David Callaway: Wall Street’s giving tips again; time to worry
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David Callaway: Wall Street’s giving tips again; time to worry
One sure sign that the markets may be getting ahead of themselves this summer: Wall Street banks are recommending each other’s shares again.
Bill’s take on this: Yes, we should all be very, very afraid. It always bugged me that banks recommended banks, the “watchdog” SEC and Moody’s, S&P, and other rating agencies not only didn’t “get” the economic downturn we’re all living in, but they showed a complete negligence about the disaster. Further, they all have conflicts of interest.
For example, the rating agencies. Take S&P. (Please!) They “rate” securities, presumably on risk. The riskier the underlying securities, for example, on a bond, the riskier the bond, the lower the rating. (First off, does anybody understand the rating system? Why can’t it simply be A-F? Why quadruple double-A, which means, not so good? I made that up, but you know what I mean.)
However, the S&P benefits by giving good ratings. If a company gets poorly-rated, they don’t do ANY business with S&P, which has a whole host of business services it sells Wall Street firms.
In the interest of “transparency,” then, a rating agency really should have no other duty. I don’t know how they’d make money, but that’s for them to figure out.
You cannot tell me that the “risk” side doesn’t take the potential lost business into consideration. I bet the “risk” side even takes some heat from the revenue-generating side.
Used to be, investing in an index was a sound investment idea. Now that all the parties are having affairs and inbreeding, I’m not so sure.
Wealth-Building Wednesday — June 30, 2009
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Last week, we talked about getting the proper mindset for building wealth. As you may recall, you can have everything: All the tools, money, advertising, etc. and still fail. It may be due to a mindset that isn’t quite right.
And it doesn’t mean that you have a bad attitude. It may be that your past experiences have set your expectations for yourself too low. If you don’t aim high, you may not hit your target. The world can be your oyster. If you make it so.
Today, we’re going to talk about how to parlay your interests into a wealth-building activity. There are many ways to build wealth: Real estate, investing in stocks or other securities, becoming an executive in a company that grows, etc.
But by far, what is within reach of most of us (i.e., YOU) is starting your own business. A popular approach is to take something you really like, something with which you are really, REALLY passionate about and find an angle that makes money from it. Here are some questions to get the creative juices flowing:
- What are your hobbies?
- At your current job, what are your strengths? What do people come to you for?
- When you’re out and about, what makes you happy?
- What are you really good at but never pursued because “life” got in the way?
- What are your dreams?
- If you had to name 3 of your most redeeming qualities, what would they be?
- Do you currently own any “idle assets” that have the potential to earn an income?
These are just a few questions that you could ask yourself to find out what kind of business you could start to begin your wealth-building empire. The how comes later.
Now, of course, there are many different methods and media in which to run your own small (no, BIG) business: Traditional “brick and mortar,” online, multi-level marketing, agent (as in Real Estate), or a service business (like running errands for the elderly or really busy). I suggest that you begin with the online aspect because the start-up costs are extremely low (in many cases, you can start a business for free), the barriers to entry are nil (online, you can look as big and BE as big as Amazon; nobody has to know you’re running your website out of your garage or spare bedroom), and the chances for success without killing yourself are pretty high.
Plus, virtually any business can be run from the web — even service businesses. Just target local consumers and you can build a thriving business in no time, selling services or products (or both — this is where you can differentiate yourself from your competition).
Advertising costs are low, as is setting up a database of customers and potential customers for future promotions that you might have (call them “leads” or “prospects”).
In short, virtually everything a business can do can be easily done online.
As your website grows, so too can your enterprise. Start a small website, branch out into a small office, then a second physical store, etc. The possibilities are endless!
One thing I’ll caution you on right now: Don’t get caught up in the technical aspects or let your fear of technology stop you from getting started. In subsequent weeks, I’ll show you how to do some of the technical stuff, but it won’t get very complicated at all. 10 years ago — even 5 years ago — you needed a lot of expertise to set up and run a successful online business. You can start one now with virtually zero technical know-how and very little money and time.
But I’m getting ahead of where we need to be right now.
So you asked yourself the questions above and arrived at a list of answers (you wrote them down, I know). Now, think like a customer: What do I want? Am I seeking information, product recommendations, or solutions to problems? How can YOU help me? Can you provide me information? Recommendations? Solutions?
If you can answer these questions, then you may well be on your way to creating a lucrative business for yourself, one that provides you the income you need and the wealth you desire.
Next week, we’ll brainstorm some more and define a concept for your business.
I am basing a lot of this introductory wealth-building information on what’s in this Action Guide, which, by the way, you can consider the “fast-track” to this first set of WBW posts. In other words, if you don’t want to wait for each week’s posts, you can just read the whole guide and go from there.
David Weidner’s Writing on the Wall: Do Madoff victims expect too much?
David Weidner’s Writing on the Wall: Do Madoff victims expect too much?The Bernie Madoff spectacle, once compelling for illustrating the grandeur and scope of his fraud, is in danger of losing its relevance, says David Weidner.
Bill’s take on this: While Bernie Madoff belongs in jail getting whatever it is that other prisoners wish to dole out on him, he’s paying for his crime. The victims, on the other hand, need to be compensated for being defrauded. HOWEVER, their retribution should come only from Madoff and whatever assets and future income he and his estate receive. It should NOT come from the SIPC (which insures up to $500k). At the very most, 500k should be covered by, yes, us, the taxpayers; anything above that limit should be borne by the dumb shareholders who participated in a “too-good-to-be-true scam.”