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Drive a Bargain, Save Money

Looking to buy an 8 x 10 rug for our family room, I visited a local rug seller. Before doing so, I knew full well that the rug selling business has a bizarre business model: first, rugs are marked up by a ridiculous amount; then the merchant touts a ‘50% off sale’, ‘going out of business sale’, ‘liquidation sale’, ‘time sensitive once in a lifetime sale’ – any promotional tactic the purpose of which is to drum up foot traffic. It’s amusing really; this particular rug store has been ‘going out of business’ for the past four years running.

After finding a rug I liked, taking note of the wink, wink, nudge, nudge list price and ‘sale price’, I asked the owner if he was willing to accept a price 25% lower than the ‘sale price’. Knowing what I do about the rug business, that there are fat profit margins resulting from buying rugs cheap in places like Afghanistan and India (I won’t get into the child labor issues here), and selling to naïve North Americans at hugely inflated prices, I was confident that a lower price could be negotiated.

But I turned out to be wrong. The owner looked at me as if I were from another planet. A hostile planet at that. Who did I think I was?! Daring to ask to pay a price less than what is written on the price tag! By the way he reacted, you’d think asking a question is an unforgivable crime.

Still, I figured he was posturing: this was the owner’s opening volley in negotiations. But after he walked away from me, effectively communicating that our short-lived interaction had ended, I realized I misread the situation.

Here was a guy steeped in North American retail culture. A culture that has effectively trained consumers to pay list price. Likewise, retailers have been trained to expect list price to be paid. And if the consumer doesn’t like the price, then there’s only one option: leave the store and go look for a lower price elsewhere.

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Florida Flea Market

I was 17 years old the first time I struck a deal with a merchant. In Florida with my parents, we visited a flea market. One of the stalls was selling brand name knock off watches with minor defects (i.e., the tiny Gucci name was changed to Cucci – who would know the difference?).

I saw a watch I liked and asked how much. Ten bucks I was told. Before I could reach into my pocket for the money, my father pulled me aside.

“Offer him $6,” he said.

“What do you mean? The guy said the price is $10,” I naively responded.

“Listen, he expects you to negotiate. Offer him $6. Haggle with him. See what you can do.”

This was all unfamiliar territory to me. But with my father’s encouragement (and a smile on his face, telling me to relax and have fun), I started the process. After a few minutes of back and forth haggling, the merchant offered the watch for $8. Thinking I was doing well, and that eight bucks was a good deal, I returned to my Dad for guidance. He told me to take $7 out of my pocket and place the money in the merchant’s hand.

“Why?” I asked.

“Because $7 is a fair price, and because when someone is putting money in front of you, in your hand, it’s difficult to resist.”

He was right. The watch was mine for $7. And once the negotiating process was over, I felt both a sense of relief and satisfaction. I mean, after I got over my initial trepidation, I saw bargaining as a game to play. As for the merchant, he still turned a healthy profit as his cost for the watches was a whole lot less than what I paid, so I learned afterward.

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Bargaining: The Third Option

Negotiating on price is not limited to Florida flea markets or Middle Eastern bazaars. The option to negotiate presents itself in many situations but we don’t know this unless we ask. And when we ask, and find a willing merchant, well then, say hello to a lower purchase price that translates to savings and more dough in our pocket.

So who can you bargain with? I’ve bartered with big telecom companies (i.e., cell phone), department stores when buying large appliances and mattresses, even the Gap when buying clothes for my kids (they threw in extra discounts and coupons for future purchases). Whatever the store, if I see an opening, I try to drive through.

As for retailers who look at you as if asking for a lower price is somehow not playing fair, or as if you’re speaking a language known only to Klingons … that’s their issue. If they’re willing to lose a sale, lose a customer because their ego is bruised, so be it. It’s a competitive landscape out there and you, the consumer, may always take your business to the competitor most willing to meet your terms.

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Big Ticket Item No. 1: Automobile

You absolutely need to know that bargaining is expected when shopping for an automobile.

Car dealers typically shoot for a 10% profit. Meaning, there is 10% wiggle room, with most dealers willing to accept a 3-4% profit. But they’re not going to just give it to you! The dealer’s starting position is that you pay list price (Manufacturer’s Suggested Retail Price – MSRP). And if you don’t ask for less, if you don’t even try to bargain, then that’s what you’ll pay.

If you’re willing to give bargaining a go (highly recommended) when purchasing a vehicle, start by grinding down price, with your opening offer being 10% lower than MSRP. The dealer won’t accept such a low offer because they wouldn’t make any profit. But setting your opening bid low gives you room to move up in price and the dealer room to move down to meet you somewhere around 5% less than MSRP.

If you’re not getting as much of a price reduction as you want, lean on the dealer to throw in cash rebates or other incentives. When I bought my last car, and I wasn’t entirely satisfied with the price being offered, I caved to the dealer’s price in exchange for a few goodies, including car mats, trailer hitch, roof rack cross bars and a car box.

And keep this in mind: you always have the option to walk away. Don’t underestimate this option. It’s powerful. It’s a tough business, car sales. Salespeople want your business, and they’ll usually do whatever is reasonable to close a sale.

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Big Ticket Item No. 2: Home

After my recent post about buying a home, I received a comment from a reader saying that people need to know, in a buyers market or balanced market, how much under the list price do you initially offer.

Unfortunately, unlike autos, there’s no one size fits all answer. That said, here’s a few pointers:

  • Upper Limit. Know what you can afford to pay and do not exceed that number, no matter how excited you are about fulfilling your home buying dream (because if you exceed your limit, you’ll dig your self into too much debt, and the dream morphs into a nightmare, or at least undue stress).
  • Do Your Homework. With the upper limit number in mind, as well as the list price, have your real estate agent give you the stats, i.e., sale price of similar homes in same neighbourhood during the past few months, and all other available research relevant to home price and current market activity. And do your best possible sleuthing to try to find out the seller’s situation.

For example, if the seller has already bought another home, and that transaction closes in two months, then you know seller is feeling the heat because they need money from this home to fund their future home. Otherwise they’ll be carrying all the expenses of two homes. Under a time crunch, seller may be more willing to accept a lower offer.

  • Don’t Be Reasonable. Right. Not something you hear everyday. But in negotiating, your job is not to look out for the other person. Your job is not to be liked, not to be thought of as a good guy/gal by the seller or their agent. Nope. Your job is to get the lowest price possible. It’s up to the seller and their agent to look out for themselves.

So start with a low ball offer. And don’t fret that an unreasonable offer equates to showing disrespect. It’s not. You can show kindness and consideration to the seller AND make a low offer. One does not cancel out the other.

Then wait for the seller’s reaction. If they ignore the offer, then you increase the bid by a small amount if you’re serious about purchasing. If they counter-offer, then you know you have a seller who wants to get a deal done, even though the lowball bid won’t fly.

Here’s a concrete example. A friend of mine (HomeBuyer) was looking to purchase a home for him self and his family. They found what appeared to be the perfect fit. The home was listed for $595,000. After four months on the market, the seller dropped the price to $505,000. Clearly, a sign that they wanted to sell.

Armed with detailed market research, knowing there were no other offers and the seller was ‘motivated’ (as they say in the trade) HomeBuyer offered $460,000. Seller balked, saying that Homebuyer’s bid was a slap in the face.

Homebuyer tried again, increasing his offer to $480,000. Though Seller wasn’t thrilled with the revised offer, they saw that HomeBuyer was for real and countered at $495,000. Homebuyer, asking to split the difference, made a third offer of $487,500. Seller refused, saying they were already taking a bath if they sold at this price. Still, they gave a little more, reducing the ask price to $492,500. HomeBuyer, believing it wasn’t wise to push any further, accepted and moved into his new home a few months later.

Now remember, Seller could have exited negotiations at any time. But they didn’t. Likely because they were able to alter their perspective, i.e., the home’s value may have been $595,000 to them but in 4+ months, no buyer had agreed with that valuation. So they had a choice: wait for a higher offer or take what was on the table.

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When You Try, Sometimes You Get The Price You Want

You won’t ‘win’ every time you step up to negotiate. That said, you’ll never get a price reduction if you don’t even try. So try. See what happens. Experience the thrill (is it just me?), the fun, of bargaining, and odds are you’ll be saving yourself money.

 

 

Negotiating For Your Dream Home

Sure, a home is an investment and it gets all exciting when it’s located in a market where real estate prices are rising and property value is increasing. But the thing is, as much as it feels good to know that our net worth is getting a boost, first and foremost, our home is a sanctuary.

Home is a refuge with deep emotional meaning; a place of comfort, waiting to greet us with a warm cozy bed, a spouse, loveable munchkins, and a furry four-legged friend; a place where we don’t have to put on a face to the outside world, where we can let it all hang out. Home is our soft landing.

We fall in love with our home, maybe at first sight, maybe sometime later. Either way, we ultimately develop an attachment for our home that simply is not formed with any other investment, no matter how much money it is worth. And that attachment, dear readers, is a problem.

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Emotions Monkey Wrench Negotiations

Any sort of successful negotiation involves emotional detachment. This doesn’t mean you have to dial down the delight at having found your dream home. But to get the best price possible, it would help to bring a cool reserve to the bargaining table, an objective perspective focused not on the picture perfect property but on striking an advantageous deal.

Advantageous to you and the seller, that is. Because both buyer and seller need to feel that they’re benefitting from the transaction. Otherwise, the deal won’t get done.

And typically, the most effective way to ensure that the deal is fair to you, the buyer, is to stop your self from blurting out during a tour of the home,

‘I don’t care what it costs! I love it! I want it! Money be damned!’

And the best way to do this is to hire a real estate agent. A realtor places distance between you and the negotiation process. They take emotions off the table. Because for the realtor, this is all about business. And their business is to advise you, to guide you, and to negotiate on your behalf and in your best interest. They have zero emotional attachment to the house. Rather, they’re just doing their job. Oh … and the bonus? Seller pays the realtors commission; you don’t pay a dime.

 
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Market Conditions Dictate

The local market will determine your offer and how much wiggle room, if any, there is in negotiations. That said, real estate is a local game, meaning prices will vary not only in different cities but also in different neighborhoods.

Your realtor will provide you with up to date information (i.e., comparable sale prices for similar homes in the same area during the past few weeks and months) and tell you whether it’s a buyers market, sellers market, or somewhat balanced. This matters because the kind of market will go a long ways to determining your bargaining power.


Buyers Market

This kind of market is reflective of too much housing supply among limited demand. A market where properties sit for months. Where price reductions and other purchase incentives are common. And where buyers can strike their best deal. For buyers, this is nirvana!

Here, you definitely do not pay the asking price. As for determining how much to offer, this can be tricky. Make an offer too low and the seller may be insulted and close the door on you.

That said, you never know what a seller will accept if you don’t ask. That’s your role as a buyer, to ask. The seller’s role is to push back. And the offer is your way of asking. If a seller responds with a “no” to your offer, and does not extend a counter-offer, well, then you have two options.

First, walk away. This being a buyers market, there will be other homes for you to choose from.

Second, submit a revised, higher offer that is within your limit and respectful to the seller. Because how the buyer presents them self is important for a lot of sellers. In this regard, no one wants to feel like they’re being burned on a deal.

If you do submit a higher offer, be sure you know your upper limit and that limit is within your budget. Otherwise, you may end up overpaying and digging your self a big, deep, financial hole.

As for timing, you may submit a revised offer immediately or wait. If there are no other buyers on the horizon, then wait a week or two as this will add pressure to the seller. Seeing no other potential buyers, seller is more likely to accept a bid under the list price.


Sellers Market

This is a major headache of the migraine variety for buyers (Hello San Francisco! Vancouver! Both examples of steaming hot markets where prices seem to climb and climb and climb and …).

For the most part, buyers have no leverage. Whatever the asking price is, buyers offer that price if they are to have any chance of completing a deal. Still, with demand high and supply low, sellers can be picky and wait for the best offer. Often, this means multiple offers over the asking price.

When competition is intense like this, and buyers are in a tizzy, fearful they will miss out on a once in a lifetime opportunity, some offers exclude the usual conditions (i.e., subject to financing and/or inspection) in an attempt to woo the seller.

To put it mildly, this is not a wise approach, one I certainly would not recommend. If financing falls through, tough luck for the buyer because the contract is enforceable and they’ll have to find the money somehow if they don’t want to be subject to a lawsuit for breach of contract. Or if the inspection turns up asbestos, a leaky roof, or cracked foundation, that is at buyers cost as well, further adding to an already inflated purchase price.

If you can be patient, wait for the market to cool, this will serve you well in the long run. But if you’re intent on buying in a sellers market, know that you’ll most likely be holding the short end of the stick when it comes to price to be paid.


Balanced Market

With the forces of supply and demand about equal, neither buyer nor seller has a distinct advantage. As a buyer, you would want to offer a fair price that is less than the list price. But know that the seller may not be in hurry to accept the first decent offer that comes along, believing that other offers will soon follow. Still, if your offer is reasonable to the seller, expect them to at least provide a counter-offer. And if both sides want to get the deal done, then both sides compromise on price.

Chewy Bit. Buyer and Seller had come to terms on a property listed for $1.5 million. One contentious issue remained: a built in cappuccino machine, cost $500. Buyer wanted it included in the purchase price. Seller refused. The deal fell apart, and the seller waited another two months to sell the property for $100,000 less than what the initial buyer offered. A $1.5m deal implodes because of a $500 difference of opinion? That’s ego talking, and the seller paid a huge price for not being able to see the big picture.

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Hold The Love

That whole ‘falling in love with your home being a problem’ bit that I mentioned near the beginning of this post? It’s only a problem when you’re wearing the residential real estate buyer or seller hat. At all other times, well, bring it on!

 

Inside An Investor’s Mind

Little more than one year ago, I bought shares in Canada’s largest airline, Air Canada (TSE:AC), at about $9 per share. At the time, my investor geek friends (naturally, I count myself among the geeks) questioned whether jello had replaced the brain previously inhabiting my head.

Historically, you see, the airline industry has not been friendly to investors. That, I suppose, is putting it mildly. For the brutally honest take, lets defer to legendary investor and gazillionaire, Warren Buffett, who called the airline business a ‘death trap’ as recently as 2013.

From one notable quip to another, Buffett offered this in your face sketch:

“If a capitalist had been present at Kitty Hawk back in the early 1900s, he should’ve shot Orville Wright; he would have saved his progeny money.”

So … if I haven’t been invaded by jello, what makes me think I know more about investing than Buffett?

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Research, Research, Research, Before You Buy

Let’s get this out of the way: I fully recognize the limits of my investing chops. Besides, comparing myself to Guru Buffett? Really? He’s a self-made gazillionairre. I’m not. Enough said.

Then what was I thinking?

To start with, life is nothing if not teeming with change. And that includes the aviation industry. So when I read a research report issued by TD Securities (TSE:TD)(TSE:NYSE) that argued the case for AC, saying that the airline was massively undervalued, and slapped a $21 target price on a stock hovering around $9, I took notice.

But, hey, it’s just a research report. And it’s essential to keep these reports in perspective, to understand that the company issuing the report may be self-interested (i.e., they may own the stock directly or through a subsidiary). That if you have ten securities companies issuing reports on one publicly traded company, often, nine will have a ‘buy’ or ‘hold’ recommendation and one lone voice will issue a ‘sell’ recommendation.

What does this all mean? While stock analysis may be informative, prudent and reasonable, it’s also self-promotional. By way of research reports, analysts do what they can to support the investment industry, to get investors to enter and stay in the game.

So while TD’s report was intriguing, it wasn’t enough to convince me to buy AC.

And the $21 target price? Which was more than double the current value?

Every investor must absolutely, positively, take these with a healthy grain of salt, skepticism and doubt. If I’m not making myself clear, how about this: Do NOT make investment decisions based solely on a stock analyst saying a certain stock is about to lift off, destination moon.

Because here’s the thing about target prices: they’re educated guesses, nothing more. Granted, securities analysts have access to more information than your typical investor, and may have more of an understanding of a particular industry and inner workings of a particular company. But, and this is hugely important, they do NOT know where a stock is headed, no matter how confident and blustery they appear.

 


Off Target

Consider a research study published in 2006 by Mark Bradshaw of Harvard Business School and Lawrence Brown of Georgia State University. These two guys examined nearly 100,000 12-month price targets issued by analysts from 1997 to 2002.

And here’s what they found: only 25% of stocks were at or above target at the end of a 12 month period; and less than 50% of stocks exceeded the target (then fell back) at some point during the 12 months.

This is their conclusion:

“Target price forecasts are overly optimistic on average, and … analysts demonstrate no abilities to persistently forecast target prices.

This evidence is consistent with prior findings of low abilities of various experts to forecast interest rates, GDP, recessions and business cycles, and the infrequency with which actively managed funds beat the market index.”

Okay, fine. Then are price targets and analyst reports of any use? Sure. Read the reports. Understand the rationale for slapping on a high price target. But don’t be sold. And certainly don’t let these reports be your only information source upon which investment decisions are made.

Getting back to AC, reading TD’s report was step one. After which I reviewed AC reports issued by other securities firms; researched and compared other airlines based within Canada, USA, and elsewhere; and read domestic and foreign newspapers, searching for information about the airline industry. And after taking time to digest all this information, I made the decision to buy AC.

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The Times, They Have A Changed

It just so happens that as I was contemplating purchasing shares in AC, Warren Buffett was considering buying certain American based airlines. And after word got out that Buffett invested nearly $10 billion in four airlines in late 2016, he had this to say:

“It’s true that the airlines had a bad 20th century. They’re like the Chicago Cubs. And they got that bad century out of the way, I hope.”

As an investor, what did Buffett’s considerable investment do for my psyche, for my decision to buy AC? Reflexively, I experienced a boost, felt good about my call. ‘Hey, look at me, I got in the game before Buffett.’

Then I talked myself down. I mean, what did it really matter that I spotted an investment opportunity before Buffett? It meant nothing other than I may have had access to some similar information. And just because Buffett is buying airlines, that in itself is no reason for me to buy. Because my investment objectives are likely different than his. Because he can afford to lose $10 Billion, and I’ll be hurt if I lose a lot less. And most importantly, even though Buffett is an investing genius, he’s human (gasp!) – no, really, he is – and he too experiences losing investments.

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Higher and Higher … Not

This week, nearly one year after my buy of AC, the stock soared to $22. More than doubling my money. Well, look at that, the TD analyst was right! Uh huh. And on 50-75% of his other predictions he was wrong. So, as my teenage son would say: whatever.

Still, I have to tell you I was feeling good. To my thinking, I bought low, and sold high. The perfect trade. And I rode that wave of satisfaction for about 24 hours. Because the next day, I read a new report issued by TD. Seems that they have now upped their target price to $34. Other securities analysts have also increased their target price, most to the mid and upper 20s, with one lone voice calling for a fall back to the teens.

And for a few minutes after reading these ambitious price targets, jello does jiggle my brain. Suddenly anxious, I’m thinking, uh oh, did I sell too early? The analysts say AC stock is going even higher! I could make even more money! Oh no! Why did I sell?!

The insanity then passes. BuddhaMoneyLama takes hold, reminding me that greed sucks. Telling me to be grateful for my good fortune, for my wisdom to sell at a peak. All is good now. Mental balance returns.

Will AC go higher still? Maybe. Do I care? No. Because I’m no longer invested. Because I’m satisfied with my profit and am now looking forward to investing the proceeds in other companies that offer better value.

And I’m certainly not buying the analysts bluster that the stock will now rise another 75%. I mean, this is what analysts do. If they’re lucky enough to make a correct call on target price, as soon as the price is reached or within spitting distance, they raise their target even higher. ‘Hold forever; the stock will go up, up, up!’ And they do this because it’s their job, to entice more people to invest in the stock market.

Here’s what I have to say to that: don’t succumb to jello brain. Once a security has reached YOUR target price, whether on the upside or down, stay disciplined and sell. Say thank you very much. And move on to the next investment.

 

 

 

 

 

 

 

The Seattle Project

There was an amazing response to my last post about Hygge (pronounced “Hoo-gah”). So I’m following up by continuing the discussion, focusing in on this thing we call happiness. Exploring why happiness matters, and how to bring more hunky-dory feelings into our day-to-day living.

Not just because happiness is a worthwhile goal, although mellowing in blissful mental states is most definitely high on the list. But also because when we’re clear-eyed, feeling the groove, and our mind is in a good place, then we’re driven by positive, constructive thoughts, and we make healthier decisions all around.

This includes money related decisions, i.e., better investment choices, increasing savings and reducing debt. In short, happiness is good for the head, the heart, and the wallet.

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Gross National Product … Rejection!

If you read the business pages, you’ve no doubt come across the term, Gross Domestic Product (GDP).

Technically, GDP is defined as the value of all goods and services made by a country’s residents and businesses. In essence, GDP refers to measurement of an economy’s output or production. And it’s used to gauge the health of a country’s economy.

GDP plays a large role in driving government policy and Central Bank interest rates, both of which aim for strong, sustainable GDP growth. Because the thinking goes that more economic growth means more employment, more people making and spending money, and a more prosperous nation.

And, so says conventional wisdom, when people have money to burn, they are happier. Governments like happy, content people because they’re less likely to agitate for change, less likely to ‘throw the bums out’ at the next election. Thus continues the relentless focus on GDP.

The government of Bhutan doesn’t buy it. Bhutan (bordered by Tibet and India; human population less than one million) rejects the idea that prosperity is measured strictly in economic terms. Instead, the Bhutanese people measure prosperity through Gross National Happiness, i.e., ‘well-being’ takes preference over material growth.

But let me be clear here: Bhutan is not saying that GDP doesn’t matter. Not at all, because economic output, growth, has tremendous potential benefits for individuals and all of society. But Bhutan’s question is … growth at what cost? 

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The Happiness Alliance

There’s a non-profit organization based in Seattle, Washington, called The Happiness Alliance (HA). Inspired by Bhutan, these forward thinking folks assume a holistic view of life that expands the concept of prosperity beyond how much dough you can jingle jangle in your pocket.

Here’s the jist of what HA has to say:

  • The purpose of government is to secure equitable opportunities for all people’s happiness.
  • The purpose of the economy is for human happiness and planetary sustainability.
  • The point of life is to be happy.
  • You are the happiness movement.

Radical notions? That instead of going to battle every day for our share of the pie, accumulating as much stuff as we’re able and keeping it to our self, well, we’re all in it together, cooperating, compromising, accepting shared responsibility, breathing life into the notion of ‘common good’.

And we can do so if we understand that,

“You are the happiness movement.”

Really, I love this! The idea that it’s up to each of us to shape our own perspective, to choose to let the light in … or not. Now, I’m not here to tell you what that means, to let the light in. That’s personal, it’s for you to figure out.

But I will reveal my own hand in saying that when enough people see the purpose of government as being to secure equitable opportunities for all peoples happiness, then you get a society like Denmark (see The Danish Way of Wealth) that repeatedly scores at or near the top of the World Happiness Report.

Denmark. Derided by some as a ‘welfare’ state. Praised by others for adopting a balanced approach to life. Not pursuing growth at all costs yet enjoying a high standard of living. Compassionate toward its people. All of its people. Not just those fortunate enough to afford a middle class, or higher, lifestyle.

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What Does Wealth Mean To You

That’s the question we all have to ask. What is wealth? How do our values inform our definition of wealth? And does monetary wealth affect our values?

Is wealth only about accumulating assets? Or is there more to being wealthy? Is it about finding contentment? Does contentment lead to the warm and fuzzies? Some would say that contentment is our greatest wealth.


Enter Buddha

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The cause of suffering is craving. When one is filled with intense drive to acquire, the drive in itself causes suffering, causes much anxiety, and little satisfaction even once the desired object is attained.

Do not confuse quality of life with a quantitative ‘standard of living’. Quantity does not lead to happiness.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Danish Way Of Wealth

Since 2012, the Sustainable Development Solutions Network (SDSN) has undertaken an annual comparative study of happiness within nations. The study measures …

Since 2012, the Sustainable Development Solutions Network (SDSN) has undertaken an annual comparative study of happiness within nations. The study measures a host of variables factored into measuring happiness then publishes its results in something titled the World Happiness Report. Now, for anyone who may be about to raise their eyebrows and question whether the study is nothing more than a hippie dippy tie dyed waste of taxpayers money, check your impulse and have a look at some of the study’s purposes:

  • Mobilize global scientific and technological expertise to promote practical solutions for sustainable development, including implementation of the Sustainable Development Goals (SDGs) and the Paris Climate Agreement.
  • Accelerate joint learning and promote integrated approaches that address the interconnected economic, social, and environmental challenges confronting the world.
  • Enable a large number of leaders from all regions and diverse backgrounds to participate in the development of the network.

Seemingly laudable goals? Sure seems so. And all the better for putting forth ideals recognizing that we live in an inter-connected world, a world where the force of an Australian sneeze may reverberate in Chile; a Chinese smile may ricochet in Iceland.

 

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Building Social Trust, Not Walls

Still, what do these stated goals have to do with Happiness?

To answer this question, I’ll pass the megaphone over to Jeff Sachs, co-editor of the study and director of the Earth Institute at Columbia University.

Jeff says that world leaders need to understand what matters most to people if they are to have any hope of creating sound policy. He goes on to say that,

“Happiness is a result of creating strong social foundations. It’s time to build social trust and healthy lives, not [arm our self with] guns or [build] walls.”

What Sachs is getting at is the idea that trusting each other, our elected leaders, and institutions, is essential for an individual and a society to establish a firmly anchored sense of well being. And the bonus about feeling groovy, about feeling in soulful harmony with our self? Aside from the genuinely positive vibrations we share with fellow humans and other creatures, we’re more productive, more peaceful, more compassionate, earn more, and live longer.

And this is how happiness connects to the study’s purposes: governments that truly wish to build an inclusive society, one that fosters social cohesion and sustainable economic development, first need a baseline assessment of their people’s current state of well being. Then comes the task of figuring out what’s working, what’s not working , and implementing change to make us better.

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Is Denmark Utopia?

Each year since the first World Happiness Report was issued, Denmark has ranked at or near the top. Why? What does a country that is home to less than six million people know that others don’t? A country where people prefer to stay inside for much of November through March owing to the cold, and pop umbrellas open for near 180 days of the year because of rain.

Ya, well, weather is a state of mind as far as Danes are concerned. I mean, we’re talking about a country that entertains a steady flow of foreign government representatives who are on a mission to find out what the heck it is that makes Danes so damn happy.

There’s no such rush to the USA, a country sitting at #14 on the happiness scale. Some argue that this relatively poor showing is a result of misguided political leaders who espouse misguided policies emphasizing economic growth above all else. The thinking among these leaders being that more money translates to a better, happier life. Really? Will they never learn?

Living in a monster house does not bring happiness. Driving a Mercedes does not nurture one’s soul. Having more money than one’s neighbour does not elevate self-worth or contribute to one’s value as a human being. Because here’s the thing: happiness is not driven by the bottom line. And this is where America (and some other countries) falls down; with an overriding emphasis on money, the economy, taxes.

Back to Jeff Sachs, he says,

“America’s crisis is, in short, a social crisis. Not an economic crisis.”

So what may the USA, and other countries (I’m not trying to pick here; every country has their pluses and minuses) learn from Denmark? First off, this Nordic country knows neither economic nor social crisis. Along with the other top 5 countries, they rank high for caring, freedom, generosity, honesty, health, income and good governance.  All reflective of a strong sense of community and understanding in the common good.

But you know what’s even better? You know what puts the Danes over the top? A little something known as HYGGE (pronounced ‘hoo-gah’ – see youtube video link here).

 

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HYGGE Is the Secret

‘Hygge’ is a Danish word. Though there’s no precise translation into English, here’s a few close approximations:

  • Cosiness of the soul
  • The art of creating intimacy
  • Cocoa by candlelight

Whichever definition you hang your hat on, Hygge is about an atmosphere, an experience. It’s about being with people we care for, people we love. It’s a feeling that we’re safe; that we may let our guard down; that we may engage in conversation about “big important” issues or silly nonsense; or that we may be silent in the company of others.

Of course, you could say that while Hygge sounds pleasant, the Danes have other reasons to be happy. Such as free health care, free education (from pre-school through university), subsidized childcare, job training and re-training, generous unemployment insurance (about $1900 USD/month after taxes), fuel subsidies and rent allowance for the elderly.

Yes, these social programs cost money. And to fund these programs, Denmark has the highest tax rates among European countries. Agh! Oh no! Taxes are evil! Or … are they? Is it not possible to find a compromise, a balance beneficial to both citizens and society at large, to the common good? Danish folks would say yes.

They say yes to a social system that has a burgeoning middle class, high taxes are acknowledged as a drag on economic growth but the welcome trade-off is a peaceful, caring society where no one, including vulnerable members of society, is left behind.

And this choice in favor of an expansive social system is made with awareness that collective wealth results in collective well being. In this regard, taxes are far from evil; rather, they’re perceived as an investment in society. They’re a purchase of quality of life. Because sharing and spreading wealth reduces risk, uncertainty and anxiety among citizens. And doing so nurtures happiness. And spreads the joy of Hygge!

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The Humility of Hygge

Oh, there’s so much more to say about Hygge, this word, this concept, this value, embraced by so many Danes, and contributing to one of the most successful societies we know.

Hygge is humble. Hygge is not rushing. Hygge is moderation. Hygge is watching leaves fall, baking cookies, sharing stories and laughter. Hygge is playing board games, swimming in the lake, dining on home cooked food. Hygge is saving money, making do with less, savoring simple pleasures, being grateful for what you have. Hygge is listening to birds sing, watching a child ride a bike or, better yet, riding a bike with the child. Hygge is the right atmosphere, degree of comfort and warmth, wanting to be engaged with people, caring for whom you are with. Hygge is real, balanced, down to earth.

In effect, Hygge is anti-bling, anti-consumption, anti-prestige not for ideological reasons but because it is not possible for money and entitlement to buy Hygge. In fact, if money is used in an attempt to improve Hygge, well, this act in itself is so anti-Hygge that the Hygge factor will be reduced or eliminated altogether!

What else?

Hygge is Candles. The Danes burn more candles by far than any other country. Candles, you see, create the right atmosphere.

Hygge is Presence. In this sense, Hygge is Buddha-like in emphasizing that we Be Here Now; welcome each and every moment.

Hygge is Simple Pleasures. Coffee, cake, cookies, chocolate. Whatever relaxes your mind and warms your heart.

Hygge is Equality. ‘WE’ takes priority over ‘ME’.

Hygge is Gratitude. Enjoy what you have; do not envy others.

Hygge is Harmony. Life is not a competition. We like you for you, not because of your achievements.

Hygge is Comfort. Get cozy. Relax. Take a break. Sip tea.

Hygge is Compromise and Truce. No drama. Let’s be kind and get along.

Hygge is Togetherness. Building relationships.

Hygge is Shelter. Your home, your country, this world, is your tribe. A place of peace and security.

If nothing else, my hope is that by reading the word ‘Hygge’ so many times that you now feel somewhat comfortable enunciating the word out loud (H00-gah). May you embrace Hygge!

ps. thanks to Meik Wiking, chief executive officer of the Happiness Research Institute in Copenhagen, for writing The Little Book of Hygge: The Danish Way To Live Well. A warm, inviting read that inspired this post, inspired me to continue learning more about Danish society, and to welcome more Hygge into my life.

 

MEIK WIKING jacket.jpg
MEIK WIKING jacket.jpg

 

 

Why We Give

Yesterday, a homeless man knocked on our front door asking for work. ‘Anything you can offer’, he gently said. I thought for a moment then recalled that there were …

Yesterday, a homeless man knocked on our front door asking for work. ‘Anything you can offer’, he gently said. I thought for a moment then recalled that there were sad looking flower beds in the yard that were crying out for attention. It was a job that never seemed to climb past the bottom of my things-to-do list, even though it wouldn’t take more than an hour or so.

Walking outside barefoot, I asked the man to follow me then showed him exactly what needed to be done.

“Sure, sure, that’s fine,” he said, “Any work at all is welcome.”

Not thinking, I asked, “ Do you have any gardening tools?” As soon as the words came out of my mouth, I gave my self an eye roll and head shake, wanting to take back the words. Gardening tools? Seriously? It was a hot summer day, the man was dressed in oversized long pants and a long sleeve shirt, sweating, uncomfortable, with no sun protective hat or sunglasses, and I ask him whether he happens to be carrying gardening tools? Oy.

“Nope. I don’t have anything but my two hands.”

So I found some gardening gloves, a trowel and several garbage bags. Before the man started working, he said he needed $31 in order to get room and board for a few days at the Tortoise, a homeless shelter. He didn’t ask to be paid $31, didn’t imply that I should pay him this amount or in any way play on my sympathy. Straight up, he simply asked for a fair wage.

He finished the work in less than an hour. I thanked him and gave him $50. Yes, that’s a fair bit for less than sixty minutes of gardening work. And I was fine with it. Because here was a human being who was down on his luck, who wasn’t asking to take something for nothing, and who made me reflect upon, and be thankful for, my good fortune. As far as I’m concerned, I got a heck of a bargain.

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Why We Give

Many of us give to create meaningful opportunities for others, to support individuals and causes that are close to our heart.

Equally important, giving leads us to reflect upon how fortunate we are to be able to support those in need. And it has a way of prompting us to be grateful for what we have, not just for our net worth but as importantly if not moreso, our health, friends and family.

As for giving to the man who knocked on my door, this was spur of the moment, not planned out giving and I didn’t receive a tax receipt that would go toward reducing my income taxes. The way I see it, that’s all good. Strict financial prudence need not dictate all of our actions. Sometimes, it’s good for the soul to hang loose (ya, this is the amusing thing, for financial types –- ahem, yours truly — foregoing the opportunity for a tax deduction is considered hanging loose).

And I engage in this type of wild, liberated giving now and then, whenever the opportunity presents and the mood strikes. This is in addition to planned giving. Meaning, each year, my wife and I allocate a certain dollar figure to charitable giving, decide which charitable organizations we want to support, then divvy up the funds to each organization as we see fit.

No one is telling us (and if they are, we’re respectfully listening then doing things our way) to give or how much to give because these are entirely personal decisions. And we don’t feel guilty for giving to one organization but not another, for telling charity volunteers who knock on our door requesting donations that we’re tapped out, that we’ve already determined who is on our Giving List and they didn’t make the cut this time around.

Because guilt should never drive decision-making. Rather, we choose for decision-making to be love centred. For the act of Giving to be a constructive act, something we feel good and right about, knowing that we’re doing what we can, doing our bit, to contribute to life.

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How Is Charitable Giving Different?

It goes without saying that you may give whatever you want to anyone, including charities. That said, if you want the tax benefit of giving, then know that there are certain rules around who to give to, what to give, and how much.

For tax purposes, ‘Charitable Giving’ is a defined term. It refers to making a voluntary gift to a registered charity or other government qualified organization. These gifts entitle you to a tax credit that vary depending on where you live. Only a charitable organization may issue official receipts that may be used for tax purposes.

As for whether or not a particular organization is a registered charity or otherwise qualified, for Americans, see the following IRS website:

https://www.irs.gov/charities-non-profits/organizations-eligible-to-receive-tax-deductible-charitable-contributions.

And Canadians, check out this CRA website:

https://www.canada.ca/en/services/taxes/charities.html


What To Consider Before Making a Charitable Gift

When thinking about how much to give and to whom, consider the following:

  • Importance. Start by thinking about what is important to you. In this regard, take time to consider what issues you care about and why you would offer support. Because giving is a completely personal issue, there is no right or wrong answer; we simply follow our heart.
  • Influence. Next, ask your self what kind of gift would be most effective in helping the charitable organization? What kind of gift would truly make a difference? And when should the gift be made (i.e., today, at a future time while you are living, or by way of your will)?

Often, gifts take the form of money. That said, gifts may also be made in other forms including: furniture, clothing, stocks, bonds, mutual funds, real estate, and other assets.

  • Gift Portfolio. Finally, consider how much you may afford to give. And once you’ve decided which charity(s) to include on your giving list, then figure out how much money, other assets and/or time to give to each charity.

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Giving Pledge

In 2010, 40 billionaires led by Bill and Melinda Gates and Warren Buffett, joined together in a commitment to give more than half of their wealth away.  They called the commitment, The Giving Pledge. And it remains an open invitation to billionaires to publicly dedicate the majority of their wealth to philanthropy.

The Value of Generosity espoused by these 40 people inspired others. And today, more than 170 wealthy people representing 21 countries, have signed on to the pledge. In effect, these additional signatories are saying, ‘we share your values when it comes to helping others.’

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We Give Because We Care

And that’s what this is all about. Values. And though the Giving Pledge is specific to billionaires, to the top 0.1% on the net worth chart, sharing productive values is open to everyone. How much you have is not the point. How much you give is not the point. Rather, it’s the act of giving, the mindset of sharing and caring, that matters.

Because in this simple act of giving, we experience a sense of purpose and well-being. In turn, these feelings deepen our sense of compassion. And acting with compassion, this is part of who we are, part of being human. When we stay true to who we are, we benefit our self, others less fortunate than us, and society as a whole.

 

 

Stock Market UnderBelly: Part II

A friend of mine, Tom, is a marketing expert. After reading the post published earlier this week (The Stock Market’s Dark Side), he flashed me a thumbs up for telling it like it is in the stock market world. Then he urged me to go further, not only because the subject matter makes for a good story, but …

“because people should know about the promotional side of the stock market, have their eyes wide open, before deciding to become an investor.”

So hats off to Tom for inspiring me to write Part II. To explaining to you why it would be wise to carry healthy skepticism toward corporate press releases, media reported snippets from CEOs, and any other sort of promotion be it splashy, widely circulated headlines, small time investment newsletters, or the ever more popular personal finance blogs (BuddhaMoney included).

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Let Me Tell You A Story …

Our society is huge on promotion. Whether it’s selling political drama on the right or left, running shoes, the latest Hollywood flick, toothpaste, tourism, financial products … whatever good or service or viewpoint is out there, it’s being promoted in big and small ways.

That’s all good. I mean, if old-fashioned word of mouth isn’t bringing in as much business or converts as desired, then you turn to other mediums to build awareness, bring in customers, and drive sales. This is simply how our system of commerce works.

The problem, however, arises when we’re not fully aware of the rules of the game, not seeing promotion for what it is, believing, hook, line and proverbial sinker, that the advertisement is completely truthful. When this happens, we’re bound to be disappointed, maybe taken for a ride, because the vast majority of promotion is about story telling. And commercial story telling, by its nature, involves suspending reality, manufacturing illusion, exaggerating a little or a lot here and there for the purpose of drawing more eyeballs, opening more wallets.


Watch Out For Cow Pies

Sticking to the financial world, noise is constant and relentless. Partly because the corporate arena is crowded  and you may have to raise your voice if you want to be heard.

Fair enough. And partly because the folks running banks, corporations, mutual funds, index funds, whatever financial product or service provider is out there, know full well how to play the human propensity toward fear and greed.

They know that, for too many folks, dangling fear and/or greed under the nose sells. And this isn’t cool, fair, or kosher.

Because it’s not a level playing field. Because financial service providers have vastly more information than Jane or Joe Consumer, and not sharing that information is detrimental to J or J Consumer. And when this happens, financial service providers are acting purely out of self-interest (i.e., with intent to gain more business) having little or no regard to potential harm done to honest folks handing over their hard earned money. And that … well … that’s just not the sharing, caring world that we want for our kids, or our self.

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Alright then, since it’s not a level playing field, since we don’t have access to certain relevant information, and are sometimes fed misleading information, what do you do?

You block out the noise and cut through stinky cow pies. Here’s a few pies I stepped around this morning while scanning through financial websites:

  • Sell These Stocks Before Market Closes!
  • Runaway Stock Baffles Analysts!
  • How One Man Turned $50,000 Into $5 Million!
  • Biotech Stock Explodes After Drug Announcement!
  • This Is Not An Investment Opportunity You Want To Miss!

Now, you may read these headlines, all of which are taken from small publications with important sounding names, find them mildly amusing and not give them another thought. But some folks don’t. Some folks click on the link, then get sold on shady content that feeds their investment decisions.

Unfortunate? Yes. Because here’s the thing: no legitimate, worth your time publication is going to run headlines like that, the purpose of which is none other than to draw you in. And once you’re in, that’s when the real selling starts. And if persuaded to buy (sigh), you’ll likely lose money.

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All Dressed Up

Major media players, multi-billion dollar companies, aren’t all that different from the small fish. In fact, because big media and big corporate have much deeper pockets, their promotions may be a less obvious sell, slicker, and more persuasive to a wider audience.

Take Nike, (NYSE:NKE) for example (I could have used any large corporation-not picking on Nike here). Are their shoes really better than Adidas or Reebok or any other shoe manufacturer? Because Michael Jordan is paid a gazillion dollars to promote Nike shoes, and you went out and bought Nike shoes, will you become a better basketball player, will you become like Mike, or just feel more cool? (I own Nike shoes because they’re comfortable and I can buy them on sale at discount outlets).

Aside from product quality workmanship, Nike isn’t selling guarantees. Plain and simple, Nike sells its shoes in the best way it knows how: by placing a storyline in your head. And we, the consumer, read into the ad whatever we want. And once we own the product, we feel whatever we want to feel, we perpetuate whatever illusions we like.

Financial companies are no different. Let’s use Blackrock Inc. (NYSE:BLK) as an example. The largest asset manager in the world, and provider of index funds and mutual funds, says this on its homepage:

“A suite of 18 low cost funds that can help make your long-term investment goals a reality.”

Yes, the funds could do that. And they could just as well blow up in your face. But Blackrock doesn’t mention this. However, in keeping it legal, Blackrock does state, in teeny, tiny print at the bottom of the page,

“The funds are not guaranteed, their values change frequently and past performance may not be repeated.”

Okay, good for them, check off the box next to full disclosure. But, really, how many people are reading teeny, tiny print? Even if you do read it, is the message really sinking in? I mean, it’s boring legalese with no emotional resonance.

Fact is, most of us focus on the stuff that gets our juices flowing, that makes us dream of rich, comfortable retirement years. And the ideal placement for emotional triggers is the top page. This is where Blackrock seems to promise to make my investment goals a reality. Shouldn’t I believe what they say? In short, nope. Trusting in any sort of promotional literature would not be wise, especially a promotional hook that is completely undermined by the teeny tiny legal print.

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Keeping It Honest

By healthy skepticism, I mean ask questions. Ask what is the motivation of a company to issue this or that press release, to have their CEO run the talk show circuit, or invite media to corporate sponsored events.

Know that certain major publications lean politically left or right (the center seemingly in hibernation) and this will influence both what information they present and the way in which they present information.

Know that stock analysts, those people who like to make you think they have a crystal ball when it comes to stock forecasting, are in the sales game too. Sure, they have access to company and economy specific information that we don’t, but their predictions remain simply that, predictions.

Know also that stock analysts almost always issue BUY or HOLD recommendations. SELL recommendations are exceedingly rare. Why? Do all stocks go up, indefinitely? Do all companies succeed?

The only reason SELLS are rarely issued is because analysts are engaged in their own form of stock promotion. And the last thing a stock analyst wants is to influence stock markets to move lower.

There’s a ton of promotional noise out there. The sooner you’re able to recognize noise for what it’s worth, the better informed you will be, the wiser decisions you will make.

ps. big thanks to Tom for the inspiration and a bit of promo in support http://www.reinfluenceinc.com/.

 

The Stock Market’s Dark Side

Elon Musk, founder and CEO of Tesla Inc. (NASDAQ:TSLA), recently did something highly unusual: he disparaged his company. Specifically, he knocked …

Elon Musk, founder and CEO of Tesla Inc. (NASDAQ:TSLA), recently did something highly unusual: he disparaged his company. Specifically, he knocked Tesla’s share price, saying it is “higher than we deserve.” Whether true or not, to publicly state that your company is not worth its current trading value is not only rare, it’s virtually unheard of. It’s just not what a CEO does.

Because in addition to assuming responsibility for day to day operations, a CEO also acts as a company’s primary media pitchperson, head cheerleader, numero uno fan, selling the company’s virtues to the public and financial analysts. And always with a positive spin. Unless you’re a rare breed known as Musk, so it seems.


Sales, Man, That’s What Corporate Life Is All About

I’m not here to riff on corporations as evil entities myopically bent on achieving profit and maximizing shareholder value, all the while paying little heed to contributing to the social good and society at large. To varying degrees, some companies adhere to a social conscience, others don’t. For better or worse, such is the diverse nature of organizations, and humanity.

Still, regardless of how much or little a for-profit company gives back to its employees, communities, and our world, they all share something similar: they’re in the sales business. Whether selling goods or services, companies need sales to generate revenue to turn a profit to stay in business. And selling involves promotion, marketing, and advertising. And if you have a media friendly CEO, well then, all the better for driving sales, all the better for business because that CEO’s favorable image connects with consumers, persuading consumers to use, watch, listen to, or wear a company’s product.

Think Steve Jobs and Apple. Media loved writing about Steve, and Steve knew how to play the media, to manufacture himself as a near mythical legend, and position Apple as not only best in class but in a class of its own worthy of sticker prices considerably higher than rivals products. This sort of image making, however close or far removed from reality, impacts consumers buying habits and investors desire to own the stock, and consequently bid up share price.

Now, I’m not saying that Steve wasn’t a genius visionary or that Apple doesn’t make exceptional products. Instead, what I am saying is that you can have the most excellent product or service on the planet but if relatively few people know about it, and sales lag, then the company will soon fade away.

Apple doesn’t have that problem. They remain as extraordinary at the sales game as they are at manufacturing. And to this day, their image among consumers remains intact, best in class. As does their market value, which is higher than any other company on this planet, by far.


Promotion, Man, That’s What The Stock Game Is All About

Whether you’re a stock market behemoth like Apple or Google (NASDAQ:GOOGL), or a teeny tiny penny stock, in one way or another, you’re promoting your stock, i.e., you’re selling the merits of owning your stock because you want more buyers than sellers; this is how share price marches upward.

The typical medium in which behemoths promote their stock is mainstream media. Be it an interview with the CEO, a quote, a prediction as to what comes next in the stock market or economy, an annual meeting turned Woodstock for Capitalists (i.e., Berkshire Hathaway’s (NYSE:BRK.A) annual shareholders meeting), or a product unveiling (i.e., Apple’s annual Worldwide Developer’s Conference).

And while the CEO may firmly, honestly, believe in what they are promoting, we the consumer would be wise to interpret their words with a grain or two of salt. Because they’re just words. In the investing game, words are not enough. Not even close.

Numbers, not words, tell the story. On a basic level: Revenue, Expenses, Profit, these matter more, so much more, than words. I mean, words can be beautiful and flowery and convincing, and we’re all susceptible to oratory charm. But it’s important to see words for what they are, and in the financial world, words decidedly take a back seat to numbers.

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When The Numbers Don’t Add Up, Run!

Penny stocks are a different animal.

Technically, a penny stock is defined as any stock that trades for less than $5 / share. But for our purposes, a penny stock is one that trades for less $5 / share AND is not listed on a major stock exchange AND is a small company AND is often illiquid (i.e., relatively few shares are traded each day, making it difficult to buy and sell).

Now here’s the dark side of penny stocks: scammers LOVE them! And they can make a small fortune off people who don’t know any better, people who chase pots of gold and ends of rainbows, people who lay their bet on spam email promoting the latest and greatest 10 cent stock promising to power through to $10 or $50.

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The typical penny stock company touted by scammers? Little to no revenue, little to no shares traded daily, little to no business prospects.

And the angle, the hitch, the hook? The company says (words, words, words) that it’s changing its business model and is now in a HOT SPACE. For example, if the price of gold takes off, the company will morph into a gold mining company. If biotech is hot, you guessed it, the company reinvents as a biotech company.

Then, if it’s a big time scammer, they pay a promoter(s) serious coin (we’re talking hundreds of thousands to millions of dollars) to scream about the INCREDIBLE, UNBELIEVABLE, FANTASTIC investment opportunity presented by this itsy bitsy shell of a company. And the promoter(s) sends out millions of emails, many press releases, and arranges for inclusion in hundreds of investment newsletters and stock chat rooms. This is the modern version of a boiler room (i.e., refers to a bunch of guys [rare for women to engage in this activity] hard selling stocks to random people over the phone – well depicted in the movie, Wolf of Wall Street).

Once the word is out, once enough people have been suckered into becoming buyers of this worthless stock, the scammers start selling. Because, you see, before all of the promotional activity was set up, the scammers arranged for most, maybe all, of the issued stock to be in their name or, if sophisticated, the name of a faceless corporation. The faceless corporation gives them cover from regulators who have rules regarding the boundaries of promotional activity.

And if the CEO of Penny Stock Corp. says he doesn’t know who is behind the promotion, and the regulators cannot identify the promoter, then Penny Stock Corp. CEO has no worries. And he dumps his stock to pie in the sky investors who bid up the price. Until, that is, buying momentum halts, selling ensues, and stock price craters in a matter of hours or days.


The Case of Dry Ships

But you need a real life example. So let’s briefly describe what happened recently with a company called DryShips Inc. (for the full story, check out the detailed accounting here).

In November, 2016, DryShips disclosed a huge loss and suspended debt payments to preserve liquidity. Shortly after, the company, with a market value of close to $5 million, didn’t just catch fire, it was a veritable inferno! In just four days, the stock price leapt more than 1500%!

On November 8, its stock was priced at $5107, with a grand total of 38 shares being traded. Two days later, price jumped to $13,328 with more than 5,000 shares traded. Come November 15, price it $81,760 with more than 9,000 shares traded. By November 29, price had tumbled to $4849.

The journalist who wrote the article referenced above ends his story by referring to the “stock’s mysterious rally.” Well, other than being able to prove who was pulling the scam strings, there’s no mystery. The stock blasted higher owing to deceitful manipulation and nefarious promotional activity. Because absolutely nothing related to the company’s business activity justified a massive move in volume and price. And at the end of the day, guess who loses? Right, Joe/Jane Investor who were suckered into buying worthless paper.

As an investor, you do not want to get anywhere near this kind of stock. So please do your best to ignore any spam investing emails, ignore talk of a stock being “the next Facebook”, ignore any and all penny stocks because buying penny stocks is akin to gambling, not investing, and nine and half times out of ten, you will not exit your stake a happy camper.

Ride Your Way To Wealth

Ride Demon (new name for my 11-year old son) recently bought a hoverboard. If you’re asking, ‘what’s a hoverboard’, well, know that you’re not alone. Because that was my immediate response when Ride Demon excitedly told me of his intended purchase. And my ignorance was cause for him to look at me as if I were from Mars. Or just really, really old and out of touch. I told him to go with the Mars theory.

Then Ride Demon proceeded to tell me all about hoverboards, starting with: they’re soooo much fun, move fast, and carving the streets on a board is awesome. It’s kind of like an electronic skateboard but wayyyyy more cool because they’re battery powered, come with Bluetooth speakers to play music while riding, and are controlled by body motion. Meaning, you lean slightly forward or backward to slow down or speed up, and steer right or left by placing more weight on one foot or the other.

After learning everything I always wanted to know about hoverboards, I asked Ride Demon about the cost (a few hundred dollars).

“I have it covered.”

“Oh?”

“I’m not asking you to pay.” (interpretation: it’s my money and I can do what I want).

“Okay.”

“I know it’s a lot but I’ve been saving my money for a long time and this is something I want.” (interpretation: I’d like to buy this without your opinions and analysis, Dad).

“Absolutely, your call.”

“And I’ve done all the research (the kid knows me; this would have been my next question), and this is the best board for the best price.”

“Totally trust you. Go for it.”

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Money Can’t Love Buy But It Can Buy Experience

So Ride Demon buys the board. And he’s having a blast. The added bonus is that a friend of his is into hoverboard riding as well. So the two boys venture out daily, doing their thing, no helicopter parents around to tell them to slow down or be careful.

Whether he’ll remain interested for a few days, weeks or months, who knows. And whether the expensive price tag was worth it, well, that’s a matter of judgment and perspective.

The way I see it, the kid is learning about money management. On his own, he reviews his bank balance, tally’s up the expense and consequent hit to his savings account, and makes the executive decision to forge onward with the purchase.

Sure, he gets a kick out of watching his balance grow. But, really, the three digit number only gives back so much in the excitement department. Ride Demon calculated that riding the board throughout the summer is worth a whole lot more than any squishy feeling he might get from hanging tight to money.

And I, the Dad in this equation, encourage the kid to jump through these mental hoops. To weigh the costs and benefits to any purchase. And when he makes a mistake, regrets a purchase, all the better. Because he’s learning, and what better time to learn than when you’re a kid, when life is generally free and easy (little does he know!), without financial responsibility, and no money mistake will end in any sort of enduring hardship.

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Self-Balancing

There’s another name for a hoverboard: self-balancing scooter. Yet, while the board does its best to facilitate balance, it won’t work unless you find your own center of gravity, bring your own balance to the board.

Ride Demon was a natural. He quickly learned how to stay upright and comfortably navigate. And as I watched him savoring one sweet ride after another, I’m thinking I’d like to try. So he lets me have a go at it. I step on, shake and wobble for a few seconds, then fall off. Again and again. It’s not as simple as it looks.

Neither is money management for many of us (you knew that, eventually, I was going to bring this around to more talk about money!). I mean, even when someone like Yours Truly passes on a wealth of knowledge (ahem), and you absorb that knowledge, decision making may nonetheless start from a place of discomfort (‘is this the right investment for me? Am I spending too much?) and end with a sense of uncertainty (‘I sure hope the investment works out because I really don’t want to lose money’; ‘it was fun going out for dinner four times this month but now I may not be able to pay off my credit card balance in full’).

So what do you do? Well, this is where I’m going to deliver one of those ‘sounds easy in theory but challenging to implement’ notions. You get comfortable with discomfort; you cozy up to uncertainty. You do your research, acquire information needed for wise decision-making, then make your call. And you do so with conviction knowing that the future is inherently uncertain. And if it works out, good! If not, that’s okay, you learn from it, adjust, and move forward. Not so different than life.

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Kid Rules

I love being around kids. We adults can learn so much from them. When Ride Demon falls down and scrapes his knee, bangs his elbow good, he doesn’t hesitate to get right back up, place himself in the proverbial saddle and get back to carving the streets. He seems to have an innate sense of balance, one that keeps it all in healthy perspective, one that doesn’t harshly self-judge, one that’s accepting, that exudes spirited enjoyment of life.

Now, all that said, the kid doesn’t have money issues and adult responsibilities. Okay, fair enough. But since you and I do, it’s even more important to find and embrace a healthy balanced perspective on money, and all other facets of life. Because it’s when we’re in balance that we’re healthy, wealthy, and just plain old feeling groovy about this gift of life.

 

 

 

 

 

Amazon Prime: The Inside Story

When shopping for books, my first choice is to buy used at the online marketplace, AbeBooks, a company that sources books from local bookshops around the world.

The fact that the books are used? Not an issue at all. I pay a whole lot less than what I would have paid if buying new, with the added bonus that every book I’ve ordered arrives in excellent condition.

The downside, if you can call it that, is that books may be mailed from countries like Australia or England and not arrive for anywhere between 7-21 days or so after placing an order. But I’m good with that. Because it’s rare, if ever, that I absolutely need a book immediately. And you know what? It’s fun waiting. It’s fun anticipating arrival, not unlike looking forward to going on vacation. Waiting reinforces my understanding of the phrase, ‘patience is its own reward’.

Besides, if I need a book immediately (owing to impulse control system shutdown), it may be available at a local bookstore. If not, there’s always Amazon.

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Prime Time With Amazon

Amazon bills its annual Prime Day as ‘a one-day only global shopping event exclusively for Prime members!’ Oh, how exciting, more shopping, more deals, more spending, more getting excited about … stuff.

Sarcasm aside, Amazon is not (surprise, surprise) acting out of the goodness of its heart when enticing consumers to shop until they’ve maxed out their credit card. Nah. Instead, Amazon is intent on taking over the consumer world (chewy thought: given Amazon’s voracious and insatiable growth, will the federal government step in one day, brand Amazon a monopoly and require it to break up into smaller pieces? Stay tuned).

And here’s where Prime Day greases the ravenous machine. July being a quiet retail period, Amazon offers big time deals. In the process, they attract new third-party sellers to their site (which, in turn, enhances product assortment) and persuade more consumers to sign up for Amazon Prime. Because, remember, this is a member’s only sale. And as one credit card company put it in an advertising campaign of years past, ‘membership has its privileges’. Right. The privilege to buy more stuff. Whooo Hooo (ooops, sarcasm reflexively returned).

Jeff Bezos, Amazon’s founder and CEO, knows exactly what he’s doing. Bezos knows consumer behaviour inside out. He knows that the first two Prime Days (this year is #3), generated profits 4x greater than the typical daily profit haul. And he knows that getting consumers to pay $99 to become a Prime Time member is only part of the pitch.

Because internal research has shown that Prime members spend more time noodling around Amazon’s ecosystem of services, and they spend more money. All of which further cements Amazon’s retail dominance.

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Why I Shop At Amazon

More and more, I buy stuff at Amazon. At first, it was only books that I couldn’t find on AbeBooks (did I mention that Amazon bought AbeBooks in 2008?), because even if they didn’t offer a new book priced lower than competitors, they offered free shipping. And convenience. And reliability. And excellent customer service if a package got lost or was damaged during shipping.

Now, for all those reasons, I’ve been buying other stuff at Amazon. And, obviously, I’m not the only one, their reach now being far (think India and China) and wide (think decimated mom and pop bookstores, not to mention the once substantial, now deceased, Borders and Circuit City, and the recent acquisition of Whole Foods). Recent talk of Nike selling their products on Amazon was enough to boost Nike share price and drag down their competitors (Foot Locker fell 6%; Dicks Sporting Goods dropped 5.3%, Under Armour shed 1.5%).

The thing is, Amazon lives up to its name in breadth. The company is a huge distribution channel and only getting bigger, selling everything from clothes to cat litter to car parts. So other retailers want access to that connection to massive hordes of consumers. And not having that direct line to potential consumers is proving damaging as people continue to shop more online than in store. So damaging that some are closing up shop (for example, Sears is now kaput and Macys has shut 100s of stores).

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It’s Just A Store

Amazon makes shopping easy. And the prices are good. The sales even better. Fine. Still, it’s just a store. It sells stuff. You want to spend $99 to become a Prime Member? That’s your call. But don’t buy stuff just because its ON SALE or a GREAT DEAL or a LIMITED TIME OFFER. Don’t fall prey to the marketing jargon, the nonsense, the only purpose of which is to get you, the consumer, to open your wallet and fatten Amazon’s profits.

As for me, I’ll survive just fine without Amazon Prime and their promise of delivery within 2 hours or 24 hours. Sure, it’s a convenient service. But is my personal convenience really that important? Nope. I don’t need it. In fact, I don’t want it. Because I prefer not living life at high speed. I prefer anticipation. I prefer the wait. And I prefer not to buy more than I need.


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Enter Buddha

To be impatient is to be anxious, uneasy, even greedy. Patience, however, is alert, active, expectant. Patience is not dull, it is radiant. It is a flame burning bright.