Team Jefferies,
Last week, markets delivered an ample dose of volatility in reaction to the possibility of a much more efficient way to proliferate AI in the world. And if that wasn’t enough, the possibility of material tariffs has gone from theory to likely in a matter of days. Now, it is possible that both will be head fakes, but maybe not. We are going to leave the nuances of these situations and their implications to our much more qualified research partners throughout Jefferies. However, we believe this recent uncertainty, with more likely to come, is a perfect opportunity to remind all of us about the role of change, risk, and volatility in everything we do and why embracing and accepting its eventuality is always a better choice than ignoring it, hoping it stays away or living in fear of uncertainty. Here are a few of our observations from our lifetimes of navigating the unexpected:
- Change Is the Only Constant. First, the only constant we have ever seen in business is that surprises always happen when you least expect them. Conventional thinking and the trend may always feel like your loyal friend, but sometimes it is not. Accepting this and applying your own independent thought (sometimes to things that seem like a complete waste of time because conventional wisdom is so compelling) often separates the winners from the big winners. It can be lonely, uncomfortable and create self-doubt. Often conventional wisdom is correct, in fact most of the time it is. It takes a rare breed to dig the extra layers down to find another way of looking at something. One doesn’t need many “Eureka” moments in one’s career to define oneself. If you can find just one, you may be ahead of almost everyone.
- Strong Foundation. Because volatility rears its head unexpectedly, one must always have a strong foundation and duration of capital beneath you. This foundation allows for small mistakes that happen routinely, but is critical to successfully navigate big surprises. To succeed in this world, one must take calculated risk to differentiate oneself, your products and services and your overall business. Riskless businesses offer limited returns, so while it is nice to always be able to sleep perfectly at night, you will never get anywhere important. A strong foundation allows you to feel confident taking (sometimes bold) calculated risks, knowing that even in a worst-case scenario, you will always live to fight another day.
- Opportunity. Volatility can create the biggest moments of opportunity, if you are able to play offense and capture it. When all is going well and the line is straight up and to the right, playing offense can be riskier and more expensive. As long as you remain humble and centered as your strategy and good fortune allow you to progress during these bull runs, you will be able to spring into action if the music stops or a completely different song starts. Maybe you will double down because the volatility was caused by factors that turn out to be wrong. Maybe you will entirely pivot to a new and better direction because you have embraced the volatility and have the foundation and culture to pounce ahead. While it may not feel this way at the time, some of the best game-changing opportunities occur when volatility hits and you embrace it. It can be even more eventful if very few others are in the same position to act as decisively.
- Culture. In volatile times, transparency, a sense of urgency, over-communication and integrity always carry the day. Denial, hope, blame and over-confidence are the kryptonite that paralyze people and companies. Sometimes things just don’t go according to plan. Being able to accept that, independently critique your long-held beliefs, and if necessary “make the pivot” will allow you to seize the opportunity.
- Easy Come, Easy Go. Never forget that sometimes as quickly as volatility smacks us in the face, it disappears into the ether. No change is required. No lessons really learned. Conventional wisdom turns out to be conventionally right. The world just needed to shake us all up aggressively and repeatedly for sport. Then again, a lesson can always be learned. If all that sudden volatility ever teaches us is to always be humble no matter what our good fortune, then volatility truly is our friend.
Embracing change, volatility and reality,
Rich and Brian
RICH HANDLER
CEO, Jefferies Financial Group
1.212.284.2555
[email protected]
@handlerrich X | Instagram
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BRIAN FRIEDMAN
President, Jefferies Financial Group
1.212.284.1701
[email protected]
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