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Creativity vs Creeping Conservativism, Abdundance mindset vs Scarcity

“Creativity is by its nature an act of boldness and rebellion. You are not accepting the status quo or conventional wisdom. You are playing with the very rules you have learned, experimenting and testing the boundaries. The world is dying for bolder ideas, for people who are not afraid to speculate and investigate. Creeping conservatism will narrow your searches, tether you to comfortable ideas, and create a downward spiral—as the creative spark leaves you, you will find yourself clutching even more forcefully to dead ideas, past successes, and the need to maintain your status. Make creativity rather than comfort your goal and you will ensure far more success for the future.”

From the book “Mastery” by Robert Greene

Mastery synthesizes the years of research Robert Greene conducted while writing the international bestsellers The 48 Laws of Power, The 33 Strategies of War, and The Art of Seduction and demonstrates that the ultimate form of power is mastery itself. By analyzing the lives of such past masters as Charles Darwin, Benjamin Franklin, Albert Einstein, and Leonard da Vinci, as well as by interviewing nine contemporary masters, including tech guru Paul Graham and animal rights advocate Temple Grandin, Greene debunks our culture’s many myths about genius and distills the wisdom of the ages to reveal the secret to greatness.

http://www.amazon.com/dp/B007V65PBK/ref=r_soa_po_i

 
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Posted by on October 24, 2014 in Investments

 

25 Huge Trends That Will Make People Billions Of Dollars

Recently, investing gadfly James Altucher posted a "cheat sheet" for what you should be doing with your money that spotlighted a handful of "demographic trends" that investors could get behind.

We wanted to expand on that handful to a full-blown list of all the technologies out there that are poised to make people billions.

This may not make you a billion dollars. But it shows where things are going.

1) Mobile payments

WHY: Reuters’ Emma Thomasson says the mobile payment market is now "fiercely competitive and growing," citing moves by Google, Apple, and PayPal to launch products. Big box retailers also recently announced a joint digital wallet service called the Merchant Customer Exchange, or MCX. And it’s not just dollars: Crypto-payment group Circle said it would soon launch its first consumer product that it’s calling the Skype of payments. Also for what it’s worth, we also recently explained why you shouldn’t be using cash.

2) Therapy

WHY: Many Americans are getting older and/or more stressed. As a result, physical and mental therapy took the majority of the fastest-growing job occupations in the U.S. As Altucher noted, a growing number of baby boomers will start filling up more "special facilities" as well as requiring more treatment.

3) Batteries

WHY: While the fate of Tesla’s Gigafactory is now somewhat up in the air, a recent report from Navigant argues worldwide revenue from lithium-ion batteries for electric vehicles will grow from less than $6 billion in 2014 to $26.1 billion in 2023. “The shift to lithium ion represents a major endorsement of the ability of this chemistry to perform consistently in an automotive environment,” David Alexander, senior research analyst with Navigant Research says. “Most of the major automakers have introduced battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) models in the last two years, almost all of which use lithium ion batteries for onboard energy storage.” If even Bill O’Reilly is getting behind the potential for lithium ion-powered automobiles, you know this one’s only going to move up and to the right.

4) Solar storage

WHY: "Grid defection" is the word many utilities have begun to fear as homeowners move to become near-fully autonomous energy providers. A report from NanoMarkets says the global market for solar storage systems alone will be worth $2 billion by 2018. The adoption of lithium ion batteries in cars will help drive the cost of solar storage systems, most of which are basically repackaged l.i. batteries, downward.

5) Farmland

WHY: Despite some temporary declines, wealthy farmers and non-farming investors continue to plunk down money on crops, Reuters says. That’s because there remains healthy demand for what comes out of America’s breadbasket, especially from China. Check out this chart from the USDA showing forecasts for Chinese imports of soybeans and corn, both of which the U.S. is the largest exporter of. Insane:

USDA

6) Employed millennials

WHY: Yes, the numbers have been grim of late. But data show the slack is slowly draining out of the 25-34 cohort not in the labor force. As Matt Busigin points out in his Most Important Charts In The World selection, the data suggest "there is a long uptrend in 25-34 employment coming."

Matt Busigin/Business Insider

7) Robots

WHY: In their new book "The Second Machine Age," MIT Sloan professors Andrew McAfee and Erik Brynjolffson argue increasing automation of the labor force will be a permanent feature of the economy. Thus robot-makers like Kiva Systems, which built Amazon’s warehouse bots, stand to see receipts climb.

8) Personal drones

WHY: A sub-trend of the above. Drones largely remain legal for personal use, and the market is now large enough that products are getting reviewed in the Wall Street Journal. Guangdong-based DJI, which makes drones for cameras, is among the most successful.

Nova Labs

9) App stores

WHY: Chris Dixon argues that people have basically stopped using the mobile Web and now exclusively use apps. This means that the owners of app stores — that is to say, for now, the mobile phone developers — wield tremendous power. " What if AOL or some other central gatekeeper had controlled the Web, and developers had to ask permission to create Google, YouTube, eBay, PayPal, Wikipedia, Twitter, Facebook, etc.? Sadly, this is where we’re headed on mobile."

10) Personalized genetic testing

WHY: Shares in gene-testing companies like Myriad have seen some of the best performance of 2014. 23&me had seen strong consumer interest before the FDA temporarily halted sales of its testing kit. The company says it’s working with the agency to get its product back on the market.

11) Wearable tech

WHY: It’s getting to the point where you probably have a friend, or a friend of a friend, who owns a Nike FitBit, a Jawbone, or some other device tracking their personal health data.

12) Smart fabrics

WHY: There’s a company called SmartWeave whose product prevents sweat stains. There are also companies developing new smart uniforms for the military. The sector is constantly growing.

13) Uberification

WHY: Here’s a list of every company now offering on-demand personal services, via Steve Schlafman at RRS. There are more than 70. "The “uberification” of our economy signals a fundamental shift in the way that local services are discovered and fulfilled," he writes.

Steve Schlafman

14) Politics

WHY: The Supreme Court continues to loosen rules targeted at limiting the amount of money that can be spent on a political campaign. The Koch-brothers-backed group Americans For Prosperity spent $1.4 million on ad buys in Arkansas against Democrat incumbent Senator Mark Pryor, and has spent $30 million nationally, according to The Washington Post. Meanwhile, most members of Congress are now millionaires. There is no guarantee that you can earn a living off being a campaign manager, but the field is diversifying.

15) Reinsurance

WHY: The companies that insure the insurers have adjusted well to climate change and the climbing toll of natural disasters. "In 2011, the costliest year ever for loss claims thanks to floods in Thailand and the earthquake that caused the Fukushima disaster, the 40 largest reinsurers made pretax profits of $5.4 billion (U.S.), according to Standard & Poor’s," says the Toronto Globe and Mail.

Flickr via NASA

16) Rents

WHY: Rents climbed 12% between 2009 and 2013 as the housing bubble pushed former homeowners into apartments. Seattle saw the largest YOY jump last year at 7.1% followed by San Francisco at 5.6%.

17) Online groceries

WHY: Online groceries generated more than $15 billion in sales last year. Amazon’s AmazonFresh is about to get expanded into Seattle, Los Angeles and San Francisco, and possibly a bunch more. Wal-Mart To Go has also already been up and running in the Bay Area, and just expanded to Denver.

18) Meal kits

WHY: You could have your groceries delivered to you — or you could have the ingredients for specific meals delivered in precise quantities and with detailed recipes. Blue Apron, the leading start-up in this field, now may be worth more than $500 million. Naturally, there are now at least a half-dozen other start-ups looking to edge their way into the space.

Mashable/Blue Apron

19) Cheap natural gas

WHY: Goldman Sachs recently ranked Cabot Oil and Gas as the most undervalued stock in the market, and cited a host of other energy companies as having an untapped upside. The forward curve on gas futures doesn’t climb above $5 any time soon.

EIA

20) Blockchain technology

WHY: We recently explained why people keep investing in Bitcoin despite many recent headaches in the Bitcoin ecosystem: Its underlying technology — the Blockchain — is being called the next Internet. The companies incorporating blockchain remain in their infancy, but the most prominent one, Ripple, continues to raise millions of dollars from outside investors.

21) Meteorology

WHY: On Nov. 1, agriculture giant Monsanto bought a 7-year-old firm called Climate Corporation for about $1 billion. Founded by two former Google employees, Climate Corporation might be described as the expression of the "big data" movement in the farming sector: It takes figures from hundreds of monitoring stations and publishes real-time weather forecasts. We have also seen an increasing number of commodities futures move on weather forecast releases.

22) 3-D printed organs

WHY: Researchers in Kentucky are on the verge of printing out the first-ever human heart. Medicine in general is becoming the major growth area in the 3-D printing field, as a significant part of the printer market remains confined to hobbyists.

23) Online luxury

WHY: Online luxury sales are growing twice as fast as the overall market, according to a new report from McKinsey. "Last year, online shopping ‘directly generated more than 13% of offline luxury sales and influenced another 28% of sales.’ Consumers typically purchase big ticket items in-person, leading many luxury retailers to overlook e-commerce," BII’s Cooper Smith writes.

24) Rockets

WHY: Elon Musk and Jeff Bezos are paving the way for the first true "space age," The SpaceReview’s R.D. Boozer writes. "SpaceX estimates that if they are able reach a point where the whole Falcon 9 rocket is recovered and repeatedly reused in such a manner, they may achieve launch costs for around one hundredth of what they currently are. If they successfully meet this ultimate challenge, then we are on the verge of the first true Space Age, with all of the spaceflights that have occurred before amounting to an expensive, decades-long process of baby steps leading to this new capability."

25) Music streaming

WHY: The profitability models are still being worked out, but there is no doubt this is where the future of music lies. The purchase of music data service The Echo Nest by Spotify for an undisclosed amount signals where this is all going.

 
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Posted by on October 24, 2014 in Investments

 

James Altucher’s The Idea Matrix

90% of the feedback I got about “Choose Yourself” was about one thing: How to bridge harsh reality with the world of imagination: how to become an Idea Machine.

For my whole life I felt like a stray dog, dashing around until I could survive in the jungle. But I was lost and it took a long time.

And I get it. I was dead on the ground. I was broke. I was separated. I was fired. I was scared. Scared and lonely.

Everywhere I looked I couldn’t believe people knew how to smile. They were faking it, I thought.

In “Choose Yourself” I describe the first tiny steps I took to get off the ground.

Well, actually, the second. Because the first was horribly embarrassing. I pretended to be a psychic on Craigslist just so I could make friends.

But ignore that. I was lonely and just needed to reach out into space.

Specifically, I tried to improve physically, emotionally, mentally, and spiritually each day. Just a little bit each day. The 1% rule. Improve 1% a day.

They are all equally important. If you sit on a four legged chair, you are firm on the ground. A three-legged chair, and a strong wind will blow you over. And below that, you fall easily.

But ideas are the currency of this economy. NOTHING else. Which drove me to my next book, “The Choose Yourself Guide to Wealth” I focus a lot more on ideas:

  1. why ideas are the NEW CURRENCY of the 21st century, a century already defined by declining currencies and more volatile employment
  2. why ideas are so closely linked to wealth.
  3. how to create good ideas and sell them and negotiate the highest value for them.
  4. how to avoid other people’s bad ideas

This is not a self-help book. It’s exactly what I did for myself. I know it worked for me. I had ideas first, wealth second. It ONLY worked in that direction.

At my worst moments, I had no ideas. All I could do was work on the ideas for others, even bad ideas, because I needed a paycheck.

Then I had bad ideas. But bad ideas come back at you with loan shark prices and you HAVE to pay.

Good ideas are a link between the real world and the world of myths and dreams.

I needed to survive, I needed to pay for my family. I was going through a divorce. I was dating people maybe not so good for me. I was miserable all the time and I was scared it was only going to get worse.

And often it did get worse. Often there is no bottom until you make the active effort to climb out of the hole which I did by keeping my health up and being only around people who loved me and who I loved.

But then I created the attached image. This is when I finally took the red pill instead of the blue pill: THE IDEA MATRIX (see the attached image).

And ever since, my life has 100% changed every six months. I can’t even believe the ways in which it has changed. I can’t say better or worse. But I’m not crying on the floor anymore, pretending to be a psychic.

The bottom axis starts off when you are working solely on the ideas of others.

This is not necessarily bad but it basically means you are an employee and you are an idea slave to someone else’s whims.

You could get fired. Your boss could have bad ideas and go broke. There is no loyalty. You are not in control. You feel “stuck” all the time.

On the top right is when you are an idea machine: you are non-stop working on good ideas that help the lives of others. You mind dips into dreams and you make them reality or art or abundance.

Peter Thiel underlined this for me when he told me the story of Mark Zuckerberg turning down Yahoo’s offer of $1 billion. Zuckerberg would’ve made $250 million. Peter wanted him to take, or at least consider, the idea.

Zuckerberg decided in ten minutes time: “No”.

As Peter put it: ideas were more valuable to Mark than money.

Not everyone is going to create Facebook. I never will. But everyone could create abundance in this upper right corner. Wealth is the side effect of being an idea machine.

I’ve been at the bottom left corner many times. When I was working a job where I’d keep my office door locked all day long. I had to write an instruction manual for some chip.

I was horrible at it. You see how many grammar mistakes I make in these posts? I was worse then.

My boss even called me into his office and yelled at me, “don’t you take any pride in your work?”

I’d leave work at 4:45 on the dot every day so I could hitch hike home. I wrote horrible novels at night. I hung out with my friends. I lived with a woman I didn’t love. Nothing was going well. I was an idea slave.

Many employees are at the bottom left. They get their paycheck, their hours are filled from 9-5 or more just working on the bad ideas of others.

This is not a natural state for human beings. We NEED to explore. We’re curious. We want to adapt constantly to new environments and use the part of our brain that evolved specifically so we could create new works of art or production.

But we’ve been fooled into thinking by a century of corporatism that if we just “pay our dues” and climb “the ladder” then there is a pot of gold at the end.

This loyalty never existed and is now gone forever as people slowly adapt to a new world.

In the bottom right: where you have bad ideas but you are giving ideas to others.

Many professions exist here: lawyers and stockbrokers are the most common. Tons of ideas but they are usually bad.

This is not such a horrible thing for society. But it requires the customers to be aware of the hidden agendas of the lawyers and brokers (the fees, being charged by the hour, etc).

Not all lawyers and brokers are bad. But their job is to give you a ton of ideas and hope for the best.

“Where Are The Customers Yachts?” is a famous book about this corner.

When I’ve been a consultant for companies trying to figure out what to do with their websites I was mostly in this category. Lots of ideas, most of them bad, but I needed the client to say “yes” so I can charge for more websites.

Getting HBO to pay $75,000 for a three page website about Dennis Miller was my crowning achievement as a bottom-righter.

At the top left is when you are working on good ideas but based off of other people’s ideas. Whoever created Gmail on top of Google is in this category.

Whoever buys a losing business and turns it around is here. There is money here, just not as much as the upper right.

I was in this category when I worked at HBO. I was initially hired to do some basic computer programming for them (idea slave) but then I started pitching them ideas that I could do for their website.

I was still under their umbrella but I was able to become an “entre-ployee by working on good ideas within the umbrella idea of “HBO”.

I made more money this way, had some fun, got some promotions, but I was still an employee.

See in the middle where it says “disobedience”? I don’t mean like a kid running away from home for the first time. Because the kid always comes back. I came back. Again and again.

This is where you break free from the system. Where you realize that everything is a stage set and now it’s time to get to work.

This is where you say “sorry” instead of asking for permission.

This is where you wake up and everyone’s attached to a tube and you pull the tube out and maybe then, just like in the movies, you learn karate and fall in love.

At the top right is the IDEA MACHINE.

Nothing can stop you.

This is where abundance is. This is where seeds are planted. This is where you dip into other dimensions not yet created.

A few months ago I wrote Amazon a list: 10 Ideas for Amazon to Improve their Self-publishing division. They liked the list.

They flew me out there, showed me all the different departments, showed me what they were working on, and it was a lot of fun.

I even took a photo of the very first Starbucks.

They didn’t pay me but I got to meet everyone, I got to be at the center of the universe for publishing, and I planted a seed.

Who knows where those seeds can grow in the future and what abundance can be created. The top-righter idea machine plants lots of seeds. Builds many bridges into the world of dreams.

But we have to pay the bills.

I’ve also made a lot of money in this area. One time I had a set of ideas for a company. They invited me to go on their board where I ended up making a lot of money as they implemented my ideas. This has happened to me many many times.

Just yesterday I spoke to someone and gave him five ideas for how he could build a substantial business. I didn’t mention my involvement at all. But if he does well, I’ll do well. It always works out this way.

Every day I try to plant seeds.

What about big companies, like Facebook or Apple. Are they in this quadrant? Of course! Facebook is a great example: they set up the platform so that everyone can aggregate information about their identity into one place. They basically generate non-stop ideas for a billion different people around the world who want to communicate and share their online identities.

Despite all the complaints you read in the media, everyone I know uses Facebook, including the people making the complaints.

Claudia asked me about Marcus Lemonis, who stars in The Profit and I’ve been begging to get on my podcast. “Where is he on this matrix?”

Two places. He buys declining businesses and helps turn them around. This is in the top left: take an idea from someone else and start to throw good ideas at it.

But he’s also in the top right. He’s an idea machine.

He takes his simple concept of turning around companies, applies it to MANY companies and now he’s making a TV show out of it. He gets 40,000 emails for help from business each week. What a way to guarantee he has non-stop opportunities!

Where are you on this matrix right now? Where can you be in six months?

When I was a kid I looked up to my dad. I thought he was an idea machine. No matter what the problem, he had a solution. If I argued back, he’d show me where I was wrong. And I was always wrong.

He built up a good business and went public. But then it went bankrupt, he went broke, he got depressed, and he let it stop him. I don’t know if he ever had a good idea again.

At my worst moments I thought I was turning into him. I would cry to therapists that I was turning into him. Someone who would sit all day and do nothing until he died. They would assure me for $200/hr that I wasn’t. But how could they know?

But the daily practice I describe everywhere gives me the energy to come up with ideas, and to come up with ideas for coming up with ideas. I write down ten ideas a day no matter what.

Being scared and lonely happens in a cycle. It effects all of us. Even a little bit each day. Watching the river go into the ocean sparks a little bit of that loneliness.

We’re meant to often feel lonely and scared. It allows us to re-calibrate where we are and ask the important question: is this what I’m supposed to be doing right now?

When I am most fearful is EXACTLY the time when I want my idea muscle humming, when I MUST write those ten ideas a day down and become an idea machine.

It’s when I’m most scared that I get out of bed and I know that today is the day I can do anything I want to.

It’s not an affirmation. Or wishful thinking. Or the words of a song.

It’s a box I check when I’m done writing my ideas down.

KA-BOOM!

 
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Posted by on October 23, 2014 in Investments

 

The Ultimate Cheat Sheet For What You Should Do With All Of Your Money by James Altucher

I like this guy – here’s a link to his site – he really makes me think about things…. http://www.jamesaltucher.com/

_______________________________________________________________________________________________________________

In the history of capitalism, this is the hardest time ever to invest. People are going broke, losing their jobs, and fear more than greed rules the news and tries to rule thoughts.

In short: people are scared. And I do think the uncertainty is going to rise quickly so I wanted to put this note together.

In 2001 and 2002 I lost all my money through bad investing. The same thing happened to me on a couple of occasions after that.

So why should anyone listen to me about investing? You shouldn’t. You shouldn’t listen to anyone at all about investing. This is your hard-earned money. Don’t blow it by listening to an idiot like me.

Here’s my experience (and perhaps I’ve learned the hard way about what NOT to do and a little bit about what TO do.):

I’ve run a hedge fund that was successful. I ran a fund of hedge funds, which means I’ve probably analyzed the track records and strategies of about 1000 different hedge funds.

I’ve been a venture capitalist and a successful angel investor (I was a HORRIBLE venture capitalist though – but I put that under the category of “does not work well with others”).

I can’t raise money anymore. Nor do I want to play that game. I don’t BS about my losses and everyone else does.

So I’m not in that business anymore. It’s too much work to run a fund anyway.

In the past 15 years I’ve tried every investing strategy out there. I honestly can’t think of a strategy I haven’t experimented with.

I’ve also wrote software to trade the markets automatically and I did very well with that.

And I’ve written several books on my experiences investing, with topics ranging from automatic investing to Warren Buffett, to hedge funds, to long-term investing (my worse-selling book, “The Forever Portfolio”, which has sold 399 copies since it came out in December 2008, including one copy for the entire last quarter).

Incidentally, why publish a book called “The Forever Portfolio” during the worst financial crisis in history. I begged my publisher (Penguin) to postpone but they couldn’t. “It’s in the schedule” was their magic incantation. Publishers largely suck. The good news is: they will never make back the advance.

That said, all of the picks in that book have done excellently since then but the one thing I am proud of is that I made a crossword puzzle for the book. I don’t know of any other investing book with a crossword puzzle in it.

So, Ok! Let’s get started. Don’t follow any of my advice. This is advice that I do and follow and it works for me.

A) SHOULD I DAYTRADE?

Only if you are also willing to take all of your money, rip it into tiny pieces, make cupcakes with one piece of money inside each cupcake and then eat all of the cupcakes.

Then you will get sick, and eat all of your money, but it will taste thrilling along the way. Which is what daytrading is.

B) I DON’T BELIEVE YOU. MANY PEOPLE DAYTRADE FOR A LIVING.

No. I personally know of two. Maybe three. And they work 24 hours a day at it and have been doing it for a decade or more. So unless you want to put in that amount of time and be willing to lose a lot first then you shouldn’t do it.

One more thing: when you daytrade and lose money it’s not like a job.

When you go into a job you NEVER lose money. If you show up for two weeks, you get paid. Even if you have been warned repeatedly about sexual harassment you still get paid. You might get fired but they won’t take your money.

The stock market TAKES your money on bad days. Sometimes it takes a lot of your money. We’re not used to the brutality of that and it can destroy a person psychologically, which makes one (me) trade even worse.

C) WELL, WHO MAKES MONEY IN THE MARKET THEN?

Three types of people:

1) People who hold stocks FOREVER. Think: Warren Buffett (has never sold a share of Berkshire Hathaway since 1967) or Bill Gates (he sells shares but for 20 years basically held onto his MSFT stock).

2) People who hold stocks for a millionth of a second (see Michael Lewis’s book “Flash Boys” which I highly recommend.) This is borderline illegal and I don’t recommend it.

3) People who cheat.

I’ve seen it for 20 years. I’ve seen every scam. I can write a history of scams in the past 20 years.

Without describing them, here’s the history: Reg S, Calendar trading, Mutual fund timing, Death spirals, Front running, Pump and Dump, manipulating illiquid stocks, Ponzi schemes, and inside information. Inside information has always existed and always will exist.

One time I wanted to raise money for one of my funds. I went to visit my neighbor’s boss. The boss had been returning a solid 12% per year for 20 years.

Everyone wanted to know how he did it. “Get some info while you are there,” a friend of mine in the business said when he heard I was visiting my neighbor’s boss.

The boss said to me, “I’m sorry, James. We like you and if you want to work here, then that would be great. But we have no idea what you would be doing with the money. And here at Bernard Madoff Securities, reputation is everything”.

So I didn’t raise money from Bernie Madoff although he wanted me to work there.

Later, the same friend who wanted me to get “info” and “figure out how he does it” said to me: “we knew all along he was a crook.”

Which is another thing common in Wall Street. Everybody knows everything in retrospect and nobody ever admits they were wrong.

Show me a Wall Street pundit who says “I was wrong” and I’ll show you…I don’t know…something graphic and horrible and impossible [fill in blank].

D) So how can one make money in the market?

I told you about: #1. Pick some stocks and hold them forever.

E) What stocks should I hold?

Warren Buffett has some advice on this (and I know because I wrote THE book about him. A friend of mine who knows him told me my book was the only book that Buffett thought was accurate about him).

He says, “if you think a company will be around 20 years from now then it is probably a good buy right now.”

I would add to that, based on what Warren does. It seems to me he has five criteria:

  1. A company will be around 20 years from now.
    b. At some point, company’s management has demonstrated in some way that they are honest, good people. If you can get to know management even better.
    c. The company’s stock has crashed for some reason (think American Express in early 60s, which he loaded up on. Or Washington Post in the early 70s. Or Coca-Cola in the early 80s).
    d. The company’s name is a strong brand: American Express, Coke, Disney, etc.
    e. Demographics play a strong role.

With Coke, Buffett knew that everyone in the world would be drinking sugared water before long. Who can resist? He also started buying furniture companies right before the housing boom. He knew that as the population in the US grows, people will need chairs to sit on.

Note that Buffett is not what some people call a “Value investor”. But I won’t get into that discussion here.

F) WHAT ELSE?

One time I accidentally got an email that was intended for a famous well-known investor. It was from his broker and contained his portfolio. I can’t say how this accident happened but it did.

Of course, I opened the email.

This is a man who writes about lots of stocks.

His entire portfolio was in municipal bonds.

I don’t know whether or not municipal bonds are good investments. But I would look into stocks that are called “closed-end funds” that invest only in municipal bonds.

They usually pay good dividends, usually trade for less than their cash or assets in the bank, and are fairly stable (it’s very hard for a municipality to not pay back its debts for various reasons, some of them constitutional).

But do a lot of research into the towns.

I’ll tell you one story. I had an idea for a fund in 2008 when oil was crashing at the end of the year.

Stocks / funds that invested in municipal bonds in Texas were getting destroyed. Somehow, because oil was going down, everyone naturally assumed that Texas was going to simply disappear. I researched every municipal bond out there and found a good set of Texan cities that were being sold off with everyone else even though they had nothing to do with oil.

I pitched it to a huge investor who had told me he wanted to back me on any idea I could come up with.

He loved the idea. He loved it so much he told me, “You’re too late. We already have about $500 million in this strategy and we bought the very stocks you are recommending.”

They went up over 100% in the next six months while the world was still in financial collapse. So he made a lot of money.

As for me, I didn’t put a dime into my own strategy and made nothing.

G) SHOULD I PUT ALL OF MY MONEY IN STOCKS?

No, because you’ll never know anything about a company and you won’t get the kind of deals that Warren Buffett gets.

So use this guideline:

- no more than 3% of your portfolio in any one stock. But if the stock grows past 3% you can keep it. To quote Warren Buffett again: “If you have Lebron James on your team, you don’t trade him away.”

- no more than 30% of your portfolio in stocks (unless some of the stocks grow, in which case you just keep letting them grow).

G, PART 2) WHAT IF WE ARE IN A BUBBLE?

Bubbles don’t mean anything. We had an internet bubble in the 90s. Then a housing bubble. Bubbles bubbles bubbles. And if you just held through all of that, your stock portfolio would have been at an all time high last Friday.

So ignore cycles and bubbles and ups and downs.

And NEVER EVER read the news. The news has no idea about the financial world and what makes it tick. Any investing off the news is like taking out your eyes because you trust a blind person to drive you to work.

H) MY FRIEND HAS A BUSINESS IDEA. SHOULD I INVEST IN IT?

Probably not. But if you want a checklist, make sure these four boxes can be checked:

  1. The CEO has started and sold a business before.
    b. The business is a sector with a strong demographic headwind behind it. (or is that a tailwind?)
    c. The company has revenues and/or profits.
    d. You are getting a really good deal. (This is subjective but you can look at similar companies and what they were valued at.)

I can say this: every time I have invested with this approach it’s worked miracles. And every time I have not invested in this approach it’s been a DISASTER. Like, a CLUSTERF*(*K

Claudia doesn’t let me invest in a private company unless all four items on my checklist apply.

Which is important because I tend to believe in everything people tell me. So I’m happy to invest in a time portal black hole machine.

I) WHAT DO YOU THINK OF BITCOIN?

I think bitcoin has about a 1 in 100 chance of being a survivor. So I have 1% of my portfolio in bitcoin.

J) WHAT ABOUT METALS AS A HEDGE AGAINST INFLATION?

No, they have zero correlation with inflation. The best hedge against inflation is the US stock market since about 60% of revenues of the S&P 500 comes from foreign countries.

K) WHAT ABOUT METALS LIKE GOLD? DON’T THEY HAVE INTRINSIC VALUE?

The only currency in the history of mankind that had actual intrinsic value was when people traded barley in the markets of the ancient city of Ur. Since then, we’ve developed currencies that we had to have faith in their value.

Every currency has faith and hope backing it. When people began to lose faith in US currency (in the Civil War), the words “In God We Trust” were put on the dollar bill to trick people into having faith in it.

But if you’re going to pick a metal, wait until the gold/silver ratio gets higher than it’s historical average and buy silver.

How come? Because silver is both a precious metal (like gold) and an industrial metal (also like gold, but much much cheaper). So there actually is some intrinsic value in silver.

I bought some silver bars back in 2005. But then lost them when I moved. That’s why nobody should listen to me about investing.

L) WHAT ABOUT MUTUAL FUNDS?

No. Mutual funds, and the bank representatives that push them, consistently lie about the fees they are charging. I know this from experience.

One time I accompanied a friend of mine who had made some money (she was a model and had a good run for awhile) and was looking to invest it. She asked me to go with her to see her bank representative who had some “ideas”. Because she was beautiful, I went with her to the bank.

I didn’t talk at all during the meeting but jotted down every time the bank guy lied. He lied five times.

Afterwards I explained each of the lies to her.

What happened? She put all her money with the guy. “He’s practically family”. I can’t argue with a good salesman.

But he lied about the mutual funds’ performance that he was pitching, the fees they were charging, the commissions he was charging, and a few more I can’t remember now. I wrote an article about it in the Financial Times back then.

Fact: Mutual funds don’t outperform the general market so better to invest in the general market without paying the extra layer of fees.

Use the criteria I describe above, pick 20 companies and invest.

M) WHAT ARE SOME GOOD DEMOGRAPHIC TRENDS?

  1. The internet. Yes, it’s still growing.
  2. Baby boomers retiring. They need special facilities to live in. They need better cancer diagnostics and treatments.
  3. Energy. The more people we have, the more energy we will consume. Go for energy sources that are profitable and don’t need government subsidies. Whenever you depend on the government, you could get in trouble.
  4. Temp staffing. Every company is firing people and replacing them with temp staffers.
  5. Batteries. If you can figure out how to invest in Lithium, then go for it.

and a dozen others. Feel free to list more in the comments.

N) IS A HOUSE A GOOD INVESTMENT?

Everyone will disagree with me on this but the answer is an emphatic “NO!”

It has all the qualities of a horrible investment:

  1. Constant extra layers of fees and taxes that never go away (maintenance, property taxes, etc that all rise with inflation).
  2. Usually housing is too-large a percentage of someone’s portfolio. Even just the down-payment ends up being the largest expense of someone’s life.
  3. Usually massive debt is involved.

If you can avoid, “a”, “b”, and “c” and don’t mind the opportunity cost in the time required to maintain your house then go for it. Else, rent, and use the money you saved for other investments that will be less stressful and pay off more.

Fact: Housing has returned 0.2% per year in the past 100 years.

O) IF NO HOUSING AND ONLY 30% OF MY PORTFOLIO IN STOCKS, THEN WHAT SHOULD I DO WITH THE REST OF MY MONEY?

Why are you in such a rush to put all of your money to work? Relax! Don’t do it!

There’s a saying “cash is king” for a reason. I will even say “cash is queen” because on the chessboard the king is just a figurehead and the queen is the most valueable piece.

Cash is a beautiful thing to have. You can pay for all of your basic needs with it.

You can sleep at night knowing there is cash in the bank.

I love a stress-free life. When I look back at the past 15 years, the times when I’ve been most stressed is when I’ve been heavily invested and the times when I’ve been least stressed is when I had cash in the bank.

With cash in the bank you can also invest in yourself.

  1. P) WHAT DOES THAT MEAN, “INVEST IN MYSELF?”
  2. it costs almost nothing to start a business. Find something people want and start posting information about it on a blog and then upsell your services on the blog.

Or write 1000 small books about different topics and publish them on Amazon. You can do this on the side while you learn and have a full time job and then when you are ready, you can jump to your other passive streams of income.

Note: It takes a lot of work to find “passive” income but when it happens, it’s worth it.

These are some ideas. There are many others.

  1. Invest in experiences rather than possessions.

Figure out interesting and unique experiences you can have or places you can go to (but they don’t always have to be places).

Experiences pay much higher dividends than an extra TV or a nicer car.

  1. Books. Reading is the best return on investment. You have to live your entire life in order to know one life.

But with reading you can know 1000s of people’s lives for almost no cost. What a great return!

Q) SHOULD I SAVE MONEY WITH EACH PAYCHECK?

No. Just try to make more money. That is easier than saving money. I find that whenever I try to save money I end up spending more. I don’t know why that is. I’m a horrible spender, which is probably why I’ve gone broke so many times.

Better to just make more with many streams of income so you don’t have to worry about going broke. And then saving will come naturally as you make more money.

Don’t forget that a salary will never make you money. After taxes and the daily grind, and your exhaustion and the feelings of “I hate my job”, and then inflation and then new expenses (kids), you will never be able to save. Avoiding Starbucks every day won’t make you a millionaire, that’s a fact.

I say it glibly, “try to make more money”. I know it’s not that easy. But in the long run, if you have a constant focus on alternative ways to make more money, then you will.

R) WHAT ELSE SHOULD I DO WITH MY MONEY?

Forget about it.

Money is just a side effect of health.

I talk a lot about the daily practice I started doing when I was at my lowest point.

I know now after years of doing it that it has worked. I’ve done very well with it, and I started doing it when I was dead broke, lonely, angry, depressed, and suicidal.

I didn’t start it from a position of privilege.

And you don’t have to buy my book. I’m not selling anything.

Here’s the whole thing: stay physically healthy in whatever way you know how (sleep well, eat well, exercise). Be around good people who love you and respect you and who you love and respect, and be grateful every day.

Think of new things each day (or all day) to be grateful for. “Gratitude” is another word for “Abundance” because the things you are most grateful for, become abundant in your life.

And finally, write down 10-20 bad ideas a day. Or good ideas. It doesn’t matter. After exercising my idea muscle for six months, I felt like an idea machine. It was like a super power that just wouldn’t stop. More on this in another post.

Money and abundance in your life is a natural side effect of the above. I know this for myself but now since writing about it for almost four years I can tell you from the letters I get that it works for others.

S) WHAT’S IN IT FOR YOU?

I don’t know. I used to write about money stuff because I wanted investors, or I wanted to sell books, or get speaking engagements. Now I want none of that.

But I get worried that in a world of increasing economic uncertainty that more and more people are getting “stuck” and are scared about what is happening.

Too many people I know are nervous and depressed.

There’s nothing else to know about investing your money. If your bank tries to give you any advice just say, “thanks but I’m ok”.

If they want you to put your money in a savings account, even “so you can get the interest” I would politely decline. There’s a reason they are asking you to do this and I have no idea what it is but it’s not good for you.

You won’t get rich investing your money but you can do very well. And if you combine that with investing in yourself, you will get wealthy.

But only if you remember that financial wealth is a side effect of real inner wealth.

This is the most powerful investment you can do with your time and your life.

You can always make money back when you’ve lost it.

But one single split moment of stress and anxiety you will NEVER make back again.

Investing in the future will never bring back the past.

To be able to sit and not have a million stressful thoughts racing through your head. To be able to appreciate everything around you for the abundance it is.

Most people think they need to say “thank you” to the world.

But the world is constantly saying “thank you” to you for being alive, for creating new things, new energies, new experiences.

Every day give the world at least one more reason to whisper “thank you” to you.

If you can hear that whisper, everything else, every gift in life, becomes expected. You earned it.

Just take it.

 
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Posted by on October 23, 2014 in Investments

 

8 amazing life hacks to start your day

For many of us, mornings begin in a rushed panic. We allow our alarm clocks to buzz at least a dozen times before we decide we have to get out of bed. We then rush around our homes half-awake trying to get ready for our day. In a hurry, we stub our toe on the bedpost, forget to put on deodorant, and don’t pack a lunch because we simply do not have time.

It’s no wonder that so many folks despise the thought of being awake before 9 am!

So it may not surprise you to know that happy individuals tend to actually enjoy their mornings. They appear to thrive on waking up with the sun and look forward to a new day or possibilities. These happy people have humble morning rituals that increase their own sense of well-being and give their day purpose.

Happy people tend to share many of the following morning habits:

1. They wake up with a sense of gratitude.

Practicing gratitude is associated with a sense of overall gladness. They start the day with love. This means that they’re truly appreciative of their life and all of its little treasures. They practice small acts of gratitude in the morning by expressing thankfulness to their partner each morning before they rise from bed. They may also write about their gratefulness for five minutes each morning in a journal that they keep bedside.

2. They begin anew each and every morning.

They know that it’s a brand-new day to start over and do something different. Yesterday may have been a complete failure for them, but today is a new day for success and adventure. Individuals who aren’t ruined by one bad day are resilient creatures. Resiliency is a telltale sign of having purpose and happiness.

3. They take part in prayer, affirmation, or meditation.

Many of the happiest folks alive are spiritual. Prayer is a way of connecting and giving thanks for our creator. Meditation helps keep our mind focused, calms our nerves and supports inner peace.

Happy people even use affirmations to declare how their day will go. Steve Jobs‘ morning routine used to start by looking in the mirror and asking himself: “If today were the last day of my life, would I want to do what I am about to do today?” And Benjamin Franklin asked himself each morning, “What good shall I do today?”

4. They read.

Some happy people read a bit of scripture each morning, while others read inspiring stories to get their day started. Either way, they make it a ritual to read self-improvement literature tostretch and grow their insight and knowledge. It’s starts their day off on a positive note with new ideas to guide their day’s journey.

5. They keep things simple and don’t rush out the door.

Complex morning routines are difficult to stick to and set us up for failure. Happy individuals’ routines are simple for them because they prepared the night before. They picked out their work attire, prepared their lunch, set their coffee to brew — all the night before. A simple routine limits any multitasking that most people do in the morning to ensure that they make it to work on time. Multitasking may create stress and anxiety and steal your peace during your first waking hours.

6. They exercise.

Exercise boosts levels of health-promoting brain chemicals like serotonin, dopamine, and norepinephrine, which may help buffer some of the effects of stress and also relieve some symptoms of depression. Exercise is a big enough priority that happy folks tend to do it first thing in the morning so that they don’t have to try to make time later in the day for it. They recognize that willpower is strongest in the morning.

Morning exercise gets the blood flowing and gives them more energy throughout the day.One study published in the Journal of Health Psychology discovered that working out improved how people felt about their physical bodies — even if they didn’t lose weight or gain any noticeable improvements in their physique.

7. They get some fresh air.

Morning walks are beneficial for all creatures. Walking is also proven to stimulate creativity in the brain, which isn’t a bad way to start the day either.

If they have a dog, they walk it. Walking the doga mile or two in the morning is a form of much needed exercise for humans and dogs alike. When happy individuals walk their dog outside, they breath in the crisp morning air, whichpromotes a sense of vitality.

8. They savor the beauty of their surroundings and practice being present in the moment.

Whether they go on a morning walk with their dog or sit in their favorite chair by the window,taking the time to appreciate their environmentcan be invigorating and gets folks excited about their day. Being present connects and grounds them to what is really important in the moment. There is a certain kind of wisdom that comes with being a witness to your own life.

How many of these habits do you perform each morning? Are there some that you would like to see on the list?

Photo Credit: Shutterstock

 
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Posted by on October 23, 2014 in Investments

 

5 Tips on How to Be Successful From Relativity CEO Ryan Kavanaugh

Ryan Kavanaugh

Photo Credit: Alex Berliner

Ryan Kavanaugh is a man who is well versed in the art of success. The Relativity CEO and founder has completely revolutionized the way films earn money by creating a “Monte Carlo” system designed to predict the odds of a film’s success. Through Relativity, he has financed more than 200 films that collectively earned over $17 billion in revenue and 60 Oscar nominations. Under his careful watch, Relativity isn’t known for simply financing, but for its content production and distribution, including movies, television, fashion, sports, digital and music. Even more shockingly, he has built a company known for its fearless innovation in just over ten years—and at the very young age of 39, no less. Kavanaugh is an inspiration, and when we had the opportunity, we simply had to ask his advice on how to be successful.

RYAN KAVANAUGH’S 5 TIPS FOR SUCCESS

  1. Never give up.
  2. Never give up.
  3. Don’t get stuck on a business plan just because it was your business plan. One of the things that allows us to be as successful is that we may sit there thinking, ‘We’re going left, we’re going left, we’re going left and this is the way we should go…and then an opportunity presents itself. No matter how many times you’ve sat there and said, ‘This is our model and we’re going left,’ if you see an opportunity—because this business, particularly entertainment, moves so fast and nobody really knows where it’s going—if there’s an opportunity and it’s to go right, the mistake a lot of people make is that they think, ‘Well, I’ve been saying let’s go left for so long, I’m not going to break that.’ You have to be willing to break it. Nobody has a crystal ball, and part of evolving a business plan is to say, ‘I might have said we’re going left, but I see the opportunity and we’re going right.’
  4. Be flexible.
  5. Never make too good of a deal. It sounds a little counterintuitive, but the deals that are too good of a deal for you in the long run will end up hurting you. A lot of people in our business don’t realize that. They think their job is to go in a room and negotiate the highest price.
 
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Posted by on October 22, 2014 in Investments

 

China admits 40% of magnetic rare earths supply is illegal

China admits 40% of magnetic rare earths supply is illegal

World’s dominant supplier of rare earth elements reveals a huge portion of supply used in magnets is illegally mined; much larger than initially anticipated

21 October 2014

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China – the world’s leading producer of rare earth elements – has revealed that 40% of its supply used in high strength magnets is from illegally mined sources in the country.

The figure was revealed by rare earths expert Prof. Dudley Kingsnorth of Industrial Minerals Company of Australia (IMCOA) at a high level conference in Milan, the European Rare Earths Competency Network (ERECON).

Prof. Kingsnorth, who is the leading source of data in the rare earths market, was citing experts within China who are not only involved in the mining of the elements but also the government-led rare earths association.

China continues to dominate rare earth supply despite two new mines opening in the US (Molycorp) and Australia (Lynas) since the well documented crisis of 2010. Although the country’s share of global rare earths has waned from 95% in 2013 to 90% in 2014, future supply security for the West is far from being solved.

High strength magnets are the leading market both for today’s volume demand and growth projections over the next five years, which is why the revelation about China’s sourcing is significant.

Rare earths such as neodymium (Nd), dysprosium (Dy), terbium (Tr) and praseodymium (Pr) are used as the key magnetic components in electric motors that drive some of the world’s most important technologies including wind turbines and some electric vehicles.

China is not only the leading supplier of these elements but also of the magnets used by some of the world’s largest corporations including Siemens and General Electric.

A situation that cannot last

Prof. Kingsnorth explained that in 2020 the magnet market will consume about 30% of total rare earth elements produced in the world. The magnet market is forecasted to rely on China for 70% of its elements.

The question is whether the country can make up the shortfall from illegal sources if it decides to crack down on these activities.

China’s tolerance for illegal mining is quickly diminishing. While the country is not likely to damage its own prospects by cutting a vital source of rare earths to a key industry, the longevity of this illegal source is in serious doubt.

The Chinese government, naturally, dislikes any unlicensed mining activity which occurs in many mineral and metal industries in the country. It is a wasteful process, environmentally damaging and gives the country bad press. It also undermines the larger, licensed miners that the government has hand-picked to become the next generation of more efficient, international suppliers.

And rare earths are about as high profile as it gets for China since the 2010 fishing vessel incident that threw the critical mineral and the country onto the front pages of the international press.

If China has its way as it invariably does, the reliance on illegal sources of rare earths is likely to come to end or significantly diminish sooner than many may expect.

This leaves the industry with a key question to answer: With an alarming lack of investment in new global sources, where will buyers turn to if China’s black market supply is eliminated?

Simon Moores
Benchmark Mineral Intelligence
London
www.BenchmarkMinerals.com

All data and comments in this article are freely available to use and quote by citing author (or attribution in article) and Benchmark Mineral Intelligence

 
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Posted by on October 21, 2014 in Investments

 
 
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