Think and Make Money

You’ve heard of Elon Musk? He’s the CEO of Tesla Motors (NASDAQ:TSLA), the upstart luxury electric car manufacturer. He’s also, according to an article published in Forbes, “The Coolest Guy on Earth”, “a genius”, “formidable competitor”, “one heck of [a] stand-up guy”, and oozes “greatness”.

Those are some accolades. But that’s how so much of media operates. The goal being to draw in readers through schlocky headlines and exaggerated entertainment pieces masquerading as impartial reporting. Objective information? Too often, nothing but an unfortunate casualty of the sales and ratings game.

Of course, Musk could have paid for this lavish flattery (unlikely given his public persona and accomplishments straight out of central story casting). Or maybe the writer is a slobbering acolyte of the highest order unable to contain his worship of the Coolest Guy. Still, he’s not the only one (for better or worse) as many others sing Musk’s praises.

Warranted or not, that’s not for me to comment. Instead, as an investor (note: I have never owned Tesla shares), I have zero interest as to whether the CEO of a company is anointed by media as cool.

[Another note: a comparable example is the cult of Steve Jobs, who passed on a few years ago. There were many proclaiming that Apple would tank without Jobs at the helm. They were wrong. Because the organization is bigger than one person. And as extraordinarily talented as Jobs was, he wasn’t the God of Technology; other mortals could, and have, filled his boots].

See … if I’m a Tesla investor, I’m not investing in Elon Musk fanciful imagery. Sure, I’m looking for a strong management team to run the company, and a savvy, capable CEO is always preferred. But if I’m buying Tesla stock, I’m investing in Tesla, the company. And if I’m thinking of becoming a Tesla shareholder, I want to know a few things, such as:

  • What are projected future sales of electric vehicles?
  • To what extent do sales depend on infrastructure (i.e., charging stations) that does not (yet) exist?
  • What about range? If I’m only getting 200-300 miles for each full charge, I can’t drive too far on the highway without needing a recharge. Where do I recharge given that charging stations are few and far between?
  • What does Tesla offer that Nissan and GM and Toyota and the other older kids on the block don’t?
  • Given its measly number of auto sales compared to the big manufacturers (i.e., Ford, BMW, etc), what’s to say that Tesla’s not a shooting star destined to flame out, with the established players already chipping away at market share?

If you live in a high electricity cost jurisdiction (i.e., Massachusetts or Ontario), is an electric vehicle worth the cost? What is cost per mile (km) driven compared to cost of gas? Of course the higher the cost of electricity compared to gas, the less incentive to switch from gas powered vehicles. (no, I’m not ignoring the real and pressing environmental argument. But to my thinking, electric cars will not become a popular option unless they’re affordable to the vast majority of consumers).

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Dig Before You Buy

I enjoy gardening. Being outside, planting, digging, pruning, these activities bring me peace and relaxation. Sometimes to the point where I’m in a meditative state, my focus entirely on the task at hand, no other thoughts or stories running wild in my head. In the here, now, this is what I call a state of bliss.

And I identify with the idea that investing money is similar to gardening. First, you research what kind of crop (companies, etfs, etc) you would like to grow (buy). Next, you plant the seeds (buy shares). And like any seed, investments take time to produce results. In the meantime, you check in on the seed and the soil (company specific news, general industry zeitgeist) and if they’re not thirsting for water or sunlight (fundamental change in company business), then you sit back, relax and admire your holdings. Still, you don’t ignore them. Weeding and nurturing (monitoring portfolio) is essential.

Alright. Enough of the analogies. Here’s what I’m getting at: Good investors do their homework. Good investors don’t get caught up in hype. Good investors don’t let emotions drive decision-making. Good investors ask, ‘what am I missing? What are the holes in my reasons for buying shares of this company?’ Good investors are turtles, playing the long game, slow and steady.

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Stock Investing: The Nuts and Bolts

When buying shares of a company such as Tesla, you buy a piece of the company, participating in its growth (and, hopefully not, its decline). As corporate profits grow, share price is likely to increase.

In the myopic short-run, share price is influenced by factors such as: immediate economic forecast, interest rates, degree of optimism/pessimism among investors (for better or worse, often influenced by media).

But the short run approach is no way to invest. Buy a stock hoping to making a quick buck? You’re not an investor, you’re a trader. And you’re playing a high risk game, one that burns a whole lot of folks. Putting money to work long term is what good investors are all about. And in the long run, share values reflect past and projected growth in earnings and dividends. The more they grow, the more likely the stock increases in value.

All that said, every company is exposed to a host of risks that potentially affect share price. And these risks may fluctuate monthly, annually … really, there’s no set timetable for when risk appears. But here’s the beauty of it: as a long term investor, you know that the emergence of risk often results in stock price volatility. You also know that volatility in share price of a fundamentally sound and prosperous company represents a buying opportunity. To be clear, in stock markets, volatility and downturns are inevitable. When the inevitable happens, the good investor goes shopping for quality companies at bargain prices.

The Buddha of Investing (Warrant Buffet) puts it this way:

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

and …

“Price is what you pay; value is what you get. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

Why bother buying shares of quality companies when there’s risk and volatility? First off, unless you or your advisor has a special knack for it, don’t buy individual companies. Instead, buy stock based Exchange Traded Funds (ETF) (which I talk about in Swinging For Singles).

Either way, good investors hold stocks. Because quality stocks generate superior returns over extended periods of time. Superior to what? To fixed income (i.e., bonds) and cash instruments (click for a detailed review of returns from 1928-2016).

As I wrap up this post, the question arises: why bother? Why bother undertaking all the time, effort, research, monitoring, decision-making when it comes to investing? Well, the typical responses have something to do with being able to afford a decent lifestyle (defined by you); provide for you and your family; and wisely prepare for retirement, those days when you no longer collect a paycheck, instead you’re living off your accumulated funds.

Really though, it’s an issue for you to decide. What do you need in your life? What do you want? And how are going to reach your goals?

 

 

 

Suze Orman: What Does She Know?

If Americans know one person who dishes out financial advice, it’s Suze Orman. She’s huge, right? USA Today (who doesn’t trust this reputable publication? Um, okay, sarcasm creeping in …) says Suze has been called “a force in the world of personal finance” and “a one woman financial advice powerhouse.”

Never mind those shiny accolades, according to her website, Suze is a “New York Times mega best selling author” (mega? Is this necessary? The book either makes the cut as a best seller or not, there’s no minor, middling, or mega best sellers – but, hey, that’s hollow marketing schtick for you); “two-time Emmy award winning television host, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today. Orman is undeniably America’s most recognized expert on personal finance.”

Whew! Those are some credentials!?

But … so what? Why should I listen to Orman? Because mainstream pop media sings her praises? Because she’s an extremely capable, and well-financed, self- promoter? Here’s my concern: with all of her activities, how is it possible that she’s able to focus sufficient energy on remaining a financial expert?

Let me be clear: my point is not to undermine Suze Orman. In fact, based on my readings of her, and despite over the top promotional glop, I’d say that she’s one of the more reliably informative talking heads operating in the personal finance sphere. And I completely respect her becoming the Oprah of personal finance, morphing her self into a hugely successful business. But again, her fame and fortune by itself isn’t sufficient reason for me to follow her advice.


Who Do You Trust?

Not only does Orman dish out piles of financial advice, she also sells stuff like a “Protection Portfolio: Gold Edition with Personal Finance Online Course Offer”. And you have the option of paying in five easy instalments! Or, take her online Personal Finance course for a fee, buy one of her many books, finance related ‘kits’, CDs or DVDs.

For me, this is where I raise a bushy eyebrow or two. Because her business model works like this: continually churn out financial advice/information for the purpose of drawing more eyeballs. Convert eyeballs to acolytes who open their wallets to buy stuff peddled via website. And repeat.

With a clear cut self-interest in generating revenue through sales, should I trust her advice knowing she’s serving it out with the intent to sell? I mean, her advice could be construed as a movie teaser: read me, like me, trust me. Now that I have your trust, buy my stuff.

That said, simply because Orman’s hustling to make a buck, or several million, this alone doesn’t make her untrustworthy. Besides, it’s not like she’s the only one looking to monetize her know how.

But she’s the biggest in the personal finance guru world. And given her public stature, I figure she’s fair game to illustrate my point:

When educating your self about finances, money management, investing and all others matters related to money, consider your source.

Question not only the authors qualifications to broadcast their know how, but also the bias that we all bring to the broadsheet, which way do we slant, right, left, somewhere in the middle? Is there an ulterior motive underlying the publication? And don’t limit yourself to only one source. Read several so-called expert advice bloggers or mainstream publishers to get a comprehensive lay of the land.


Wear A Mustache

Contrast Orman with a website called mrmoneymustache.com. The site was started six years ago by a guy who wanted to share his thoughts about all financial matters, big and small.

In my opinion, this was the best personal finance site not only in the blogging virtual world but also compared to any mainstream media (notice I used the past tense. This is because the site publishes only one or two posts a month now; after six years and more than 400 posts, the author is understandably slowing down. For a review of some of the author’s best material, go to the archives page).

Within a year or two of the first posting, hundreds of thousands of people visited the site daily, with many of them engaging with fellow readers on the sites interactive forums. And here’s what made the site special: the author is smart, funny, and well educated when it comes to finance issues. Posts are well written, hugely informative, cover a range of topics and are holistic in that the author ties in money issues to broader perspectives related to life and the meaning of money.

Does Mustache sell anything on his site? Nope. While there’s the occasional third party advertisement from which the author derives revenue, the site is not a shopping destination. And for me, this adds to the author’s honesty and credibility.

Why am I singing this person’s praises, given that he’s a blogging competitor? Ha! Why not? Why shouldn’t I direct readers to another site I consider worthwhile? Why shouldn’t I be generous with my knowledge and share with others? Besides, it feels good and right to give back.


Meditate On This

BuddhaMoney (that’s us!) and other personal finance bloggers have this advantage over corporate media: we’re not necessarily in it for the dough. Then why do we spend so much time and energy, and our own coin, building a blog and sharing knowledge? Well, the motivating reward is not always money.

Sometimes, for those lucky enough, the reward comes in the forum of giving, not taking. Sure, it’s a kick to see readership numbers increase, to know that you’re reaching a wider audience, to receive positive reader feedback that proves, if only for one post, that you’re writing hasn’t been sucked into a black hole.

As for me, I count myself among the lucky.

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The Gift of Generosity

There’s a website that goes by the name of Rockstar Finance. The primary purpose of the site is to aggregate all personal finance blogs in one space, and organize blog postings according to subject matter, and other relevant categories. As of today, the site boasts 1,321 listed blogs. That’s a whole lot of folks (including yours truly) sharing thoughts about money, doing their best to inform and educate readers about anything and everything related to the notion of money.

How to earn more money.

Get out of debt.

Save for retirement.

Stick to a budget.

Pay off your mortgage.

Build wealth.

Invest smart.

Spend wisely.

Reduce expenses.

Become a millionaire.

Live frugally.

Consume less.

These are some of the common topics discussed by bloggers. And the posts are often helpful. Because we live in a money-centric world. And too many people lack knowledge/information supporting effective navigation of day-to-day money issues. So, we educate our self thereby increasing our self-sufficiency, maximizing our sense of freedom.

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What About Giving?

The tagline for the BuddhaMoney site is: Find Balance, Be Wealthy. And my idea of balance comes from more than focusing on the self and improving the state of my finances. Don’t get me wrong here; money is important, we need money just to get by in life never mind affording luxuries.

But money and accumulating stuff can’t be the sole focus because an integral part of balance and wealth includes sharing and giving to others. A little something called generosity. And when we are generous, when our focus is not solely on our self, well, this is when we experience peace and freedom and happiness.

You ever hold the door open for another person to walk through ahead of you? Give directions to a stranger? Snap a photo for a tourist? Recognize someone’s birthday? Give clothing to charity? Say ‘thank you’ and mean it. Listen, truly listen, to someone without interrupting, without judging? Say ‘I’m sorry’ after you’ve caused hurt through words or actions? Lend money because the other person needs it and because you can afford to?

These are all small acts of generosity. No, wait. Let me clarify. There are no ‘big’ or ‘small’ generous gestures. Because generosity is generosity. There’s no point in quantifying or measuring. It’s not a competition.

When we feel generous, we give. What we give is entirely up to us (i.e., money, material objects, time, wisdom, support, etc). But whatever the gift, the act of giving itself says ‘I’m putting another being first, relegating my personal wants to the backseat’.

Why does this matter? Because when we give without reservation, give from the heart, we feel pure joy, a sort of lightness of being. And it’s an amazing feeling.

In part, this feeling is generated by a sense of letting go of whatever you’re holding onto too tightly, i.e., money, stuff, an idea, expectation, or your own sense of importance. And when we let go, we broaden our perspective and broaden our world simply because we’re no longer self focused, and others gain as much importance as we ascribe to our self. Then our world grows more expansive and our happiness more habitual.

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Joy to the World

When I was in third grade, my teacher was friends with a producer of the kids television show, Sesame Street. Somehow, my teacher finagled for myself and several other students to appear on the show, mostly to sing a song the title of which I knew to be Jeremiah Was A Bullfrog. Sometime later, I learned that the actual title is Joy To The World (the band Three Dog Night sings the most well known version. Although, in my biased opinion, I will say that the version belted out by my enthusiastic classmates and I would surely hold its own against Three Dog Night).

Such generosity! What an amazing gift! And to this day, I thank my teacher for her kindness, for going out of her way to bring this experience to her students. And it’s an experience I always look back upon fondly and with appreciation (the memory is most often triggered by hearing the song!).

Everyday, several times per day, we have the choice to bring it, to bring Joy, to our self, and spread it to others. And we can do this in so many ways starting with showing respect, offering good wishes, or being polite to others. Not just because family and society teaches us this sort of behavior, but because this is our nature. And when we behave in a manner that’s true to our nature, we feel balanced and calm.

To the contrary, when anger or jealousy or pride take hold, we’re completely out of balance, filled with negativity, suspicion and distrust. Who wants to be around people like that? I mean, when I’m feeling negative, I don’t want to be around myself!

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Find Balance, Be Wealthy

Read personal finance blogs (shameless plug: BuddhaMoney knows a thing or two), mainstream financial media, and other sources of information intended to educate your self about money management. Learn ways to up your income, decrease expenses, save, invest and grow wealthy.

And … if you’re of the mind that peace and happiness are important, know that a starting point to healthy well being and relationships with others includes practicing and cultivating generosity of spirit. Because this, not a seven figure portfolio, is where true freedom and joy come from (that, and daily sing alongs with Three Dog Night to Jeremiah Was A Bullfrog).