Category Archives: Investment

One Simple Change that will rock your world.

Bootstrap, Business, concepts, Entrepreneurship, Inspiration, Investment, MLM, Money, real estate, The World, , , , , ,

I am sure that you have noticed that the media, and what people talk about has really become a bummer recently.  I mean all that I hear is doom and gloom.  It is a fact that the economy is slowing down and things ARE going to be much different in many different areas in the future.  Two main areas will be the availability of credit and the profit margins that companies have.   Many companies simply are too inefficient to stay afloat in this time.  Many companies will close and make all their employees go home, others will cut costs by eliminating employees, both of these factors will result in much higher unemployment.    Bills will go unpaid, people will be evicted, and the masses will feel generally negative.

So what can you do about all of this, for yourself and for your business?  Well the truth is that you must change the way you think about all of this.  Here is the real situation, there has been a shift happening for a while in the way business is done, the way money is made.  Knowledge is the key, creating a better system to do something and then implementing that system is the road to wealth in America now.  It has been so for a long time but the majority still can not see it.  In a time of change, like the one we are going through, there is unprecedented opportunity everywhere.  The larger the crisis the larger the opportunity.  And we are in a huge crisis, it is most likely that the opportunity will never be larger in your lifetime to make serious money, have serious success or to change the world.

So here is the basic change that you need to make.  Every time you hear someone say “Challenge” or “Crisis” or “Recession” or any of the other negative things you hear every day, constantly think “OPPORTUNITY”. Think about how the change has displaced old players and has make openings for you and your business to move forward.  When you hear about how someone can’t get a new car because of the credit mess, think about how money can be made keeping their old car looking like new.  When people talk about going out of business or they are clearing out their inventory to make payroll think about what a good deal you can get, and how you can buy more than you need and then mark it up to others once the sale is over.  (I do this on Laptops, buy at the clearance sales, and sell after the sale is over, or online to those that don’t know about it.)  When a company goes out of business you can look at the strong companies in the same industry and you have just found a good investment.  Best Buy is going to do great in 2009 when Circuit City is gone, that was the thorn in their side and it is gone.  And what about all those people who are out of work?  Well MLM sign-ups are at record levels, everyone is looking for an opportunity to own their own business, and people are putting much more effort into building those business.  Because of this so many new MLM companies have popped up, but many of them are not very good, please read about what makes a good MLM here.  When you see the real estate market just think about the fact that in the long run housing always goes up, and many cities have already started to show signs of recovery.  You can easily find houses that are great deals, get a tenant in there, and have much larger positive cash flow than has been possible for over two decades.  I know people buying houses with 20% down for under $120k and having payments less than $600 a month, then they rent it out for $1,200 a month.  Rental prices have not seen the drop that ownership has had.

So in every area that I can think of there is huge opportunity for the person and company that can see what if going to happen, figure out the correct change to make and implement that change quickly.  During this time you will need to break some ties with your old cash cow that has been paying your bills for the last few years, and focus on what is going to make you money in the future.  Many people will never be able to do this.  I know a very rich and successful guy who has not changed the way he has done business in years, his company has recently had to move out of two of their buildings, fire half the people and make some other huge changes, but they did not change the core of their business, and their business focuses on Luxury Construction supplies in Arizona, and I fear that this is not a market that will come back before this company is out of business.

So look for the opportunity in every crisis, embrace change and reap the rewards.

Is it ok to steal?

Business, Computers, concepts, Government, Investment, Money, Politics, The World, , , , ,

I own a computer store.  It is fairly small and not so profitable recently.  In fact as our products have turned into a commodity it is very hard to make money any longer.  But there are other places that sell computers, CostCo, Dell, Best Buy. These companies are big, they make tons of money and are very rich.  They have tons of extra inventory just sitting there on their shelves.  Now if I went out and decided to take some of that inventory from their store and put it on my shelves, it would help my employees keep their jobs, it would help my store make more money this month and it would be totally illegal and immoral.  It is there stuff, I have no right to it.

But this is exactly what our government does but on a much grander scale.  In fact if you are the big store, and you don’t them steal from you Joe Biden calls you unPatriotic.  Yea if you are one of the people who will benifit from this plan I can see how you may support the Obama/Biden plan of taking more from the people who really make this economy work and giving it to the people who are middle class, or even those who choose not to work.

If you have any ethics you must see that this is simply another form of theft, the problem is that we have lived with it for about 63 years and people have become so used to it that they have become dependant on it.  If you make more than 120k per you, or maybe even less you should expect your taxes to quickly go up.  Obama says 250k in many speaches, 200k during his infomercial, and biden said 150k a few times last week, but now other written items from they say 120k.  Once he takes office, if he wins, I think it will quick drop to 100k or 75k.

On a side note Bush made some tempoary tax cuts that were fairly large and they expire in 2010.  When Obama says that he will not raise taxes to the middle and lower class he simply means that he will not add any new taxes BUT he is fully intending for the Bush tax cuts to be allowed to expire, in effect raising taxes, but HE did not do it….it has long been set in motion.   This slick concept is not caught by most people.

Social Security is the worst kind of theft.  It is a huge program that simply will NOT keep working much longer.  Basically you have a shrinking group of hard working young people who are mostly working pay check to pay check hardly getting by.  Then you have a growning group of older people who have had 40 years of high income earning, they mostly own a house and they have on average 10 times the assests of the first group.  Who should give who money.   Well, you guessed it, our government has it backwards, the hard working poorer working people give their money to the retired people who sit around and lead a life of leasure for the most part.  The worst part is that they feel entitled to this life because that is what they have been told for decades, it is illogical and is the main cause to our problems but there is little that can be done to fix it.

The Mortgage Crisis in Plain English

blogs, Business, concepts, Entrepreneurship, Government, Investment, Money, Politics, real estate, The World, Uncategorized, , , , , , , , , , , , , , , , , , , ,

Hello, my name is Jason Dragon.  You may be a long time reader of my blog, or like many people you may have found this simply by doing a search, if that is the case then welcome.  I plan for this blog entry to be one of the largest in scope of any entry that I have every done.  We are going to talk about the current Mortgage Crisis.  I will talk about it in 4 areas.

  1. The Boom
  2. The Bust
  3. The Current Situation
  4. The Way Forward

If you are wondering, I do have a degree in Business and I spent a lot of time studying economics. For a short time I even sold mortgages.  I will try to keep the text as simple as I can, I want you to not get bored and to read the entire things. Some of this will be my educated opinion, but most is simply fact.

The Boom

At the start of 2000 there was a bust in the stock market, millions of people pulled out a total of billions of dollars.  When 9/11 came they did so even more.  All of these people needed a place to put the money and the new trend was to put it into Real Estate, housing prices started to rise.  By 2003 and 2004 many real estate gurus arrived on the scene, showing common people how to make money in real estate.  It was a great time.  Prices were going up each month.

To add to this information, for the first time, was easy to get and compile.  It was easy to find a good deal on a house online, you could even find out the estimated value of your house or any other by going to sites like Zillow.  It was also easy to get a loan.  Because home values were expected to keep going up you could get a house for $150,000 and get 100% funding because by the time you get close to closing it was already worth $175,000.

The housing market was a great investment, it is one of the only investments that you can get almost total leverage in. Figure this, you buy a house for $150,000.  You only put $10,000 as your down payment, you get a tenant in the house and they pay for all the expenses giving you a zero cash flow but no expenses.  Now you sit, wait a year in this market and the price of the house goes up by 10%, BUT your return was not 10%, because the price goes up on the whole value of the home, not just your down payment.  You now have $25,000 equity in the house, a return of 150%.  This is the reason that investors flocked to houses, huge returns.

For many people, the more passive kind who usually invest in bonds and such this was way too risky for them, so they decided they would simply buy mortgage backed securities.  100’s of billions of dollars flew into these.  What these were was baskets of mortgages, and you could buy shares in this basket just like a stock, they had sold and predictable returns.  If you were used to getting 2% on your money in a CD or government bond, now you could get 5% on your money by buying one of these.  It was great for pension funds and foreign banks to sock away money because it had a higher yield and was still considered very safe.

The reason it was considered so safe was because of the very low default rate in mortgages caused by a booming housing market. Most people would simply sell their house for a nice profit before they went into foreclosure.  The investment banks reduced the risk even more by bunching 1000’s of mortgages together.  They would then break them up into different levels.  If there were any defaults the investors at the lowest level would be wiped out first, and the investors at the highest levels would still receive their full returns even if 20% of the mortgages defaulted.  It was a great system.  The investment banks bought up over a 100’s of billions of dollars worth of mortgages using this process, and they charges a hefty fee for all of it, making them some of the most profitable companies in the world.

For almost 70 years there was been a set of two companies, founded by the US government to facilitate the flow and resell of mortgages, these are Freddie Mac and Fanny Mae.  Basically these were huge companies that would buy mortgages from banks.  If a bank could not resell the mortgages they would need to get deposits to cover all the mortgages that they wrote and that would be nearly imposable.  About 92% of all mortgages are resold.  Freddie and Fanny purchased over half of them.  They would buy them from the bank, the price was set by the value of the house, Credit of the home owner, zip code of the house and a few other factors.

This created a great system for the banks.  They would sit there and advertise that they can get you a great deal on a mortgage, they would help you with all the paperwork, they would send your information to underwriting, where they would basically see what was needed to make your loan sell for the highest price to Freddie/Fanny.  They had some rules such as the first mortgage could only be 80% of the value of the house, or else the homeowner would need to buy PMI (Private Mortgage Insurance).  The bank would then take your entire mortgage packet and find out how much they could get.  On a $200,000 loan at 6% there is someone making $12,000 in interest every year.   The buyer of the mortgage would pay a premium for the loan, but they wanted to make sure they would get their money back.  So what the banks did was to get the home owner to sign a pre-payment penalty clause.  Basically this was a clause saying that the bank would get 2 years worth of interest from the customer, that the customer would still have to pay 2 years of interest even if they sold or refinance the house before 2 years was up.  So on that $200,000 mortgage at 6% interest the holder of the mortgage was guaranteed $24,000 in interest payments.  Because this $200,000 mortgage was really worth $224,000 for the first 2 years they would offer to buy it for $215,000 from the bank.  The bank where you got your mortgage made $15,000, paying some of that out as a commission to your mortgage broker.  They also usually would agree to service the loan, meaning they would send out statements and collect the money on behalf of those who owned the mortgage.  If a loan had a longer pre-payment penalty the bank would get more money, if they sold it for a higher interest rate they would also get more money.  The more income they could show for the client the more they would sell the loan for.  The interest of the bank and mortgage broker was to get as much from the client as they could so that the resell value would be as high as possible.  A few banks even started to lie about some of the details to drive up the price.

Mortgages were sold almost instantly.  This allowed banks to generate mortgages as fast as they could.  It was a great deal, get someone to come in and fill out some paperwork, show that paperwork to the mortgage buyer, get the buyer to agree to fund the deal and then you close on the whole deal and walk away with huge profits.  Do this a few times a day and a little office with a handful of people can make millions per year.  And that is exactly what happened. The banks had every incentive to get you into a mortgage, and they would do whatever was needed to do so.  It was easy to get a loan, even if you had no money to put into the deal, they simply would do a 20% second mortgages, or even if you really had no income, you could just do a stated income loan.  People were buying houses who could not pay for them.  Their main plan to pay as little as they could each month, and refinance when that 2 years was up and they would have a ton of money due to the value of the house going up.  It was a great system that worked for millions of people.

All of this easy money was causing housing prices to sky rocket.   I live in Phoenix Arizona and between 2003 and 2006 prices for most of the city doubled, people were bidding against each other in attempts to get houses, simply because the house was a good investment.

Where was this money coming from?  Well as I said much of it came from people who got out of the stock market, and needed a new place to keep their money, a large chunk came from foreign companies.  Remember we are buying at least 700 billion dollars more of stuff each year than we export.  So many nations, China, India, Saudi Arabia have billions of dollars that they need to invest somewhere.  They want us to keep buying to they make it easy for Americans to buy things on credit, then we buy more and they sell more.  It is a great spiral that put America in huge debt while at the same time sending millions of jobs all over the world.  The is the greatest transfer of wealth in the history of the world, but more on this in another blog.

The Bust

In mid to late 2006 the prices started to get very high, and there were signs of problems.  Some of these no money down investors who bought on stated income loans started to not pay their mortgages and the prices were not going up fast enough to still leave the buyer of the loan with a profit.  The buyers of these loans started to change their guidelines on who they would give money to, they started to make it harder.  This was a sign to many investors to start to sell, and the number of houses for sale started to go up.

Some of the hottest housing markets were Southern Ca, Phoenix Az, Vegas Nv , Atlanta Ga, and Miami, Fl.  These markets saw some of the largest gains, they were all nice warm places to live and people have been moving here for decades.  But they also had something else in common, they were all major places where Illegal immigrants would flock.  In late 2006 and early 2007 there was a huge national debate about Illegal Immigration,  and many of those here illegally owned houses but decided to simply leave, they dumped their houses, many others just borrowed as much as they could and walked away.  And the prices in these markets started to fall.

Once prices started to fall it changed all the numbers for the banks and the buyers of the mortgages.  If you get that same loan for $200,000 the buyers have more risk now, they don’t have a security of the house itself because the value will likely be less than $200,000 if the customer defaults.  So they said that they would only take the best and most qualified borrowers.  No more stated income loans, no more loans to people with sub-prime credit.  Suddenly most Americans could not qualify to buy a house.   All of these people were pushed out of the market, demand for houses plummeted, and when demand goes down price is soon to follow.

To make matters worse some of the Sub-Prime loans started to default.  Many were from investors who were upside down on the loan, they borrowed in a corporate name so there was no ill effects to them to simply walk away and give the house to the bank.  So thousands of them did just that, it was smart for them to do so.  The people who used the system the most were mostly the smartest and best at it, and when things started to go down they were the first to get out.

Most of these banks only put a 1-3% budget in for losses and some are getting much higher losses than that.  These foreclosed houses had to be sold so the banks simply dumped them on the market.  But banks are not in the business of selling houses, and they do a very poor job of selling houses.  They are risk adverse so they only want buyers who they feel will actually close the deal.  For the most part they sell the house as-is.  They do nothing to make the house look good and nothing to try to sell it.  For most buyers, buying a REO (Real Estate Owned)(Bank Owned) house is not appealing.  People with good credit who can buy a nice house want that house to be ready, and come with a warranty.  So these houses sat on the market for a while and the only choice for the banks was to keep slashing prices.  This was the main cause for housing prices to plummet.  This caused even more people to realize that they are upside down on their house and more of them simply walked away.  From the middle of 2007 until now this process has been happening, and it keeps getting worse.

These banks then saw their stock start to melt down.  Imagine a company that has 250 billion in mortgages but they owe 200 billion in debt on those mortgages, lets call them Mega Bank.  It was great for them in the boom time, they borrow money at 3% and loan it out at 7%, making 4% on 200 billion dollars, or 8 billion per year.  They had every inventive to do this as much as they could.  This company would have a value of 50 billion dollars or so in book value, the stock market almost always prices your stock well above book value so the Market Cap (The total value of all stock of the company) may be 100 billion or so.  With earnings of 10 billion or so it would be at a Price to Earnings ratio of 10, something that wall street loves to buy.   This company would be a star.  Now what happens if there is a ton of risk in the mortgages that the company owns, the company figures out that 5% of their loans are defaulting, but for one loan that is a total loss it wipes out the profits from 10 other loans.  So their accountants do figure out on average how much are all of the loans that they company owns worth.  If that number is lower than what they currently value the loans at they restate the value of these loans and do a write down of these impaired assets.  If you have 250 billion of loans on the books your accountants may feel that they are only worth 200 billion.  50 billions dollars, on paper, just disappeared.  Some companies bought insurance for such a thing to happen, the largest company that sold such insurance was AIG, they have as much as 300 billion dollars of insurance losses out there that may be paid.   So if you are Mega Bank the value of your company just went down by 50 billion dollars, but in reality all the rest of your assets you owe so your stock crashes, your market cap is no longer 100 billion but maybe more like 10 billion, or even 1 billion.  Investors on the stock market don’t know what to do, all they know is that they can’t value your stock.

The Current Situation

At the start of 2008 there were 5 major investment banks in the US, and three banks acting as mortgage clearing houses.  These were the banks that were selling mortgages to investors.  The investment banks took most of their profits by keeping some of the most high risk and high profit mortgages for themselves.   4 of the 5 investment banks saw huge losses, and all three mortgage clearing houses saw major losses.  1 of them went out of business, Indy Mac, they simply took so many losses that they could not pay depositors any longer.  Freddie Mac and Fanny Mae lost almost all of their stock value and had to be propped up by the government to stay alive.

Of the 5 investment banks Bear Sterns was the first to fall, they went from a 100 billion dollar company one week to being bought out by JP Morgan Chase for only 1.1billion the next.  The next to fall was Lehman Brothers.  They lost billions in sub-prime mortgages.  Their book value was negative.  They has a lot of really good assets though and tried to sell to a bank in Korea, but it did not work and in September of 2008 their stock went almost to zero.  They declared bankruptcy On Sept 13th, and are being sold in pieces to different companies, stock holders will probably get nothing.  On the same day the third Investment, Merrill Lynch was purchased by Bank of America for $50 billion.  Bank of America stock fell 15% that day because investors thought that they had over paid.   That only left two Investment banks,  Goldman Sachs and Morgan Stanley.  On September 22nd 2008 these two bank, under new government requirements converted to traditional banks.

None of this was helped by the hedge funds, these are basically large pools of money that often bet that something will fail.  These hedge funds helped drive the price down of many of the companies I wrote about today.  But many hedge funds also lost money on the mess.

The government has decided that for the most part they are going to bail out many of these companies, they are also considering a new govenment agency that will, for a short while, buy up this bad debt for pennies of the dollar, allowing the banks to write off these losses and move on.

During this whole time it has gotten harder and harder to get a loan, basically unless you put 30% down, have perfect credit and tons of income you are not getting a loan.  The government put in a program to help some home buyers which helped out a bit.

Even with all of this going on our economy is still fairly sound.  Employment levels have only gone down a bit, and many other parts of our economy are still stable.

The Way Forward

I have always been a free market guy, I think that the system works best when there is freedom to be successful and freedom to fail.  The government is really taking the failure and greed of these companies and helping them out.  They are doing this to save the normal people and the economy as a whole and to fix our broken mortgage system.  The government, and our President have seen how large this problem is and that they only way to fix it is a huge government bail out, and I AGREE with them.  The bail out will put stability into the system, it will prop up all the banks, and it will resolve the credit crisis allowing money to start flowing again.  They are looking at up to 1.5 TRILLION dollars in loans, and buy outs.

I think that we need to do this, if we don’t our economy is sunk, but this is NOT a progam that I think will cost the taxpayer any money, in fact I think it will make our government the highest profits that we have ever made.  Think of it this way, they are not just giving money away, they are going to be buying mortgages at the low of the market, the current talk is to buy them for 50-60 cents on the dollar.  If they do that they will set a low in the market, these mortgages are still backed by the actual real estate and the economy will turn around.  So one of three things will happen to each of these mortgages.  They will either get forclosed on and the government will sell off the house, most houses are still valued at over 60% of the value of the mortgage so they will still make a bit of money.  Option two is that later on they may sell back the mortgage for a profit, maybe 70-80 cents on the dollar.  The last thing that will happen to some of these loans is that the home owner may sell or refinance the house, and the government will get 100% of the value of the house, basically doubling their money.  I think that if the government does this that they will make at least a 20% profit on the money.  They are talking about buying 700 billion in mortgages, making them about $150 billion.

For AIG they are giving them a 2 year loan for $75 billion.  In the termns of the loan the government gets a 11.25% return each year AND they get stock options where they can buy 80% of the company at a very low price.  The company was worth over $200 billion last year.  If it goes back up to even 100 billion the government will make almost 80 billion from their stock options, and still make about $17 billion from the interest on the loan.  This bail out could make the government almost 100 billion dollars.  The owners of AIG see how much they will loose if the Government loans them the money so they are still looking for other lenders to help them out.

Almost everything that they are doing is set up in such a way, this whole bail out system as a whole, will probably cost out government nothing and make us at least half a TRILLION dollars in the next 2-3 years.  This could wipe out our deficit and radically change our government balance sheet.   It is not enought to totally wipe out our deficit but it will reduce it a lot.  If the economy really picks up so will taxes and the government has a good chance of being in the positive.  Of course this positive change will not happen until 2009 and if a democrat wins as president will probably say that it was them that made this change and that they are the reason that the government is suddenly so profitable, but we know the truth.

On a side note the President does very little to effect the economy.  Most of what is done is done by congress or the treasury department.  Also anything that the president does do takes 2-3 years before it really goes into effect.  Such as the losses in 2000 were not caused by Bush, he just took office.  All I know is that I would never vote for someone who thinks that raising taxes in a time like this is a good idea.

Thanks for reading, if you liked this blog entry, please leave a comment, I read all of them, and also please subscribe, you will then get all the nice future entries that I make.  Thanks.

Breakthroughs in solar power technology.

Business, concepts, Entrepreneurship, Government, Inspiration, Investment, , ,

I am a techie person, I have always loved the idea of solar power, mostly cause it was so neat, you could power small portable devices wherever you go.  But the cost of solar power has always made it a bad deal.  Heck with normal solar cells it takes three years of use to produce as much energy as it takes to make the solar cell.

Let me share a bit on solar power.  There are two basic types of solar power.   The first is called Photovoltaic, where you convert sunlight directly into electricity.  The second is a solar concentrator, this is where the energy is focused and used to heat water, or some other thing.  Concentrator can be used to heat water for your house, cook for food outside in a solar oven or used to superheat water to turn a turbine and make electricity.  It can be as simple as filling a water bottle with water, and placing it on a mirror in the sun for a day, producing clean potable water out of water that was toxic, this is used by millions in third world nations.

Most people are interested in photovoltaic technology, it is cool, and it produces what we need, ELECTRICITY.  The key to wide adoption of these technologies is to lower the price of creating the power.  Spain has over half of current photovoltaic power plants.  But there is a new technology out there called nanosolar film technology where you basically can print a special ink on a plastic film and now you have a solar cell.  This cell is flexible, able to produce power in lower light and off angles, is lightweight but MOST importantly it is less than 10% the cost of traditional solar power.  [youtube=http://www.youtube.com/watch?v=cZOyhnlY0Hs]

This technology will allow anyone to pay once now to buy a solar array and save enough money in only 1-2 years to totally pay for it.  Imagine being able to get cells that can product over a KW of power for a cost of less than $1000.  Here is a company that is attaching this to metal roofing.  Crazy.  Already there are plans to build a powerplant using these that will 10 times larger than the current worlds largest solar plant. This is a very key technology that will change the world.  You see the thing is that money has been king when it comes to power production, coal has been the cheapest but now they can build solar plants for less money than a coal plant, what will happen when a solar plan costs less to build, and almost nothing to operate, the free market will make it happen.

There are a few major problems though.  The powers that be are either heavily invested in other types or power, or if they have invested in solar they are invested in the old expensive kinds.  Even with this new technology most new plants, and new installs on houses are with the old technology.  What we need is for this technology to dominate the market.

Computer Entry: How to select a laptop.

Business, Computers, Investment, The World, , , , , , , , , , , , , , , , , , , , , , , , , , ,

This article is part of my Computer series, click here for the list of other entries.

Today there are so many features on laptops. For most businesses they simple need a good laptop that works for a long period of time and at a great low price. So when they look at laptops they see units that are almost exactly the same with huge price differences. Many upgrades and things in the laptop world simply are not logical and not needed. I will talk about many of them and tell you the secret to finding the best prices.

For example 250 GB hard drives are fairly new, and 320GB laptop hard drives are still very rare. The standard is a 160GB hard drive. The larger hard drive, can ad 100-200 dollars to the price of the laptop, for just a bit more space. The average business customer uses less than 40GB of space so it is crazy to pay extra for this space.

One thing that you should know about laptops is that all laptops sold are really only made by 7 companies, and all of these companies are Chinese. Every brand you see is really a laptop from one of these companies branded with the company logo. Dell uses 5 of these 7 companies. Because of this you will notice laptops from different brands that look exactly the same, you will also notice laptops from the same brands that look totally different. The only one of these makers that sells laptops direct is Acer, but their laptops are usually very low quality and it is usually better to pay a bit more for better quality.

In the world of computers the price of something is more about how many of them are being sold and NOT about how good or complex the item is. The main cost in any item is the designing of the item and the equipment to make the item. For a CPU for example it costs up to a billion dollars to design a new chip and may cost less than $10 to actually make the chip. So if you make 20 million of these chips the cost is $60 per chip, but if you make 500 million of them your cost is $11 per chip. You even get more savings that that when you build a lot of the same item. Because of this many newer, better and faster things are much cheaper. Many CPUs are much higher in level than what you are buying but the maker just takes the higher ones and disables some higher features and sells them as a lower unit because it is cheaper to do this than make the lower unit any longer. RAM is also the same way, DDR2 is much better and faster than DDR but because it is made in much larger amounts it is cheaper. This is called “Economy of Scale” and it hold true from everything from your TV to you Car.

In the world of laptops this idea works all over the place. In my opinion HP and Toshiba make great laptops and because they sell so many they are actually better and more updated than laptops made for the same price by other companies. Because Sony is so much more money they sell less, and have a higher cost, a bad situation to be in. By far most laptops that are sold have a 15.4 inch screen, so laptops with this size are also the lowest priced of all laptops. Touchpads are by far the most popular and their price has plummeted so they now have the lowest price and are now the only choice most companies offer. DVD burners do everything you would want an optical drive to do, and because they are built in such number now they are cheaper than all of the lower types to put in, thus every laptop you will see has a DVD burner, because it is cheaper and has a larger perceived value to the customer.

The choice of CPU, Hard Drive, Optical Drive and many of the other parts of a laptop, and computers in general are based on this idea. Now to get the best deal you need to look at many different laptops and notice the trends. A laptop that floods the market may be $100 less than the others and yet be much better. This is why people hire my company to find their next laptop, we know the trends and we have a very small markup. They can pay us and still end up with a faster and better laptop and pay LESS money than if they went to wherever they normally go for laptops.

What Exactly to look for in a business laptop.

When you look for your laptop simply compare the specs from one laptop to another, but it pays to have a huge source and look at large lists of laptops because you will often find a better deal on that list.

Balance: When you look for any computer look for balance, too much CPU power at the cost of everything else will result in a slower computer. Also think about what you want to use the laptop for. If you want to play high end games then insist on a laptop with a higher end video card, it may cost $100 or more extra but will do what you want. With computers running vista you really need at least 2GB of RAM to do things efficiently. If you find a great deal on a laptop with only 1GB, buy it then upgrade the RAM later, it may be much cheaper. Don’t spend the extra money getting a much larger hard drive, first 90% of all users never use the space, second if you need more space you can get an external hard drive later, but mostly that extra bit of space really costs a lot of money in most cases. Almost every laptop comes with Vista Home Premium. This is ok for about 90% of the people out there, but if you expect to join a domain be sure to get the business version. Also if you really need XP you are looking for a older out of production laptop, these would have been sold at a much higher price to the seller and they will be asking more for them, and you get less new features than a Vista laptop.

Battery Life: Also think about battery life, for the road warrior out there it is important to have that computer last a long time. So this is what you should look for, first you need to have a processor that can scale back and use less power when you don’t need full power, but can scale up as when you do need the power. The AMD Turion is the best AMD chip at this job, but Intel really dominates this concept with their Core 2 Duo and their entire Centrino line.  Companies have spent a lot of time and money focusing on power saving, so newer technology chips are much better at this than older ones.  For any laptop the MAIN use of power is for the screen, usually it is hard to find the power consumption of the screen, but again newer technology is better.  To get all this best technology be willing to pay for it.

Size: For many people, the size of the laptop is very important, they want a smaller, thinner and more portable laptop. Because of economy of scale there is a common size that most makers make, small enough to sell in huge number and large enough to not be too much money to make. When you want to go smaller you fight economy of scale and also the fact that smaller parts cost more. Because of this smaller, thinner laptops cost much more. Every now and then a company will make a really small laptop in a large quantity and if you find that you can get a great deal on a laptop just the way you want. Don’t get the smaller laptop unless you really have figured out how much you are really paying for that option.

Laptops also change really fast. Think about how they are made. The design of the laptop, and making the first one is over half the cost of the entire run. So companies will make the really hard analysis to decide how many of a laptop design to order from the places that make them. Once the production run is over that laptop is usually never made again. Because it takes so long to build a container of laptops, maybe 2 weeks, then 2 more weeks to ship them it these companies have to predict upfront how many may sell. Usually the production run is less than a few full shipping containers. So the company, lets use HP, designs a laptop, orders 10,000 of them. They are made and shipped, they arrive in the US and are quickly sent to wholesale warehouses and retail stores all over the US. Amazon buys some, Wal-Mart buys some. Before the container even lands in the US HP will try to have it all sold. If it is all sold they may order another production run of 10,000. Almost every week a new, better chipset or CPU or something comes out, and often for a better price. So the designers are always looking to go to the next thing. And that brand new, popular design is now put out of production, never to be made again. Most designs are already put out of production before the first customer even gets one. It is a harsh business with huge risks and huge investments. This is also why only a few companies are really players in this business.

Every now and then a design is produced in a larger amount than that which can be quickly sold off. When this happens they slash the price and dump it on the wholesale market. Sometimes they just sold this computer for $700 to Wal-Mart and have only 500 units left and the design is no longer made so they dump it for $500 or less. Most wholesale companies only mark up parts 10% or less because there is huge competition. Only computer companies can usually buy from these wholesale places, this is exactly what we do here at Emerald Computers. We look for the best of these wholesale deals, select them and we post an online flyer and send email updates to our customers. If you are not getting our email you really are missing some great deals.

So what would I do it I was going to buy a laptop today? You choice for a laptop or any computer is based on what you plan to use the computer for and your personal habits.  Here is the logic that I use, if you need help choosing a laptop then email me your phone number and I will call you and help you with the process.  Lets make it fair and give me a budget of under $1000.  First I would budget in a Microsoft Wireless Laser Optical Laptop Mouse.  They are really a must have for me for long usage, and at under $25 they are a bargain.  Next I would look for a Turion based laptop unless I could find a special on a Intel based one.  The Turion ones are usually at least $100 less for the same speed.  I almost never go a long time on battery power so for me personally batter life is not much of a concern.  What is a concern is a high resolution screen.  I would stick to a 15.4″ size simply because it is just the right size for me, 17″ it is a bit to big, but I try to get at least the 1440×900 resolution, maybe the 1680×1050 (WSXGA+).  I would not get the very common 1280×800 because for me and my eyes I can see much better than that and I need the space.  I don’t game on my laptop so an average video card is good for me.  And I have a few external hard drives, and most of my data will stay on my main computer so a 160GB drive is ok for me.  I like to multitask so I would need 2GB of RAM, I would not get more than 2GB because it takes extra power to run that extra ram, and I almost never go over 2GB, also I like to hibernate my computer and more RAM makes that much slower. When a new OS comes out I may upgrade the RAM.  I would still look at computers with 1GB because I know can upgrade the RAM very cheap on my own.  I do watch DVD movies and I like to have good sound so I would look for a computer with a nice DVD drive and good speakers.  I would also look at a picture of the laptop first, different makers have much different styles and I only like some of them.  I also like black better than silver, but that will not kill the deal.  I found a laptop just like this for only a bit over the budget.  You need to look for one based on your needs.

So when you are ready for your next laptop you now have much more information, you will probably have more than the employee selling the products. I wish you good luck, and if you ever need help feel free to email or call my company, we will be happy to help you.

CLICK HERE FOR THE UPDATE I WROTE ABOUT MONITORS

The best MLM for me, and why

Business, Computers, concepts, Entrepreneurship, Inspiration, Internet, Investment, Marketing, MLM, , , , , , , , , , , , , , , , , , , , , , , , ,

I finally did it, after about 3 months of research, investigating, going to meetings and trying to figure out what I wanted I finally selected the BEST MLM that I could find.

I have been in many MLM / network marketing companies, I have been to hundreds of meetings over the last 15 years, I have built teams, I have sold products, I have marketed many things but this is the first time that I stood back, and researched the pros and cons of different MLM concepts. You may remember back in April I wrote a series of blogs about the idea of a MLM. You can read them HERE, HERE, and HERE. I never wrote the last two in the series because I was still doing my research. In the process I actually joined 4 other MLM companies even before I was sold on them and all of them did not pan out. But now I finally found the best MLM company I have ever seen, more on that later.

So what makes this company better than anything else I have ever seen. There are so many reasons why. Read these reasons and compair them to any MLM that you are looking at.

Well first it is a product that EVERYONE can use, it is easy to understand, and everyone has a need for it. It also is something that you can easily prove, too many MLM promote a product that you just have to have faith that it works. (Most nutritional companies.) But for me the MOST important reason I think that this is the best MLM is because it is a great value, cheaper than normal way of doing things, and the reward of using this product is measurable and instant. You can sign up and start making money the same day, and with only three sales you are already in the black, in MOST MLM companies it is very hard to become profitable, in this it is easy. There is no other company doing anything even close to what they are doing. They are old enough to have their act together but not too young to be saturated. They are in a multi-billion dollar industry and with a radical new way of doing things will take huge market share from the two companies that have over 80% of the market share. Another thing I really love, is that everyone who hears about this product says something like “Of course that is a better way to do it, sign me up.”

If you are in a MLM now, or are thinking of joining one read that list and objectively think about how the company you are with stands up to all of these things.

The name of the company is something you probably never heard before. It is Send Out Cards. What they do is print and mail physical greeting cards that you select, customize and order online. It is a great business tool, allowing you to follow up and keep in contact with all of your co-workers, customers and business contacts. It is also a great personal tool, helping you make the people around you feel good. If you would like to try it out right now I have set up a special offer for all of my blog readers, you can CLICK HERE and you will receive a free account where you can send out two cards to anyone you like, you can play with all the features and see how it works.

Even if you are already busy building your own business you need to look at Send Out Cards as a marketing tool for that business. What would happen if you were able to follow up with EVERY prospect 2-3 times? What would happen if you sent a thank you note to each of the top 20% of your customers, how much extra business would they bring in. Think about it, try out a demo now.

I hope this blog shows some light on your journey to success. If you are looking for the best network marketing company around this one may be for you, it may not.

I made the top 30 in 7m7y.

Business, concepts, Entrepreneurship, Inspiration, Investment, Money, real estate, , , , , ,

I don’t know if you remember.  But a few weeks ago I told all my readers about how I was entered into a contest called the 7 Millionaires in training.   Well last week the announced the top 30 and I was in it.  On thursday of next week I will be hoping to be in the top 15.  From there it will be the final 7.  The prize for this contest is something really cool and really great, it is a mentorship from a highly successful serial entreprenure and real estate investor.  It does not say how long this will last but I bet it will last until most of the final 7 are millionaires, at least that is my hope.   Cross your fingers and wish me good luck., God knows I need it.

His blog is really good, find it here, he has written many of my favorite articles like this, this and that.

If you would like to tune in, there is a web broadcast show every thursday night at 6pm PST.  Click here.

Our world is too complex and getting worse…please help.

Business, Computers, concepts, Entrepreneurship, Government, Investment, Money, The World, , , , , , , , , , , , , , ,

Many people have jobs, where your job is to make something better.  In order to keep your job you need to show results.  Now a problem happens, many companies make their product just about as good as it can get.  In the real world of products they just move on to the next thing, but in software they keep adding features well beyond what is useful.

There are many examples of this. Winamp was perfect 8 years ago, it played music well, it had good skins and an equalizer.  Then they started adding stuff, and adding and adding.  They put in a video player, but it sucks.  They put in a browser, what is the point in that?  Adobe Acrobat is a program that never really worked well.  And every update just makes it slower.  There are third party ones that are much faster and better.  There are many other examples.

So companies that make programs have figured out that most people don’t need their updates, but if people don’t get their updates they can’t push future changes on them, that may include more advertising, or toolbars on your browser, and these companies love to do that.  So they have made their programs “phone home” each time they load, and if the company decided they want to send an update they will do so.  This makes these programs slower, and many of them gripe if you are not online when you load the software.  At least 20 programs I know of now try to push the Yahoo toolbar on their customers each time you update and unless you are very careful and unselect a box hidden somewhere you get it.  And it is hard to remove and almost totally useless.  There is really a battle going on for your attention, and these companies are trying more and more intrusive things to make you use their software, even though most of it is free.  The other day I noticed that if you update java, it tries to install download and install open office, a almost 180MB download.  Java is just a programming language, why should they push an entire office suite on users.  Most users are not smart enough to catch this stuff, then they call me when they see stuff they don’t understand, and these calls are increasing.  (As a note I love open office, I suggest it to many people and install it on all systems we sell.)

Now in the world of software this is a minor annoyance. You can run older versions, or usually disable all updates. But this is also done in many other areas, it is human nature that once something is very good you will keep changing it, even if the change is bad, simply to look like you are doing something.  One area where this is VERY costly and actually dangerous is in the area of Government.  The government keeps adding rules, and regulations in areas where none really is needed.  Many people running for office brag about the number of bills they introduced, and the number of laws they passed.  All of this makes life more complex.  Do we really need such a complex tax system that you have to call an expert for help and even the experts don’t know half the time.  Do we really need over 20,000 classifications for imported items.  Do we really need to have so many regulations on hiring employees, increasing complexity and costs so much that companies get fed up with it and simply hire people in other nations.  Should it really take over a year for a citizen to bring his wife to the US legally?  Do we really need the government to tell us what food is safe, to tell us that we need to give our babies over 20 shots, many of which cause more harm than good?  Should it be so complex to get a Federal grant that Matthew Lesko has become famous for his awesome 3000+ page book with over 15,000 DIFFERENT programs listed (BTW read his blog).  Do we really need a government with 1000’s of different divisions?

This has cost our country a huge price.  Our power has allowed us to survive for a while but now a crisis is coming. It is so hard to appease the government regulations that no nuclear power plant or oil refinery has been built here in over 30 years.  Most factories are built overseas simply because lack of regulations make them much more profitable.  Why would you want to build you widget here, and deal with the EPA the IRS and OSHA when you can built it overseas and import it for less.  This is why our balance of trade is so bad, this is why are money is flowing out of this country and we are all in debt, as a nation we are living well beyond our means.  This has been a problem for many years, but just recently it has gotten so bad that people have stopped lending to us, whole nations are writing down our debt, and this is causing problems for millions of Americans.  This is a problem, created by our own government decades ago, the symptoms were hidden for years, the official government report showed almost no inflation from 1997 until 2005 while the average person saw huge inflation.  Now it is all catching up, and millions of people are SHOCKED by it.  It will ruin the lives of millions, it will also improve the lives of millions.  I have written many times about this subject, see here or here.

Anyway this was suppose to be a simple post about how everything is getting more complex simply because people want to keep their job and have nothing better to do.  Please comment on what you think about all of this.

A story from the heart, what drives me.

Business, concepts, Entrepreneurship, Inspiration, Investment, Money, real estate, The World, , , , , , , , ,

I often think about my dreams. To me almost all of my dreams have to do with my legacy, what I leave behind for future generations. For me there are a few things that really give me a great since of satisfaction. First, I really think that it is important to help out people who need help, and want the help. The think that I feel really made my life what it is the fact that I had access to education and tools to take advantage of that access. I started high school in 1989, and I was the only person I knew who had a computer at that time. I also spent a huge amount of time learning. By the end of high school I knew more about computers than any teacher there, same thing went when I was in college, almost all of this was self taught. (In high school I entered into a state competition, and got first place in the entire state for computer expertise) I only placed number 24 when I went to the national competition.

To everyone’s surprise computers turned out to be a huge industry, taking control of much of how the entire world works. I was given a huge advantage. Now we all know that computers are VERY important to success, so I have gone on a plan to give very poor children, access to computers, and access to quality education. These are kids that would not be able to get a good education or maybe even go to school. These are kids that will live a very poor life if we do not step in to help. This year we are looking to support 7 kids. The cost for one year is about $800 per kid. I am trying hard to raise this money now because it needs to be committed by the first of June. If you want to help out you can donate using PayPal. (Just send to my email [dragon(at)capitalactive.com] as a donation) Anything you send will go directly to help these kids.  This photo is of the 4 kids we helped in 2007, before they met us they were living in a small shack, with a tarp as a roof, they never had been more than 10 miles from home, and never even seen a mall.  (I have before pictures also but they would break your heart.)  They were very smart but the schools they went to were very poor, and this kids were years behind the city kids, even though they were near the top of their class in their rural schools.  In one year they were able to catch up and pass the city kids, we gave them quality food, clothes, and housing.  This year I want to do even more.   My goal is to support 7 kids.  We will use these 4 and add 3 boys.  Without your help I don’t know if I can do it.

The next thing is a much larger thing. I really want to develop Real Estate. I have always been interested in architecture and large buildings. When you see a large building you know that someone designed it and also someone thought of it and paid for it to be built. To me this is the ultimate legacy. I want to build great unique buildings that will stand out. I decided to go a different path, and I went into computers and business. But now I want to go into. I firmly believe in the mixed use real estate concept. Basically building communities, of housing, work, and shopping all in the same mega complex. This is the way life used to be but, here in the southwest, the car made all of these things disperse. Most people travel many miles to work, and at least a mile to shop. There is no community left in many places and this lack of community is one of the major things destroying our country. Imagine if you lived on the 7th floor of the building, shopped on the first and second floor and worked in your office on the 15th floor. All the while you had many friends, and felt like you truly belonged. I don’t just want to do real estate; I want to do real estate with a purpose. I have a young son, only 9 months now, and I want to leave him a legacy he can be proud of, and one he can carry on.

I also want to provide quality housing to people in need. Imagine going to a city in Asia, where the people are poor, and getting the community to work together to build a massive complex, I would supply the materials and organization, the community would do most of the work, and we would own the building and charge a very low rent. People would have the ability to move up from the squalor to live in healthy and much higher quality housing. What is I can do that, and impact a thousand lives in a very profound way. This is the legacy that I want to leave.

Now I am only 32 now, I have decades to do this. I am looking for like minded people who will know more than me to advise on these projects. I don’t think I will have the resources for a few years to do such a thing, but once I do it will roll on and on.

This is my WHY, this is the reason I want to be hugely successful, this is the reason why I need to make the things I do work. It is much more than me I do this for.

If you know of ways to get this done faster or cheaper I would love to hear from you. Please email me or comment below. Thanks.

How do you value the worth of a company or person?

Business, concepts, Entrepreneurship, Investment, Money, , , , , ,

So I am going to take a break from the series that I am writing because I have a topic that I really want to talk about.  I would love to get some input from my readers, so please leave a comment.

There is a website called Networth IQ, this website is about keeping track of your income, assets and debts.  Then over time you will be able to track how your networth is doing.  When you track something you focus on it more and then it starts to improve.

Now after using the site, I did expect a bit more.  My most valuable asset is my businesses and there is not even a place to enter your business so I put it in other assets.

To point of today’s blog is to ponder the question of how to value a small company.  When you are a public company the value is usually what someone is willing to buy it for.  Of course most companies will really sell for the market cap, this is because many people who hold the stock think it is worth more than the current price of the stock, so if you wanted to buy the entire company you would have to buy these shares at a higher price.  So even this measure of market cap is not a real value.

For me, I own a few companies.  The two with the most real assets are my tile business and my computer business.  The tile business has about 60k worth of inventory at our landed cost, but we have a contract to sell this tile for 150k to a buyer, we also have exclusive import deals and exclusive sales deals that makes our company worth more.  So how do you value this company?  Do you do it on the cost or the sales price.  What about the deals, do they count?

Next is the computer company.   The actual assets of the company are fairly small, this is because the cost of computer hardware always falls so we keep very little in stock, we do have at least 20k tied up in tools, furniture and the computers that we use in the business.  But then we have some very valuable assets.  First we have connections and relationships to great suppliers, built up over a decade.  Next we have over 3000 historic customers, we have over 1000 people on our mailing list and over 400 resellers on our reseller mailing list.  Many of these people will usually call us up when they are ready to get a computer.  We have systems and processes in place that took years to figure out, so that things get done right and the on time.  We have pricing models set up, and vast experience.  Almost all of this is heavily documented.  We have many domain names and websites, together these get about 200-300 unique hits per day.  So how do you value all of these things.  With these things we can design a system and send out a mass email and in a day we will have orders coming in.

Now lets take this same idea to individual people.  People are much like a small business like my computer company.  We have connections, we have systems for getting things done, we have our experiences and mindsets.  You also have your education and knowledge which translates directly into ability to make money.  There are some people who have assets and these assets took a decade or more to get.  While there are others have the tools and knowledge to gain those same huge assets in a very short amount of time, even though they may not currently possess those assets.  So, networth is important but it is not the most important thing.

I think of it like poker.  Good poker players treat the chips in from of them like ammo.  Some times you take risks and it does not work out and you have less ammo.  But good players know how to play, they know how to win because they can read other players, they know things that others don’t.  In the end they usually win, but of course there is always luck and sometimes they fail.  But even when they are down they know how to pop right back up.  The have the connections to get money and the knowledge of what to do with it to earn more. During the game the value of what you have in front of you is not nearly as important as your ability to turn that money into something larger.  But at the end of the game it is the money sitting in front of you that decides if you won or lost.

Networth is much like this, if you want to be the really big winner at the end, sometimes you have to go “All-In” and risk it all for a great return.  Most people play it safe, they never lose big but they also never win big.  And in life the bets are never 50-50, if you know what you are doing most of the time the chances are way in your favor.

Tell me what you think please.