Buy low, sell high. This is the basic “secret” to investing wisely. Investors will discuss how a drop in price reduces the “risk” related to buying the stock. The price of a stock, in theory, represents all future cash flows of that organization. When the price is down, the investor has more opportunity to benefit from an upturn in that predicted cash flow.
This “secret” can also be applied to other areas of the economy. When was the “riskiest” time to buy a house? In many markets, the housing bubble peaked between 1 and 2 years ago. Buyers who based their purchases on history at that time, predicted a continued increase in housing prices and so felt “safe” in buying into the market. However, the past is not always the best way to predict the future. Buyers who looked ahead and saw that they were buying into a “bubble” were able to exercise more caution. Those who have the opportunity to buy in now are finding lower “risk” options for buying a home because prices are down.
This same bubble has impacted the market for business careers for the last year. Businesses have faced tough decisions and challenges as the recession deepened. As it turns out, the “riskiest” time to transition from the military to business was early in 2008. Many officers interpret the current market as “risky” because they are looking at what has happened over the past couple of years. However, a more accurate assessment is that the business career market was riskier a year ago. Today, most businesses have adapted to the economic changes and are looking ahead to recovery. Some economic analysts say that recovery could begin as early as the end of 2009. What does that mean for your career? If you want to transition to a business environment, you could be looking at the lowest “risk” we’ve seen in the career market this decade.
Consider the following:
- The economic drawdown has taken “risk” out of the business career market much as a drop in a stock’s price takes “risk” out of buying that stock.
- The aging of baby-boomers has not stopped. As the market recovers, so will their retirement options and they are likely to leave Corporate America in record numbers.
- Several industries are already ramping back up hiring efforts to address these needs.
How will you know when the business career market has recovered? Some key indicators are easily tracked:
- Revenue will grow – public companies release earnings statements every quarter after their March, June, September and December financial close outs. As the economy recovers, they will start to show year-over-year growth instead of declines. Year over year growth is a better indicator of a recovery than consecutive quarters because of the change in buying patterns in many industries throughout the year. Think about the impact of the end of year holidays on consumer-goods retailers, frequently making the 4th quarter much bigger than the 3rd quarter for companies in that industry. However, this year’s 4th quarter compared to last year’s 4th quarter will likely be closely watched by analysts as a key indicator of economic recovery.
- Inventory will shrink – one of the big challenges with a recession and decreased demand is that companies have to produce inventory in advance. At the beginning of the recession, their inventories far exceed demand, tying up capital, space and time. During the recession, they seek to stabilize inventories at a lower level more consistent with reduced demand. At the end of the recession, unless they are perfect at predicting a recovery, they will not ramp up production in time to match increased buying trends. Inventory will drop temporarily during the lag needed to meet new demand.
- Unemployment will stabilize or shrink – Depending on the speed of a recovery, companies may need to hire more people, shrinking unemployment. However, if the recovery occurs more slowly, companies will ramp up production but may hold off increasing employment numbers to avoid hiring into temporary spikes that put them back in a challenging position with payroll.
The problem with recovery “indicators” is that they always record the past. If you wait for reports on these factors and then work toward a business career, you will be way behind. The combination of the delay in reporting on the recovery, and your need to apply for a separation date giving the military advance notice, may delay your opportunity to step into the market by a year or more past the recovery.
How you handle your situation can determine how successfully you achieve your career goals. There is no “one right answer” to understanding how to factor the economy into your career search. If you have questions, get someone involved who knows the market and knows your situation. For our candidates, we are always happy to discuss these factors. If you are a military officer looking for help and not currently in our program, give us a call. We’ll listen to your situation and help you look ahead to opportunities in the business career market so you can factor ”risk” into your career decisions.