Before every big investment, ask:
- If this investment dramatically falters like a mofokoko, will we still have a chunk of the business left?
- You're running a 160-year-old company.
- You've invested chunks into the mortgage industry.
- The mortgage industry hits the destruction period. Now, if that current investment fails, your entire company is headed for doom.
What do you do?
- a) Hang on and hope for the best.
- b) Hedge your bets by selling a freakish chunk of your mortgage investment.
Merrill Lynch did the latter, and saved itself to be safely acquired.
Lehman did the former, and now they're headed for bankruptcy.
The moral: When an investment turns sour, try this:
- Think of the worst possible motherkeruffin thing that can happen to that investment.
- Will that destroy your business?
- Act accordingly.
Do a Merrill.
Posted on September 14
Next tip »