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Lessons We Should Be Learning Now—And Don't We Wish We'd
Learned Them Earlier! |
1. Mother Nature Always Wins.
This simply means that unbreakable laws of cause and effect are...unbreakable. Thus, we think that we can expand the money supply endlessly. Please catch up on your economic inflation history of post-WWI Germany and currently, Zimbabwe. President Robert Mugabe of Zimbabwe is the current world economic dunce-award winner, as he has printed money endlessly. Well-run banks typically have between $0.50 to $1.00 reserve for each dollar lent. In the US, Lehman Bros. lent $50-$60 for each of their reserve dollars, which meant they had only $0.02 of reserves.
Key Point: Live within your means. Build adequate reserves. We can't avoid perfect economic storms, but we can build reserves to protect ourselves when these economic storms occur.
2. Discover What You're Good at and Stick to It.
Our friend Joe needs to have his gall bladder removed. His condition is serious but not critical, so he has time to select a surgeon. Here are his two choices:
Henry Marsh, MD. Physician and general surgery. Fractures repaired, knee surgery, elbow surgery, laminectomies and hip replacements.
Jordan Sinclair, MD. Specializing in internal medicine and surgery.
Which doctor would you choose?
Key Point: Your customers and clients want expertise from an advisor. Be very good at a few things rather than mediocre at many things.
3. Discover Your Target Market and Your Ideal Client.
Contrary to popular belief, your Target Market chooses you, not the other way around. Only by going through an intense (but relatively brief) series of exercises can you discover your Target Market and ideal client. Advisors who work with ideal clients 80% of the time have more fun, do better work, and make more money.
Key Point: Accept the fact that you cannot be all things to all people. Focus on your Target Market and refer out any other prospects who are not in your sweet spot.
One area of our expertise: helping you go through a process which will yield your Target Market and your ideal client. This is a good example of working smarter, not harder. Contact me for more information. |
Nick is available to answer any of your coaching concerns, and as always, will provide a complimentary coaching session to anyone interested in pursuing a coaching program. Please call Nick at (510) 898-3245 or
email him to set up a session.
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Newsletter
Issue No. 15
June 2009 |
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Irrational Exuberance and Creative Destruction: The Extremes of Our Capitalistic System
Alan Greenspan, when Chairman of the Federal Reserve, used the term "irrational exuberance" in a 1999 speech. He was referring to the dot.com boom which ultimately crashed in March of 2000. Joseph Schumpeter, probably the most renowned economist (after Keynes) of the mid-20th century, used the term "creative destruction" to describe the ruthlessly efficient way capitalistic societies shed inefficient or unproductive businesses.
These two terms are currently greatly in evidence. Except for people born no later than 1920, this economic downturn (Recession? Depression?) is the most severe and protracted any of us have seen.
What is generally missing from the "keep the faith" advice is how you're supposed to run your business in difficult times. The challenge is not what you do in good times, but how you handle the bad times.
Many of the traditional financial planning mantras we counted on now offer no solace (remember buy and hold; rebalance; diversify).
Part of the solution to our current economic travail is to recognize that when you are at the epicenter of a 7.5 earthquake or in the middle of a Hurricane Katrina, your only goal is survival. No realistic person expects anything but physical survival. I believe that should be our goal as well.
This month's theme: what have we learned and what do we do with our new-found knowledge?
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