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What We Can Learn from Waffle House

[/fusion_text][fusion_text]Have you heard of the Waffle House index? If you’re near me in the upper Midwest, you might not have even heard of Waffle House. My nearest location is 365 miles away. Waffle House is a 24 hour diner that is so good at dealing with natural disasters that FEMA (Federal Emergency Management Agency) created an informal index as one way to measure the damage from storms. Waffle Houses stay open until they are forced to evacuate and special teams from other areas of the country come back in after a disaster to get things up and running as soon as possible. It’s quite impressive.

What can we learn from Waffle House in how we manage our investments?

Plan ahead – Hurricanes in the South are a way of life. The size and scope vary and they are hard to predict. Waffle House employees deal with this uncertainty by meeting months ahead of hurricane season to plan how they will react. Sound familiar? Stock market drops are also unpredictable. Timing is unknown, but downturns are inevitable. You had better have a plan for what to do when they occur. Emotions will run high when the economy sours. The doomsayers will be all around. How will you stick with your plan? Who will help you implement it?

Keep Operating Right Until the End – Waffle House locations stay open until there is an evacuation notice. When everyone else is fretting, they are providing a valuable service and making money. I suggest you do the same as the stock market climbs ever higher. Don’t sit on the sidelines. Take some of the profits as you go, but stay invested. More money is lost waiting for the next recession than is lost in the inevitable temporary decline.

Be Ready to Take Advantage of Opportunity when it Knocks – This is the most impressive part of the Waffle House operations. The company sends in special jump teams from other areas to run the business after a storm. This lets the local employees worry about getting their lives back on track. After a major storm, there aren’t many places open for business. Food supplies can be scarce. That means there isn’t much competition. Opportunity also knocks in bear markets. People who have part of their portfolio allocated to safe bonds can use some of it to buy stocks at a big discount.

This isn’t a perfect metaphor. It’s not a good idea to bail on your stock investments, whereas Waffle House employees should definitely leave when there is mandatory evacuation. There is no “all clear” when it’s safe to buy more stocks, but you can tell when the threat from a hurricane has passed. Even so, it’s a good reminder that prior planning can pay off handsomely when a storm hits Wall Street.[/fusion_text][separator style_type=”single” top_margin=”” bottom_margin=”” sep_color=”” icon=”” width=”” class=”” id=””][fusion_text]

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. ASA gathers its data from sources it considers reliable. However, ASA makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.