Every day, leaders face the daunting challenge of making sound investment decisions amidst uncertainty. The global economy is subject to a myriad of factors—from geopolitical tensions to unforeseen pandemics—that can drastically impact financial markets. In such volatile times, the ability to maximize returns on investments while minimizing risks is a crucial skill for leaders across industries.
Below, Forbes Finance Council members offer actionable strategies and insights that empower leaders to navigate the unpredictable terrain of the economy, ensuring they not only safeguard their investments but also capitalize on opportunities that arise in the midst of uncertainty. From diversification to leveraging technology, these approaches provide a blueprint for making astute choices in an uncertain world.
1. Diversify Your Portfolio To Cushion Impact
Diversification helps spread risk across different asset classes, industries and geographic regions. A well-diversified portfolio can cushion the impact of volatility in specific sectors and minimize losses during economic downturns. Diversifying your portfolio is a strategy that involves spreading your investments across different types of assets to reduce overall risk. – Xingyu Yang, T&J brothers group LLC
2. Keep A Year’s Worth Of Liquid Assets
Keep dry powder funds available. Cash is earning as high as 5% in money markets, CDs and T-Bills. With that being said, keeping about a year’s worth of expenses liquid is sound advice to buy in more and handle unexpected expenses. You don’t want to pull away from long-term investment strategies in an unpredictable economy. I would argue those economies have the most growth potential. – Lance Scott, Bay Harbor Wealth Management
3. Focus On The Fundamentals Of The Companies You Invest In
Investors should not focus too much on the markets, but rather on the fundamentals of the underlying companies in which they invest. Investors can sabotage their own performance by making mistakes driven by fear and other emotions, particularly the mistake of selling during downturns. We believe in owning innovative companies that create paradigm shifts, even during periods of sub-par economic growth. – Gerry Frigon, Taylor Frigon Capital Management LLC
4. Invest In Your Employees
One of the best ways to keep your business healthy in an unpredictable economy is to continue investing in your employees. Employees will make or break your business—you can’t grow or succeed without them. While cutting employee wages or benefits may seem like a good way to save money, it will only cost your business in the long term as turnover mounts. – Allison Kelly, ICA Fund
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5. Avoid Impulsive Decision-Making
In an unsteady economy, leaders must focus on long-term goals. Short-term fluctuations can be deceiving! Focusing on long-term objectives and avoiding impulsive decision-making will help maximize returns. You should keep current with economic statistics, industry and market trends. Data-driven decision-making based on in-depth analysis enhances the chances of making wise investment choices. – Geanette Rodriguez-Ojeda, GRO Accounting and Tax
6. Take A Long-Term Approach To Investment
Leaders can maximize returns on investments and continue to make smart choices in an unpredictable economy by taking a long-term investment approach. They should have a well-balanced, diversified portfolio. An example would be investing 90% in real estate and index funds and 10% in high-risk stocks and cryptocurrencies. – Yaakov Goder, Millendeal
7. Welcome Change As An Opportunity For Growth
An uncertain economy demands leaders balance shrewd judgment with calculated risk. Prioritize thorough risk analysis, capital allocation across diverse assets and continuous market monitoring. Leverage historical trends, anticipate disruptions and embrace dynamic strategies. Market fluctuations require flexibility and a resilient portfolio. Welcome change as an opportunity for informed growth. – Jeffrey Bartel, Hamptons Group, LLC
8. Stay Proactive And Flexible
Stay informed of economic trends, regulatory changes and industry developments to make well-informed decisions. Prepare to pivot and adapt investment strategies to changing economic conditions. Rely on data and market research to make smart investment moves. Ultimately, achieving long-term financial success comes down to proactivity and flexibility. – Anthony Georgiades, Innovating Capital
9. Focus On What’s Important To Your Business And Portfolio
Economic swings are unpredictable. To maximize returns over the long term, leaders should stay focused on the factors important to their business and portfolio. Macro scenario analysis, growing vs. maturing industry prospects, building competitive moats and ensuring financial health and stability are smart choices and in management’s control. – Martin Jarzebowski, CFA, Federated Hermes
10. Learn And Grow Continually
Even as a leader, you are never finished learning, especially in this macroeconomic environment. It is important to stay updated on market trends, economic indicators and industry developments. Continuous learning allows leaders to be informed based on real-time data and insights. Ensuring that your company has sufficient liquidity to handle changes in the market goes hand-in-hand with this learning. – Xan Myburgh, Backd Business Funding
11. Build An Agile And Responsive Team
Understand the flow of money in the investment value chain. Diversify investment and risk portfolio with strong market insights. Build an agile and responsive team that is able to predict and manage operational and portfolio risks. – Oluwatoyin Aralepo, Mastercard Foundation
12. Assess The Variables You Can Control
Leaders have to assess the variables they can control and the ones they can’t. The most dangerous option is to do nothing or have no plan. It’s better to focus on the key data points in both the supply chain and the customer demand cycle and tune out the noise. An unpredictable economy will affect your competitors too—look at those moments to deploy capital and take market share. – Dryden Pence, Pence Capital Management
13. Stay Up To Date On Market Developments
Stay informed about the latest economic trends, technological advancements and market developments. This knowledge allows leaders to make informed decisions and anticipate shifts in the market. However, keep in mind that although short-term gains are important, successful leaders often maintain a long-term perspective. – Sean Frank, Cloud Equity Group
14. Focus On Keeping A Healthy Cash Flow
Keep a laser focus on your investments’ cash flow management. If a business is showing long-term issues with keeping a healthy cash flow, then not only will it have problems staying in business, but if it does seek growth capital for expansion then lenders may be put off. A green flag is when a business invests time in tools that help maintain good financial health and monitor cash flow easily. – Nick Chandi, Forwardly
15. Recruit And Retain Talented Individuals
Recruit, retain and develop skilled individuals to identify strategic investment opportunities, optimize operations and manage risk. The long-term benefits of hiring such talent—increased production, innovation and efficiency—outweigh the initial cost. – Neil Anders, Trusted Rate, Inc.
16. Analyze Internal And Macroeconomic Data
There has never been more available data than there is today. Use your company’s internal data as well as macroeconomic data from sources like the Federal Reserve’s FRED and the Bureau of Economic Analysis to better model future performance. Run scenario analyses on each of your proposed projects to evaluate their feasibility given a range of potential outcomes. – Glenn Hopper, Eventus Advisory Group
17. Keep An Investment Policy And Revisit It Annually
Have an investment policy. Make sure you have a clear guide to priorities for your cash that considers short-term and long-term business needs, risk tolerance and options for investing excess cash. Revisit that policy at least annually. – Michelle DeBella, JumpCloud
18. Conduct Market Research And Analyze The Results
Conducting thorough market research and analyzing data-driven insights can help you identify emerging trends to stay ahead of the competition. Likewise, fostering an agile and adaptable organizational culture allows you to quickly adjust your strategies in response to changing economic conditions, ensuring continued success in uncertain times. – Justin Goodbread, WealthSource Partners, LLC
19. Retest Strategies And Avoid Complacency
Unlike at Easter when you put all your eggs in one basket, you want to diversify. These days, options to diversify your portfolio, business offerings, locations and lead sources are readily available. Do trial runs. What works? What doesn’t? Keep retesting strategies and don’t get complacent. Complacency is the business killer—we all know what happened to Radio Shack. – Will Murphy, Everlasting Capital
