Seeing the Opportunity Amidst Chaos

 

What interesting times. Oil at an unexpected low price, our dollar depreciating in value and interest rates being slashed to unprecedented levels. A provincial government rushing to election in avoidance of presenting finances, and a Federal government delaying financials release because they are too far from an election date. Are things really this bad?

It is a time to take pause and for many to start night sweats. Fear is a contagion, and there is certainly no lack of news to make one skittish.

The natural order is always to seek balance. For every negative there is a counterbalancing positive, but we often do have trouble seeing the positive.

With the challenge brings opportunity and this is a great time to be optimistic. Low interest rates are terrible for those in or nearing retirement; but it is great for those carrying or collecting debt. While it is important to reduce your debt when rates are low, it is also a great time to collect smart debt. An investment that looked good when prime were 1%, looks really good when rates are 0.75%.

The argument goes that if money is inexpensive and available then people will spend it, businesses will invest and jobs will be created. Once this cycle gains stability these stimulants are no longer necessary. Thursday the European Central bank announced they would print more money as their strategy to have more capital circulating in the European economy.

These actions are responses to economic challenge, and as long as people respond as expected then hopefully economic challenge will be averted.

Low oil prices are awful if you have built forecasts on benefits of high oil pricing or if you have exposure (investment) in the energy sector, but for consumers and many businesses this is a welcome discount. A $20 savings on filling a fuel tank can be reinvested in another expenditure – thus providing a stimulant to a sagging economy.

A low Canadian dollar is troubling if you are traveling South for March break or buying US stocks, but if you are an exporter selling into markets outside PEI you suddenly have a 15% price advantage that you didn’t have 6 months ago.

Yes, our dollar has depreciated quite a lot recently, but to put in perspective it was roughly $0.94 in July and a large part of that decline is our economies reliance on energy and commodities; these resources are not going to remain down in the medium term. Our economy is resilient and we are seeing investment in the forgotten sectors of our economy like manufacturing.

For every negative there is a positive. An art is being aware to find the counterbalancing opportunities in a volatile environment. Look where others are not, position for the weakness and create your own positives.

Businesses must do this, and have become very adept at times like this. All citizens can employ the same rational; you simply have to watch what is going on with wide eyes. Don’t get wrapped up in negative emotions or challenges other jurisdictions are experiencing. Be positive, be alert, be smart, and be successful.