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ARTICLE AD BOX
Blackstone Group CEO Stephen Schwarzman says economic downturns are normal and temporary. While recessions bring falling prices and tight liquidity, disciplined investors can seize opportunities by buying quality assets cheaply with less risk, positioning themselves for growth when the cycle turns.
Business leaders and entrepreneurs often share their words of wisdom, helping many who either lack motivation or are too afraid to begin their journey. In LiveMint's quote of the day, we focus on a quote by Stephen A. Schwarzman, the co-founder and Chief Executive Officer (CEO) of Blackstone Group, which is one of the world's largest investment firms.
“I’ve lived through periods of illiquidity before. Asset prices come down. The economy slows or even goes into recession. Then the cycle restarts. We buy at lower prices with less leverage.”
Here's what it means
In this quote, Schwarzman is implying that during his lifetime, he has seen many phases when money becomes scarce, businesses slow down, and prices of things like companies or stocks also witness a decline. According to him, it is during these times that many people start worrying because the economy is also likely to slip into a recession. However, things eventually get better, and the cycle restarts again.
He is emphasising that tough times in any economy are normal, and that they do not last forever.
Schwarzman's quote highlights an inevitable truth about global markets: economic cycles are inevitable. After periods of massive liquidity and increasing asset prices, what often follows is the phase where capital tightens, growth slows down, and weakening confidence.
Such a phase can rattle businesses and investors as declining valuations and reduced access to credit can create pressure across sectors. However, Blackstone CEO's experience shows that these downturns and economic cycles often reflect our perspective. For the positively focused investors, such a period could represent an opportunity. For seasoned investors who are financially strong, such bad times can turn out to be good opportunities. When prices are low, valuable assets can be bought off cheaply as compared to the overpriced markup during boom periods. He further implies that by using less borrowed money, they can reduce the risk, if similar conditions continue to persist. Whereas, for those who can easily be swayed by such downturns, exiting the game or panicking becomes a resort.
The shift creates a window for disciplined investors to step in.
Schwarzman’s quote serves as a timeless principle, one of the fundamental ones of investing. In an era marked by global uncertainty, downturns are not to be considered as the end of the story. For those willing and able to act prudently, these transitions can mark the beginning of the next phase of growth.
English (US) ·