Posts Tagged ‘Budget’

The 3 Keys to Start-Up Survival

09/17/2009

“There were 3 reasons why we survived: We had no money, we had no technology, we had no plan. Every dollar we used very carefully” Jack Ma, Founder of Alibaba.com (read that again)

It forces you to be clever, to dissect problems instead of throwing cash at them, to innovate instead of imitating better-funded competitors. Embrace your lack of resources, your weaknesses! Every problem has a potential solution.

There is an inverse relationship between the amount of funding and the ultimate success of companies.

1) Write down the positives of whatever you’ve been viewing as a negative. No funding? Budget wisely. Set trends, not follow them.

2) Consider the negatives of the positives. Too much funding gives a false sense of security. Nothing is perfect so do whatever you can.

3) Look for dark horse models. Has anyone overcome worse circumstances to do what I want to do? Yes, of course. Every problem has a potential solution. Go find it!

The above is an executive summary of an article written by Tim Ferriss. As a first-time entrepreneur, I understand the facts above to be “self-evident”. Think if it this way. If big companies have the best people, and the most money, how is it that entrepreneurship and small business even have a chance in Corporate America?

The answer, of course, is that funding doesn’t always lock in your success. Yet I would clarify that money is the life-source of any organization; profit or non. You need capital, and lack thereof can send your company to bankruptcy faster than you can sign your supplier’s check.

Find a way to grow using only profits from existing sales without any outside funding and you’ve got it made!

Related articles: The 8 Pillars of Business Endurance

01/18/2007
Bernanke urges Congress to put budget on sustainable path

WASHINGTON (MarketWatch) — Fed chief Ben Bernanke urged Congress to put the federal budget on a long-term sustainable path. “If early and meaningful action is not taken [to lower the budget deficit], the U.S. economy could be seriously weakened, with future generations bearing much of the cost,” Bernanke said in testimony prepared for delivery to the Senate Budget Committee. Bernanke said that recent narrowing of the deficit was simply “the calm before the storm” as spending on entitlement programs will begin to climb quickly during the next decade.

At this point if you still don’t hear the bells ringing, your portfolio is most probably not going to do that well in the near future.

12/11/2006
Why the Rich get Richer…With Gold
Written by Richard Daughty
…the angriest guy in economics
The Mogambo Guru

The article is even more hilarious if you read it without commas 🙂 Enjoy.

I get mail from people who lament the fact that they, too, have tried to educate their bonehead friends and relatives about gold and silver, but they were, predictably, rebuffed. Our consolation must be that these people are the majority, and it is a rule of investing that the majority has to be wrong. That is the only way for the minority, who are right, to make money.

Ergo, we who are buying gold and silver are the minority that will be right, and we will be the ones that make a lot of money.

And the way it works is that as time goes on, as silver and gold rise and rise, and commodities rise and rise, and the majority find out that they were wrong in trying to make money with stocks, bonds, houses, and government contracting.

Then the majority, who have been burned again, will become even more frantic after having lost so much money on their stock, bond and real estate investments, and are even more desperate for profits, as retirement is nearer and nearer and almost here, and all the money they planned on having is gone. And then more and more people will climb on board the gold and silver and oil and commodities train because that is where profits are being made, driving prices up and up until, one day, a slight majority of people are in commodities, and only a slight minority are not.

And then it will still continue, as more and more people move into commodities, and prices will rise and rise the whole way in response to this exponentially-growing demand, attracting more and more money, until the overwhelming majority are now invested in commodities in general, and gold and silver in particular. Then that whole bubble will collapse, too, and the majority will, again, lose, as they must.

That is why you, in the minority, will make a lot of money for a long, long time by just buying gold and silver now, and why the majority, who are not, are wrong.

In that regard, it is again proved by Tim Iacono, of Iacono Research, who says that when you walk into a coin shop, “you’re more likely to see people selling than buying – it’s kind of depressing and ironic at the same time actually. It is surely a sign of the times when soaring metal prices cause financially stretched individuals to sell family heirlooms or other precious metals – all during an era of supposedly low inflation.”

12/10/2006
The Value of the Dollar

I remember hearing from my uncle who had gone to a concert with a very wealthy individual, who runs a very successful business in Real Estate developments near and around the Disney area, as well as in family vacation packages. This guy, David, didn’t really seem all that interested. I guess your modern-day Reggae concert just wasn’t his thing.

As they got their tickets, it occurred to David that he was holding VIP passes to front row seats. Seeing all the fans waiting eagerly around him to get in, he immediately turned to an excited fan and asked if he was interested in buying a VIP pass. Here is a man, my uncle thought, worth millions of dollars, looking for a buyer of his two passes. Incredible! This man got where he is today not by simply “Buying and holding”, but by selling what he had to someone who obviously wanted it more. He understood full right the “value of the Dollar”.

Robert Kiyosaki, in an artcle titles “Go for Gold and Silver” said it best, “One of the reasons why we have this enormous gap between the world’s haves and have-nots is because the have-nots value money – they work for it, save it, cling to it, and lose it.”

The value of the dollar, per se, equals no more than the cotton-paper its written on. Its merely a symbol. An IOU, a promise. A credit labeled as legal tender explaining how any Bank will accept it as a medium of currency.

But what is money? Money is no more than an exchange of service or goods, an Interest. I give you, you give me, nothing more and nothing less. The “haves” spend their lives working for a higher worth of goods or service, while the “have nots” hide their wealth under their mattress while its “time value” deteriorates slowly but surely.

The laws of supply and demand apply to a dollar bill the exact same way they apply to any commodity or asset. This is by definition the power the Fed supposedly has to control the US currency market through Interest Rates. By driving up or down the return on the dollar, the holding of cash becomes more or less attractive.

In this way, when a country is doing well it needs not worry about the amount of dollars – or any medium of exchange – in circulation. People want goods and services, not money. When the interest for these wither, such as in a time of economic recession on contraction, then money will become more valuable.

This, nevertheless, is not always that easy to predict. Many times a government will under or overestimate the proper status of the money supply or the demand thereof. In this case running the printing press too long could result in a financial crisis, similar to what Germany went through after WWI, sending the economy into a tailspin of hyperinflation, (people were using German marks as firewood because it was cheaper).

It isn’t getting better. The United States now has a second problem as well, with a trade deficit in the trillions. Although many don’t seem to find it to be a problem, it spells clean-out financial trouble. Like Spain in the 16th Century, we no longer have any major exports. Instead Spain just used their enormous gold holdings to buy their imports from other countries. When the gold ran out they were doomed. Nothing to sell and with nothing to buy.

Today our money is no longer backed by gold. It’s backed simply by the faith and confidence of the world, since a huge chunk of US dollar holdings are now in foreign lands. If that trust is breached, or if those countries simply find another asset to be of better or safer value it could cause a run on the dollar, causing a major inflationary crisis, sending interest rates through the roof (anyone remember 17% rates in the 70s?) and driving a prosperous country into severe recession.

Could this happen? Well, as we speak countries holding extremely large amounts of US assets have indicated diversifying away from the dollar. China, Japan, Russia and Iran have all mentioned that they may move part of their assets into other holdings such as the Euro or gold.

What to do? The best way to hedge oneself against such events is to buy gold and silver. These have been considered money, by all, for thousands of years. The novelty of an unbacked currency goes back only 35 years to 1971 when, with the Bretton Woods agreement, many countries agreed to peg their currency against the dollar, instead of with gold.

Historic records show however, that no currency unbacked by any hard asset has ever survived. Not in Spain, England or even ancient Rome.

Here’s one more thought to ponder. The US government reserves officially hold (although many believe unverified) about 200 Million ounces of gold. In April the government ceased its announcements of M3 – the amount of US dollars in circulation – claiming that it was an unimportant report. M3 is thus estimated at approximately $10.5 Trillion dollars. A dollar used to represent one silver dollar and 1/16 oz. of gold. Whats 10.5 Trillion divided by 200 Million? Answer: $52,500. Divided by 16 would still equal $3,281. Even if we were to exaggerate the sums of each more benevolently we would still be facing a shocking number.

This means that either the dollar must come down to 1/3000-th of its value or gold must rise to $3000. Of course they will most likely land somewhere in between. As a matter of fact, these fundamentals have already begun their move. The dollar has already shrunk to 13-year lows against other major currencies (like the Pound and the Euro), while gold has more than doubled in its nominal value.

I would say that we still have plenty of time before gold (and silver) attains the status that it so rightfully held for centuries before. This could take time, with many small corrections in the gold price, but it’s still far safer than cash.

I’m even more Bullish on Silver than on gold, but more on that in a later article.

11/16/2006
The “Social Security ‘Crisis” explained best

By The Mogambo Guru (04/18/05)

“From another perspective, namely the Up Close And Personal view, Social Security is like when I tell my kid to get a paper route and start making some money mowing lawns and babysitting somebody’s brats. And I will, as the benevolent father who loves her and wants to protect her, will take – poink! – a sixth of everything she makes, off the top. She starts yelling and screaming, “Mom! Daddy took a sixth of my money, and he won’t give it back!” and so my wife yells up the stairs for me to give the money back, and so I go out into the hall and patiently and calmly explain my terrific new plan to Save Our Daughter’s Future, which I cleverly call The Mogambo Plan To Save Our Daughter’s Future (MPTSODF), by yelling back, “Shut yer hole, ya crazy old bag, before I come down there and shut it for you!” Which was apparently the wrong thing to say, because the next thing I know, I hear shells being loaded into a pump 12-gauge shotgun and she is yelling, “You stay right there, mister! I have had all of the Mogambo crap I am going to take!” Deciding to test whether the window is a good emergency fire exit, I quickly found myself outside, and so I went to the bar and had a few rounds, and then everything started looking better. I wrote an IOU on a bar napkin, which I thought was really poetic in its own way, but I probably won’t get any credit for THAT, either!

“But sitting there on that barstool, hour after hour, gave me time to think about how I will tell them that I am taking this money ONLY to save it for her college and eventual retirement, and how this is in her best interests, and how everything will be wonderful, if you trust me. I mean, I give a little of the money to her older sister, who is obviously closer to needing an education and a retirement, and the rest I spend on myself and my hoodlum friends. But instead of admitting that I am stealing her money outright, because it sure as hell LOOKS like I am stealing her money outright, and since everybody knows the kind of dirty, treacherous back-stabbing gutter-rat that I really am, I will leave the aforementioned IOU in the piggy bank! Then it will NOT be stealing, see?

“Then when she gets ready to go to college, and she looks into the piggy bank, and all that is in there are these IOUs that smell like stale beer and cigarette smoke and one of them has the phone number of someone name Trixie written in lipstick, which is a lot harder to explain than you would think. Then, when she is grown and banging on the door, shouting, “Daddy! Wake up! Where is all my money?” then all I have to do is tap her younger sister on the shoulder, hustle her lazy butt out the door to get a paper route, pick up some extra money mowing some lawns, and babysitting somebody’s brats. Then I will take a FIFTH of HER earnings, which is more than enough to pay back some of the IOUs, and there is still plenty still left over for me to spend on myself and my hoodlum friends! Whoopee! And then I can take my new-found expertise onto the campaign trail, so that I can get elected as a Congressman from one of the blue states, which actually believe this kind of crap, and then I can parade around and explain how I want to Save Social Security by doing this exact same thing, and everyone will love me, and re-elect me year after year after year.”