The 1,057 Point Swing

The 2016 presidential election results surprised everyone and created much uncertainty in many quarters. Often uncertainty produces fear about what’s going to happen in the future. There’s no doubt that many people have expressed such fear in recent weeks. I watched the election results during the evening of November 8 and remember how futures for the Dow Jones Industrial average plummeted as much as 800 points on the prospects of Donald Trump being elected president. Then when the markets opened on Wednesday, November 9, the Dow marched ahead closing up 257 points. This is a swing of more than 1,000 points in less than 24 hours. What the heck happened?

It’s pretty clear to me that there was a great deal of uncertainty surrounding the direction the election results were headed. This uncertainty produced much irrational fear that drove the markets lower. When cooler heads prevailed the irrationality evaporated and the markets moved up. What is the byproduct of uncertainty and fear? It’s opportunity. It’s my opinion that the greater the level of uncertainty the greater the level of opportunity.

I attended an affordable housing industry conference a week after the election. There was a lot of hand-wringing and pessimism. A number of attendees were convinced that support for affordable housing was going to decline and the industry would blow up. No doubt there are some potential threats on the horizon, but there are an equal if not greater number of opportunities. As entrepreneurs we have a choice to make. It’s the classic “glass half-full or half-empty” choice. There’s no question that things can and will happen that are less than desirable – that’s an absolute. It’s how we prepare and deal with them that matters.

At the industry conference I sat on a panel and posed the following question to the audience. I’ll pose it to you as well. “How many of us have a strategy to deal with the effects of uncertainty?” Out of a room of 750 people maybe two or three hands were raised. Was your hand raised? It’s so easy to become lulled into a sense of complacency. We think we know where our business is positioned in the marketplace, and we generally understand the direction our industry is headed. But then something happens to completely upset the apple cart. Simulating various scenarios and their impact in advance of such occurrences can be very helpful in identifying potential courses of action. But there’s still a healthy dose of optimism that is also required.

The real test for us is how we react to uncertainty. Do we immediately begin envisioning all of the negative possibilities? Or do we lick our chops at what uncertainty could mean in positive terms? Some entrepreneurs thrive on uncertainty. They run toward the disruption caused when things don’t go as planned. Why? Because they know how to adapt. They modify their strategy to fit the current situation. They are nimble and opportunistic. They are unafraid and know how to manage risk.

We too can learn how to use uncertainty to our advantage. To do so we must constantly be looking at a multitude of “what-ifs.” What if the election goes a certain way? What if interest rates increase? What if our top salesman walks out the door? As we cycle through the various possibilities, we weigh the pros and cons. And only seeing the cons misses the entire picture. There are always silver linings in whatever happens – we just have to look and find them.

One of the biggest threats to our affordable housing development business is the prospect of corporate tax reform. Investors use a federal affordable housing tax credit to help fund our developments. If the tax rate goes down, the value of the credit is less and there are fewer funds available for development. With the election of Donald Trump and a Republican Congress, the prospects for corporate tax reform are much improved. But we’ve been hearing about corporate tax reform for the past several years. And tax reform won’t cause the demand for affordable housing to be any less. So even before the election, I’ve been mulling over other ways to deliver affordable housing should the tax credit be diminished or even eliminated. We do have a strategy to pursue an additional product set that will enable us to continue providing such housing with or without the credit.

When we develop a strategy to deal with the effects of uncertainty the sky is the limit. We are able to move forward with confidence and optimism while others may be mired in negativity and limited thinking.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 23 – Misplaced.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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All the Best

Question: I hate being disappointed about so many things in my life. How do I set my expectations so that this doesn’t happen?

Answer: Disappointment is an insidious feeling. Years and years of disappointment breeds cynicism. Disappointment also leads to pessimism. Cynicism and pessimism slowly creeps into our consciousness and attacks our soul. At all costs we must avoid allowing ourselves to be disappointed. So your question is really about how to avoid being disappointed.

The solution may sound perverse but it’s really not. Expect the best. It’s that simple. Expect the best. This is not a Pollyanna concept but a mindset. Think about it. When we try to lower our expectations what does that do? It creates a mindset that is limiting. We may take actions that align with our lowered expectations and as a result we ensure that we won’t achieve our highest good. The reason we may be disappointed is because we may not really believe high expectations. We think at one level that things are going to be amazing but deep down inside we don’t really believe it. And the situation then becomes a self-fulfilling prophesy.

Expecting the best is all about truly believing. I’ve written before about being accused of wearing rose-colored glasses. But I’ve found over the years that always expecting the best generally turns into reality. It’s the law of mind-action. What we believe in our minds is produced in the world around us. Of course a distinction must be made lest this law be misunderstood. If I’m 60 years old and believe I’m 20, I’m not really going to roll the clock back and become 20 again. But if I believe that I feel like I’m 20 . . . if I truly believe this . . . then I will feel like I’m 20. Which brings us back to expectations. How many times have we said, “I really want to win that new contract, but the deck is probably stacked against me.” What is most likely to happen? We won’t win the contract because we affirmed that we wouldn’t. Our lowered-expectation is that we won’t win.

Expecting the best is liberating. It means that we have no need to lower or measure our expectations. Instead we can truly believe the best about our lives. And as an added bonus, our beliefs will manifest.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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