Investors should not panic at times of volatility between cycles and try to spot short-term trends that can be taken advantage of, advises Blackstone Group Chief Executive Officer Stephen Schwarzman.
"The system adjusts and so you're seeing securities markets respond to those uncertainties mostly by going down," Schwarzman told NDTV Profit.
"But not everywhere. Europe which was a real laggard economically is going up. And China, which was very much a laggard, its market is going up. So different parts of the world get affected in different ways," he said.
"It's important to try and figure out where you think the biggest impact will be. Try and get a sense of how long a period of uncertainty will exist... Most people get so worried that they almost panic, and then stop doing anything. That's the wrong answer," Schwarzman explained.
Schwarzman, whose firm manages over $1.1 trillion in assets, said technology and the use of the internet is taking reactions to events to a new level that is leading to higher volatility. He cited the example of the Silicon Valley Bank in the US that went bust in early 2023.
"Now everybody has their own little communications network, and they get things immediately. And that's how Silicon Valley Bank went bankrupt, because somebody said 'I think they might go bankrupt in a few hours'. That was communicated to other people who said, 'Give me my money. now'," he said.
"There was nothing wrong with Silicon Valley Bank, which was the second biggest bankruptcy in US history. What went wrong was that everybody could take their money out at the same time. So that kind of almost harmonic move introduces risk and change," added Schwarzman.
The lesson for Blackstone in this? "You have to manage people's money in a way that protects them from that kind of overreaction," he said.
Watch Blackstone CEO Stephen Schwarzman's full interview here:
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