"We Never Had It So Good"

“We Never Had It So Good!”
John Howard, former Prime Minister of Australia

When Prime Minister Howard uttered these words the Australian economy had been in a difficult period of decline, and he was severely criticized far and wide by what I call the “Herd Mentality” people. The criticism was so sharp that Howard ultimately suffered political defeat - in part because people didn’t see the up-side brimming with opportunity as their Prime Minister did.

Herd Mentality people are those that think, move, and act with the majority, preferring the assumed safety of group-think. These are the market investors who look for get-rich-quick tricks, and enter the market very late in the cycle only to lose equity during the downturn. They too often buy stocks when they are at the top of the cycle, and sell when they are declining. These are the people that believe the media reports of major gloom and doom, and are frozen by fear, and thus miss out on the real prime opportunities.

“Herd Mentality” vs. Counter-Cyclical Thinking!

Warren Buffett, arguably the greatest CEO/investor ever, said “be fearful when others are greedy, and be greedy when others are fearful.” Buffet’s counter-cyclical actions, his refusal to follow “herd mentality” and his refusal to give into fear are the real basis for his success.

Counter-cyclical means moving against the economic (or business or market) cycle. For example, counter-cyclical business will make higher profits when the economy slows, and a counter-cyclical investment will rise when markets fall.

It is not difficult to think of examples of counter-cyclical businesses (accountants and lawyers specializing in insolvency and bankruptcy are an obvious example) but they are small and specialized. Our last blog outlined counter-cyclical business sectors that wise investors looking at during this cycle of economic downturn. Healthcare and Education are two huge counter-cyclical businesses that are enjoying great growth and prosperity amidst this difficult time.

We are pleased that Access Education, along with most of the education sector, is enjoying expansion and growth, and we encourage all entrepreneurs to reject the “herd mentality” and join us in realizing “we never had it so good!”