Source:  Christian Personal Finance

Today’s post is an interview with Seth Klarman, another terrific investor, whose philosophy and approach we could all learn from.

Please click on the link below to enjoy the video:

Charlie Rose interviews Seth Klarman

Source: My Investing Notebook

Editor’s Note: Harvard Business School professor John Quelch writes a blog on marketing issues, called Marketing Know: How, for Harvard Business Online. It is reprinted on HBS Working Knowledge.

“Marketers are trained to match supply to demand. Everything that consumers need should be available at the right time in the right place at the right price. Coca-Cola’s mantra always has been to be within an arm’s reach of desire. To be out of stock is to lose a sale or, worse, to lose a sale to a competitor.

But marketers also understand that, by using the illusion of scarcity, they can accelerate demand. This false scarcity encourages us to buy sooner and perhaps to buy more than normal.

We saw two excellent examples of this effect this summer with the launches of the iPhone and the seventh Harry Potter book. In both cases, the pre-launch publicity was designed not only to fuel demand but also to create the illusion that supplies would be limited. In fact, there were very few supply shortages. In both cases, the marketers anticipated demand levels pretty well.

As the mountains of press coverage and strong opening day sales attest, the scarcity illusion strategy paid off for Apple and Potter’s publishing company. It wasn’t just direct sales of these two products that benefited from the scarcity illusion, however: The heavy crowds drove sales of related products in Apple stores and bookstores during a relatively slow sales month.

But there are risks to using false scarcity as a strategy. First, hype invites heightened scrutiny: Common first-version shortcomings of the iPhone fueled negative reviews that were then amplified by the blogosphere. Second, some consumers, frustrated by waiting in line, may have given up or switched to other alternatives.

Creating the illusion of scarcity can be a smart marketing strategy.

Creating the illusion of scarcity is a far different situation than marketers genuinely underestimating demand for a new product. One well-known example of this misstep occurred in 1998, when Volkswagen under-forecast demand for the New Beetle in its launch year. Of course, ramping up production of a car is more challenging than printing an extra run of a book. But after its initial error, VW made some smart decisions to mitigate the damage.

First, the company rewarded their best dealers by making the scarce New Beetles available to them first on preferential terms.

Second, VW factories “fully loaded” the New Beetles with options to maximize the unit margin that VW and the dealers extracted on each vehicle.

Third, VW incented its dealers to stock up on non-scarce cars such as Golfs and Jettas as a quid pro quo for receiving scarce New Beetles. Consumers drawn to VW dealers to look at the New Beetle often ended up buying other VW models more suited to their specific needs. In this way, the scarce product acted as a brand magnet for the entire product line.

As the examples above illustrate, scarcity can be a blessing or a curse. Creating the illusion of scarcity can be a smart marketing strategy. And even if you’re in the unfortunate position of experiencing very real scarcity, there are tactics you can employ to minimize the brand damage and even profit from the error.

What’s your scarcity story? Has your company been caught flatfooted in a scarcity situation or has it successfully manufactured the illusion of scarcity to accelerate demand?”

Source: Harvard Business School

“Evidence has long shown that getting a group of people to think individually about solutions, and then combining their ideas, can be more productive than getting them to think as a group. Some people are afraid of introducing radical ideas in front of a group and don’t speak up; in other cases, the group is either too small or too big to be effective.

But according to a recently published study, the real problem may be that participants’ get stuck on each others’ ideas. On Monday, the British Psychological Society highlighted a recent study by Nicholas Kohn and Steven Smith, two researchers at the University of Texas at Arlington and Texas A&M University.

They asked undergraduate students to contribute ideas for improving Texas A&M, both individually and in collective groups. They shared the ideas on a computer, either in small chat groups or alone, but combined together after the fact. As expected, the “nominal” groups, or those made up of individual ideas that were later pulled together, outperformed the real chat groups, both with the number of ideas and the diversity of them.

Kohn and Smith believed the cause might be due to “cognitive fixation,” or the concept that, when exposed to group members’ ideas, people focused on those and blocked other types of ideas from taking hold. They experimented with this by manipulating the number of ideas participants saw in their chat windows, with some getting a few cues and others getting more. Their hypothesis was right: When exposed to many cues, the undergrads offered up less creative, diverse ideas. The numbers improved when the students were given a five-minute break during the exercise.”

Sources: Washington Post

“Here’s the truth about time management.

We don’t ‘find’ time, we must ‘make’ time for what is important to us.

For me, that means getting up at 5am each day so I can take advantage of my magic time to write. I have to put effort into making that time available for me. I don’t just randomly find time to get my best work done.

But if you’re not interested in rising before the rooster crows, Joe Polish has good news for you. You’re about to discover his productivity secrets that will help you get more work done in less time – all while sticking to a regular 9-5 schedule.

Craig Ballantyne

“It’s not enough to be busy, so are the ants. The question is, what are we busy about?” – Henry David Thoreau
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A New American Dream

He might be the most connected man in small business.

With Richard Branson on speed-dial, over a decade of teaching carpet cleaners how to build their businesses, and access to almost every web-based business owner in North America, Joe Polish is another example of the American Dream come true.

But Joe never had it easy. In fact, he was a trouble teen who was down and out, heading towards poverty or worse. Fortunately, he found an opportunity to add value to his community by running a carpet cleaning business in the early 1990’s.

From there he learned direct response marketing from the masters and went on to an illustrious career, at one point even being a consultant to Bill Phillips’ sport supplement empire.

Today Joe is one of the most networked and giving small business experts in America. He connects dozens of people every day and adds value to their lives and businesses through his Piranha Marketing company and his 25K mastermind group. The keys to Joe’s success have been direct marketing and being a value adder – two key success components that all of us can master.

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Productivity Secrets to Help You Get More Done

By Joe Polish

Entrepreneurs, and people in general, get inundated with a LOT of different choices. And in today’s day and age, I’ve noticed the world is more ‘Crazy Busy’ than it’s ever been in history. (‘Crazy Busy’ is a term coined by my good friend, and famous Harvard graduate psychiatrist, Dr. Edward (Ned) Hallowell.)

In fact, there’s more data coming at us than ever before, and it’s easy to get thrown off track. You either manage modern life… or it will manage you.

So, in order to manage modern life, we need to learn to become PRODUCTIVE. But what is “productivity?”

The definition of Productivity is this… Maximum Results, Least Amount Of Time.

The definition of Leverage is this… Maximum Results, Least Amount Of Effort.

Just understanding and identifying productivity and leverage is critical. And to get the maximum results in the least amount of time and with the least amount of effort… it’s going to require you to be willing to spend time on things that are highly productive activities based on your goals, your unique abilities, your passion, and your interests.

You might think to yourself: “So, what are some of the best way to be productive?”

Well, firstly, you need a Productive Environment. If you want to be healthy, you can’t get healthy if your environment is filled with junk food, or with people that are drinking and smoking, or if you have toxins surrounding you. You need to be in an environment that’s healthy and supports you being healthy.

Your Productive Environment is a place you can literally go and think, where you can focus, and where your attention is not being interrupted every other minute. In many cases, that means you shouldn’t be in front of a computer or on the Internet.

Now, some people ask me: “Joe, how do YOU make time to get things done? What is one of YOUR personal/business productivity secrets?”

Let me share with you a productivity secret I personally use: I get more productive work done in two hours in the library than I would get done in an entire day in my office. Now, that may not work for you, but it works for me, and I’ve given this advice to hundreds of people over the last decade. When they follow this advice, they’ve always reported back to me that just getting into the right environment usually makes them more productive.

In fact… one of the very best things for successful entrepreneurs is to NOT have an office. Why? Because an office, for many people, is a place where entrepreneurs or business owners go to pretend they’re doing work… but they’re really just getting distracted all the time. Remember: If they can’t find you, they can’t interrupt you. Instead, go to places like a public library, or a coffee shop, or some place where you’re not going to be interrupted so that you can really THINK and FOCUS.

Here’s something you can do RIGHT NOW to get rid of your office. Read the book “How The Best Get Better” by Dan Sullivan. You can find the book at www.strategiccoach.com. That book is incredible if you want more information on how to get rid of your office.

If you’re still finding yourself completely overwhelmed (which is one of the biggest problems and issues entrepreneurs face these days), here’s what you can do.

Sit down and ask yourself: “If I had to put a dollar figure on all of the things that I need to get done, which one is going to give me the highest return on money, and which one is going to have the highest likelihood that I can actually do something with it?”

In fact, if you don’t have any other criteria to decide what to spend your time on, then spend your time on the thing that is going to bring you the highest likelihood of money and that have the highest probability of working.

That reminds me something my friend Mary Ellen Tribby says. Mary Ellen Tribby is the Founder and CEO of www.workingmomsonly.com and former publisher of Early to Rise. What Mary Ellen says is this: One Thing Done Equals Money. Five Things Undone Equals No Money. So, if your goal is to make money productively, then you need to focus on getting one thing done to completion.

Also, make sure in your quest of pursuing excellence that you’re doing things that really DO matter and really DO need to be done. My favorite Peter Drucker quote is: “There’s nothing more useless than doing well that which need not be done at all.”

Constantly question what you’re spending your time on, because, frankly, a not to-do list is more important than a to-do list.

IN FACT… right now… pull out a piece of paper and write down 10 things you’re doing that you really should NOT be doing because they’re robbing you of productivity and leverage, and they’re not the highest and best use of your time.

If you do this, you’ll be well on your way to becoming a more productive individual (and entrepreneur). Just remember two things: Firstly, this about developing a day to day habit that will serve you the rest of your life. And secondly, never confuse activity and accomplishment.

[Ed. Note. For one more productivity tip, watch this video by Dean Jackson, Joe's business partner. The video is called "The 50-Minute Focus Finder" and you can watch it here. Joe Polish shares his best marketing ideas and strategies at www.iLoveMarketing.com and also has the best-selling program at Nightengale-Conant. In addition, Joe put together an uncensored sales program featuring content from the late Gary Halbert here.]“

Sources: earlytorise

 For some 24 hours is never enough.  For others it’s too much and they have to find ways to “kill” time.  Although I’m not really sure how you go about killing time.  Realy it’s more of finding ways to waste it or let it slip by.  And by waste I mean not using it productively.  The truth is time will pass whether you choose to do anything with it or not.  It will come and go and you can either be better -off or worse-off after it has passed.

How Could You Better Spend Your Time?

Let’s consider an increment of time such as one-hour.  If you find yourself with an extra hour in the evenings or on the weekends what could you do to be better-off?  In just one hour you could:

1) Exercise and create a healthy vibrant life.  Consider investing in a program called  Turbulence Training .  Craig Ballantyne created a system to help busy men and women lose fat and gain muscle in 3 workout sessions per week.  You can try the program for up to 8 full weeks with a 100% money back gurantee if you are not satisfied for any reason.  

2) Start a side business.  There are an unlimited amount of online opportunities that allow you to start slowly with little capital and expand at your own pace.

3) Put in an extra hour at work and do what you need to do to finally earn that promotion that is long overdue.

4) Read for one hour in your field.   Brian Tracy, a leader in business and personal development said in a blog post dated 7/28/2008 that reading for one hour a day makes all the difference.

“If you read only one book per month, that will put you into the top 1% of income earners in our society. But if you read one book per week, 50 books per year, that will make you one of the best educated, smartest, most capable and highest paid people in your field.  Regular reading will transform your life completely.”

He goes on to say that

“one hour per day of study will put you at the top of your field within 3 years.  Within 5 years you’ll be a national authority.  In 7 years, you can be one of the best people in the world at what you do.”

In my oppinion the above examples are productive uses of time.  I know that after I have spent time on one of the above activities I am better-off for it.  But that’s me.  I know that by either exercising, reading, or working on some aspect of my career I am moving closer to my long-term goals.

Get Clear On What You Want

In order for you to use your time in the most efficient and productive way possible you must first decide what you want out of life and only then can you determince what you need to do daily, weekly, monthly, and annually to get you there.  Maybe exercising or finding ways to advance your career are not at the top of your list.  That’s o.k. 

If your long-term goal is to take the family on a dream vacation they will never forget that’s great.  Get working on it now.  Don’t spend countless hours in front of the t.v. thinking about it.  Get out a pen and a piece of paper and go to work.  Decide what you can do right now to move you closer to realizing your goal.  Spend your time wisely

The point is to develop a list of tasks that you can work on daily.  You can take that extra hour or half-hour each day to do just one thing on your list in order to move you closer to your objective.  It won’t seem like that much at first but if you do just one thing each day you’ll be amazed at how much progress you will have made in a very short amount of time. 

How To Find More Time

If you just don’t have an extra hour, or even half-hour, consider investing in a time management course.  Learn how to prioritize and manage the time you do have in an effective manner.  As we said earlier we each start the day with 24 hours to work with.  6 to 8 of that will be spent sleeping.  What you do with the rest is your decision.  Learning how to utilize that time to reach your goals can be one of the most profitable investments you can ever make. 

Time is all we have.  And from the moment we are born we are running out of it.  Do you think Warren Buffet, Bill Gates, or Donald Trump have been able to achieve the success they have simply due to luck or being smart?  I’m guessing that not one of them goes home in the evening and plops down on the couch to spend an evening in front of the t.v. unwinding.  It’s all about taking action on a consistent basis.  It’s probably not story book material.  It’s about doing those things on a daily basis that no one likes doing such as making those tough phone calls or tackling that one task on your to-do list that you typically put off until the last possible minute. 

A Gross Waste of Time

In my oppinion one of the biggest detractors from making progress on goals for people is television.  We have one in our household and I fully understand the temptation and how appealing it can be to come home after a long day and veg out and un-wind in front a t.v. show.   And like anything, once in a great while that’s fine. 

But did you know that According to A.C. Neilson the average american watches more than 4 hours of t.v. each day. That equates to 28 hours a week or 2 months of non-stop t.v. watching per year.  Over the course of a normal 65 year life that person will have spent 9 years of their life watching t.v.  If you live to be 70, 80, or even 90 that number increases significantly.

 I don’t know about you but 9 or 10 years of my life is an awful long time to spend in front of a television.  When you stop to think about it is it really worth giving up your precious time for a few mindless laughs? 

Ask Yourself What Could You Do With 10 Extra Years?

10 years is a long-time.  In 10 years you could definitely get in shape.  No ifs ands or buts about.  No matter where you are today on the health scale you can be better off in 10 years than you are today if you exercise and eat healthy.  The time is going to pass anyway correct?  You might as well make the most of it. 

Consider the following questions.  “What is it that you really want out of life?” And  ”how do you spend your time?”  If you haven’t achieved all that you wanted to out of life then you may need to reconsider how you manage your time and the activities you engage in with the time you do have. 

Time is so precious and valuable.  Don’t waste it.  Once you do you’ll never get it back.  Don’t let a lifetime go by before you begin to go after what it is you truly want out of life.  Value your time and choose wisely in how you spend it.  Your future is being defined by what you put in your minutes and hours today.   

Who Is He?

 Maybe you have you never heard of him?  Chances are even if you don’t know who he is you’ve visited one of his controlled investments such as Sears, Kmart, or Autozone.  In the most recent addition of Forbes he was listed as the 117th richest person in America with a net worth of $3 billion. 

The short version is that he is a businessman and investor.  He operates a hedge fund, ESL, that takes fairly concentrated positions in a handful of stocks and holds them for an extended period of time.  Yes that is correct, a modern day investor that actually holds his investments for years.  :-). 

A 2004 article in Businessweek  referred to him as the “The Next Warren Buffet“.  Fortune Magazine called him the best investor of his generation.   Time will tell if those acolades are deserving but learning how someone like Mr. Lampert approaches investing and life can only help you in your own quest for greater wealth and abundance. 

Just like many people wait each year to read the letter that Warren Buffet writes to the shareholders of Berkshire Hathaway, Mr. Lampert, as Chairman of Sears Holdings, produces his own.  You can access the past letters here. 

How you spend your time is directly correlated with your overall level of health, wealth, and happiness.  Choosing to allocate a portion of your time to studying the traits, habits, mindset, and characteristics of succesful people is one of the best investments anyone can make.  Then just choose one or two of those that you can implement in your own life immediately.  You just have to be willing to keep studying and learning and the results will follow.

Sources: Businessweek, Fortune Magazine, Forbes Magazine, Sears Holdings Corporation

Simplifying your life means gaining control over your time and focusing on those activities which truly drive results and move you closer to your goals.  Friday’s message from Craig Ballantyne and Ryan Murdock is on simplifing life and letting go of that which is no longer important.  To read the full article click here.  I think you’ll be glad you did.  It helps to put things into perspective.

“Despite a hectic travel schedule and being a partner in several businesses, I like to think I have a pretty simple life – one that I’ve designed almost exactly as I wanted it.

I have a simple apartment that isn’t cluttered with material goods I don’t need. I don’t own a car as I can get around Toronto on my bike. I’m healthy, happy, and fit due to living an active lifestyle supported by whole, natural foods. And thanks to my amazing family and friends I have very little drama in my life.

I believe that it’s due to my simple lifestyle that I’m able to accomplish a relatively large amount of work each week. A cluttered, stressful life is clearly not conducive to progress.

Perhaps you need to simplify your life, and by doing so, this will take your “foot off the brake” so to speak. Maybe a simple life would get you faster results.

Today you’ll hear from a friend of mine, Ryan Murdock, who will show you how to simplify your life. I guarantee you that following his tips will do you a world of good.” Craig Ballantyne

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” [Stanford commencement speech, June 2005] 

Our time is limited.  We need to make the most of what we have.

Sources: The Wall Street Journal

O.K. most people would say “sure”, that’s easy enough but let’s be realistic, saving a dollar here or a dollar there just isn’t going to cut it.  And to an extent I don’t disagree.  So the more appropriate answer is to start saving as early as possible, save as many individual dollars as possible, invest that money in a conservative manner with a long-term focus, and strive to increase the amount you save each and every year. 

START EARLY

The sooner you begin to save the better.  So start saving as early as possible.  Time really is your friend.  The wealthiest people alive today started early.  All you have to do is look to the books written on Warren Buffet and his early days as a paper boy.  He was obsessed with saving and accumulating as much money as possible.  Such disciplined saving coupled with an incredible investment record allowed him to build what is today Berkshire Hathaway. 

Did you know that if you started saving at age 15, and set aside just $1,742 per year throughout your working life (working until age 65), and assuming an 8% compound growth rate, you could end up with $1 Million Dollars? 

What if you are 35 with investable assets currently valued at $25,000?  You have finally gotten serious about planning for your retirement and decide that you would like to work for another 30 years.  How much would you have to save each year to accumulate $1 Million Dollars?  The answer is $6,600 assuming an 8% annual return. 

Do you see the difference of starting earlier in life when it comes to saving money?   

Pay Yourself First

We all have demands on the money we earn.  It doesn’t matter who you are or how much you make, there is always something or someone ready to help spend your money for you.  Whether it’s the taxes we must pay, the utility bills, or the mortgage, there always seems to be more money going out than coming in. 

The way around ending up at the end of the month with very little left for yourself is to pay yourself first.  In fact it is one of the most powerful and effective strategies for building wealth.  Joshua Kennon, a writer and young businessman wrote an article on paying yourself first at about.com.  You can read the complete article here.

Power of Compounding

Compounding is one of the great secrets of wealth accumulation.  It is having your money work for you.  It is having the money earned from dividends and interest generate additional money.  And having that money generate money.  It is a snowball at the top of a hill.  To start to enjoy the benefits of compounding all you have to do is give that little snowball a push (save that first dollar).  As the snowball first starts moving down the hill it doesn’t change much at first.  But as it continues to roll down the hill it gets bigger and bigger at an increasing rate.  That is compounding.

Summary

Accumulating wealth is no easy feat.  If it were everyone would be a millionaire.  It takes hard work, commitment, and a willingness to sacrifice a little bit today for a better tomorrow.  Most importantly it takes time and a willingness to learn, change, and continue to grow.  Just remember that the path to wealth begins $100 at a time.  3 steps you can take immediately to begin to accumulate wealth are as follows:

1. Start Saving Now
2. Pay Yourself First
3. Take Advantage Of The Power of Compounding