Getting Smarter

Issue #2362

• WEALTHY: Are you getting what you pay for when you invest? (Andrew Gordon)
• HEALTHY: 5 ways to live into your 100s (Dr. Jonny Bowden)
• WISE: Epictetus on education

ALSO IN THIS ISSUE:

• A simple workout for your mind (Rich Schefren)
• The difference between good and excellent service (Suzanne Richardson)
• It’s Fun to Know… about the original chocoholics
• Add "desultory" to your vocabulary

*** Highly Recommended ***

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Why Most Expensive Stocks Are Rip-Offs

By Andrew M. Gordon

Many investors swear by the "efficient market theory." All it means is that through the magic of millions of investors buying and selling stock every day, you get what you pay for. If a company is cheap, it’s cheap for a reason. If it’s expensive, it’s expensive for a reason.

I’m a dissenting member of the "efficient market theory" club. First of all, the market runs as much on emotion as it does on logic. And extremes rule. Investors are either too pessimistic or too optimistic.

Instead of the "efficient market theory," I’d call it the "inefficient market theory."

The fact is, you hardly ever get what you pay for when you invest. You usually get too little or too much. These days, when it comes to expensive stocks, you get much too little.

There are 153 companies with a price-to-earnings (P/E) ratio of over 100 (according to a search I did on my Yahoo stock screener). If you’re not familiar with P/E ratios, a share price greater than 100 times annual earnings or profits (per share) is very high. To justify such a high price, the company has to grow like the dickens and give every indication of continuing to do so.

I didn’t go through all 153 of those companies. But going through about half of them, I found that just a few earned their high P/E ratios because of strong growth. Usually, it was because their earnings fell faster than their price.

A good example: eBay (EBAY). Its earnings dropped 65 percent over the past 12 months. But its price dropped only 8 percent. At a P/E ratio of 98, its price is now much higher compared to its earnings than it was a year ago. The point is, eBay got more expensive by having a bad year, not a good year.

There are rare exceptions to this pattern, and one comes from overseas. Baidu is China’s Google. Its P/E ratio is 127. But it also grew its earnings over the past year by 95 percent. Phoenix-based First Solar’s (FSLR) P/E ratio is 110. But its earnings grew over 1,000 percent last year.

At one time, you could have argued that Google’s ultra-fast growth in revenue and earnings warranted its high P/E ratio. (It was over 100 for a long time but is now at 40.) But very few of the current crop of super-expensive companies can make such a claim. You should avoid them like the plague… unless you know from looking at past earnings that you have a Baidu or a First Solar on your hands.

[Ed. Note: ETR's Investment Director, Andrew Gordon, is the editor of INCOME, a monthly financial advisory service that uncovers income-generating stocks that promise safety (first and foremost), along with much-higher-than-average profit potential.]

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"Only the educated are free."

 Epictetus

Getting Smarter

By Rich Schefren

Are you interested in getting smarter?

I think most people are. However, I also think most people misinterpret what "getting smarter" really means… or… should mean.

Let me explain…

When most people think of increasing their brainpower, all they think about is increasing their IQ. And there are many books out there promising that if you just add a few points to your IQ, your life will improve… and improve dramatically.

Nice hook for selling books… but… I disagree with the concept. If we want to be successful in business and in life, I don’t think the goal is to have a higher IQ…

Not at all. And here’s why…

I’ve had the good fortune to meet many smart people. A few of them legitimate geniuses, with extremely high IQs. But when I sized up their accomplishments, there was much to be desired.

So if increasing your IQ doesn’t make you smarter in terms of reaching more of your goals, what will?

I think I have an answer…

For me, getting smarter in terms of reaching my goals means improving myself in certain key areas: my ability to concentrate, the speed at which I learn, my problem-solving ability, my mental endurance, the clarity of my writing, the depth of my creativity… and… my ability to remember, recall, and put what I learn into practice.

Does this resonate with you? Would improving yourself in these key areas help you reach more of your goals?

Most definitely.

Richard Restak, a renowned neuropsychiatrist and author of Mozart’s Brain and the Fighter Pilot: Unleashing Your Brain’s Potential, referred to the above as "goals of cognition." Your mind’s ability to attend, identify, and act. And the latest research shows you can significantly improve your cognition with training.

You see, even though the brain is an organ, in many ways it behaves like a muscle. What I mean is, your brain, unlike other physical organs, doesn’t wear out. In fact, the more you use your brain, and the more you challenge it, the stronger it gets.

The flip side is also true. If your brain isn’t stimulated consistently, it atrophies. "Use it or lose it" is the operating principle behind your brain’s performance as well as your physical body’s performance.

All right, so let’s say you’re on board. You want to "get smarter." You want your brain to get stronger and better instead of weaker and slower. What do you need to do? You need to do some brain training.

You train your brain the same way as you train your body - with both direct training and cross-training.

Direct training is where you focus "directly" on improving the specific skills you are after.

And cross-training is where you engage in activities that improve the skills you are after… "indirectly."

A simple example: If a baseball player wants to increase his bat speed, he would engage in both batting practice (direct training)… and weight training (cross-training).

A more elaborate example…

Let’s say you want to increase the effectiveness of the marketing copy you write.

First, you identify and work on the mechanics involved in copywriting. You do this by reading "how to" books, taking courses, going to seminars… and so on. These are all direct-training activities.

Next, you identify cross-training opportunities - things like reading popular novels. And not just reading them for entertainment… but for form, word choice, etc. Watching hit movies. Also not just for entertainment… but to learn about pacing, action, and the things that motivate different kinds of people.

Okay. Now that I’ve got you thinking in this direction, I’m sure you’ll be able to come up with your own brain-training program to improve your cognitive skills and give a "bump" to your chances of success in reaching your specific goals. You simply need to:

• Identify both direct and cross-training activities that will help you… and…
• Engage in them, frequently… preferably daily, at the same time every day.

[Ed. Note: Rich Schefren, known in marketing circles as "The Guru's Guru," coaches many of today's top Internet experts. He's an online business exploder whose clients rake in more than $500 million every year - piling up more than $1 billion in sales every two years. To learn how to streamline your business while skyrocketing profits, visit his blog here.

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== Highly Recommended ==

Your Normal Life Is Getting in the Way of Your Dreams

If you’re like most high achievers, your life may look this: You work hard at your job. You care deeply for your family and friends.

And you have tons of dreams. Maybe you’ve always wanted to learn how to speak Italian and one day retire to the Tuscan countryside. Maybe you have always dreamed of writing a biography of your favorite president. Or maybe your long-term goal is to go back to school and pick up a degree in a subject you love.

But your normal life is always getting in the way.

Your life has taken on a momentum of its own. And it is quickly moving you away from everything you’d dreamed of.

I’m here to tell you, it doesn’t have to be that way…

Learn more right now.

- Charlie Byrne
Associate Publisher, Early to Rise

A Lesson in Service From a Detroit Airport Waitress

By Suzanne Richardson

While waiting in the Detroit airport, I popped into Max & Erma's for lunch. Grace was serving about six or seven other tables. And she was everything you'd expect a good waitress to be - prompt, friendly, efficient. She had a drink on my table in three minutes. She took my order in five. And my order - which had a few "tweaks" that deviated from the description on the menu - was exactly right and on my table in 10.

But she also did something that I believe all businesses should try for. She anticipated the needs of her customers, and met them as quickly and efficiently as possible.

That meant she refilled my drink before I'd taken the last sip of my first one. She asked the man sitting behind me if he wanted mustard the second she put down his burger. And - because everyone eating there had a flight to catch - as soon as she made sure we had everything we needed, she placed the bill on the table, and was ready to take it as soon as we had to leave.

These may sound like small things. And they were. But they made me feel comfortable. I wasn't worried about missing my flight. I got exactly what I wanted to eat. And though she was quick, I didn't feel the least bit rushed. The main thing is, I didn't have to ask for any of it.

"Spending time and energy on your customers. That's what good customer service is," says Michael Masterson.

 Just anticipate what your customers want, and deliver. This might take some out-of-the-box thinking on your part. And it means going beyond offering what your customers would expect. But if you take the time to do it, you'll find yourself with loyal customers who will trumpet your praises to the world.

[Ed. Note: What are you doing to anticipate your customers' needs? Let us know here.]

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Anti-Aging Strategies From the Longest-Lived People in the World

By Jonny Bowden, PhD, CNS

Recently, I interviewed Dan Buettner, whose latest book, The Blue Zones, is a veritable treasure trove of tips for living longer. Buettner is an explorer whose work for National Geographic led to the book. He investigated four parts of the world where there are more healthy centenarians than anywhere else - Sardinia, Italy; Loma Linda, CA; Okinawa, Japan; and Costa Rica’s Nicoya Peninsula. Here’s what we can learn from the folks who’ve done "anti-aging" better than anyone else on the planet.

1. Move. Longevity all-stars engage in regular, low-intensity physical activity, whether it be hiking, shepherding, gardening, walking, yoga, or something else. The data suggest that moderate, even easy, activity done on a daily basis will extend your life.
 
2. "Hara hachi bu." This Okinawan saying means "Stop eating when your stomach is 80 percent full." Clear enough? Cutting calories by a mere 20 percent will extend your life.

3. Go heavy on the plants. While readers of ETR know that higher-protein diets can be really healthy, that doesn’t rule out a diet that’s also loaded with vegetables. All of the long-lived peoples investigated by Buettner ate a plant-based diet with almost no processed foods.

4. Drink some alcohol. In Sardinia, it’s wine. In Okinawa, it’s sake. Whatever you prefer, alcohol in moderation seems to reduce both stress and inflammation. But remember that women who drink need to be getting plenty of folic acid in their diets. (Even moderate drinking raises the risk of breast cancer - but only for women who are folic acid deficient.)

5. See the big picture. Okinawans call it ikigai. Nicoyans call it plan de vida. In both cultures, the phrase translates to "why I wake up in the morning." Develop a strong sense of purpose, connection to others, and community. It’s the best anti-aging "medicine" you can find.

[Ed. Note: Dr. Jonny Bowden, a nationally known expert on weight loss, nutrition, and health, is the author of the new book The Most Effective Natural Cures on Earth. For more information, go to www.jonnybowden.com. To read more of his articles on healthy living in ETR's natural health e-letter, click here.]

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It’s Fun to Know: The Original Chocoholics

Researchers analyzing 3,000-year-old pottery shards from Honduras have found evidence of the earliest man-made chocolate product. A chemical breakdown of material found on the shards led them to believe that it contained a wine-like beverage made from the fermented pulp of the cacao plant. This discovery pushes back the earliest documented use of cacao by 500 years.
(Source: Discover Magazine)

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== Highly Recommended ==

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There Goes That Safe Driver Discount… Right? Not anymore…

Click here to read more.

Word to the Wise: Desultory

"Desultory" (DES-ul-tor-ee) - from the Latin for "to leap" - means fitful, randomly jumping from one thing to another.

Example (as used by Scott Eyman in a Palm Beach Post review of The Post-War Dream by Mitch Cullin): "We are introduced to Hollis in his bathrobe, a 68-year-old man in good health desultorily reading a Tom Clancy novel, a bottle of Glenfiddich at his side."

[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]

Copyright ETR, LLC, 2008

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