This Blog was started to discuss the Four Pillars of Wealth Creation, Financial, Physical Health, Mental and Spiritual
"Outside of a dog, a book is man’s best friend. Inside of a dog it’s too dark to read."
Groucho Marx
Have you ever asked yourself these questions…
- What is the purpose of my life?
- How can I make more of an impact?
"We don't get paid for activity, just for being right. As to how long we will wait, we'll wait indefinitely."
Warren Buffett
When you mention Benjamin Graham, Warren Buffett, and value investing in the same conversation, you're likely to get everyone nodding and going along with what you say. That's because agreeing with a philosophy is the easy part. But actually understanding and applying the approach of that philosophy is another story.
Aside from what he's currently buying and selling, Buffett has no investment-related secrets. It is my sincere belief that if you read Graham's The Intelligent Investor and Security Analysis, along with everything Buffett has written, and then work on truly understanding and applying their principles to investing, you will outperform 75% of investors.
Graham sums up how to invest intelligently when he says, "Investment is most prudent when it is most businesslike." Apply that reasoning to your investment considerations, and you will already have a head start. But to elaborate on that idea, let's turn to some words of wisdom from the Oracle of Omaha himself.
"I am a better investor because I am a businessman and a better businessman because I am an investor."
Running a business and making an investment go hand in hand. It's that simple. You wouldn't buy a business based only on rapidly increasing profits, nor should you invest in a company on that one metric. Instead, the prudent businessperson and the intelligent investor would scrutinize the balance sheet and determine, for example, whether earnings growth has been coming at the expense of increased receivables as a result of poor credit policy. Furthermore, as any businessperson realizes, earnings are easily manufactured, whereas cash is real.
Buffett's 1973 investment in the Washington Post (NYSE: WPO) is a wonderful example of a businesslike approach to investing. The idea was simple. The Post owned a wonderful collection of media assets that Buffett concluded were worth about $400 million. The company, meanwhile, was selling for just $80 million. Was it a great business? Yes. Was there a satisfactory margin of safety? Yes. Case closed.
"Never ask a barber if you need a haircut."
Here, Buffett was alluding to investment bankers and analysts. Let's face it: These folks get paid when you buy what they're selling. To be fair, there are many excellent investment bankers and analysts who truly offer a valuable service. Buffett's illuminating point was that you already know the answer you're going to get, and it will be determined by everything but rationality.
"I don't try to jump over 7-foot hurdles: I look for 1-foot hurdles that I can step over."
Buffett's critical advantage over the pack is that he focuses on the boundaries of his circle of competence rather than the size of his circle -- although his is still probably bigger than most. It's illuminating that one of the most talented investment minds of our time made the bulk of his fortune through businesses such as insurance via GEICO, soft drinks via Coca-Cola (NYSE: KO), candy, razor blades, and a host of others that are simple to understand.
"We don't get paid for activity, just for being right. As to how long we will wait, we'll wait indefinitely."
Buffett has always said you should never allow the stock markets to guide you, because the market is really there to serve you. One of Buffett's greatest attributes is that he can be patient about investments until the time is right, regardless of how long that time may be. In one case, Buffett waited nearly four years to make a significant move -- in 1970, he folded his partnership and made virtually no public-market investments until 1974, when the price-to-earnings ratio of the S&P went from around 20 to 7. At that point, Buffett began buying all over the place.
During that time, Buffett became famous for saying, "I was selling stocks at three times earnings to buy stocks at two times earnings." The approach worked: Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shares rose from $40 to $420 per share from 1975 to 1980, for about a 57% annual rate of return!
"When a management team with a reputation for brilliance joins a business with poor fundamental economics, it is the reputation of the business that remains intact."
A truly great business can survive with mediocre management. You should always consider that at some point, less-than-stellar management will find its way to the helm of any business.
Words to invest by
From just these few simple words, you can develop a good framework for successful investing. Simply focus on investing in great businesses that you can understand, and then be patient. Do what Warren would do.
"Life takes on meaning when you become motivated, set goals, and charge after them in an unstoppable manner."
Network Marketing, also known as MLM (Multi-Level Marketing), can be worked successfully online as well as the more traditional, person to person, direct mail or over the phone methods.
Net work Marketing had its roots long before the internet. Some very large and successful companies were built on, and continue to thrive, based on a MLM model. The way it basically works is this: a company sells products or services through a vast network of independent distributors that sell at retail prices to the end consumer.
The new distributor usually pays some sort of fee to join and/or has to buy a certain amount of the products to gain distributorship status. All legitimate network marketing companies work on a solid business model. The parent company has a product or service of value to offer its customers. The networker’s responsibility is two-fold; to find other customers to buy the product and to recruit new members.
Network Marketing companies urge distributors to bring in new people to do the same as they are. The referring distributor then earns a commission on the products that the new distributor sells. If the new distributor also brings in other distributors, the original distributor also receives commissions on those sales and so on. This is the "Multi Level" business model. You can be paid on any where from 2 to 10 levels, some companies pay even more.
In most network marketing companies you can earn more income by referring new members than you can by just marketing the companies products. The best distributors are usually people who love the product and who would still purchase the products even if there were no business opportunity also.
If you are considering a network marketing opportunity, you should ask the following questions:
1) Who owns the company? What is their commitment level, their integrity and honesty?
2) How old is the company, most companies fail with in the first 5 years.
3) Who is your upline? What kind of training does the company and/or your upline provide. Investigate the entire upline just like you would a business partner you'd never met before.
4) What is the product? Become an expert on the product and/or service that’s being offered to clients. Learn as much as you can about the competition as well.
5) How long will it take for you start making money?
6) How do you recruit new members? As a customer first, then mention the possible income opportunity, or the business opportunity first and the products second. Usually a combination of these two methods works best depending on the person that you are talking to.
7) Why pursue this network opportunity with this company? This is perhaps the most important question of all.
Essentially, there are no right and wrong answers to these questions concerning a network marketing opportunity. The point is to make sure that everything you need to know is easy to find out, if the answers are vague, do more research before you decide if this is the right company for you.
Many people have made a lot of money in network marketing; this type of business can supply you with a very nice part time residual income.
Author Resource Box
Lee Stuckey is the owner of Key2Wealth.net, he writes on a variety of subjects concerning the 4 Pillars of Wealth Creation. To learn more about this topic Lee recommends you visit: http://www.key2wealth.net
“A permanent portfolio should let you watch the evening news or read investment publications in total serenity. No actual or threatened event should trouble you, because you’ll know that your portfolio is protected against it, whether it be inflation, deflation, recession, or war.”
Creating Wealth Wisely
If you are running your own business then chances are you are so caught up in the day to day operations that you may not have taken the time to look into alternative ways for you to create wealth by investing your extra money in to your FFA-(Financial Freedom Account).
After a while you may actually earn more money from your investments than you are earning from your business. The reason for this is, depending on your business you will not have to deal with the overhead expenses, salary, and interest in a business. These factors are not present in most investments because you are making your money work for you rather than you working for your money and your investments will also be working for you 24 hours a day.
So how exactly can you go about this? You want to invest your money so that it will earn you a passive income. There are many investment options that you can choose from. Even your regular saving account in the bank could be regarded as an investment because you are able to earn a specific amount of interest on the money you have deposited although the interest rate is usually very small.
A bank account is a good place to accumulate money in your FFA until you find a more suitable investment that will let you receive a higher yield on your money. Some of these opportunities may include investing in the stock market, in bonds, ETF’s, REIT’s and even in foreign exchange.
Even investing in mutual funds carries some risks because the management fees can be so high that it eats away at your original investment or the money manager may have changed and the new money manager is not as capable at earning as good of a return.
Some people may prefer to have their money managed by a professional money manager; this may provide you with a sense of security because you know that your money is managed by competent financial managers. In addition, you should note that diversification is important in today’s world.
One way you can achieve both of these prerequisites is to invest your money in a holding company like Berkshire Hathaway, this company already has the diversity, and it owns and is invested in many different types of businesses and is run by the world’s most successful investor who also happens to be the richest person in the world, Warren Buffett. By investing in Berkshire Hathaway, you would have
Taking a little time to understand which type of investment is best for you will require a bit of in-depth exposure to investing. This time is well spent as it will pay off handsomely in the future as you watch your FFA grow and grow.
However, you should note that just as in operating your own business, investing does present risks also.
Overall though, learning how to invest your money is a good way to earn a passive income while enjoying the convenience of being in control of your time and your money.
Author Resource Box
Lee Stuckey is the owner of Key2Wealth.net, he writes on a variety of subjects concerning the 4 Pillars of Wealth Creation. To learn more about this topic Lee recommends you visit: http://www.key2wealth.net
"Often the difference between a successful person and a failure is not one has better abilities or ideas, but the courage that one has to bet on one's ideas, to take a calculated risk - and to act."
Maxwell Maltz
Charlie Munger's 10 Rules for Investment Success
Those of us who have been lucky enough to attend a Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) annual shareholder meeting have undoubtedly heard Charlie Munger say, "I have nothing to add."
In reality, the guy has quite a bit to add. Thankfully for us, Munger is almost as forthcoming with his investment thoughts as his pal Warren Buffett. In his must-read book, Poor Charlie's Almanac, Munger puts forth a 10-step checklist that even the most inexperienced investors could benefit from.
1. Measure risk
All investment evaluations should begin by measuring risk, especially reputational.
It's crucially important to understand that from time to time, your investments won't turn out the way you wanted. To protect your portfolio, don't set yourself up for complete failure in the first place. Giving yourself a large margin of safety, avoiding people of questionable character, and only taking on risk when you can be sure you'll be satisfactorily rewarded are all steps in the right direction. Companies like Chipotle might have perfectly bright futures, but when their shares are priced for perfection, they might nonetheless prove too risky for savvy investors.
2. Be independent
Only in fairy tales are emperors told they're naked.
With stockbrokers often rewarded for activity, not successful investments, it's critically important to make sure you believe that what you're doing is right. Chasing others' opinions may seem logical, but investors like Munger and Buffett often succeed by going against the grain. Big Berkshire investments such as Coca-Cola (NYSE: KO), and more recently Petrochina (NYSE: PTR), were largely ignored by the masses when they were first made.
3. Prepare ahead
The only way to win is to work, work, work, and hope to have a few insights.
It shouldn't surprise you that the best investments aren't the ones we typically read about in the paper. The diamonds in the rough are out there, but finding them requires effort. Buffett reads thousands of annual reports to cultivate ideas -- even if he only comes up with a few candidates each year. Munger advocates a constant curiosity for nearly everything in life. If you never stop asking the "whys" in what you do, you won't have trouble staying motivated.
4. Have intellectual humility
Acknowledging what you don't know is the dawning of wisdom.
Perhaps most crucially to Berkshire's success, its leaders never stray away from their comfort zones. In investing, a clear idea of what the business will look like in the future counts most. If you struggle to comprehend what the business does today, you might as well be throwing darts. While companies like Google (Nasdaq: GOOG) and Boston Scientific (NYSE: BSX) are certainly titans in their own right today, they might look drastically different in five to 10 years.
5. Analyze rigorously
Use effective checklists to minimize errors and omissions.
The numbers don't lie. When researching investments, Buffett and Munger like to try to estimate the security's worth before they even look at its price. They are businessmen, not stock-market junkies. They focus their brainpower on the value of businesses, not convoluted economic forecasts or intricate market-timing techniques. Munger is incredibly brilliant, but the analytical rigor of his investment decisions is based around simplicity, not complexity.
6. Allocate assets wisely
Proper allocation of capital is an investor's No. 1 job.
In the early days of Munger's investment partnership, he held very few securities. When good ideas came, he poured significant capital into them; otherwise, he simply enjoyed the California sun. The amount of money employed in each of your investments should relate directly to its attractiveness. When you find a great investment, don't be afraid to bet big on it.
7. Have patience
Resist the natural human bias to act.
Munger said it best himself: "Half of Warren's time is sitting on his a***and reading; the other half is spent talking on the phone or in person to a highly gifted person that he trusts and trust him." While it can be tempting to jump in and out of the market, true fortunes are made from big commitments in quality companies, held indefinitely. When you're done with that, find a hobby. Spending all day watching stock tickers won't do you much good.
8. Be decisive
When proper circumstances present themselves, act with decisiveness and conviction.
This also goes back to not following the herd. When others are jubilant, you should be scared, and vice versa.
9. Be ready for change
Accept unremovable complexity.
Investing success requires us to accept inevitable changes. Munger and Buffett hated railroads for decades, but as the times changed, they threw their old thoughts out the door and invested billions. The world around us won't always conform to our preferences and prejudices, and sometimes our best ideas will prove incorrect. If you aren't willing to roll with a changing market, you may find yourself fighting a lost cause.
10. Stay focused
Keep it simple and remember what you set out to do.
In chasing little, unimportant things, we often overlook huge and critical factors. But by keeping it simple, we can fixate on what really matters: buying good companies at a good price, and holding them until they're fully priced.
Charlie Munger often gets overshadowed by his more famous partner, but don't assume that's any reflection of Munger's own genius. He's undoubtedly been a guiding light for Buffett himself, and by any count, he should go down as one of the greatest investors of all time.
Lee Stuckey
"Money is plentiful for those who understand the simple laws which govern its acquisition."
- George Clason
Warren Buffett earned a cool $10 billion since last year, due almost entirely to Berkshire Hathaway stock appreciation. The Oracle of Omaha is now estimated to be worth $62 billion, besting Mexican tycoon Carlos “Slim” Helu’s $60 billion net worth and Bill Gates’ $58 billion.
If you’d like to have Mr. Buffett work for you just purchase Berkshire Class B shares which peaked at an incredible $50,000 in December.
Berkshire Hathaway's annual report has been released and as usual it is filled with wisdom written in plain english by the richest man in the world.
The average overall annual growth in book value since Warren Buffet took over management of Berkshire in 1965 is 21.1% compared to the S & P which has averaged 10.3%. What makes this even more amazing is that Berkshire Hathaway's return is after taxes and the S & P return is before taxes.
Speaking of taxes her is a quote by Warren from the Berkshire Hathaway annual report that you can read at:
http://www.berkshirehathaway.com/letters/2007ltr.pdfWe paid the IRS tax of $1.2 billion on our PetroChina gain. This sum paid all costs of the U.S. government – defense, social security, you name it – for about four hours.
I will post more articles to my bog in the next couple days concerning the annual report from Berkshire Hathaway and the two partners that control it, Warren Buffett and Charlie Munger.
Lee Stuckey
"Please understand my friend, that where you find yourself tomorrow is a function of the positive decisions and actions you take today."
Akin A. Awolaja
This article deals with a topic that creates confusion for a great many people. Over the years, I have found myself amazed by how little most people know about becoming wealthy.
I mean no disrespect by this statement; it just seems unusual that so many people do not have the basic knowledge of how to build a substantial amount of financial wealth.
There seems to be a misunderstanding about the difference between making money and building wealth.
Making money is necessary for your survival. Simply put, making money is just like eating. If you don’t eat, you won’t survive.
On the other hand, you can live fairly comfortable for many years without ever becoming wealthy. You can live a good life as long as you continue to go out and make enough money to eat and keep a roof over your head.
What if you decide that you don’t want to go out to work one day, you will have to ask your self how do I plan to eat? What if you find your self in a situation where you are unable to go out and work to provide for the food you eat for a long period of time, you could end up dying or be forced to live on welfare.
In our world in order to live, you must have money. How you live is greatly decided by how much money you have.
Over the years, I’ve worked with many people who were able to earn large amounts of money. The problem is that they never take the time to think about what would happen if they were not able to work or how would they live? They never save any money. They just live day to day.
I have noticed that these people have found themselves in situations that caused them misery because they were unable to work and provide for themselves once the income stopped or even if their income dropped. These people had geared their standard of living to match their large income and then found themselves in a difficult situation when their income failed to keep up with their expenses.
In order to stop this from happening to you, you need to learn some basic financial concepts. The first of these concepts is that you have to pay your self first, pay your self a minimum of 10% of what you earn and then invest it into your FFA (Financial Freedom Account) then use this money to build your self some type of passive income stream. In order to become wealthy, you need to have several types of income producing assets working for you. The difference between people who are wealthy and people who are not is that the wealthy are able to stop working and still earn an income.
The first mistake that people make is they fail to set aside a portion of their money, most people spend every penny they make and then some.
You need to create wealth 24 hours a day if you want to become financially independent. When you are financially free you can provide for yourself if you discontinue working, either because you want to or if you are forced to.
At the very least, you must learn the habit of setting aside a portion of your income for an emergency fund. Then if an emergency situation arises you have the ability to pay for the necessary expenses over and above what your income usually provides for you.
I tell people to put their FFA plan on automatic. By automatic, I mean that you have your bank deduct money from your paycheck and split it up in to your FFA and emergency accounts before you ever get it. This way you will hardly even notice the money is not in your account.
If you do not have a plan for creating wealth, such as a retirement account or a FFA account, you need to set one up right away. Once you start doing this, you will be amazed at how fast your money will begin to grow. Even better, you have now started another source of income that can replace your income from working every day if you choose not to.
Remember, when it comes to creating wealth, it’s not what you make, it’s what you keep. Pay your self first. Regardless of your current income, you can create the wealth you need to provide for yourself and your family.
It is very important that you take the time to learn how to build your financial wealth. Using your FFA to build passive income is one of the building blocks in making this happen.
Author Resource Box
Lee Stuckey is the owner of Key2Wealth.net, he writes on a variety of subjects concerning the 4 Pillars of Wealth Creation. To learn more about this topic Lee recommends you visit: http://www.key2wealth.net
Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”
When things go wrong, as they sometimes will,
When the road you're trudging seems all uphill,
When funds are low and the debts are high,
And you want to smile but you have to sigh,
When care is pressing you down a bit,
Rest if you must, but don't you quit.
Life is q***with its twists and turns,
As every one of us sometimes learns,
And many a failure turns about,
When he might have won if he'd stuck it out.
Don't give up, though the pace seems slow -
You may succeed with another blow.
Often the goal is nearer than
It seems to a faint and faltering man;
Often the struggler has given up
When he might have captured the victor's cup,
And he learned too late, when the night slipped down,
How close he was to the golden crown.
Success is failure turned inside out -
The silver tint of the clouds of doubt,
And you never can tell how close you are -
It may be near when it seems afar;
So stick to the fight when you're hardest hit -
It's when things seem worst that you mustn't quit.
Author Unknown
Lee Stuckey
Excerpted from Multiple Streams of Internet Income
A let’s boil marketing down to a few bedrock principles.
According to marketing guru Jay Abraham, when you boil business down to its basics, a businessperson is trying to master only three major activities:
1. To increase the number of customers
2. To persuade these customers to buy more in their initial orders
3. To encourage these customers to buy more frequently
Getting more customers is all about generating leads-getting your message in front of the right people and enticing them to take a look at your business. Increasing the average order is about persuasion and bundling-giving people a better deal for a larger order. Increasing the frequency of purchase is about the back end-developing long-term relationships with your customers so they want to buy again and again.
The importance of differentiating your marketing message from that of your competitors was first defined in 1960 by an advertising agency chairman named Rosser Reeves. He called it the unique selling proposition, or USP for short. He taught that every advertisement must offer the customer a specific, unique benefit-a proposition that differentiates it from all other competitors.
What is your USP? Whatever it is, it must set you apart. It must make you different. Even after you’ve found a school of hungry fish-even after you’ve discovered what they’re biting on-your bait will get lost in the whirlpool of competing messages unless you figure out a way to make it stand out from the rest.
How Do You Create a Powerful USP?
Let’s learn how to create a USP. The letters actually stand for the words unique selling proposition, but let me show you how to supercharge your JSP-how to create a USP that not only differentiates but actually sells hat you have. I’ll give you words to use as a hook to help you remember the three most important aspects of creating a powerful USP:
Ultimate advantage
Sensational offer
Powerful promise
Ultimate Advantage
What specific benefit do people get from doing business with you that they could not get from one of your competitors? The very first and most important part of a USP is to give the customer a major advantage or benefit. Try to make each benefit something that none of your competitors offer-differentiate your product or service in at least one major way.
Can You Discover the “Copper Rivet” for Your Business?
When designing your business, you need to lie awake nights trying to discover ways to separate yourself from all of your competitors. On the Internet you will be competing with people from all over the world. Why should anyone buy from you? What advantage can you offer that truly separates you from the pack?
In other words, what single benefit do your customers get from you that they won’t get from a competitor. Take out a package of 3 x 5 cards. Write on each card the words, "You get …" and then write one major differentiating advantage on each card.
Keep writing until you fill out as many of the 100 cards as possible. You should continually ask yourself this question as your business grows, because people can come along and steal your advantage. They may be able to copy where you’ve been, but if you keep improving your advantage, you’ll always leave them in your dust.
Once your list is complete, try to determine what your one major advantage is and then emphasize it in everything you do. Just make sure it is a unique benefit that only you offer.
Sensational Offer
How to Create a Sensational Offer
Everyone likes a deal, a bargain, a discount. There are ways to. Package a deal to make the purchase appear to be a bargain. The other day, while surfing for an airline ticket, I did some comparison shopping at several of the major online travel sites. All of the airfares were within a few dollars of ach other, but one site included a 30 percent discount on a future ticket from the same airline.
This bonus did two things: It enticed me to buy from this site instead of the others, and it forced me to return to this same little the next time. It locked me up now and in the future. Smart. This little incentive tipped me over the top. The travel company was giving a volume discount: Buy two, get 30 percent off. It’s a no-brainer.
You need to lie awake nights figuring out a classy way of offering special bonuses to go along with your main product to make it look like an unbeatable deal.
Here are some examples of things you could offer a first-time buyer:
• An extended warranty
• A discount coupon
• A free special report
• A CD-ROM containing a free book or other valuable information
• A free banner ad on your site
The goal is to reward your customers for taking action-to make each purchase a surprisingly pleasant experience. But don’t stop there. In addition to giving them a bargain on the front end, you should build enough into your price to send them a “surprise” bonus with every purchase-to reward, delight, surprise, and astonish your customer for his or her purchase.
Powerful Promise
The thing that clinches a deal is trust, and let’s face it, with your first time buyer you don’t have any. What is an instant way to gain trust? Offer a I clear, unmistakable, no-questions-asked guarantee. But this isn’t enough. You need to supercharge your guarantee with a powerful promise.
You see, a guarantee by itself is powerful, but when you attach your guarantee to a powerful promise, you’ve supercharged it, you’ve energized it, you’ve made it real. The promise should heighten your uniqueness.
For example, consider hotel room service. Any hotel can guarantee to deliver your meal quickly. But Marriott goes a step further: “Your meal in 30 minutes or it’s free.” Now that’s a promise with teeth! It heightens and illustrates Marriott’s USP of quality service.
An outrageous Promise
In coming up with a powerful promise, you may need to push the envelope-get outrageous, take a risk. Then work backward to figure out a way to deliver on your outrageous promise.
By Robert Allen
Best-selling Author and Co-founder of EWI
Robert Allen is one of over 50 instructors with Success University
Lee Stuckey
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