While many questions regarding the Coronavirus pandemic remain unanswered, and with a stock market experiencing extreme volatility, there is continued uncertainty as to what could happen in our industry over the next few years. But many people in the industry have been through such ambiguity before. We sought the advice of industry leaders who successfully made their way through the Great Recession, and we asked what they learned from it and how they will use their experiences to advance through the coming years.
DOUG ARNOLD, Buck Pond Farm
Liquidity is the key to everything that goes on in the breeding business. I think an issue that farms can run into in an economic downfall is acquiring too much debt. You look at the stock market—liquidity is of utmost importance. After two weeks, they were starting to have a problem with liquidity. So if you were able to keep a little money aside, that helped.
What really amazed me was how fast the liquidity dried up and how everyone does the same thing in borrowing money, making a profit on their product, and then reinvesting their money before they've paid off their debt. Nobody knows quite what's going to happen putting six trillion dollars into the economy, but you would have to think the interest rates are going to go up. So watch your costs and if you're breeding good horses, you'll be ok.
Unlike in 2008, our farm doesn't owe a lot of money now, so I think going forward with these uncertain times, that'll be advantageous for us. I think of the farms that went away in 2008 and many of them got too far away from home base. They owed too much money and were hurt when the downturn came. While everyone wants to reinvest when we have the opportunity, in our game you don't want to get too far into owing too much money.
We just had our last foal of the year and we haven't lost a single foal. We had a good year. So maybe it's one of those things where you turn your attention back to the horse. Get away from the office and out where the horses are.