6 Deadly Investing Mistakes

6 Deadly Investing Mistakes

Comments on article by William Lynott found at bankrate.com

Source: http://www.bankrate.com/brm/news/investing/20080822_6_investing_mistakes_a1.asp

Given that this article is coming from Bankrate.com I take a lot of things in there with a grain of salt. “Bill, I want you to create a piece called 6 deadly investment mistakes…yea yea, I’m likin’ the sound of that..”

Its definitely skewed like so many things on the Internet, including blog posts but it drew me in nonetheless.

Under mistake #1, I completely agree with Bill here but I always get a laugh from comments like that from Lisa Feathergill. She sounds like a typical stockbroker, "Remember, you haven't lost money until you actually sell the security. I know a guy who followed this advice and watched his million dollars in stock turn into zero dollars in a very short amount of time. Ouch!!

I agree with Mistake #3 that savvy investors make more money during downturns in the economy, however I’m having trouble with his stock pushing again. In my humble opinion, unless you are lucky, stocks wont’ make you rich Bill. Any comments on this?

I wholeheartedly agree with Mistake #6, Abandoning your investment strategy. Bill’s right. Whatever you decide to invest in, stocks, bonds, real estate, gold or silver…stick to the plan.

I think the worst thing any investor can do is react to the whims of the media about the investment environment, from wherever you are looking. Bill wrote, and I agree, “If the headlines are full of it and everyone else is doing it, you're probably too late.”

Does anyone have any other comments or thoughts on these 6 deadly investing mistakes? I’d love to hear from you. Read more!

10 Things Millionaires Won't Tell You

Source: http://www.smartmoney.com/10things/index.cfm?story=september2008-10-things-millionaires-will-not-tell-you
1. "You may think I'm rich, but I don't." While $1 million was a tidy sum three decades ago, you'd need $3.6 million for the same purchasing power today. So what does it take to feel truly rich? The magic number is $23 million, according to Fidelity.

2. "I shop at Wal-Mart..."

3.    "...but I didn't get rich by skimping on lattes." So how do you join the millionaires' club? You could buy stocks or real estate, play the slots in Vegas — or take the most common path: running your own business. That's how half of all millionaires made their money, according to the AmEx/Harrison survey. About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth.

4.  "I have a concierge for everything.

What??

5. "You don't get rich by being nice."

6. "Taxes are for little people."

The wealthy tend to derive a higher portion of their income from dividends and capital gains, which are taxed at lower rates than wages (15 percent for long-term capital gains versus 25 percent for middle-class wages). Also, high-income earners pay Social Security tax only on their first $97,500 of income.

But the big savings come from owning a business and deducting everything related to it.

7. "I was a B student."

According to the book "The Millionaire Mind," the median college grade point average for millionaires is 2.9, and the average SAT score is 1190 — hardly Harvard material.

8. "Like my Ferrari? It's a rental."

Why spend $3,000 on a Versace bag that'll be out of style as soon as next season when you can rent it for $175 a month? For that matter, why blow $250,000 on a Ferrari when for $25,000 it can be yours for a few weekends a year?

9. "Turns out money can buy happiness."

It may not be comforting to folks who aren't minting cash, but the rich really are different. "There's no group in America that's happier than the wealthy," says Taylor, of the Harrison Group. Roughly 70 percent of millionaires say that money"created" more happiness for them, he notes. "People experience their day very differently when they have a lot of money," Stevenson says.

10. "You worry about the Joneses — I worry about keeping up with the Trumps."

"Millionaires are always looking up," says Schiff, "and think it's better up there."

Posted by Corey of Project Liberty

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How Do Companies Like Trump Realty and Wal-Mart Save Millions of Dollars on Taxes?

Loopholes of the Rich: What is Cost Segregation?

Steve Ruf and Darrell Weaver of Cost Segregation Authority joined us for a Master Mind last night to talk about how to enjoy enormous tax savings on your commercial properties.

Cost Segregation is a way to increase/accelerate depreciation and maximize tax deductions on commercial property. By performing a study, whereas they do a reclassification of assets to increase cash flow and maximize tax deduction, investors can enjoy benefits that are unknown to most investors.

Cost segregation is now approx.10 yrs old. How did cost segregation get into the main stream? The IRS put conditions on it to control how it is used. Surprise, surprise! Large real estate companies use this method, such as Trump Realty and the Bellagio. Small producers are usually not familiar with cost segregation. Darrell Weaver adds that it is essentially a “tool of the rich.”

Please add your two cents on cost segregation if you have some cents…!

Contact info for Darrell Weaver: dweaver@costsegauthority.com

Posted by Corey of Project Liberty

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Large US investment banks will be able to access emergency cash from the Federal Reserve into next year if market turmoil persists

The Fed going way out of bounds. What about moral hazard and banks with this emergency cash? Comments? Posted by Corey Curwick of Project Liberty Article Link from FT.com: Feds ready to extend bank aid 

Fed ready to extend bank aid

By James Politi in Washington

Published: July 8 2008 13:53 | Last updated: July 8 2008 22:43

Large US investment banks will be able to access emergency cash from the Federal Reserve into next year if market turmoil persists, Ben Bernanke said on Tuesday in a sign of the growing concern among policymakers that financial strains could continue for some time.

The signal from Mr Bernanke is likely to soothe Wall Street, in that it confirms Fed support for investment banks through the credit crisis. US stocks rose on Tuesday, the dollar rallied against the euro and oil prices staged their biggest retreat in months.
EDITOR’S CHOICE
Video: Michael Mackenzie on Fed move - Jul-08
US mortgage regulator tries to ease fears - Jul-08
US hopes of housing recovery subside - Jul-09
Full text of Bernanke speech - Jul-08
In depth: Central banks - Jun-12
Editorial comment: Fed must beware inflation risks - Jun-26

As well as signalling fears that the effects of market turmoil may be felt for longer than hoped, extending the credit facility would press Congress to tighten regulation of investment banks.

Speaking in Virginia at a forum on mortgage lending for low-income households, Mr Bernanke said: “We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current and exigent circumstances continue to prevail in dealer-funding markets.”

In March, the Fed granted primary dealers – a term that covers investment banks such as Lehman Brothers and Merrill Lynch – access to emergency cash for at least six months in an effort to stabilise the US financial system on the same day it helped rescue Bear Stearns with a $29bn loan.

Previously, access to emergency funding was only allowed for commercial banks such as Citigroup and JPMorgan.

Although the moves helped stabilise credit markets for several months, worries about mortgage debt and the health of financial institutions have flared up again.

More evidence of the depth of the US housing crisis came yesterday when a measure of pending home sales fell at an unexpectedly steep rate of 4.7 per cent in May.

The regulator of Fannie Mae and Freddie Mac sought to ease investors’ fears that the two government-sponsored mortgage financiers might have to raise billions of dollars of capital in response to potential accounting changes. James Lockhart, director of the Office of Federal Housing and Enterprise Oversight, told CNBC that “an accounting change should not drive a capital change.”

Worries that Fannie and Freddie would have to raise more capital sent their shares plunging 16.2 per cent and 17.9 per cent, respectively, on Monday. However, their share prices were up 11.94 per cent and 13.01 per cent, respectively, on Tuesday.

Mr Bernanke’s comments came as Congress was preparing to examine what kind of changes to financial regulation should be made in the wake of the credit crisis. The House financial services committee will on Thursday hold its first hearing on the topic, with testimony expected from Mr Bernanke and Hank Paulson, Treasury secretary.

In his speech on Tuesday, Mr Bernanke said Congress “may wish to consider” whether new tools were needed to liquidate a “systemically important” investment bank on the verge of bankruptcy, as with Bear Stearns.

The Fed chairman said Treasury should take a lead in this process and that one option was a structure allowing federal regulators to set up a “bridge bank” to help a securities firm – a strategy used for failing commercial banks.

“A bridge bank authority is an important mechanism for minimising public losses from government intervention while imposing losses on shareholders and unsecured creditors, thereby ­limiting moral hazard and mitigating any adverse impact of ­government intervention on market discipline,” Mr Bernanke said.

The Fed chairman also indicated the US central bank would release fresh guidelines on mortgage lending next week.

The S&P 500 closed up 1.71 per cent at 1,273.70, rebounding from a loss of 0.8 per cent on Monday. Oil fell to $136.04, down from last week’s record $145.85. The dollar was up 0.4 per cent versus the euro.

Copyright The Financial Times Limited 2008 Read more!

What Is Our Money Really?

Federal Reserve Notes are not money because they don't have any intrinsic value. They cost two cents to make regardless of denomination. That's an obvious shocker to a lot of people - the fact that someone actually makes a 98 cent profit on every dollar bill; a $99.98 profit on every $100 bill.

Presuming it is the government that does this (actually it's not - the Federal Reserve is no more federal than Federal Express - more on that at another time), one might wonder why it (the government) needs so much money in taxes, license & permit fees, citations, fines & penalties and confiscations, and all the other perhaps subtler methods it uses to remove us from our property.

Federal Reserve Notes are negotiable instruments that discharge debt, but they are not money. They are not backed by silver anymore like they were in the days of the silver certificates, nor are they backed by any other commodity that meets the definition of money. The collateral for Federal Reserve Notes is the future labor of the people of the United States as evidenced by the birth certificates. That's a very loaded sentence that we will go into more in a minute, but one of the keywords is future. In other words it doesn't exist now, it may exist later. So Federal Reserve notes are in that category of negotiable instruments called "promises to pay" or promissory notes. They are debt instruments.

In reality, we can't actually pay any debts anymore because all of the real money has been extracted from society. All we can do now is discharge debts. All we have to do it with is fake money or counterfeit money. Are our Dollars, these Federal Reserve Notes, are they counterfeit money?

Any comments? Thoughts? Agree? Disagree?

Posted by Jared Matola of Project Liberty Read more!

Assessing Risks of Projects

One of the most effective mediums I have found to identify and then mitigate risk in a project is to have a Master Mind meeting about it. Over the years, I’ve gotten better at assessing risks associated with investments by using this tool described by Napoleon Hill in ‘Master Key to Riches.’ This tool is called the Master Mind Principle. Usually those who will be involved in the project or investment are in the master mind, along with one or more of my advisors such as my attorney or my CPA.

Assessing risk is much easier if you break it down by categories. What we do then is get together and go through each category one by one and try and find as many potential risks that we can think of in that category. Once we feel like we’ve identified all of them, we then try and think of ways to mitigate the risks if possible. Using the master mind in this way has been so helpful for me to be able to see if something is even going to work and if so, how it will work. Doing master minds has saved me a ton of time and money because usually other people are better at spotting things that you may have overlooked. This is what the master mind principle is all about. Here are a few examples of categories of risk that we pick through:
• Financial Risks-funding delays, each partner has own financial situation, cash flow situation, capital reserve
• Market-related Risks-seasonal sales cycles, competition, our recent sub prime crash is perfect example
• Political Risks-imminent domain, nationalization of industry, stock market affected by elections, tax law changes indirectly from newly elected leader or anticipated changes in the future
• Economic Risks-currency, recession, availability of commodities, price changes of commodities
• Social Risks-social trends and changes
• Environmental Risks-natural disasters, fire, flood
• Security Risks-crime, theft, vandalism, negligence
• Legal Risks-liability, lack of contracts, insurance-related

What else am I missing here?

By Corey Curwick Read more!

OPR – What the heck does this mean?

OPR stands for “Other People’s Resources” and this term is used when talking about investing. It’s a popular term used by Robert Kiyosaki in his books. What the heck does this really mean though? Having some form of control over your assets is called leverage. When you leverage Other People’s Resources to accomplish your investment goals, some examples are using outsourcing, utilizing virtual resources, or doing co-ventures or forming strategic business alliances. You can also count licensing as a form of leveraging OPR.

Posted by Chad Albury Read more!