Six Lessons From Bear Stearns Debacle
The VAR Guy is sickened by Bear Stearns’ fall from grace. But even worse, look at this video of Jim Cramer from March 11.Pathetic. Now, let’s look at six key lessons from the Bear Stearns Debacle.
Here we go.
1. Don’t (Always) Trust the Experts: Cramer sounds a lot like those Wall Street analysts during the beginning of the dot-com implosion, who told us all to hang onto Enron, MCI and hundreds of Silicon Valley Startups.
2. Don’t Bet on a Single Vertical: Solutions providers and consultants who focus only on IT for Wall Street could eventually face a nuclear winter. Bear Stearns certainly isn’t buying any new IT. And JP Morgan Chase will likely have a few thousand extra PCs sitting around once it digests Bear Stearns.
3. Listen Carefully During Summer Barbecues: In 1999, everyone at your neighborhood barbecue bragged about their dot-com investment gains. In 2004, everyone at your neighborhood barbeque bragged about their growing home equity. When Mr. and Mrs. Jones try to talk like stock pros, you know we’re in an inflated market.
4. Don’t Assume One Company’s Problems Are Isolated: Bear Stearns has (or had…) roughly 14,000 employees, according to AP. Those 14,000 employees certainly won’t be rushing out to buy a new car, buy a bigger house, or get their hands on the new Apple MacBook Air. And think of all those Bear Stearns suppliers and contracts that just lost a big client. We won’t know the full fallout for months.
5. Bet On Yourself: The VAR Guy lost his job at a big media company during the 2001 downturn. He incorporated his own business within two days of that job loss, and has always had emergency freelance options place — just in case the economy took another turn for the worse.
6. Borrow Money When You Don’t Need It: This wise piece of advice comes from The VAR Guy’s dad. The easiest time to borrow money is when you don’t need it. The VAR Guy set up a home equity line of credit that he never plans to use. But if he ever needed it, a blank check is under his pillow.
That reminds The VAR Guy: It’s time for some sleep. Hopefully, sweet dreams rather than financial nightmares await him.