The stock market is not the economy. It is not indicative of the economy’s health. The stock market is a human collective reacting emotionally to news and numbers. It is merely a means to measure the perceived value of publicly-owned companies based on human emotion and expectations. Those perceived values can be overvalued, undervalued or properly valued, and with the Dow Jones Industrial Average dropping nearly 1,000 points the last three days, it seems stocks were overvalued.

Why did stocks fall?

Stocks were overvalued due to a myriad of factors. According to the “Shiller PE Ratio,” stocks were more expensive than they were on “Black Tuesday” in 1929, but less expensive than they were at the height of the dot.com bubble. So historically speaking, stocks were dangerously expensive.

Stocks are overvalued when things are going right. A lack of volatility over the past few years has culminated in a perfect storm that’s seen the VIX -- the stock market’s most popular measure of stock volatility -- rise more than 300 percent in a month.

“One big change affecting the market is interest rates, which have climbed sharply in 2018 to multiyear highs in the U.S. and around the world as economies have picked up steam,” Ed Carson writes for Investor’s Business Daily. Higher interest rates mean higher borrowing costs, which result in people consuming less. Much of the stock market’s recent losses are tied to an expectation that consumers will be spending less in 2018.

What to expect from the stock market in 2018

Don’t expect the stock market to continue providing 2017 rates of return, and with interest rates likely to increase, bonds aren’t necessarily the best place to put your money, but not the worst either.

There is good news for this newly volatile stock market. Midterm elections are more often good for the stock market than bad. “[T]he seasonality associated with midterms has brought positive returns for the stock market a lot more than it has brought losses,” according to Dominic Chu of CNBC. “On average, the S&P 500's return between Oct. 31 of the midterm year and Oct. 31 of the following year has been an eye-popping 17.5 percent.” So it’s not time to pull your money out of the stock market; it’s time to invest in the stock market.

What’s the best approach for investing in 2018?

The best approach for investing in 2018 is the same approach for investing in 2017 and any other year: invest and forget. You’re not going to get rich buying Exchange Traded Funds (ETFs), but you will realize a better return than you would from putting your money in a savings account or buying a Certificate of Deposit (CD).

Attempting to time the market is also a mistake, as is reacting to the market like stock traders did this week. Pulling your money out of the stock market at the first sign of adversity is the same emotional response that drove the stock market down in the first place. Traders selling shares in fear worsened the market’s decline because they had come some accustomed to the market’s lack of volatility. In fact, regular contributions to the stock market help limit volatility. So expect volatility and accept it. Just keep feeding the beast and try to forget that it’s there.


If you like this, you might like these Genesis Communications Network talk shows: USA Prepares, Building America, Free Talk Live, American Survival Radio, Jim Brown’s Common Sense, Drop Your Energy Bill, The Tech Night Owl

Published in News & Information

So you’ve got an idea that’s going to revolutionize an industry. You’ve got some startup capital to invest in your business, and you’re ready to dedicate yourself to your startup. But before you launch your product or service, there are mistakes you can easily avoid when starting your business that will sink your startup before it starts up.

1. Write a business plan before doing anything else

You might be thinking, “But I don’t need any funding,” or “I’m bootstrapping this business,” or “I have to be first to market.” And none of that matters. A business plan isn’t just a way to entice investors to provide funding for your startup. It’s a way for you to get to get to know your business intimately.

Most startups that fail do so because the CEO provided a product or service that didn’t solve a problem. Don’t try to solve a problem people don’t know they have; solve a problem they know they have. Writing a business plan is the best way to determine whether your business is solving a problem people know they have.

A business plan will also help prepare content for your website. You’ll nail down your company’s mission and answer key questions customers will have about your business. You’ll likely realize where a section of your business plan fits on your website while you’re writing it.

Most importantly, a business plan will help you prepare for each phase of your startup process, both operationally and financially. You’ll know how much startup capital you’ll need to start your business and have a budget so you don’t overextend yourself. You’ll also know who you’ll need to help start your business, and the list is probably longer than you imagined.

2. Invest in people before your product or service

The most important assets a company has is its employees, and it’s no different for a startup. Before you invest in a prototype or technology, surrounding yourself with the right people can help you avoid a failed launch of your business.

The first people you need are potential customers. You’re not selling them at this point, but their needs should dictate yours and that of your company. They can provide valuable feedback about your product or service that will help you perfect it prior to launch. Talk to at least 15 people you think would have an interest in your product or service. Let them know what you intend to offer and how they would improve it.

One of the best investments you can make in your business is in public relations. You might think you can do this work yourself, especially after writing a business plan. After all, you know your business better than anyone else. But journalists and editors of newspapers, magazines and websites are more apt to publish something about your business when it comes from a PR person or firm with whom they’re familiar. A press release received from an email address that contains the same business name as the press release doesn’t exactly scream “trust me.” A third party writing about your business, though, does have some validity, even though you’re paying that party.

You’ll likely pay more than you think, too, according to Tom Hogan and Carol Broadbent’s new book, The Ultimate Start-up Guide: Marketing Lessons, War Stories, and Hard-won Advice from Leading Venture Capitalists and Angel Investors. Hogan and Broadbent recommend you never have a PR firm work on your account part-time and to hire a local firm where available. You should also seek out a PR firm that has contacts with media members who publish to your target market. And when you set the initial meeting, request that the people who will be actually working on your account are at the meeting. Some firms will send principal members of the firm who will never actually work on your account. Don’t allow them to pull the “bait-and-switch.”

Once you’ve chosen a PR firm to spread the word about your company, set regular updates and weekly meetings to keep everyone on the same page and make sure your goals are being accomplished. Also be sure that your public relations team is fulfilling your agreed-upon reporting style.

Another place new business owners attempt to save money is by not hiring a social media manager. Don’t do this unless you are a social media wizard that understands how to read Facebook Insights and analytics and where to best invest your social media advertising dollars. If your target market is Millenials, the majority, if not all of your advertising budget should be spent online.

3. Don’t do business with family

If you have a family member with money to invest in your startup, don’t allow them to do so unless they’re aware they could lose every penny and you know it won’t alter your relationship.

If your big brother is a social media wizard, think twice about hiring him as a social media manager. How will your big brother handle taking orders from you? Believe me, I know what it’s like to work with family. I made my senior film a family affair and ended up being ordered around by my elders despite being the writer, producer, assistant director and assistant editor of the film. While I didn’t follow their orders, it wasn’t pleasant for anyone else on set.

4. Don’t go it alone

You need a partner. While no one likes to give up equity in their company, investors like to see at least two people working together to start a business. It shows that both are capable of working with others. If you go it alone you don’t give that impression.

Having a partner also allows you to get a different perspective to make more well-informed decisions early in the startup process. Working within your own bubble puts your business in a bubble that will burst. Be open to new ideas and different perspectives because your business can benefit.

5. Find a mentor

You can find business executives that will give you free advice through SCORE, a nonprofit organization dedicated to helping small business get their start. Just enter your zip code and find business mentors near you. They’ll give you tips on your business plan, sales, advertising, operations management, etc.

There are also other tools available through SCORE. There are templates for business forms, webinars that will answer your immediate questions, and you can even register for a workshop in your area our schedule time with a business counselor. Even if you’re confident in your business plan, run it by a mentor to see what you and your partner are missing.

6. Stick to a timeline for launch and expansion

Whether you’re planning a soft launch or a massive grand opening, your launch is the first impression potential customers get of your business. Don’t screw it up too badly because it can sink your startup before is starts. Plan every part of your launch (and expansion) meticulously and stick to that timeline. Set goals that you want to reach within a certain period of time and then meet those short-term goals. If you say you’re going to launch on a certain date in press releases and advertisements, the worst thing you could do is push back your launch date because you’re behind schedule.

You’ll also want to set goals for expanding your company and meet those goals within a certain timeframe. If you say you want to open a new store within three years of launch, make sure you do your damndest to be in a position to do so. Meeting your goals gives you a lot to brag about as a company and CEO.

These are the easiest and most common mistakes you can avoid when starting your business, so don’t let one of them sink your startup before it starts.

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If you like this, you might like these Genesis Communications Network talk shows: USA Prepares, Building America, Free Talk Live, American Survival Radio, Jim Brown’s Common Sense, Drop Your Energy Bill, The Tech Night Owl

Published in News & Information
Friday, 26 May 2017 05:17

Get intimate with your money

While Birdman might sleep on a million dollars cash, you can get intimate with your money without sleeping with it. That’s a more lustful relationship with money than it is intimate anyways. The relationship I’m talking about is one that allows your money to give back.

I recently wrote about how the science of keeping checkbook register is dying but is still badly needed. But it didn’t take long to realize that in order to make my money make more money, I’d need more than a checkbook register in my smartphone. To truly get intimate with your money you have to bring in a third party -- a money ménage à trois, or partie carrée for those ready for a finance orgy of four.

Bring a Money Monitor into the Bedroom

Having someone or something monitor your money habits might sound a little uncomfortable. There they are, looking lustfully at your money, salivating perhaps. But there’s really no need to worry. While online money monitors connect to your bank and credit accounts, their interest is to sell you their money management plans -- not steal your money.

I used both LearnVest and Personal Capital, and I prefer LearnVest because it does more of the work for you. You can just make yourself comfortable and let her take control, so to speak. While LearnVest has a hard time determining from where your money comes and goes, she attempts to organize it in three key areas: income, fixed costs and flex spending. Personal Capital simply puts your money into two categories: assets and liabilities. So I like that LearnVest lets me know how much money I’m spending on things I might not need.

LearnVest can easily identify your income and does a pretty good job of doing so (unless your income doesn’t show up in your bank account via direct deposit). It’s the debits that cause a problem for LearnVest. Some electronic withdrawals aren’t very specific. For example, an auto-payment to a Chase credit card of mine simply comes up as Chase Bank in my bank statement. That was one of many transactions I had to put in the “Credit Card Payments” folder. You can even create a folder for regular expenses that don’t fall under broad descriptions like transportation, travel, gifts, groceries, shopping and home.

LearnVest also has the easier user interface of the two money monitors. There’s no struggling with the bra on this software. Pretty much anyone can figure her out, and she allows you to set priority goals like paying off credit card or student loan debt.

The busty, budget monitor is a really nice feature, too. She let’s you know if you’re in the black or in the red, and by how much. You can even set expected income and expenses and budget for specific things like eating out, transportation, travel and entertainment.

The best thing about bringing LearnVest into the bedroom is it will help you save and better invest your money for retirement. Now she’s not going to whisper hot, stock tips while nibbling on your ear, but by monitoring your money together, you get a better understanding of where it goes and where it could go.

Get Intimate with Your Money Outside the Bedroom

Spice up your relationship with your money by trying new things in new places. You can’t spend all day in the bedroom with your money. Your money needs to get out in order to make money for you. And you don’t need a chaperone, either. You can control your financial future and retirement planning without the help of an investment banker. Just read this first. Then check out Stash. Stash allows you to build a portfolio based on the things you love, so you’ll feel good about where your money is going when she’s not with you.

Stash groups similar companies together in exchange-traded funds (ETFs) so you can invest in an industry rather than a single company. An ETF is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, though, an ETF trades like a common stock on a stock exchange, so prices change throughout the day.

So if you’re into technology, you can invest in the “Techie” ETF on Stash. If you’re into social media, you can invest in the “Trendsetter” ETF, and so on. Stash is a great way for young people to start preparing for their retirement without needing a lot of investment knowledge or a large investment. You can get started for as little as $5, and you can set it and forget it with Stash. Regardless of how much trading you do, you’ll pay $1 per month to Stash, and twelve bucks a year is pretty cheap considering individual trade commissions range from $4.95 to $6.95 each.

There are plenty of ways to earn a good return on your money without paying commissions to an online trading service, too. Charles Schwab offers over 200 commission-free, exchange-traded funds (ETFs). You can trade any one of them anytime without paying a dime in commission. This is an even cheaper way to get started on saving for retirement.

Whether you’re a recent graduate looking to begin growing the very little money you have or an experienced stock trader looking to invest over $100,000, there’s an online stock broker that’s right for you. Nerd Wallet has again knocked it out of the park and reviewed every online stock broker for you. But there’s even more you can do to grow your relationship with your money.

Bring an Investment Manager into the Bedroom

If your money is too much to manage by yourself or with a money monitor, it might be time to bring another person into the bedroom. An investment manager can design an investment strategy that will hopefully meet your retirement goals. I say hopefully because not all investment managers are reliable in the bedroom, and I certainly wouldn’t pay one doesn’t perform.

If you live near a metropolitan area, your best bet is to sit down with a local agent of a few online brokerages. There’s a Charles Schwab and Scottrade office near me, so I’ll be visiting with their staff next week to see which one I like more. I’m leaning toward Charles Schwab because of their commission-free ETF options, but you never know what these people are willing to offer once you’re on the way out the door with your money. Do your research before you sit down with these people, though. Have an idea of what you’d like to do with your money, how risky an investment you’re willing to make and how often you intend to trade. You don’t want to bring another person into the bedroom without warming-up to them a bit first. 

If you live in a rural area, you’ll probably have one investment advisor in the whole town if you’re lucky. But it doesn’t cost anything to schedule an appointment and just chat about your plans for retirement. You might even learn something you didn’t realize just by uttering your retirement plans aloud.

Whatever you do, don’t commit to anything or sign anything, open an account or hand over any money based on your initial interaction with this person. First of all, these people are selling themselves in order to have an affair with your money. They aren’t who they seem, and you don’t want to realize that once they’re in the bedroom disrobing your money and tossing it around like a pimp. Secondly, these people are selling themselves, so they’ll likely offer you a better deal if you play hard to get. Investment banking is highly competitive, and customers don’t come along with your stash everyday. You are special, and you have a special relationship with your money. You didn’t get intimate with your money to hand it all over to someone else. You should remain involved in the relationship going forward, so find an investor who wants you in the bedroom with her and your money.

That’s how you get intimate with your money and stay intimate with your money. Online money management services and stock trading allow you to be more involved in your retirement planning than ever. And you should stay involved, because while you can’t take it with you, your money can work for you and those you love long after you’re gone. Getting intimate with your money will payoff for generations, so sit down with your money regularly and don’t be afraid to bring someone or something new into the bedroom.

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If you like this, you might like these Genesis Communications Network talk shows: USA Prepares, Building America, Free Talk Live, American Survival Radio, Jim Brown’s Common Sense, Drop Your Energy Bill, The Tech Night Owl, Travelers411, What’s Cookin Today

Published in News & Information

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