CEOs: Why You Should Be Confident While Others Are Fearful

Having a diversified portfolio helps investors cope with market turbulence. In these times of uncertainty, the same should be true for companies.

Everyone knows that CEOs need to be confident, unwavering and strong, right? CEOs have bold visions for the future, and their relentless pursuit of those visions can be so powerful that they almost force their eventual attainment, regardless of whatever may happen along the way.

But the world seems to be in quite a bit of trouble these days. We have a new virus that governments have struggled to contain. Entire countries are on lockdown, global economies are constrained, and people are sick and dying. Add to this the latest oil-price war, extreme volatility in the financial markets, political dysfunction, skyrocketing budget deficits and debts and the usual geopolitical risks, and the picture looks bleak.

So how are you feeling these days? Confident, unwavering and strong? If you’re willing to admit at least a bit of worry—as I am—allow me to offer you a framework to address that worry.

I’m the CEO of a financial services company. One of our lines of business is asset management. We have thousands of clients and billions of dollars under management, so you might imagine that our clients are themselves full of worry these days. Global equity markets have fallen precipitously, with wild swings and volatility levels not seen in years.  We don’t know how the coronavirus saga will end, or even if it will end, and markets hate uncertainty. We also don’t know how long the oil-price war will continue, and, of course, there’s always a list of other unknowns.

Maybe the markets will repeat the extreme patterns of 2008-2009. Maybe they won’t. No one can know for sure.

But we have worked with our clients to plan thoroughly for their financial futures. We have worked to diversify their portfolios so as to withstand downturns and optimize their chances of achieving their personal goals over time. We’ve run simulations of what could happen in a wide variety of conditions, based on a wide variety of assumptions.

Perhaps most importantly, we are working with our clients right now to ensure that they stick to their plans and find ways to take advantage of current conditions. We advise them not to panic, as panic is a place from which poor decision-making is almost certain to occur.

So why am I telling you this? Because that’s exactly the way CEOs need to be looking at their companies in today’s environment. If you’re feeling worry or fear right now, that’s natural. That feeling is there to remind you to look at your company and consider how it can be expected to fare in today’s environment. But just as an investor should have a plan and a well-designed portfolio built to anticipate unknowns, your company should, too. And just as an investor will always feel a sense of worry or fear when the unanticipated happens only to feel an offsetting sense of confidence in their plan and portfolio, so it should be with a CEO and their company.

Your company should have a clear plan for the future. That plan should be one that anticipates implementation in the real world, which is never fully predictable. It should account for the possibility of adverse conditions just as it accounts for the possibility of favorable ones. And your company should have a diversified “portfolio” of people who can operate over longer periods of time in a wide spectrum of conditions, along with business lines, strategies, products, and services that can do the same.

Acknowledge your worry or fear, and consider your company’s plan and portfolio. If they’re sound, then stick to your plan and take comfort in your diversified portfolio, which has been built for the long term. Find ways to take advantage of the current conditions, and do not panic. Focus on your long-term goals and vision, and you’ll soon find yourself back to being confident, unwavering, and strong.