Category Archives: Rich

Look! I've got a Golden Ticket!

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My ‘grand experiment’ has reached another milestone … we now have narrowed the field down to the Final 15 ….

… that means that 15 lucky people (well, 18, but 3 more will be eliminated over the coming weeks) have won a “Willy Wonka” Golden Ticket behind the gates of 7million7years’ Millionaire Factory.

We started with a field of over 70 serious applicants but, by the end of next month there will only be 7 Millionaires … In Training!

AJC.

PS If you want to become wealthy, as well, then you had better follow their journey, which starts here.

 

Copping a loss …

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I received an e-mail from Andrew who asked;

Your webcast today prompted me to look up some more of Warren Buffet’s letters to shareholders and general advice, I wanted to get your take on something I came across that seemed potentially contrary to what you mentioned about your use of stop losses in your webcast today.
Warren said he believes that when you invest in a company you should be able to see it go down in value by as much as 50% and not sell off because you know that you already bought it at a steep value. I know this is potentially different than what you mentioned because you were talking about protecting gains, but if you have the time let me know what you think.

Now, this is a very timely question …

First, let me tell you the context of what I believe that Andrew was seeing:

Warren Buffett has said that he has only taken a 2% loss on a position … however, he has watched one of his holdings go down 50%. Now, I can’t find the reference so my memory may be failing me, but it seems that warren is saying that he simply held through the drop and the stock came back.

Of course, Warren isn’t saying that he accounted for the cost of lost opportunity when his money was tanking in a stock only to recover to slightly less than break-even, when his track record says that he averages 21%+ compound return …

… in other words, by my reckoning, he actually ‘lost’ 25% on that transaction …. but, he could have just as easily crystallized a real 50% loss had he panicked and sold out.

Here’s where I think warren is at:

He generally buys a business – perhaps 100% or a controlling interest, or sometime a minority share as an ordinary stock-holder (as though having Warren Buffett / Berkshire Hathaway on your share register can be considered ‘ordinary’) – but, in all cases he is buying the underlying cash-flows.

He is not using technical trading to buy a stock because it has broken some mythical ‘support line’ or using some fundamental analysis to determine that the Price/Earning growth rate seems higher than the current stock price is reflecting.

No, he is ‘buying’ the whole shebang – even if he only ends up buying some of the stock.

Under these circumstances, as long as the price he pays is low compared to the future cashflows that the company will produce, who cares if the stock price drops 50%? In a same world, it eventually had to come back, and even if it doesn’t who cares?

As long as you never sell!

The price you pay gives you the right to your fair share of those future cashflows regardless what arbitrary price the auctioning system called the stock market ‘values’ the stock at today.

May we all have the foresight and fortitude of Warren Buffett …. [sigh]

I am facing a dilemma right now:

As part of a deal I made to close a recent business transaction, I took a final (bonus) payment in the form of stock in the acquiring company – just under 1% of its entire share capital.

Of course, the London Stock Exchange crashed a day or two before the share certificates were in my hands … and kept dropping. So far, I have lost half the ‘face value’ of the payment in stocks.

Will I hold or will I sell? Will the price keep dropping or will it reverse? Does the company have the cashflows to justify holding?

Luckily, the outcome shouldn’t affect my financial future … but, it would have paid for a chunk of my new house and the renovations, as well.

BTW: if you are ever offered stock in an acquiring company for stock in yours … decide:

IF they paid you cash instead, would you then turn around and ‘invest’ that money in the acquiring company’s stock?

If the answer is ‘no’ then push for a cash deal … that’s what I did (except for the last little chunk … boom!) …

AJC.

There's no Law of Averages!

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The best way to give up your ‘day job’ is to watch my Live Show this Thursday @ 8pm CST (9pm EST / 6pm PST) at http://ajcfeed.com ….

__________________________

Just yesterday I wrote a pretty long piece about the effects of inflation, and how much you could reasonably expect to save for retirement …

… it turns out that you need to save a lot (per week) to get a little (to live off per year, in today’s dollars).

If you followed along, you would have realized one thing … I used a very conservative annual expected return on my investments of only 8%.

This got me to thinking … what annual rate of return should we be using? Isn’t  the historical rate of return from the ‘market’ (hence an broad-based Index Fund) around 12% – 14%?

Let’s face it, the difference between investing $100,000 for 20 years at the 8% and 12% is not the 50% more that you would intuitively expect …

It’s actually a difference of $430,000 or exactly 100% !

That means that whether you make an 8% return or a 12% return is the same as doubling your ‘salary’ in retirement … compounding greatly magnifies success (and, failures!), especially over long periods.

Since the average return for the stock market is 12%, we should use that, right and just double all the numbers that I gave you yesterday [phew!] … right?

Trent from the Simple Dollar asked that exact same question … on June 17, 2007; here’s an excerpt from that post:

Another favorite of mine is the ongoing debate over the Vanguard 500. The Vanguard 500 is an index fund started in 1976 that precisely mirrors the S&P 500, a collection of the stocks of most of the largest companies in the United States. Since its inception, it has averaged a return of over 12% per year. Given that, I often use a 12% annual return as a number to use to calculate annual returns in the stock market over a long term (longer than ten years).

I will never be bold enough to say that I’m absolutely correct and the 12% annual average will hold up, but if you ask me what I thought, I’d say that it will, at least for a while, and I’d dump several reasons on your lap. Someone else would likely disagree with this and deliver several reasons why it won’t happen. I know at least one person with a degree in economics who firmly believes that the next several years will be much betterthan 12% as several new industries come online with marketable products. Who’s right? Only the future can really tell.

How has the market actually fared over the past 10 years?

12%?

No, the broad S&P 500 Index that Trent referred to averaged just somewhere between 2% and 4% over the past 10 years!

The Dow Jones Industrial Index that measures a smaller basket of larger companies averaged just somewhere between 4% and 6% return [AJC: Why the range? There was a major crash exactly 10 years ago, so do we assume we go in at the top or at the bottom?].

Isn’t it great having the benefit of 20/20 hindsight? Does it mean that trent isn’t smart? 

No, Trent’s a pretty smart cookie … so am I, and so are you … even smart people get stuff wrong!

For example Warren Buffett (who I like to quote – a lot – on stock market-related topics, because he is regarded as the World’s Greatest Investor) has made some doozies that he openly admits to; here’s just one of them, according to USA Today:

Buffett conceded that he has made what he considers mistakes, including a reluctance to buy large amounts of Wal-Mart stock several years ago. “I cost us about $10 billion,” said Buffett.

I guess for Warren a $10 Billion mistake is the same as a 8% – 10% mistake for us?

Actually no, if you were planning for a 12% return but only got a 4% return, for every $100,000 that you invested for just 10 years, you would ‘lose’ $650,000 – your estimates of future income would be out by a factor of 3 (that’s just like getting a 2/3 pay cut)!

So, here’s what I recommend … as I said yesterday, averages are for everybody – what might happen to everybody anytime.

You are special … you are investing whenever you invest [AJC: stick with me on this!] … and, you have to live forever more with the consequences.

This means that you should plan for the worst case … and smile when the result is better.

So, if you decide that $1,000,000 in 30 years is enough [AJC: I hope, by now, that most of my readers are planning a LOT more a LOT sooner!] and you are willing to take a chance on the averages (i.e. 12% returns), then by all means set aside just $60 a week (starting now) … but, make sure that you index it for inflation (means that you will be saving $85 a week by year 10; $127 a week by year 20; and, $187 a week towards the end). 

But, if you want to be certain that you will have $1,000,000 in 30 years, then you had better start by putting aside $110 a week (and, increase to $157 a week by year 10; $232 a week by year 20; and, $343 a week towards the end) … because the market only guarantees an 8% return for every 30 year period in history!

What does this mean? 

Aim for the certainty … don’t leave it to chance [a.k.a. historical averages]!

What can you do?

1. Decide whether a different type of investment would be better for you (e.g. direct investments in stocks; or leveraged real-estate; or businesses) in which case you can save the same amount per week and (hopefully) achieve better returns to get you there … i.e. concentrate on investing rather than building income.

2. Increase your income, so that you can just dollar-cost-average into the broad-market Index Fund … i.e. concentrate on actively creating income rather than actively investing the proceeds.

3. Do a little of both.

This blog is aimed at squarely at those who want to do a little of both …

Good Luck!

Can a Trailing Stop Limit Generate Explosive Investment Returns?

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Short answer, I don’t think so … in fact, a trailing stop has nothing to do with increasing returns, it’s all about attempting to limit losses.

But, that was the premise of an article by Debt Free, excerpted here:

A trailing stop limit is simply a stop loss order, but one with a very important difference compared to a traditional stop loss order. A traditional stop loss order is a command to your broker to sell a stock holding when it drops below a preset price.

For example, say you hold 1,000 shares of Microsoft (MSFT) corp that you bought at $10.00 a share. You can tell your broker to sell those shares if the stock ever drops below a price that you feel comfortable with, for example $7.50. That way you limit any potential losses on your position.

There is a problem with a traditional stop loss order however, and I’m sure you’ve spotted it already. What happens if Microsoft corp shows impressive gains for a year, say it increases its share price to $18.00? That’s great, but your stop loss order is still set at $7.50, so if MSFT corp’s stock then drops back down you’ve protected yourself against a 25% loss in your original position, but you haven’t protected your gains at all.

A trailing stop limit changes that for you. A trailing stop limit order actually changes the number at which it goes into effect as the stock price changes. That buys you a very important benefit as an investor. It protects you against loss, but also allows you to make a nice profit while doing so. Basically it mitigates a certain measure of risk while maximizing your investment returns. Anything that mitigates investment risk while allowing an investor to generate potentially explosive returns is a great thing.

Using a trailing stop limit can generate explosive gains for your portfolio because you will maximize gains in your stocks, while minimizing losses. Any time you can do that, you’ll be retired on a beach in Maui that much sooner.

I’ve taken a whole chunk out of the article because Debt Free summarizes the idea of a Trailing Stop Loss quite nicely …

… in fact, whenever I buy a stock I always set a Trailing Stop at about 5%, 8% or 10% depending on the stock and how volatile I think it might be.

Perhaps counterintuitively, the more volatile the stock the higher the number that I set, as I don’t want to be shunted out of a stock that is just bobbing around in a range … the less volatile the lower, usually 8% but maybe 5%, as any downward swing could be a bad sign.

But, I don’t see how a Trailing Stop on its own can generate anything?!

It may help protect you from losses, therefore, may make you overall returns higher (same gains, fewer losses = higher average returns) …

… equally, it can bump you out of a stock that was having a slight correction, but then jumps back up too quickly for you to (sensibly) buy back in again, meaning that you miss out on the upside (lower gains, fewer losses = lower average returns).

In other words, it sure ain’t no Magic Bullet!

And, there’s one other problem with Stop Losses of any kind: they can’t always protect you.

If the stock has a sudden and major drop, the price may suddenly drop from, say, $168 to say $10 (remember Bear Stearns?) … the Stop Loss may trigger the sale (if you have it set to accept the market price) but you will still ‘drop’ 95% of the value of your investment!

The only way to protect against that is to buy a PUT Option (at, say, 8% less than the current price to avoid paying top dollar for the PUT) … that way, no matter how low the stock drops you have already locked in a buyer at the price that you set for the PUT.

So, Stop Losses – particularly Trailing Stop Losses – are a great tool …

… but, using a Trailing Stop Limit can’t generate explosive investment returns on it’s own … only time and/or luck can do that!

 

 

Hitting Suze Orman out of the ball park …

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… with a fly ball that even Dave Ramsey won’t be able to catch!

As expected, my recent post “Contrary to popular opinion, paying off your mortgage is the dumbest move you can make …” drew a number of comments – but, not as many deep criticisms as I was expecting (hoping for) … I would’ve liked some issues out in the open so that we can really bang them around.

After all, my view is diametrically opposite to the ‘pay off ALL debt INCLUDING your mortgage’ view espoused by the likes of Suze Orman and Dave Ramsey!

With some suitable flaming of the “you’re just another Make Millions In Real Estate Like I [wished] I Did guru” or “Robert Kiyosaki knows what he’s talking about compared to YOU” kind, I’d at least be able to dig in and show you why my view is correct for MOST people.

I’d also be able to explain why, perhaps counter-intuitively, it’s actually the more conservative option.

Instead, let me make do with the much more polite, and more thoughtful, comments that one reader – Chris – did leave on that post:

AJC – I completely understand and agree with your concept. I think the reason why you and Suze Orman differ is because you target a different group, or have a different approach.

You talk much more about leverage. Suze Orman wants to get people to stop buying frivolous things and instead pay down debt (because most people are buying junk and creating more of it).

While anybody can start a business, a rental, etc. There are people who don’t have the ambition or the stomach for it. The concept of leverage and more involved ways of wealth appreciation get lost on those people.

The point that needs to be made is, if you aren’t going to leverage that debt properly to grow wealth, then paying it off is better than buying useless things. Perhaps for some people we need to focus on getting them to be frugal spenders first, and then wealth builders later.

I would also note that I think paying off mortgage debt should rank much lower than other investments in reducing higher cost debt, a business (including rentals) or retirement accounts. But for some people, putting an extra $100 towards a mortgage is a great way for them to start being more financial considerate.

The assumption is that my approach is different to Suze’s and Dave’s because:

1. I aim at a different audience

2. Their approach is a more sure way to a comfortable retirement

3. They focus on ‘frugal living / debt free’ which comes before wealth building

It seems logical, safe, and conventional … and, I agree on one point, my approach isn’t for everybody …

… it’s just for anybody who doesn’t want to retire on the poverty line!

By that, I mean that I am targeting anybody who wants to retire with a nest-egg of MORE than $1 Million in LESS than 20 years.

Now, that is almost everybody that I have ever known or met– and, I’ve known and worked with a LOT of people from call-center people to CEO’s – because $1 Mill. in 20 years (the typical target for the ‘save your way to wealth’ crowd) simply gives you the equivalent of $15k per year in today’s spending-dollars!

For every extra million dollars, you only get an additional $15k per year to live off … and, for every 10 years that you will retire sooner, you get another $7,500 per year ‘pay rise’.

So: how much do you need to live off now? How much do you need to live off when you ‘retire’ and by when?

I don’t know the answers to these questions, so you do the math …

I can tell you this: if all you do is live frugally and become debt free you will be poor, with a roof over your head … if you don’t, you will be poor without a roof over your head.

Neither seems like a great option … so, you can understand when I say that the Suze Orman / Dave Ramsey ‘save and pay off all debt’ approach still seems a tad ‘risky’ to me, and a sure approach to a fairly uncomfortable retirement.

Given that Door 1 and Door 2 pretty much suck [AJC: OK so one door sucks more than the other … are we here to measure degrees of ‘suckiness” or what?!] what’s left is Door 3 …

If you live on the same planet that I come from (Planet Save a Little, Spend a Little … Enjoy a Lot), then we simply have to aim for more … a lot more!

That’s where leverage comes in … and, it has to come in WHEN saving, WHEN learning to be frugal, WHEN paying off all debt (and, probably BEFORE paying off some debt) …

… and, if you are aiming to retire somewhere above the poverty-line, then you are simply going to have to find the ‘ambition or the stomach’ for something.

I never had the ambition or stomach for work … I simply had to do it or starve. Don’t you?

I never had the ambition or stomach for investing … I simply had to do it or figure on retiring near-broke. Won’t you?

If the government takes away your social security safety net … if your employer takes away your pension … if your rich relatives die and forget to leave you anything … it’s going to be that simple: do it or retire broke.

OK, if that hasn’t turned you on, then nothing I ever write will … otherwise, here are some options, in decreasing order of risk and difficulty – but, also decreasing order of financial outcome:

1. Start a business

2. Buy a business

3. Invest in real-estate

4. Buy your own home

5. Leverage into Stocks

6. Leverage into Index Funds

In every one of these cases, you borrow as much as the banks, convention, your gut, your advisers tell you to … then you hold – preferably for ever.

[AJC: Speculative ‘investment’s such as: rehabbing/flipping real-estate; trading stocks/options etc. all belong in Category 1. Start a business]

Now, go do it …

The check-cashing sub-culture

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There’s a whole world of Check Cashers out there … people who need to cash checks outside the banking system.

Why?

I have NO idea …

… to find out, though, check out this video that my blogging friend (and, 7 Millionaires … In Training! applicant) – mysteriously known as ‘The Dragon’ 🙂 – first pointed me towards this video.

AJC.

Play the match game …

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Here’s an ‘investing match game’ for you to try … simply match the active investment actions in Column A with the investment vehicle of choice in Column B (you must use each word in Column A once, and once only … you may use any word/s in Column B as often as you like):

Investment Actions Investment Choice
Rehab’ing / Flipping   Real-Estate
     
Mortgaging / Leveraging   Motor Vehicle
     
No Money Down   Business Assets

Now, is this a trick question? If you’re honest, you probably answered:

Investment Actions Investment Choice
Rehab’ing / Flipping   Real-Estate
     
Mortgaging / Leveraging   Real-Estate
     
No Money Down   Real-Estate

… after all, these are all ways to make money with real-estate; so did you pass the little test?

Good, because here is how they might work:

1. Rehab’ing, then flipping (quickly on-selling) real-estate

You can purchase a run-down property in a good location (usually a small house, condo, duplex, triplex or perhaps a run-down apartment complex), provide some of your own labor (or try and find a general contractor willing to work cheap) to fix up the kitchen and bathroom/s, apply a little paint and some new carpet, and … voila … you get to re-list the property and resell it for a price that covers your purchase price + rehab + profit (both yours and the general contractor). At least that how it used to be done – and, will again, sooner or later. Rehab’ing and flipping can be a useful way to generate a small lump of cash (also known as ‘chunking‘).

2. Mortgaging real-estate

You can purchase some real-estate, perhaps putting in a deposit of 10% – 20% and then using the bank’s money to pay for the balance. You can either live in the property or rent it out to help cover the cost of the mortgage (which you should usually fix so that you can be certain of your future costs). Since the mortgage payments do NOT rise with inflation (if you were smart enough to fix them), but rents do … over the long run you will earn an income and an eventual capital gain as the property increases in value. Buying and holding is a simple strategy for long-term wealth.

3. No Money Down

This is where you find a creative way to avoid paying a deposit (perhaps you don’t have the cash?) and then work with one of the other two strategies. There are people who swear by this method and others who say that there is no ethical way to use this strategy in a repeatable fashion. In either case, you use tools, like assuming an existing loan, and/or seller carry-back financing and/or finding a partner to avoid the necessity for fronting the 20% deposit yourself.

Of course, this little primer on real-estate was just a little ruse to stop you from peeking ahead …

… you see, even though I have also invested in real-estate in many different ways, here’s how I would match up those columns a little differently, based upon some things that I have actually done over the years:

Investment Actions Investment Choice
Rehab’ing / Flipping   Motor Vehicle
     
Mortgaging Leveraging   Business Assets
     
No Money Down   Business Assets

i) Rehab’ing, then flipping a motor vehicle

Just out of college, I landed a high-flying job in the hot IT sector (yes, we had computers in the 80’s … just bigger) … when all of my friends were buying their first new car, I was selling mine, to buy …

… a 10 year old Porsche 911 (the particularly ‘hot’ S-model) for just $13,000 (she was a beauty, but more exhaust fumes ended up inside the car than outside … helps to explain the loss of a few memory cells).

The trouble is that she was that horrible bright/lime green that the German engineers thought was oh so appealing … yuk. I hired a compressor and bought some paint and materials … and, a friend who (said that he) had some experience spray painting, helped me to strip and sand the car’s exterior to bare metal then we spray painted it (in his backyard garage) a beautiful red … acrylic. We used over-the-counter enamel spray cans in a matching red to change the color of the interior of the doors, cabin, and engine/trunk because those areas were too hard to sand smooth and polish to a shine.

When we were finished the car ‘looked’ a million dollars …. needless to say I flipped it pretty quicky … selling it for $26,000. That was a decent profit for a not-long-out-of-college kid in the early 1980’s!

2. Mortgaging business assets

I mentioned in a previous post that I left my high-flying job just shy of 10 years to join my father in a very small finance business (just me, my father, and one administrative clerk); it didn’t perform very well, not even covering salaries. However, when my father got sick, I decided to buy out the family, leaving me $30k in debt.

The only problem was, that being a finance company, the business needed funding – bank funding, and a lot of it. The best solution that I could come up with was to find a bank who would treat the business assets (the ‘paper’ that we were funding) just like real-estate: I had no trouble finding a major bank willing to lend me 75% against those assets at a middling-to-high interest rate (leaving me to find the 25% deposit … by way of a partner whom I found then later bought out). The bank took no other security other than my personal guarantee … now, I have banks lining up to fund millions at up to 95% of those same assets (sub-prime or no sub-prime!) with no additional security and, now at an excellent rate.

3. No Money Down

Obviously, finding a partner for that business was a ‘no money down’ technique as applied to business, rather than real-estate. However, I came to the USA to sell some software to a related business. What I found was a business that had been family-owned for 50 years, allowed to run down, then been purchased by a large multinational for a ridiculous sum.

Naturally, the part of the business that I was interested in was not operating profitably, so instead of selling them my software and services to help them ‘fix’ the business themselves, I provided a cost-benefit that showed that they should give me majority share – for nothing – in return for taking over, and re-engineering its operations.

My team and I turned that business around in just a few, short months, and I sold my share to another public company for a huge gain (what’s the return on ‘no money down’? Infinite!) just 2 years later.

The point here is that money can be made anywhere, in any manner … all you need to apply is the NEED to achieve a certain level of financial result, the VISION to see a way to get there, and the PERSISTENCE to see it through …

… failure to do so will NEVER be for a lack of opportunity!

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Hi Dad, I'm going to win $1 Million!

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For this week’s video, I thought that I would choose one that has no apparent financial lesson behind it …

… but, I might be wrong! Also, watch for the ‘phone a friend’; it’s a doozy (doozie?):

http://youtube.com/watch?v=hr3tsMCrQgo

Here’s the ‘lesson’:

There’s a fine line between arrogance and confidence … arrogance is a sure way to lose everything because it’s an anti-people skill, and people skills are critical to your success.

But, the confidence to put it ‘all in’ when you are certain – in your gut – that what you are doing is right, is the stuff that millionaires are made of.

Just be sure to have a buffer and a margin of safety, when you do go ‘all in’ … because there’s an equally fine line between bravery and stupidity 😉

AJC.

Life is a ballgame … you in or out?!

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Amal is an applicant for my 7 Millionaires … In Training! ‘grand experiment’ [AJC: we are down to our Final 30 now! Good Luck to all of those who made it this far!].

She says that she is 51 and came from Egypt (“the Land of the Pyramids, the Pharaohs Legends”) to the US 20 yrs ago. Since then Amal has studied nursing, worked as a personal banker and teller, even started a small business but she says that it “didn’t make me a Millionaire either!!”

Amal e-mailed in this question for Thursday night’s Live Chat Show:

What you do if you are alone in a world of a desire of making millions? When your hard work and persistency attitude toward reaching the ultimate goal, don’t make any sense to others?

I answered last night with the need to have a clear idea of why you need to be “making millions” in the first place; without the massive why, you won’t have the driving need that creates the massive action needed to make the big bucks. But, you can see me answer Amal’s question on YouTube, so I won’t repeat it here …

No, the part of Amal’s question that I want to discuss today is “when you don’t make sense to others”.

You see, I’m in the middle of a harmless ‘tussle’ with a couple of the ‘save your way to wealth … because there can be NO other way in our book’ guys on one of the forums that I occasionally drop into, but a couple of them started to become quite nasty and personal.

According to these ‘save and ye shall be delivered’ boneheads (you won’t see this post because the comments were so vile that the original poster removed the quote thread!): I have an “infomercial” (I don’t); I “spam” (I provide links to relevant posts where allowed by the host site); I “scam” (I don’t sell/endorse any products or even allow any advertising on my sites); and, I even have “zits” (I don’t … but, I am thinning on top, so “baldy” would be a better insult) …

… but, would I let it get me down? Of course not – but, it does put into new perspective the e-mail that I just received from JD Roth (who writes Get Rich Slowly, perhaps the most widely read personal finance blog on the blogosphere) unexpectedly and out of the wild, blue yonder. JD says:

Hey, Adrian.

I spent several hours going through most of your archives. I’m impressed. Though you and I disagree on some fundamental points (such as the value of diversification), not only do I agree with and support most of what you say, I actually think you’re covering territory that nobody else is covering. I *want* to focus on money-making strategies at Get Rich Slowly, but I’m not doing a good job of it. For the most part, my readers love the frugality stuff, and so getting them to pay attention to boosting their income is a challenge.

Anyhow, count me as a new subscriber!

–j.d.

You see, JD also doesn’t agree with everything that he found on my blog … and, some things that I say even run totally counter to what he tells his readers – which is how he makes his living!

Yet, he can sift through what he likes, and what he doesn’t like … and, take away what he wants to, simply leaving the rest.

Similarly, I’m still an avid reader of personal finance books; some things I take on board, others I discard. But, I don’t dismiss the author and their writings out of hand. I wouldn’t be writing this blog today, if some other authors hadn’t shaken my entrenched belief system … THEY made me rich!

So, here’s what I sent back to JD:

Well JD that’s a mark of the Man … you have a fantastic blog; you’re a pioneer in this ‘industry’ and an inspiration to all of us following along. You are right at the top of the PF blogosphere … yet you actually take the time to investigate a potentially opposing view!

 Most people respond to a differing point of view far more negatively/aggressively – these are the guys sitting in the bleachers with their faces painted, yelling at the players who are actually out there on the field working their butts off for them.
 
But, you are right there … in the dugout, patiently waiting for your turn with the bat. I am just an average player on the other team, covering 2nd base. My ‘team’ dares to question diversification and other PF mantras.
 
It’s true that we have some heavy hitters, and some guys who seem to swing and miss a lot … all in all, we do pretty well.
 
Your pitcher is John Bogle; mine is Warren Buffett … two great players who openly show great mutual respect and admiration.

Now, you can see why some people are pioneers in their field (JD being the clear leader in personal finance blogging) and others are relegated to shouting abuse from the sidelines …

So, are you in the game or just hurling abuse at the players from the bleachers?

I am woman … hear me roar!

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Congratulations to the Final 30 for our 7 Millionaires … In Training! ‘grand experiment’; visit 7m7y.com to see who ‘made the cut’ …

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Well, to set the record straight, as those who watched my first live show last night will know, I am definitely not a woman … but, those were the lyrics to the famous Helen Reddy song …

… and, I was amazed at the sheer number – and the relative proportion – of women of all ages who applied for my 7 Millionaires … In Training! project.

One of them was Debbie, who received a ‘good luck’ comment from ‘Janet’ … I followed the back-link and found a great site that specializes in helping women succeed on-line!

Well, that just blew me away, so I simply had to write to Janet Beckers (it turns out that she’s a fellow Aussie, bless her soul) and ask about the Power of Women Phenomena (I just made that up!):

Why is it that so many women are applying to become one of my 7 Millionaires … In Training! and what has changed (either in perception or reality) in recent years to make these women so ambitious and, well, so capable as entrepreneurs? Also, why does the Internet seemingly hold so much attraction for women and where can they go for help?

You know Adrian, I’m not surprised that most of your applicants are women. I would also be willing to bet some of your 7 million dollars that if you had offered this opportunity 2 years ago the ratio would have been very different. There have been dramatic changes in the last few years. In fact I would go so far as to say that we are experiencing a new era in Internet business and women are the pioneers. I can see 2 reasons for this. Let me share them with you:)

Visible Role Models

There have always been incredibly ambitious and successful women on the Internet. But they have traditionally flown below the radar. I think this is for a couple of reasons.

Firstly Internet marketing styles are traditionally quite sexist though not usually intentional. So successful women have been excluded by the boys club and gone unnoticed.

Secondly, they are so busy managing the many other roles a woman has, they just get on and make money instead of promoting themselves as “gurus”.

This is one of the reasons I launched Wonderful Web Women. I was searching for role models I could relate to. I couldn’t really relate to the men on stage at Internet Marketing conferences because their reality was so different to mine and that of other women who attended. When I launched, my male colleagues recommended I make it a short term project because I wouldn’t find enough successful women. I’ve been booked solid every week for a year interviewing successful women and never see it ending.

Women are so much more visible now and that gives other women (like Debbie) the confidence to push themselves beyond their boundaries.

Social Networking

Women are natural networkers. We thrive in an environment that lets us create relationships, share and create a community. The recent changes in the Internet, called Web 2.0 means there are so many ways for women to communicate with each other. We are the most effective users of blogs, forums, membership sites, facebook etc. In fact, even in the open mastermind session we hold every week after our live tele-interview, the women on the call form Joint Ventures on the spot. It is not unusual for a woman in the US to arrange to communicate and do business with a woman in Australia who she has only met on our conference calls. It is rare to see men do this.

Relationships and Joint Ventures are the best way I know to create a lasting Internet business and women have the networks in place now to know they are supported by a community of other women who wish them well. A romantic ideal but very true.

Why is the Internet attractive to women?

Well, apart from the wonderful way we can use our relationship skills, the Internet holds the same attraction for women as it does for men – except more. The Internet offers the attraction of a flexible lifestyle, the freedom to choose your hours. Women do balance so many more roles and expectations than men. An Internet business means women don’t have to choose between career and being at home with the kids. You can have both. For example, I run a successful Internet business yet I never miss a school event, sporting event or performance of my 2 children. They never rely on before and after school care and they know that Mum or Dad will be home every afternoon to hear the stories of their day. I still work hard, but when I choose to. How good is that?

So where can women get help?

At Wonderful Web Women of course! Not only do we have fantastic resources and interviews with amazing women we also have an incredibly supportive community of women from around the world. My hope is that women who join us will find at least one successful woman who really “clicks” with them. Someone who they can relate to and think “she’s not that different to me and she did it. So can I”. Our members range in age from 12 to 80 years so it is never to early or too young to become the person you want to be.

Well, there you have it … why women could be the new powerhouse on the web. This was my first guest post, and I couldn’t think of a better subject for it! Nor a better person to be writing it … thanks, Janet!

Note: Janet Beckers and The Wonderful Web Team can be found at:

www.NichePartners.biz
www.WonderfulWebWomen.com
www.WonderfulWebIdeas.com
www.WonderfulWebSeminars.com
http://wonderfulweb …..you get the idea!