- Issue #2539
WEALTHY: How to pick good companies in a falling economy (Andrew Gordon)
- HEALTHY: Keep track of these, and you WILL meet your weight-loss goals (Craig Ballantyne)
- WISE: Thomas Edison on not giving up
ALSO IN THIS ISSUE:
- When it comes to success, the ability to bounce back counts most (Michael Masterson)
- An easy way to show more respect for your customers (Suzanne Richardson)
- It’s Good to Know… 2 things you should never do on picture day (Mark "Ski" Struczewski)
- Add "extirpate" to your vocabulary
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The Other Measure of a Company’s Worth
Price-to-earnings ratio (P/E) is a popular measurement of a company’s true worth. I’ve always liked companies with a P/E below 10. But nowadays, I pay little attention to this number – for two reasons, and both involve the earnings part of the ratio…
1. The economy is slipping so fast, past-performance P/Es shed little light on what is in store for the company right now. Many companies that did well 1-3 quarters ago are now finding it hard to grow earnings.
2. Forward P/Es are just as bad. They’ve always been based on analysts’ guesses of how much they think a company will earn the following year. But now those guesses – never reliable in the first place – are lagging badly behind what is happening in the real economy. For example, analysts still expect earnings in the tech sector to rise 21 percent next year. That simply won’t happen.
As an alternative, look at the price-to-book ratio (P/B). It measures a company’s share price relative to its net asset value (NAV). If that number is below 1, it means you’re paying less for the company than its assets are worth. And it means you’re getting the business of the company (not included in the NAV) for free. A P/B of less than 1 also helps put a floor under share prices, especially for companies that are still making a profit but are getting punished by a falling market.
Buying good value is not only a good way to pick companies in a falling economy, it’s the only way. And with earnings so unpredictable, P/B is a good alternative to P/E as a measure of value.
[Ed. Note: Finding strong companies with a P/B under 1 is a good way to prosper despite the market's condition. But you can also make money on companies that are ready to crumble. Learn how to spot the "red flag" signals that could predict (with as much as 92 percent certainty) when a company's stock is going to tank.]
"Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time."
Thomas Edison
Are You Resilient Enough?
With the economy failing, companies making cutbacks, and your financial future at stake, you might be feeling pretty grim. But don’t even think about throwing in the towel. There are lots of opportunities out there – opportunities to make loads of money and put more happiness and love back in your life.
When you’ve been beaten down by anything, it’s natural to want to quit. But quitting is a blind alley that leads to failure and despair. There is another way to go. A way that will take you past your troubles and toward your best life yet.
A few years ago, I read about this topic in the Harvard Business Review. A company called Adaptive Learning Systems did a pretty comprehensive study of the qualities it takes to be successful in life. They looked at all the expected things: education, motivation, connections, etc. But they concluded that resiliency deserved to be on top of the list.
The ability to bounce back from disappointment and even disaster, Adaptive’s CEO Dean Becker said, "counts more than education, more than experience, and more than training."
Resilience has been an important factor in my career. In the early 1980s, my partner and I took on more debt than we should have. I woke up one day and realized that I owed a lot more than I owned. My net worth had dropped from a meager but healthy $50,000 to a negative quarter of a million dollars.
That realization freaked me out. I imagined losing the little house I had just bought. I imagined living in my car or, worse yet, living in the street. It was hard to concentrate on work. All I could think about was running away from my responsibilities. I had this fantasy about changing my name, moving to a different state, and getting a job as a check-out clerk in a supermarket.
In short, I was beaten down and I wanted to quit.
Luckily for me, I had an experienced partner who had suffered several major setbacks in his business career and knew how to help me get through this one.
"The first thing you have to do when times are tough," JSN told me when he saw the dark circles under my eyes, "is take care of your body." He reminded me of the famous line "Fatigue makes cowards of us all," and encouraged me to get back to my exercise program and get plenty of sleep.
He also reminded me of my responsibility to our employees, and shamed me into adopting a better attitude. "I’d rather you not come to work at all than come in looking like you do now," he told me. "Think of how it affects our employees. They know things are tough, but they don’t know how tough. They are looking at us for clues. We have to keep them motivated."
I vowed to act chipper and fake a good mood. It was difficult at first, but within days I found that I was actually feeling better from the inside out. My smile was genuine. I was joking with my employees. They picked up on my improved spirits and began working with more energy and optimism. That, in turn, made it easier for me to work hard.
Recognizing that I was now mentally and physically ready to deal with the challenge we were facing, JSN said, "Okay, now we’re going to draw up a ’survival and prosperity plan.’"
Just the sound of it filled me with hope. "Where do we begin?" I asked – and he laughed. "I have no idea," he said, "because this is the first time I’ve been in this particular situation. But I’m sure if we put our heads together we can come up with something."
For the better part of two days, we sat in his office and worked on our plan. As near as I can remember, it included the following elements:
- Keep a stiff upper lip, regardless of what happens.
- Fire unnecessary or unhelpful people.
- Get rid of unprofitable products.
- Eliminate wasteful habits.
- Focus on core marketing strengths.
- Keep working.
Gradually, we started to see results. Some of our marketing efforts began to pay off. Then, about three months after the bottom, one of our advertising campaigns hit big. A week after that, another one did. A year later, I was a relatively wealthy young guy.
That was my first lesson in the value of resilience. But it wasn’t my last. In the 30 years that have passed since then, I’ve run into trouble dozens of times. But having overcome adversity once, I was able to bounce back again and again.
Still, my first reaction is often "Screw it."
Just last week, for example, I headed up what I hoped would be a brilliant brainstorming session. For four hours, I did my special thing with seven very bright and creative people – pushing and prodding, asking questions, and making comments. The session began strongly but started losing steam halfway through, and was barely moving when time ran out.
It was an embarrassing, dispiriting experience. I felt as if I had made a bit of a fool of myself, trying out a newfangled brainstorming technique that I should have known wouldn’t work.
But the next morning, I woke up with a new resolve. "I have to try again," I thought. "Bring the group back together and try something else. Forget about the failure and my leading role in it, and get back to what we were there for – to create a breakthrough promotion."
So I wrote a memo suggesting just that. And since then, the ideas have been coming – better ways to get the work done, different approaches, new questions. The anguish immediately started to subside, and a sense of positive expectation set in.
Faith, guts, and the willingness to work. That’s the combination you need to overcome obstacles and bounce back from failure.
But where does the faith come from? For Andrew Carnegie, one of the world’s biggest successes, it came from an overriding belief in the power of God to intervene in men’s lives. For me, the faith must come from myself – from the self-confidence developed by making success a habit.
Carnegie said, "The first thing to do about an obstacle is simply to stand up to it and not complain about it or whine under it but forthrightly attack it. Stand up to your obstacles and do something about them. You will find that they haven’t half the strength you think they have. Just stand up to it, that’s all, and don’t give way under it, and it will finally break. You will break it. Something has to break and it won’t be you, it will be the obstacle."
But not all obstacles can be extirpated. Some are best dealt with in more subtle ways. A wise man once said, "If I can’t get through a trouble, I try to go around it, and if I can’t go around it, I try to get under it, and if I can’t get under it, I try to go over it, and if I can’t go over it, I just plow right through it."
That’s the course of action I recommend.
- First, ask yourself if the obstacle can be ignored. Eighty percent of the problems you face will go away the moment you stop paying attention to them.
- Next, see if you can get around the obstacle by using your wits. If you can accomplish the same goal by using cleverness instead of brute force, why not?
- If you can’t get over, under, or around the obstacle, stand up to it firmly. This won’t be easy, particularly if you are not used to confrontation. But the more you do it, the easier it will become.
Thomas Jefferson had a similar idea about how to handle difficult situations. He put it this way: "Always take hold of things by the smooth handle."
This resilience thing is something you may have to struggle with all your life. As I write this, there is a wooden paperweight on my desk that JSN bought for me from Levenger. It must have been more than 20 years ago… soon after that that time we worked together to turn our failing business around. It’s a quote from Winston Churchill: "Never give in. Never give in, never, never, never…"
[Ed. Note: One of the best ways to bounce back from the current recession? Start your own business. And ETR can help. Our exclusive Internet Money Club walks you step-by-step through setting up a website, starting an e-mail newsletter, creating your own products, marketing those products, and much more. The Club is strictly limited to 250 members, so sign up today before you're locked out until next year.
As a special thank you to our best customers, Michael has started a new VIP service in which he gives insider business-building advice usually reserved for his private clients - a twice-weekly newsletter called Ready Fire Aim: The Michael Masterson Dispatch. If you have bought an ETR product or attended a conference and are not receiving Ready Fire Aim, please let us know by sending an e-mail to Michael@ETRfeedback.com.]
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Whose Time Is More Valuable?
Would you look into your client’s eyes and say, "My time is more valuable than yours"?
Of course not.
But business people the world around do basically the same thing all the time. I’m even willing to bet that you’ve done it yourself.
Last Friday, it happened to me three times. First, I waited until 7:45 for my 7:30 yoga class to begin. Then I waited 25 minutes in the dentist’s office. And then I waited an hour for a pre-scheduled phone call with a real estate agent. (By the way, the only person who apologized for the delay was my yoga instructor.)
In each case, the message was clear: These people are important, and their time is valuable. And mine isn’t.
If you’re making your clients wait, you’re sending the same signal. And that lack of respect for their time could make them head for the door.
I know, I know. You don’t mean to make people wait. But when unexpected "emergencies" come up, you just can’t help it. Well, Bob Cox, ETR’s expert on achievement and productivity, has a solution for you. "Unplanned events will demand your time every week," Bob says. "To minimize the amount of time these external distractions ’steal’ from you, add a buffer to your daily to-do list."
This might take a little trial and error. The idea is to find out how long it generally takes you to perform a service – whether it’s shampooing a dog or tailoring a suit or cleaning someone’s teeth. Then, once you have an average, add on a little extra time.
For instance, if you’re a personal trainer and your sessions tend to run five minutes late, give yourself a 10-minute cushion. That way, if you’re running late – or some of your clients are running late – you have a few minutes you can "borrow" from without eating up your other clients’ time. And if it turns out that you don’t have to use up your cushion, you’ll have some extra time to catch up on paperwork or find more clients.
[Ed. Note: Buffer time is just one of the billionaire success strategies you can learn from Bob Cox. He's worked closely with four of the world's wealthiest men, and he's figured out the simple yet powerful techniques they - and others like them - have used to supercharge their earnings. Learn how to unleash your own inner billionaire here.]
3 Things You Must Measure to Lose Weight
One of the biggest mistakes folks make with a weight-loss program is not recording their diet, their workouts, and their progress.
I absolutely demand that my clients record (1) their daily meals and calories, (2) their sets, reps, and weights from each workout, and (3) their weight and other body measurements.
If you do those three things, you will succeed. And for maximum success, you should be making yourself accountable to others by sharing this information with them.
I know that sounds painful, but if you want improvement, you have to lay it on the line. Soliciting social support, both online and offline in the "real world," is a proven way to get help with your weight-loss efforts.
Just be careful who you share your progress with. You must share it only with people who are going to support you in a positive way.
[Ed. Note: Online support can be very helpful when it comes to reaching your weight-loss goals. Share your weight-loss struggles, diet and exercise techniques, and encouragement for free right here.
And for a topnotch fitness program that can help you burn fat and build muscle, check out Craig Ballantyne's Turbulence Training program right here.]
It’s Good to Know: 2 Things You Should Never Do on Picture Day
It’s the moment you have been dreading. Your employer has informed you that a photographer is coming in to photograph the entire staff for the purpose of updating the website. There is even talk of a group photo for a company "Happy New Year" card. Good grief! Are they serious? You hate having your picture taken!
No worries. Here are two simple tips to help you look your best in any photo.
1. Don’t wear patterns or logos.
Patterns (such as stripes) and logos are distracting. The center of attention should be your face, so it is best to wear clothing in solid, subdued colors. Dark colors are especially flattering, because (as you may have heard) the camera tends to make you look heavier and dark colors slim you down.
2. Don’t show too much skin.
The eye naturally goes to areas of high contrast – the brightest brights and the darkest darks – first. If you show a lot of skin, people looking at your photo will focus on that instead of your face.
[Ed. Note: Mark "Ski" Struczewski is owner/operator of Photography by Ski in Houston, TX. For more easy-to-follow advice about how to take great photos and look good in those that others take, sign up for his weekly SnapShots e-zine and his monthly newsletter, It's All About You! As a gift for subscribing, ETR readers will get a special report: "7 Things You Need to Know About Portrait Photography Before You Spend One Single Dime."]
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Word to the Wise: Extirpate
To "extirpate" – from the Latin for "to pull up by the stem or root" – is to destroy totally.
Example (as used by Michael Masterson today): "But not all obstacles can be extirpated. Some are best dealt with in more subtle ways."
[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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