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Volatility's the new normal, economist says

Last December, a business reporter asked David Kohl after a Wall Street meeting his economic take on 2008.

"My response was, it happened so fast and so abruptly," says the Virginia Tech professor emeritus and president of AgriVisions. "That will be 2009, and also your next decade. If you think all this volatility is old hat, this will be the new normal. But there is a tremendous amount of opportunity that exists."

Kohl spoke at the Bayer 2009 Ag Issues Forum at the Commodity Classic in Grapevine, Texas. To survive, he encourages farmers and business people to concentrate on these factors.

  • Keeping plenty of cash on hand. "As (financial analyst) Jim Cramer would say, 'cash, cash, cash,'" says Kohl. "Cash liquidity will be king."

    Keeping cash on hand particularly works well in a deflationary period like the last few months, when oil and grain prices have dove from lofty highs earlier in 2008. In deflationary times, cash buys more of a cheaper asset.

Innovation. In times of volatility, several innovative practices can help you capitalize on business opportunities.

Resourcefulness. This includes getting marketing and risk management plans in order.

This also applies to employees and people that make your business work. "Right now, you don’t want any dead wood around you," he says.

Keep this in mind about the younger generation just coming out of college who may become your employees. "You have the 40% you don't want," says Kohl. “Another 20% are gray matter. That leaves 40% you want. These kids understand technology, and will be deliverers of change in productivity in America.

"They also have a high emotional intelligence," he adds. "They pick up on changes in culture from Dodge City, Kansas, to Waterloo, Indiana, to San Antonio very quickly."

Being selective on business opportunities. "It goes back to what Dean Smith (former University of North Carolina basketball coach said. You don't recruit, you select," says Kohl. He advises farmers to be selective of opportunities that fit with factors like their management system and human resources base.

"It's a crazy environment, but it is full of opportunities," he says.

Last December, a business reporter asked David Kohl after a Wall Street meeting his economic take on 2008.

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