Posted in Pursuit of Excellence

March 29, 2017

http://www.inc.com/jeff-haden/the-awful-truth-about-getting-rich-that-no-one-wants-to-hear.html

Many people want to be incredibly wealthy. (How you define “incredibly wealthy” is of course up to you–my “incredibly wealthy” may seem like pocket change to Floyd Mayweather, Jr.) Many people don’t hope to achieve that goal…but many people do. And there’s certainly nothing wrong with that. But you will never become incredibly wealthy by working for someone else. And you will never become incredibly wealthy by living a “safe” (more on that in a moment), “positive work-life balance,” time-clock-punching professional life. If you want to have a certain amount of money in the bank, then you are less likely to have it if you’re working for someone else. Even people with advanced degrees will earn an average income of less than six figures. When you work for someone else, you implicitly accept a limited upside and unlimited downside. Unless you somehow manage to be the employee version of a unicorn, you will never, ever become incredibly wealthy. In 2014, it took $127 million in adjusted gross income to make the top 400. (That sounds like a lot, but it just barely got you in the door. The average income of everyone on the list was $317 million.) Those are fun stats to whip out at parties, but what matters is how the top 400 made their money:

  • Wages and salaries: 4.4 percent
  • Interest: 4.2 percent
  • Dividends: 10.9 percent
  • Sale of Capital Assets: 65.2 percent
  • Partnership and S Corp Net Income: 16.2 percent

The author points out the way to become incredibly wealthy is to start your own business that can be scaled to a significant size. Unless you’re an actor, or musician, or athlete–in which case you’re still an entrepreneur, because you’re in the business of you–starting a successful business is the only realistic way to become incredibly wealthy. If that is your goal, you’ll need to start yours. Today.

http://www.investopedia.com/articles/fundamental-analysis/09/value-investing.asp

Value investing, and any type of investing, varies in execution with each person. There are, however, some general principles that are shared by all value investors. These principles have been spelled out by famed investors like Peter Lynch, Kenneth Fisher, Warren Buffet, John Templeton and others. In this article, we will look at these principles in the form of a value investor ‘s handbook.
Value investors agree that you should buy businesses and not stocks. Investors should look at the fundamentals of the company and not the trends in the stock price. You wouldn’t pick a spouse based solely on his or her shoes, and you shouldn’t pick a stock based on cursory research. You have to love the business you are buying, and that means being passionate about knowing everything about that company. You need to strip the attractive covering from a company’s financials and get down to the naked truth. Many companies look far better when you judge them on basic price to earnings (P/E), price to book (P/B) and earnings per share (EPS) ratios than they do when you look into the quality of the numbers that make up those figures. It’s best to invest in companies that you understand vs. being attracted to a company’s earnings. To quote Buffett: “look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you.” You can get a sense of management’s honesty through reading several years’ worth of financials. How well did they deliver on past promises? If they failed, did they take responsibility, or gloss it over? A good manager will be focused on growing the company and not just its market value. Growth in the company increases the value to the shareholders. If you do happen to find undervalue stocks and if you have the liquidity available, then go ahead and buy as much as you can. Keep in mind that the market only matters when you enter or exit a position. When you sell an investment, you expose your portfolio to capital gains and usually have to sell a loser to balance it out. Both of these sales come with transaction costs that make the loss deeper and the gain smaller. By holding investments with unrealized gains for a long time, you forestall capital gains on your portfolio. The longer you avoid capital gains and transaction costs, the more you benefit from compounding. Value investing requires a lot of patience and discipline, but when you do so, the potential payoff is large. Ask yourself how does this fit into my personal investing strategy? Do I like investing in paper assets, real estate, businesses or commodities? What is my concentration level? What is my exit strategy? Most importantly what is my legacy? When you look at your life through the lens of legacy you won’t lose focus on your vision and goals.

Items in italics are direct quotes from the articles above

If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section. Also, learn more about the self-lending principle in the mustard seed section.

For this week, I’ve included Be Powerful –motivational speech video – T.D. Jakes from the Motiversity YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Posted in Pursuit of Excellence

November 16, 2016

http://www.fool.com/investing/2016/11/10/trump-wins-3-stocks-to-buy.aspx

Donald Trump has secured the White House and investor attention is quickly turning to finding companies perfectly positioned to profit from his plans. While no one can know for certain what’s in store, Trump’s plans to ramp up infrastructure spending could make this the right time to pick up shares in Chicago Bridge & Iron (NYSE:CBI), Caterpillar Inc. (NYSE:CAT), and Cliffs Natural Resources (NYSE:CLF). Trump’s vision for America involves rebuilding bridges, roads, and railroads. It’s estimated that $3.3 trillion is needed to fund this process. Chicago Bridge & Iron has its roots in bridge-building, but the company, which now goes by the name CB&I, has transformed itself into a major player in energy and water infrastructure. This company receives 70% of its revenues from US Projects so it could be a good buy if infrastructure spending increases. Industry watchers target EPS of $4.54 in 2017, and that means that investors can buy shares for less than seven times next year’s estimates. 
Caterpillar’s machines are a staple of construction sites everywhere, but slow global economic growth has caused a downturn in the company’s business over the past few years, and that’s been a drag on its shares. Last quarter, North America sales, which represent about half of the company’s global revenue, fell 20% year over year because of lower infrastructure and mining demand and lower oil prices. If Trump can kick-start U.S. construction activity, then Caterpillar’s North American construction equipment and diesel and natural gas generators revenue should climb. If the company can properly manage its expenses, and its global demand doesn’t decline, then Caterpillar could be a good addition to your portfolio during the Trump presidency. Cliffs Natural Resources is an iron ore company that is the largest producer of iron ore pellets for American steel companies and producers. Over the past year, the company has reduced its debt and cost of goods sold which means a higher net income. The author recommends these stocks, but I encourage you to seek more than one source when adding to your portfolio, and another factor to consider is are you holding to sell or are you holding to hold onto forever? I’d research to see if these stocks are paying a dividend, and if they aren’t what is your exit strategy when you buy this stock? Ultimately ask yourself am I investing for cash flow or capital gains?


http://www.investopedia.com/advisor-network/articles/111116/if-you-win-1-million-can-you-minimize-taxes/

Due to the value of the author’s content, there is heavy quotation:

You may dream of having $1 million, but if you got it what would your tax plan be? One school of thought says just get the money and you can figure out what to do then. I reject that idea and I’ll show you why – the goal should be to keep more of what you make. Let’s start by thinking about professional athletes and entertainers, who often come into large sums of money but find themselves in a different situation regarding taxes. If they are considered independent contractors and not employees, then they would receive their million dollars without any taxes taken out. With even more up-front money in gross income, they could end up spending even more money, only to receive a surprise at tax time when they find out how much they still owe.

In the 1980s I met someone whose boyfriend won $4 million in the lottery. He opted to take the payments whereas most people take the lump sum payment. Was that a good idea? Today, if you take the lump sum in a $1 million lottery, your total federal income taxes are estimated at $356,875. Instead, let’s look at what happens if you take the million dollars as 20 payments of $50,000. Your total federal income taxes are estimated at $5,684. You have saved $243,195 over the 20-year period.

Total Winnings  $1,000,000 $1,000,000
Payments 1 20
Paid Out in Year 1  $1,000,000  $50,000
Taxes in Year 1 $356,875.00 $5,684
Total Received in 20 Years $356,875.00 $113,680
Savings $0 $243,195


This example above shows the power of delayed gratification, and at the same time how much taxes can affect the money you receive. When someone says, they make $50,000 a year, ask yourself is this amount gross income, take home (gross profit) or net income? Most of the time the number is gross income. This amount is before taxes and deductions, so your actual take home pay is a lot loss. In the above scenario, if you were given only $4 million to live in, would you be able to manage it properly to grow or would you spend it all? When you’re investing in assets always think of cash flow, and return on investment. How long will it take for me to get my money back when I put it in on an investment? Remember it’s not about how much money you make, it’s about much money you keep and what you do with it afterwards. With a financial checkup, I can help analyze how much your net income is, and I can show you what I look for when it comes to cash flow.

If you need a financial checkup you can reach me in the contact me section.

For this week, I’ve included Marcus Lemonis’s Top 10 Rules For Success from Evan Carmichael’s YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Posted in Pursuit of Excellence

November 2, 2016

http://www.cnbc.com/2016/10/12/marcus-lemonis-common-pitfalls-any-franchise-must-avoid-to-be-successful.html

When he was in his 20s, Michael “Rooster” McConaughey nearly destroyed the business empire he built. “The biggest failure I had — monetarily wise, business wise — was I went bankrupt,” said McConaughey, a self-made millionaire who co-stars on CNBC’s reality pitch show “West Texas Investors Club.” After striking success in the oil and lead pipe business, McConaughey had nearly spent his whole bundle. “My biggest problem was I could make money, but I couldn’t hold on to it,” he said. “I was going around with all the big shots. I thought, hell, I’ll never see a poor day.” Rooster was making a lot of money, but he was spending it just as fast as he made it. Remember: It’s not about how much money you make, it’s about how much money you keep, and how hard that money works for you once you invest it. Rooster eventually had to go broke, go back to the basics and build a foundation the slow way. Along the way, the entrepreneur learned the value of business partnerships and having good mentors. “It’s amazing how that helps, just knowing someone has confidence and faith in you,” he said. “That’s a hell of a motivator.” The whole purpose of this blog is to present a different way of thinking, and encourage you to seek mentors.

http://www.cnbc.com/2016/10/19/marcus-lemonis-shares-3-simple-tricks-to-increase-your-sales.html

Leading net-lease retail real estate investment trust Realty Income (NYSE:O) just declared its 556th consecutive monthly dividend, which translates to more than 46 years of steady income for shareholders. Just as importantly, the dividend has grown steadily over the years, and the stock’s performance has shattered the S&P’s returns since its 1994 IPO. Here’s why Realty Income is the biggest dividend stock in my portfolio and why you should consider it for your own. This stock has had been a good choice for a long-term investment for income seeking investors and investors who look for growth. This stock has paid 556 consecutive dividends since even before it was listed on the NYSE. Even more impressive are the company’s total returns. Since real estate makes money in two main ways (rental income and price appreciation), Realty Income has been able to deliver market-beating returns to investors. In fact, since the company’s public listing 22 years ago, the average annualized total return has been 17.9%. To put this in perspective, an investor who bought $10,000 worth of Realty Income in 1994 would have more than $340,000 today, assuming they reinvested all of the dividends. The company invests in retail properties that fit three criteria: discount stores, non-discretionary retail, and service-based retail businesses. Also, the company makes sure the lease structure is risk resistant through long-term “net” leases which requires the tenants to pay the property taxes, building insurance, and maintenance expense. One risk factor to consider is if interest rates rise, then it could affect the share price, however this stock isn’t to be held for a short term. The author recommends taking a long term hold of this stock. Personally, I have two different trading accounts. One I use for day trading, and the other I buy shares or ETFs of stocks to hold for the long term. Have an investment strategy that will allow you to have both cash flow and capital gains.

 If you need a financial checkup you can reach me in the contact me section.

For this week, I’ve included The Intelligent Investor – Benjamin Graham – Animated Book Review from PracticalPsychology YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs 28:26 MSG