Miscellaneous Essays

April 16, 2018 No Comments

I am sometimes asked – and I don’t know why – what course of study I recommend for college students wishing to become successful in business. My answer usually provokes skepticism if not scorn. I recommend liberal arts.

In the age of the Internet and the new economy, specialized technical knowledge is revered. Most of those who ask my opinion figure I’m going to say something like “computer programming” or “communications engineering.” In fact, I think that type of education is the least likely to put you at the top of your field – either as an entrepreneur or as a corporate climber.

There are several reasons.

First, technical knowledge is temporary. The trendier the technology, the faster it changes. What you learn now will become less true as time goes on. Eventually, it will be obsolete.

Plus, technical majors take a lot of time. The typical engineering student – if he aims to get into a good graduate school – must use up most if not all of his credits on subjects that only a fellow techie would even begin to understand. All that specialization leaves little time for “softer” skills like reading, writing, and thinking. And virtually no time for hanging around and having fun.

But the main reason I advise against a technical major is that technical workers have secondary roles in business. In How to Become CEO, Jeffrey Fox distinguishes between “staff jobs” (which make a business work) and “line jobs” (which make a business profitable). He says that in most companies “most of the people are either in administration or field sales. Administrative people are not bad, or untalented, but they are not on the cutting edge. The company doesn’t depend on them.”

I made this point to FS just the other day. He had the idea that he would “do better” in business if he majored in computer sciences or some such “high-tech” major – even though he didn’t especially like that course of study.

From what I’ve seen in business, I told him, staff people (and I’d include all technical people in this category) are unfairly but often viewed as:

Temporary: You need them only as long as you need technical know-how.
Expensive: Because they fall onto the “expense” side of the P&L, keeping their compensation low seems to make good fiscal sense.
Expendable: When sales slow down, all expenses are trimmed – including salaries for staff employees.

Good line employees, on the other hand, are seen as:

Necessary: They create the sales, and sales are always needed.
Worthwhile: Since most line positions are compensated at least partly on the basis of performance, the usual attitude is “The more we pay you, the more valuable you are.”
Irreplaceable: People who create sales have a secret power that the company does not want to lose to its competition. Again, the more money you make, the more irreplaceable you become.

Now let’s look at the other side. What’s so good about liberal arts?

A liberal arts education teaches you three skills: to think well, to write well, and to speak well. And in the corporate world – and in the entrepreneurial world as well – wealth is created by analyzing problems, figuring out solutions, and selling those solutions. In other words, a liberal arts education is tailor-made to give you the skills you need to succeed in business. And not just to do well. I’m talking about going all the way to the top.

Businesses have one fundamental problem that presents itself endlessly in different disguises: how to sell products/services profitably. There are many, many solutions to this problem. Even in a specific situation on a specific day, there is always more than one. And the person who can regularly come up with solutions – and convince others that his solutions should be implemented – is the person who is going to get the rewards. The money. The power. The prestige.

Yes, you can improve your thinking, writing, and speaking skills while enrolled in a technical curriculum. But it will happen indirectly and additionally. It won’t be what you are mainly concerned with. With a liberal arts education, you ensure that you will spend most of your time learning and practicing the very skills you will use later to get your ideas and solutions sold.

I’m not criticizing technical people. They are very valuable. I’m simply saying that if your goal is to get to the top of any organization, public or private, you need to be a very good thinker, writer, and speaker. And a liberal arts education is designed to help you with that.

I’ve known very successful business leaders that did not have a liberal arts education. The CEO of Agora, a billion-dollar company I consult with, is one. He was educated in accounting and worked his way up to CFO. But he was smart enough to see that he had reached the end of that line. So he gradually moved his way into discussions about marketing and sales and product development. Eventually, he became a very good thinker and speaker on these issues. And when it came time to appoint a new CEO, he was the logical choice.

Miscellaneous Essays

The Worst Thing I Ever Said to Laura

March 30, 2018 No Comments

For years, Laura came to our seminars, sitting in the front row, taking notes and looking earnest. And at least once during each of those seminars, she’d pigeonhole me to tell me something she didn’tlike about my presentation.

A great consumer of self-help and get-rich literature, Laura always had some shiny new idea about wealth building that she believed I should be talking about instead of the “same-old, same-old” axioms I was then and still am espousing.

One year I remember her excitement as she explained “the law of attraction” to me. Another year her big idea was networking. Still another she was all about multilevel marketing. I always listened and thanked her for her thoughts. Then I redirected the conversation by asking her how she was doing, about the progress she was making along the road to wealth.

Her response was always the same. The brilliant idea or strategy she had pitched me last year had failed to work because of some unanticipated obstacle. It was never her fault. It was bad luck or bad partners or sickness or stress or family obligations.

After six or eight years of this, I drew her attention to the elephant in the room: Maybe the problem was inside her head. Maybe all those obstacles felt insurmountable because of some subconscious reluctance to take action. Or maybe she found thinking about being rich a lot more fun than doing something about it.

Laura, it may not surprise you, did not like my hypothesis. (In fact, that was the last time she ever came to one of our seminars.)

And her story is not uncommon.

Most Americans (56%) rate wealth as “important.” For those under 30, the percentage is 10 points higher. And for lower-income and first-generation Americans, the belief in the importance of wealth is nearly 100%.

It’s human nature to want a better and/or richer life. But it’s also human nature to procrastinate – especially when the task is difficult and potentially life-changing.

Every year, millions of Americans enroll in self-improvement courses ranging from meditation to learning foreign languages to public speaking to losing weight, getting in shape, improving any one of dozens of social skills. And tens of millions read books on these subjects.

How many of them achieve their goals?

I’ve been unable to find any definitive data on that. But I can say from what I’ve seen over the years that the number is surprisingly small.

If I had to guess, I’d say that 50% never do anything more than pay for the book or program they bought. Of the 50% that start it, half don’t finish. And of the half that do finish, half of them don’t put what they learned into action.

So we are talking about 12.5% that invest in improving themselves and actually achieve the goal.

And here’s the thing. If you asked the 87.5% that never took action whythey failed to act, most wouldn’t admit the truth: that they couldn’t bring themselves to do the work.

What you would hear, though, are plenty of excuses about what was wrong with what they purchased.

I once told a well-known real estate guru how proud I was about the real estate programs my brother and I were developing. What I liked best about them, I said, was that they were designed to prompt students to take action. “We start at the very beginning. But our goal throughout is to get them to make their first purchase so they can start making money.”

“Big mistake,” he told me. “These people – they don’t want to be real estate entrepreneurs. They don’t want to be out in the world working. They want to be at home, taking courses. The best thing you can offer them after they have completed a course is another course. They’d rather pay you more money than take action.”

He wasn’t kidding. And he wasn’t wrong.

I agree with the English philosopher Herbert Spencer that “the great aim of education is not knowledge but action.” But there’s just so much a teacher can do…

Miscellaneous Essays

The Virtue of Laziness

March 28, 2018 No Comments

Speed Up Your Career by Indulging Your Lazy Gene

The unpaid bills are stacked next to the unwashed dishes. You’ve been short about $1,200 per month since the divorce.

You need something to fill that now-a-memory, two-income cash flow gap. Something that’s not a pipedream. Something that’s feasible, flexible, and powerful. Something capable of producing more dollars per hour than you’ve ever made in your life.

It can’t be a financial investment, because you’ve don’t have enough in the market to make a big difference. So what can you do?

Before shutting down your computer for the night, you check your email. You see an advertisement. But before you delete it, you notice something in the message about extra income. “What the hell,” you think.

You click on the link and it takes you to a landing page titled “The Extra Income Project.” It’s a promotion for a collection of two dozen lessons, each one a different way to make extra money by working part-time from home. The author is someone named Mark Ford, said to be a best-selling author and a self-made multimillionaire. You’ve never heard of him. Still…

You order the EIP program. It arrives immediately, and you spend the rest of the evening looking through the lessons. One of them – “Service Businesses” – is particularly interesting. “Compared to other side businesses, a service business has the lowest barrier of entry,” this Mark Ford character writes. “It can be started with the simplest marketing methods, requires little to no start-up capital, and is likely to put you into business faster than any other sort of enterprise. The one requirement: You must be capable of doing high quality work.”

“I can do that,” you think.

Ford then lists several dozen service businesses, each with a short but helpful description of its benefits and drawbacks and income potential. Under “Landscaping Business,” you read: “This is a great business for people that don’t mind waking up early, enjoy working outdoors, and don’t mind getting their hands dirty… at least for a while. The income potential begins at about $25 an hour and can increase to $100 or more once you have a customer list of a few dozen people. If you are good at managing schedules and workers and do great work, this can easily become a business that makes you six figures.”

“I can definitely do that!” you think.

The next day, you spend $23 to print 500 colorful flyers advertising your new business. You use a variation of one of the pitches suggested by Ford:

Landscaping With Love

I’ll Make Your Lawn the Best

In Your Neighborhood, Guaranteed

First Service Only $10!

The $10 offer is an advertising trick – a “loss leader,” to prove what you can do.

It works. You get six responses in week one and land two Saturday gigs. By week four, you have $380 worth of weekly contracts. Your Saturday is now a workday, but you’re making an extra $1,520 per month.

You do good work, so you start getting referrals. You can, if you want, make even more money by working Sundays. That’s money you could use to lease a new car and maybe buy some new clothes. You’d have some left over for saving.

But do you want to work seven days per week? Hell no. You’re 52, not 22. You want the money but not the work.

There is a “Recommended Reading” section of the EIP program that lists several books that promise to “take you to the next level.” One is called Ready, Fire, Aim. It’s by the same author. Mark Ford. You order the book.

To Hire or Not to Hire, That Is the Question

After reading the book, you think about your situation. You’re making an extra $1,520 per month by running your own part-time landscaping business on Saturdays. You’re tempted to expand it, but you aren’t willing to work seven days per week. The book has given you the obvious solution: Hire help.

But is it worth the cost and hassle?

Following the book’s guidelines on “analyzing growth opportunities,” you sit down with a pen and a sheet of paper and make two lists, one marked “plus” and one marked “minus.”

On the minus side, you include things like “the trouble of finding someone” and “managing people” and “figuring out the right compensation,” and so on.

The more you think about it, the longer the “minus” list grows. And yet you can’t think of anything to add to the “plus” list aside from “do less work” and “maybe make more money.”

You think, “This is exactly why I never wanted to have my own business. It’s just one long list of worries and concerns. Maybe this Ford guy is more smoke than fire.”

So you decide against hiring help. Instead, you accept a few jobs to do on Sunday mornings. You’ll make another couple hundred per week, and still have Sunday afternoon to relax.

A month later, you realize that you didn’t take into account rainy days and the occasional “Can you come back tomorrow?” You are making more money but working every sunlit hour of every weekend. It is wearing you down. It’s even affecting your performance at your weekday job.

You do the math. Doing everything yourself, you’re making about $50 per hour. You can hire someone to do the grunt work and pay him/her maybe $15 per hour. The difference, $35, would be your gross profit.

There would be some additional costs involved in growing your business, too. Taxes, for example. And you’d probably have to hire an accountant. But on an hourly basis, that couldn’t be more than, say, $5. That leaves you with a gross profit of $30 for each hour’s work.

That’s $20 less than you are making now. But overall, you’d be making about $1,800 per month instead of $1,500 while personally working the same number of hours.

It makes sense. But how do you make it happen? Where can you find a good worker?

Miscellaneous Essays

Wealth Building for Beginners (Even if You Are Not Young Anymore)*

March 26, 2018 No Comments

4.- “The Most Powerful Force in the Universe”

Legend has it that Albert Einstein was once asked what he considered the most powerful force in the universe. He answered, “Compound interest!”

It’s commonly thought that Einstein was joking when he made that famous pronouncement. I’d like to think he was serious. Compound interest is indeed one of the most powerful forces in the universe of making money. But it’s also one of the most profoundly powerful forces in every area of human enterprise.

Whether your goal is to create a new vaccine, build a faster computer, design a better building, or eliminate poverty, the time and effort you invest in your goals will compound over time, providing you with increasingly greater rewards.

When it comes to wealth building, the more time you have to invest, the easier it is to become wealthy. So starting when you’re young gives you a major advantage. However, the advice I’m going to give you here will work for you no matter how old you are or where you are right now in your wealth-building goals.

A simple example of the power of compound interest

If you took a penny and doubled it every day for a month, how much would you come up with? A hundred dollars? A thousand dollars? How about a million dollars?

Not even close. If you start with just a single penny and double it every day for 31 days, you’ll end up with… $21,474,836.48. More than twenty-one million dollars in a single month!

Your original penny will have turned into two. But then those two will have turned into four, those four turned into eight, and so on. The growth of your money will have accelerated, or sped up, not only because your original penny was collecting interest but also because all the pennies your received as interest also began to earn interest. And so the growth built up – or compounded.

That’s how we get the term compound interest.

There are three components to compound interest:

How much you invest
What return you get on your investment
How much time you stay invested

Miscellaneous Essays

Wealth Building for Beginners (Even if You Are Not Young Anymore)*

March 19, 2018 No Comments

3.-Your Invitation to the “$150,000 Club”

In the last installment https://www.markford.net/wealth-building-for-beginners-even-if-you-are-not-young-anymore-2 of this series, I told you how I got started on my own wealth-building journey. I hope it amused you. Looking back at it now, I can see that the ratio I kept between foolish and sound habits was about 2 to 1. But that was enough. I hope it comforts you to know that you can do most things wrong (as perhaps your parents and teachers always reminded you was your habit) and still become as wealthy as you need to be!

The second thing I did was to introduce you to a very simple and crazily powerful wealth secret that most high earners never follow: As your income increases (and it will!), you must resist the urge to ratchet up your spending accordingly.

And thirdly, I shared with you one of the most important insights about wealth that I ever learned. Luckily for me, I learned it when I was still relatively young. (In my early thirties.)

That insight was this: You need a lot less than you probably think to live a rich life: A lot less wealth. And also a lot less yearly income to acquire that wealth.

As for income… If you can get your income above $150,000 a year and simultaneously curb your enthusiasm for expensive toys, your chances of one day retiring wealthy are about 99.9 percent.

As for how much “money” you’ll need to sock away… A very rough number would be about 12 to 15 times the amount of money you’d need right now to lead a rich life.

If you can get your income up to $150,000 or beyond (and as I will show you that is quite easy to do if you are willing to put in the right sort of time) and if you can save 20 percent to 30 percent of that (which is very possible if you manage your finances as I’ll suggest), you will arrive one day at a net worth of between $3 million and $30 million.

And that – if you know how to spend your money – will be enough to provide a great, rich life for you and your family.

Before we move forward on that, you have to answer one question…

Miscellaneous Essays

What I’m Doing With My Money Now and for the Rest of 2018

March 16, 2018 No Comments

Consult an expert, if you like experts. Talk to your broker. Read your broker’s “research” recommendations.

But don’t ask me what you should be doing with your money right now.

I have no qualifications as a financial advisor. No certificates. No degrees. I’ve never taken a single class in economics or accounting…

I’ve read a few books – ones that came highly recommended.

And yes, I was an advisor to and publisher of investment advice for nearly 40 years….

Which gave me an inside view on how the business works and a contact list of several dozen of the best-known stock analysts in the world. I know how they work and I’ve seen the results of their work, good and bad.

I keep tabs on the best of them. And incorporate the recommendations of a few. But when it comes to making decisions about what do with my (now my family’s) money, I follow my own rules.

My rules are not for everyone. So you may decide that they are not for you.

But if, like me, you are a timid investor…

If, like me, your fear of losing money is greater than your greed…

And if you are willing to work hard to make sure your active income is always increasing… every week and every month and every year…

Then you may be interested in knowing some of these rules that I follow and what, in particular, I plan to do with my money this year.

I have several dozen rules. Here are 10 of them:

I don’t Invest in anything I don’t fully understand.
If I am determined to break rule number one, I admit to myself that what I’m doing is gambling, not investing. And I proceed fully expecting to lose every penny I put on the line.
I would never put all my savings into stocks or even into a portfolio of stocks and bonds. I have my money allocated in at least a half-dozen asset classes at all times.
I don’t try to get from any asset class (stocks, bonds, real estate, commodities) or subclass (blue chip stocks, growth stocks, etc.) more than 10% to 20% of its natural (historic) rate of return. When someone recommends an investment “sure to” do much better than that, I steer clear.
Before investing in anything, I have a Plan B in place. A proper Plan B is a pre-set (and if possible automatic) protocol that cashes me out of the deal as quickly as possible and with the least amount of damage.
As a rule, I don’t invest in growth stocks. I prefer buying shares of world-class, income producing, Warren Buffett type companies that I feel confident will still be strong in 20+ years. And I do not sell these stocks in market downturns. I often buy more of them in order to “average down” my buy-in price.
I devote the largest portion of my portfolio to income-producing real estate properties and use a trusted partner to manage them.
The next largest slice of my investment pie goes to private businesses – either in stock or debt or convertible debt. When considering such investments, I ask myself how well I understand it and whether I have some control or at least influence on management should they take actions that seem wrong to me. (And I have my Plan B.)
I don’t “invest” in hard assets or currencies because I don’t consider them investments. (They have little or no intrinsic value, do not produce value, and do not earn income.)
I never invest more than a very small portion of my net investible wealth (net worth minus my house and other things I don’t intend to sell) in any single investment. (Long ago, my limit was 5%. Now it’s 1%.)

Now it’s time to tell you what I’m doing with my money this year.

Miscellaneous Essays

How to Protect Yourself From the Next Global Economic Collapse

March 9, 2018 No Comments

I wrote the following essay a while ago. It was recently published in Laissez Faire Letter https://lfb.org and I thought I’d reprint it here because it’s relevant…

By Mark Morgan Ford

Making good investment decisions is both a science and also an art.

You can, for example, track the performance of investment sectors, fund managers, and even investment advisers with precision. You can see their successes and failures with precision. But past performance, as we all know, is no indication of what will take place in the future.

You can calculate with reasonable precision global money flow, governmental and personal debt, unemployment, the gross domestic product, and so on.

But these data combined won’t tell you with any certainty what and when some macroeconomic event might happen.

The problem is twofold. The global economy is so damn big and complicated, and humanity’s response to economic shifts is equally complex. And this is to say nothing of “black swans”—unexpected and random events that cause major turmoil.

Which is to say that, for practical purposes, anticipating the future is impossible.

Still, as lowly investors, we must try. We must make regular buy, sell, and hold decisions about investments we own. And we must make general judgments about the market in order to assess our holdings.

I’ve been in the financial publishing business for more than 35 years. In that time, I’ve worked with many of the best investment writers and followed their advice. I’ve even been able to see unpublished analytics that track their performance.

I’ve concluded that most haven’t a clue about the future. But there are some who are actually very good at making specific investment recommendations over periods of time ranging from five to 15 years.

There are also some who are very good at big-picture economic analysis. By very good, I mean they are able to write arguments that convince me, a skeptic.

Of those few that are good, about half are perennial optimists. The other half, of course, are perennial pessimists.

What I do is this…

I read the best big-picture writers I know—not to “know” what the future holds, but to get a sense of what might happen. Then, I look to the specialists for specific advice that would apply.

Around 2004, my favorite big-picture pessimists were predicting a collapse of the real estate market, the dollar, and the stock market. They predicted a serious economic recession as a result of the insanely overvalued real estate market and the government’s love affair with paper money.

The optimists were saying not to worry.

I found the pessimists—especially my colleague and business partner Bill Bonner—more convincing.

So what did I do?

Miscellaneous Essays

The Most Interesting Ad in the World

February 14, 2018 No Comments

Do you remember the Dos Equis commercials about The Most Interesting Man in the World?

They were very big for a long time. They may still be running. I can’t say. I don’t watch TV anymore.

If you haven’t seen them, imagine this: A rugged-looking, silver-haired man who is always surrounded by beautiful women. In one version of the commercial, he arm-wrestles a Banana Republic dictator. In another, he releases a grizzly bear from a trap. In still another, he explains that even his enemies list him as their emergency contact and that the police often question him just because they find him interesting.

Fun stuff… and memorable… but not exactly original.

If you are a student of advertising, you know this is a knockoff of David Ogilvy’s famous ad campaign: The Man in the Hathaway Shirt.

That was a great one. With a great story behind it…

It was 1951. Ellerton Jette, a shirtmaker from Waterville, Maine, had the crazy idea of growing his little local business into a national brand.

How could he do that?

He had no clue. But he had an idea: He had heard about the advertising prowess of David Ogilvy. So he booked a meeting with him.

“I have an advertising budget of only $30,000,” he told Ogilvy. “I know that’s much less than you normally work with. But I believe you can make me into a big client of yours if you take on the job.”

If he’d stopped there, Ogilvy would have thrown him out of the office. But then Jette said something that sold the great salesman.

He said, “If you do take on the job, Mr. Ogilvy, I promise you this. No matter how big my company gets, I will never fire you. And I will never change a word of your copy.”

Stop right there…

Miscellaneous Essays

Wealth Building for Beginners (Even if You Are Not Young Anymore)*

January 29, 2018 No Comments

2.- Welcome to My Path

Let’s stop here, before we move through this thick wood, and think for a moment. What is it that you are looking for? Where do you want to go?

You say that you want to get rich. And as quickly as possible.

I say you are mistaken. But at this point, at the beginning of our journey, you can’t be expected to know that.

“If not getting rich, then what?” you want to know.

“You want to build wealth,” I say.

“What’s the difference?”

“There is a big difference,” I say. “It’s the difference between wanting and possessing, between anxiety and serenity, between having now and forever lacking.”

“Sounds like a lot of horseshit,” you reply.

“Follow me down this path and you’ll see,” I say with a wink and a smile.

“And why should I let you guide me?”

“It is my path. The one I cut. The one I know.”

Before I found my path

As a boy, I never had any goals or specific ambitions. I wanted only to be different from how I saw myself: weak, lonely, poor, and insignificant.

I dreamed – actually dreamed – of being rich and popular. I had a specific dream repeatedly for years. It took place in the parking lot “schoolyard” where we played during lunch break. All my classmates are there. A white limousine rides by slowly and stops. A chauffer jumps out, prances around the car, and opens the door. Little me, in white tails and brandishing a diamond-tipped walking stick, steps out. My classmates ooh and ah. I am loved.

I was earning money – or having a side hustle as they say now – ever since I could ride a bike.

I had the usual childhood jobs: delivering papers, cleaning neighbors’ kitchens, cutting grass, stocking groceries in the back of Al’s Deli, working in the Rockville Center Carwash, etc.

Before we graduated from high school, my friend Peter and I had a business painting the houses of the rich people that lived on Long Island’s north shore.

To pay for college and graduate school, I generally worked three jobs, including writing essays for my fellow students. (I offered them a guaranteed grade of B or better.)

Through it all, I never had a clear view of what I was doing. I had no money. I needed money. So I did whatever I could to make ends meet. Some weeks I made more money than I needed. When I did, I found a way to spend that money on something that pleased me for a few hours or, if I was smart, a few days.

I was walking but I wasn’t on a path.

I think I found my path in 1983.

The thing about having many goals…

Miscellaneous Essays

When It Comes to Your Career, Reading Matters

January 24, 2018 No Comments

A Tactical Approach to Reading More Profitably

I don’t have time to prove this to you. If you don’t already understand it, don’t bother to read on. You’re a goner.

What I don’t have time to prove is the title of this essay: The idea that when it comes to having the career you want to have, there is nothing more important than reading.

I don’t care how smart or ambitious you are. Or whom you know. Or how hard you are willing to work. Unless you are prepared to spend an average of at least two hours every day reading and self-help books, you will never – NEVER – rise to the top of the field.

Yes, you can punch out an ordinary career with some exciting ups that result partly from relentless effort, partly from beating up on people, and mostly from luck. But business has never been more competitive. And information has never traveled so fast. If you don’t read – intelligently and constantly – you will not be able to compete at the highest levels.

MarkFord.net