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Two Sure Things About the Market (That Can Make You Wealthy)
There are two eternal truths about the stock market:
- Unexpected good news about a company almost ALWAYS drives the price up
- That good news doesn't make the share price stay up for long
Now… let me show you a simple system that can help you to make an absolute fortune with this information. People who are using this system properly make several profitable trades almost EVERY day the market is open.
The Attributes of People Who Have Personal Power, #7 of 12:
They create a culture of accountability
"If you expect your business to grow, you have to develop a sense of accountability among your staff, so they feel responsible for the success of specific projects and the well-being of the business overall. This requires you to trust people to do what they're supposed to do: This is the foundation of accountability. You have to give each person enough trust to feel accountable for the job you’ve asked them to do.
"An accountable team is an invaluable asset. Creating one takes planning, thoughtfulness, communication, and toughness, but it also takes a happy heart. "
- Michael Masterson
[Ed. Note: Through January 23rd, we are excerpting highlights from Michael Masterson’s new book Power and Persuasion. If you would like to learn no-B.S. secrets for commanding success in your personal and business life, based on Michael’s 40 years of down-in-the-trenches business experience, you can pick up a copy here.]
"Change brings opportunity."
- Nibo Qubein
Bubble Market Refugees
By Justin Ford
As a financial editor, I learned to look at stocks like a business. The numbers have to make sense. The price you're paying has to have some reasonable relationship to the company you're buying - its sales and earnings. That's why, before the crash of 2000, I recommended that investors get out of the Nasdaq and other sky-high stocks.
The numbers simply didn't make sense.
Yet, most investors I speak to who got burned when that bubble burst still say they couldn't see it coming. That no one could. Not true.
You could see stocks selling for hundreds of times sales and thousands of times earnings. Worse, you saw stocks that never came close to posting a single penny of earnings that rose 5- or 10-fold in a year or two. All driven by speculation. None of it driven by fundamentals.
And what's the most fundamental criterion there is? Earnings. It's the same with real estate.
Rental property is tethered to the income it will produce for its owner. Single-family homes are anchored by the income of their potential buyers.
Once properties break these bonds, they go beyond fundamentals and into speculation. And when properties keep rising well beyond justifiable multiples of rent and income, they go into bubble territory.
That's where we are in many real estate markets right now. To name just a few:
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South Florida
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Las Vegas
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Seattle
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the Greater New York Metro Area (including Connecticut and New Jersey)
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the Greater Washington DC Metro Area (including Virginia and Maryland)
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much of Massachusetts and Colorado
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and practically all of California
The easy money has been made in these bubble markets. Now, only buyers of distressed property will profit there.
But the smartest investors will use these bubbles to their advantage.
No matter where you live - and without ever stepping foot in these places - you can position yourself for triple-digit profits in the next two to three years. Without undue risk. Without a hefty investment of time spent managing the investment properties you buy. And without having to wait 10 years (or even five) to cash out with substantial gains.
How?
The key is to put yourself in the toll path of the money that's escaping these bubble areas. That money is flowing in record amounts to some of the best-value cities in America. And it can flow right into your pocket.
These are cities that are often rated near the top in national quality-of-life surveys. Their downtowns have been (or are being) revived. They offer a wide choice of entertainment and cultural activities.
They're business friendly and have strong, diverse economies. They're not one-trick ponies, vulnerable to a shock in any one industry. They have population and job growth. They tend to be located in warm or mild climates. And they are attracting a growing number of "Bubble Market Refugees" - the self-employed and the baby boomers looking for early retirement.
The prices of properties here still make sense relative to the rental income they command. They sell at an average of 10 to 12 times their gross annual rents. That's chicken feed compared to the 30 times rent (or more) in Boston and LA. And that means, after your down payment, you can easily cover your costs and get 100% of the appreciation. This way, a $10,000 down payment can turn into $30,000 to $50,000 or more in two to three years. And when you learn to buy some of the better values in the market, you can even buy properties with 100% financing (no money down) and still have them pay for themselves with cash flow.
Prices are still reasonable relative to the income of potential buyers, too - just three to four times the median income in the area. That's a fraction of the nine to 11 times income that homes are currently selling for in Miami, Los Angeles, and San Francisco.
Yet, prices are just beginning a strong uptrend in these bargain pockets, driven by an influx of folks from the Bubble Cities of the U.S. But you can get in now and make a killing as these Bubble Refugees bid prices up.
Profiting From the Great Bubble Market Exodus
So where are Bubble Market Refugees starting to flee to? In small- to medium-sized cities with the following characteristics …
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You can buy properties for 10 times annual rent or less.
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Properties are selling for 3 to 4 times the median household income.
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There is a diversified economy and steady job growth.
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There is steady population growth (including a lot of baby boomers migrating in from much more expensive areas).
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The area has a warm or mild climate (especially attractive to retirees) and is consistently rated high in national quality-of-life surveys.
My staff at Main Street Millionaire and I have been researching these cities over the last year. I've visited them, made offers, and have begun to buy. I was able to buy one multi-unit residential property, for instance, at 15% below market and only seven times rental value.
At the same time, I just missed a solid 24-unit apartment building that was selling for less than six times annual rent in a respectable B Area that is rapidly improving. It generated more than enough cash to pay a healthy dividend after all carrying costs, including professional management. And that would be on top of some very substantial appreciation potential.
A bank had the property, but when I called, it had just been taken. But these are the kinds of deals you can still find in the "Secret Sunbelt Cities." For this same type of property in a similar area here in South Florida - with the same exact income - the asking price would have been two or three times the amount.
I intend to take advantage of opportunities like these in the next few years. Investing in areas that offer a high quality of life, a growing population and economy ... and some of the few pockets of good real estate values remaining in America. I encourage you to do the same.
Today's
Action Plan
Justin Ford spells out exactly how to find the best values in any market in ETR's Main Street Millionaire program. And on February 9th, at 3:30 p.m. (Eastern Time), he'll be sharing the names and details of what he believes to be the best real estate values in America today. If that's an investment opportunity you think you'd like to pursue, here's how to register.]
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Setting Goals --And Sticking To Them - Will Help You Achieve Financial Independence
Don’t take our word for it. That’s the headline from an AP article than ran in hundreds of newspapers across the nation last week.
"This is definitely the time of year to get things started," was how Barry Armstrong, a Boston financial planner with Woodbury Financial Services put it.
"For some people, it's a bitter message. There are things that you don't like doing. But they have to be done."
Former waitress Pamela Newman went from hand-to-mouth living to owning two condominiums in the San Diego area. What did it take? Resolve.
Resolve to make 2006 the year you kick it up a notch. Here’s how:
http://www.isecureonline.com/Reports/700SGB/E700G115/
Notes From Michael Masterson's Journal: Econophysics
It's gratifying to discover scientific validation for long-held pet theories. Example: A physicist at the University of Maryland, Victor Yakovenko, is publishing studies proving that mega-trends in economics can be compared with micro-trends in the physical universe.
"Econophysicists" like Yakovenko believe that patterns of economic inequality "behave suspiciously like atoms," according to The New York Times Magazine. "In the United States, for example, beneath the 97th percentile (roughly $150,000), the dispersion of income fits a common distribution pattern known as 'exponential distribution.' Exponential distribution happens to be the distribution pattern of the energy of atoms in gases that are at thermal equilibrium. ...
"To an econophysicist, the exponential distribution of incomes is no coincidence: It suggests that the wealth of most Americans is itself in a kind of thermal equilibrium. To change it, 'you will have to fight entropy,' Yakovenko says. That people aren't mindless atoms and that governments try limited wealth redistribution doesn't really matter, he adds: 'Large, complex systems have their own statistical logic that trumps individual, and state, decisions.'"
- Michael Masterson
Do Mammograms Actually CAUSE Breast Cancer?
John Gofman, M.D., Ph.D., has concluded that at least 66% of breast cancer cases are caused by radiation exposure (including that from mammograms). I don't know how he arrived at that number, but you can't argue with his credentials. Dr. Gofman worked for decades at Livermore (a foremost radiation studies laboratory). And he was chosen by the Atomic Energy Commission to head their studies on the effects of radiation.
It wouldn't be surprising if mammograms contribute to cancer. The female breast is highly sensitive to radiation. Compared to other cancer sites, the breasts are 2 to 3 times more vulnerable to cancer from radiation. But not only are mammograms potentially dangerous, they're also highly unreliable. In a Swedish study of 60,000 women, 70% of the "tumors" detected by mammograms turned out not to be tumors. And according to the National Cancer Intsitute (NCI), mammograms miss the real thing 40% of the time.
The NCI has been campaigning for women to get a mammogram every year, starting at age 40. But given their questionable benefit and proven risks, I would advise against it. Instead, consider a monthly breast self-examination (BSE), and see a trained health professional every year for a clinical breast examination (CBE).
- Jon Herring
It's Good to Know: Celebrating Ben Franklin's Birthday
Today is Ben Franklin's 300th birthday - and we can think of no better way to celebrate the day than by treating yourself to a copy of The Compleated Autobiography by Benjamin Franklin,compiled and edited by Mark Skousen.
Here's just one of Franklin's many fascinating observations:
"I have long been of the opinion that the foundations of the future grandeur and stability of the British Empire lie in America; and though, like other foundations, they are low and little seen, they are nevertheless broad and strong enough to support the greatest political structure human wisdom ever yet erected."
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I Was Introduced To This "Habit" About Three Years Ago…
…and every year since I started my income (and my net worth) have grown. Can you imagine owning an asset that produces a constant and increasing income even as it increases in value? Can you see yourself...
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Being the boss of your own destiny
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Having full control of your day
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Deciding how, when, and where you work
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Working on ideas and causes you care about
These are just a few of the ways your life will change once you have an appreciating income machine of your own.
You owe it to yourself to look into this opportunity:
http://www.isecureonline.com/Reports/700SDMU/E700G1E4/
Word
to the Wise: Entropy
"Entropy" (EN-truh-pee) is the inevitable and steady deterioration of a system or society. The word is derived from the Greek "trope" ("transformation").
Example (as used in The New York Times Magazine article I quoted today): "To an econophysicist, the exponential distribution of incomes is no coincidence: It suggests that the wealth of most Americans is itself in a kind of thermal equilibrium. To change it, 'you will have to fight entropy,' [Victor] Yakovenko says."
