McKinsey Quarterly

Chart Focus Newsletter February 2010

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The upturn—sooner rather than later?

Companies deciding whether to move forward now with acquisitions or major capital projects should weigh the historical data on the timing of stock market recoveries. One common analysis calculates how many years must pass before the market returns to normal, assuming growth at the long-term average rate of 10 percent annually. In past recessions, however, the stock market came back from the trough much more quickly, with cumulative returns—over the two years that followed it—of 50 to 130 percent. If this pattern holds in the current downturn, companies waiting too long could miss the upside of the rebound.

To learn more about how companies can decide whether the moment for investments has come, read “The crisis: Timing strategic moves” (April 2009).
Also of Interest

December 2009
Dynamic management: Better decisions in uncertain times
Companies can’t predict the future, but they can build organizations that will flourish under just about any possible future.
(Premium Membership required)

December 2008
A fresh look at strategy under uncertainty: An interview
Although even the highest levels of uncertainty don’t prevent businesses from analyzing their predicament rationally, says author Hugh Courtney, the financial crisis has shown us the limits of our tools—and minds.

December 2008
Strategy in a ‘structural break’
During hard times, a structural break in the economy is an opportunity in disguise. To survive—and, eventually, to flourish—companies must learn to exploit it.

June 2002
Learning to love recessions
Most companies battened down the hatches during the recession of the early ’90s. Yet the more successful competitors pressed their advantages.
(Premium Membership required)

Did you miss last month’s Chart Focus?

“The marketer's new playbook”
Forget the past; instead, look for emerging pockets of profitability. One beverage company, for example, conducted surveys showing huge differences in the potential gains from customers within markets and micromarkets.