and finally the health freefall in 2003 from SARs. Yet if you walk around this city today, it's as if the place was unfazed by the tragedies. For all the problems Hong Kong faces - and there are quite a few - there is still an air of optimism and energy in the city that everything will turn out just fine.
So what are the key ways to survive a crisis? Let's take a look at a few of the major ones:
1. Keeping Your Cool
The easiest way to make mistakes is to make decisions in a panic. We've all done this and universally speaking, doing so is not a good idea. The reason why? Emotion is never an appropriate overriding factor when making important decisions. This is not the same as making a split decision, which you may do when the time calls for it, but do so with a clear head. In times of crises, when the stock market is plunging, when your property is in negative equity, when you've lost your job, take some time to think things through before making your next move. You won't regret it - ever.
2. Being Realistic and Adapting
When Hong Kong property prices tumbled in the late 1990s, by almost 70% in many cases, Shih Wing Ching, founder of the property brokerage company, Centaline, made a few key decisions. One was to stay in the business no matter what. The other was to adapt. "I repositioned our company," the Shanghai native recalls. "I gave up on my profit margin because I knew it would be unrealistic to maintain a profit. So I told my staff, our target is now to gain market share. I won't evaluate you on the money you earn, because it's impossible to earn any money right now, but on your ability to gain market share". That strategy paid off in the end, with his agents aggressively pursuing business they might not have otherwise sought. Today, his company is bigger than before the property crash.
Crises are major turning points in any cycle - and in our lives. It can derail your plans - whether it be saving for retirement or angling for the major promotion - but only if you let it. Adapting to the change is key in surviving any crisis, but never lose sight of your ultimate goal.
3. Jumping In When Others Jump Out
Mr. Shih did something else during this time. When things were at their most grim, he bought into a struggling rival called Ricacorp. "When the boss of Ricacorp came to me for help, I was willing to invest," he said. "It's a good time to invest when most people are pessimistic. At that time, he was willing to cut the price". Jumping in when others are jumping out of the market may feel a bit like remaining on the Titanic after hitting the iceberg. But it's not. A financial crisis, whether it be when the stock market is tanking or property prices are plunging, often offers the best buying opportunities. Imagine how many people fled the Hong Kong equities market in 1997 after the Oct. 23 fall. At the time, media reports used words like "catastrophe", "panic", "crash" in describing the equity markets. Ten years later, the Hang Seng index is now double in value and hitting record highs.
4. Going With Your Gut
Ask any successful person what is the secret to their success and he or she will tell you they've always listened to their "gut" or their "inner voice". We're not talking New Age loopey stuff, but just old-fashioned instinct honed from years of observation, failures, successes, knowledge and wisdom that keeps a person on track to his or her goal. This instinct is a powerful force when crises hit, helping guide you to the right decisions. Entrepreneurs tend to be in better touch with their instincts primarily because starting any business from scratch requires a dose of gumption and risk, which cannot be achieved without some belief in one's own goals and potential. Going with your gut can be the one thing that saves you in times of crises.
5. Keeping Perspective
And finally, like any business cycle, there is a bottom to a crisis. It may not happen for a year, maybe many years. You may have crises hit one after another. But there is a bottom. The important thing is to remember the larger perspective. When investing in the stock or property market, remember that your horizon is long-term - out 10, 20, even 30 years. Alot can change in that span of time. When you lose a job, focus on the other options available to you. Just think of how pessimistic people were in Hong Kong right before the handover. Some people fled the city. Others lamented Hong Kong would be overshadowed by Shanghai or Shenzhen. Of course we know the story now. Those who stayed in Hong Kong, those who could see the wider potential of Hong Kong against a bigger, stronger China, are now the benefiting from that larger vision. They could see the big picture. And that is, in many ways, the root of true optimism.