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Buffett – Don’t Buy Stocks Just Because They Are Undervalued

Buffett, like many other great investors, tends to be very discriminating-he avoids the temptation of buying a stock that seems alluring at the moment. Any stock can potential be a value if the price is right, but Buffett doesn’t allow himself to be fooled into buying stocks just because they are undervalued.

Eventually, each of the 10,000 or so U.S.-list stocks, including the Qualcomms and Oracles of the world, will trade at undervalued price, but only a small fraction of the 10,000 companies offer compelling long-term growth prospects. Most have poor fundamentals or an erratic growth history and should be shunned. Many others will provide periodic trading gains and then languish when the investment community tires of their stock and seeks short-term profits elsewhere. As you hone your stock picking over time, you will eventually whittle down your short list of buy candidates to a few dozen. Then, you can zero in on this list and purchase them, one at a time, as their prices fall to favorable levels.

You should avoided the temptation of buying stocks simply because you have cash on hand, Buffett believes. More often than not, a havey wallet invites mistakes. At the beginning of 1999, Buffett was holding more than $35 billion in cash and bonds in Berkshire Hathaway’s investment portfolio. He was content to hold this great sum of money, which was equal to the total yearly output of dozens of smaller countries, indefinitely until he found suitably priced companies to purchase. In contrast, most investors feel a psychological need to put their loose change to work almost immediately. Rather than patiently wait for their favroite stocks to decline, they purchase shares of lower quality companies without spending time to study their fundamental properties.

Buffett avoids this trap by identifying all the stocks he wishes to own over the next several years and buys them one at a time, but only when they fall to an attractive price. If the stocks do not fall to his desired price immediately, he takes no action. He knows that the odds favor a decline in price sooner or later. In the interim, he will devote his attention to other desirable companies whose prices may already have fallen to appealing levels.

To help you practice the taking-strike method, you should keep a list of your prospective stock prices. The list should include the maximum price you would willingly pay for the company today. Post this list in a convenient place and check it periodically.

The obvious advantage to warehousing stocks is that it forces you to be vigilant. Before buying, you must determine a reasonable value of the company, which means studying the enterprise. Putting some time into the valuation proves will greatly decrease your chance of buying prematurely. Buying companies in this manner also allows you to build the portfolio you really want and prevents you from adding undesirable stocks simply because you have idle money. In addition, the method harnesses your impatience and – most important- ensures top performance because you will be overpay for any company.

You should update your checklist periodically to make sure your target prices are reasonable. If a company’s growth prospects dwindle, the original buying price you set may be too high. Conversely, if the company’s fundamentals improve, the stock may not retreat to your buying level again. In such cases, you must reappraise the company to determine whether it is truly worth a higher share price.

The point is, when you don’t have to invest, don’t feel you should invest. Once you attain confidence in your own stock picking, you’ll naturally make fewer and fewer buy-and-sell decisions. Being a successful investor gives you the same luxury as having a 20-game lead over the second place team in September. You can rest the bat on your shoulder and take strikes indefinitely because it won’t change the outcome of the season.

PUT YOUR FAVORITE STOCKS IN INVENTORY.

Do Not Buy "Cashflow Quadrant" Until You Read This!

Cashflow Quadrant, Robert Kyosaki

“Rich Dad’s guide to financial freedom” (Sometimes called Rich Dad, Poor Dad, Part II)

What is the book about?

Cashflow Quadrant aims to help you achieve financial freedom by explaining four different methods of income generation. It reveals why some people work less, earn more, and eventually pay less in taxes.

Who is this book written for?

If you enjoyed Rich Dad, Poor Dad, (by the same author,) this should be on your reading list. If you have already made the decision to invest in your financial future, but want to know more about the different options available to you, read this book!

Robert Kyosaki, a successful business owner, self-made millionaire and best-selling author of Rich Dad, Poor Dad, imparts the valuable knowledge his rich dad taught him about the four different types of people, which make up the world of business. He described them as the “Cashflow Quadrant.”

E= Employee, S = Self-Employed, B = Business Owner and I = Investor

Throughout Cashflow Quadrant, Kyosaki describes the many advantages and disadvantages of these fours types of income generation but demonstrates how the methods on the right side of the quadrant (Business owner and Investor) offer the best opportunities for financial freedom.

” As an employee, your earnings are taxed even before you get your paycheck. If an employee is paid $30,000 a year, by the time the government gets through with it, it’s down to $15,000….As a business owner, you can expense much of the earnings before the government gets it. If you own your own corporation, you make the rules…as long it conforms to the tax code.”

Through easy-to-understand instructions and straightforward diagrams Cashflow Quadrant teaches the seven steps needed to move from the left to the right side of the quadrant. The book explains that although financial freedom can be found on all four of the quadrants, the skills of a “B” or “I” will help you reach your goals more quickly

“The main reason why 90% of the population is working on the left side is simply because that is the side they learn about in school. They then leave school and are soon deeply in debt…”

I say:

After reading Rich Dad, Poor Dad, I immediately warmed to Robert Kyosaki’s writing style. I wanted to learn more about investing, so I sought out more of his books.

Cashflow Quadrant helps you to understand the different parts people play in the world of business.

Through this book, you can start to create your own path to financial freedom whilst identifying what changes you may need to make along the way.

You may notice a couple of references to Robert Kyosaki’s game “Cashflow 101 & 102”. I bought the electronic version of this game soon after reading Rich Dad, Poor Dad and I’m so pleased I did. It teaches you how to think and act like a rich person.

In my last game I owned 25 properties, 40 acres of land, a Pizza Franchise and made $1,000,000 on the stock market!

If you are a fan of Monopoly, you will love this game!

Reinventing How Dealerships Buy and Sell Vehicles

There has been much written in recent months about the sad state of the automotive industry in the United States, as GM, Ford, and Chrysler struggle to realign their business models to the realities of the marketplace in 2009 and beyond.

Certainly, automotive dealerships have also faced rough business conditions as fewer people are buying cars. Even interested car buyers are having a harder time securing credit. J.D. Power’s has estimated that vehicle sales in 2008 decreased to 13.2 million sold, compared to a 2007 total of 16.1 million. Many dealerships will close in 2009. Those who survive the downturn in our economy, will be those who are leaner, have secure financing in place, or are self financed, and who have leveraged the efficiencies and promotional opportunities available on the Internet and reinvented their business to be better aligned to what customers expect.

David Vahman, President of WebXloo, has seen an increase in business in 2008, as more innovative dealers leverage technology to increase their exposure in local markets and improve their efficiency. WebXloo offers web based sales and marketing tools for dealers and, as with many industries, this technology transition at the dealerships has tended to lag behind what their customers are already doing online.

Mr Vahman evangelizes the importance of dealerships leveraging web based tools to automate processes, streamline operations and increase their dealership visibility to their customers. “Dealerships today are able to seamlessly list their vehicles on their own website, leveraging Web 2.0 technology to create a two way dialogue with their customers.”

Mr. Vahman describes the Internet potential going much further than a basic website. “Two things that we are seeing that are truly transformational in the automobile industry is the widespread consumer usage of mobile technology and the ubiquitous availability of pricing information, for both the consumer and the dealer.” As Mr. Vahman explains, “The sweet spot for dealerships is intelligent buying of vehicles.” Mr. Vahman continued, “Consumers today who are purchasing vehicles have a very clear understanding of what they should pay for a vehicle, through quick Internet research. The dealer who can buy inventory that is in demand, at a competitive price, is much better positioned to remain profitable. Our mobile SlingShot device, powered by the AutoXloo software, gives dealers business intelligence anytime, anywhere, whether they are purchasing a vehicle from an individual or at the auction.”

Certainly most people recognize the difficulty traditional newspapers are having as they try to remain relevant when fewer and fewer people subscribe to the local newspaper, their audience demographics continue to skew older and older, and more and more people get their news from the Internet. Craigslist has made classified ads almost irrelevant, and there is a trend toward specialty magazines and publications moving away from print to online distribution exclusively. Cox Enterprises announced earlier this year that they will discontinue the publication of AutoExtra and AutoMart. And there has been continued speculation that the classic AutoTrader magazine, that many of us grew up with, may also be transitioned to an online model only.

Noting these changes, Mr. Vahman offered further insight into the changing market for dealerships. “Our software, allows the dealer to compare real time market pricing information from Internet sources that customer use to make buying decisions. Understanding pricing from your customers’ perspective puts you in a much stronger negotiating position.

AutoXloo’s Market Report provides a comprehensive analysis of the vehicles for sale in a specific geographic region from various online services. The Market Report software queries listings on the Internet, based on the dealership’s current inventory, and presents pricing results in a convenient dashboard in both detailed and summary view. The report is generated instantly and live each time a dealer evaluates a specific vehicle.

“We help dealerships list their vehicles online, which helps them generate more leads and sell more cars”, Mr Vahman continued. “From the dealership perspective, our tools adapt readily to their workflow, enabling them to work more efficiently, reduce cost, and provide better information to their customers. Our value proposition simply put, is that we generate more leads for less money. Leads generated online are much more measurable than traditional lead generation for dealerships. It just makes sense since almost every one of their customers begin their search for a vehicle online.”

Mr. Vahman explains, “It’s easy to view technology as an expense, especially in these difficult times. What separates our tools, is our solutions are at the forefront of the primary drivers for a dealership, which is driving sales. While it can be difficult making decisions on what technology in which to invest, it’s easy for us to demonstrate to our customers that not only can they generate immediate results with our tools, but they are much better positioned for long term growth.”

Autoresponders – Automatic Email Services Compared – Research Before You Buy

If you’re planning to purchase an automatic email responder service or software program – that’s good news! That means you have customers or plan to have customers and you want to organize your client base and provide an easy means to answering emails. It’s a good thing you are reading this article – because you can save yourself time and money. Don’t make the same mistakes I made – and the same mistakes a lot of others have made in purchasing the wrong autoresponder service. Fortunately you can learn from my experiences and choose the correct email autoresponder for your business. With so many choices, it can be overwhelming – so I will break it down by individual autoresponder programs. The ones I will expand on are several of the most popular autoresponder programs, services and software out today.

Before I delve into the topic further – I need to offer one important piece of advice. Don’t use a free autoresponder service. Yes it is a direct statement and you may want to go against my advice and try one for yourself. You can – go ahead. If it works out for you then that is good. But, through my personal trials, in using so many of the “best” free autoresponder programs, my sincere and serious advice is to avoid doing them at all costs. First, the features offered are very limited. And, what happened to me every single time I signed up with a free autoresponder service is that I ended up with a lot of junk mail. I kept receiving more spam from the autoresponder company and I found it very difficult to “unsubscribe” and cancel my free accounts. The other downfall, if that one isn’t bad enough – is that the autoresponder company usually places their own ads and promos in your emails. So instead of being able to promote yourself, your business and products to the utmost extent- you are promoting theirs.

Let’s say you are an eBay seller – and would like to completely automate the process of selling. If you are sick and tired of typing in “Thank You” notes and sending links to download products, then look no further. My Digital Dispatch is the way to go. It works specifically with PayPal payments. So, whether you are selling items on eBay or on a website and use PayPal as your main payment processor – you could save yourself time and money by using this software program. It’s easy to use, setup and maintain. It stores all of your client’s contact information, as well as the date of the sale and all of the details. To purchase it, there is only a one-time fee of $67.00. The price is unbeatable, considering most of the automatic email responder services out there today charge monthly fees and only allow limited number of messages. With this software you can create an Unlimited number of messages to send out. It also has a wonderful affiliate program which has a 50% payout. The affiliate link appears at the bottom of every automatic email that is sent out. If you don’t know what an affiliate program is, basically – it is when a company offers to pay you for any traffic that you deliver to their website which results in a purchase. So if someone clicks on the link in the automatic email you sent them, and they decide to sign up with My Digital Dispatch, you will receive about $33.00. This software is perfect for eBay sellers and PayPal merchants – but if you are more interested in creating subscriptions, newsletters, ezines, etc. then you will need a more advanced program.

If at all possible, my recommendation is to find a program that you can purchase through a one-time flat fee. Programs with monthly subscriptions always end up being more expensive in the long-run. They may have excellent features and services that can’t be beat, but it can be very costly. Then when you find an autoresponder program that you like better, it is extremely difficult to switch everything over and move your client information to the new program. So, you may need to spend a little in the beginning, but if you are serious about your business and you want to start it out right, then it is more than worth the investment. So, if you have an online business and you need a powerful feature-rich autoresponder program that allows you to: manage clients, create subscriber lists, send text and html newsletters and more – then Send Studio is the software program to use. The cost is a one-time flat fee of $239.00 and worth every penny. The installation is FREE and Send Studio is jam-packed with features which are easy-to-use, yet more advanced than any other service that I have tried. It also offers you the ability to re-brand the software through a simple template. Then you can allow your clients to login and create their own email marketing campaigns on their own domains. Just “create a new user” so your client can run his or her marketing campaign, rather than needing to purchase the software for each person. With a single website license purchase, you are allowed 5 different users with access.

There are several other Top-of-the-Line autoresponder programs I recommend, but they charge per-month. They are also feature-rich and easy to operate. For more information about all of these autoreponder services and programs, comparisons and full resources about autoresponders, marketing, emails, enzines, newsletters, subscriptions and more, please visit: How2-WorkOnline.com. The site is an information center all about autoresponders – also providing tips, trick and techniques to increase your sales through email marketing and mailing lists.

Before You Buy a Gas Station Business Know the Five Dangers

A large number of entrepreneurs want to buy gas station business opportunities because the industry seems to thrive whether the economy is strong or is ailing. Like a grocery store or energy provider, the gas station supplies something that most everyone needs.

And the connection with a companion business, such as a car wash or convenience store, can return substantial profits to the entrepreneur with a ‘buy gas station business’ strategy. No special knowledge beyond basic business competency is needed to run it efficiently.

There are risks, however, particular to this kind of business, which a prospective buyer must understand. Understanding those risks and how to avoid them can help the entrepreneur enjoy success with a sound gas station buy.

1. Ground contamination is common among petroleum retailers who haven’t upgraded to newer, leak-proof storage tanks. Most communities enforce environmental regulations for gas stations. Any business with petroleum leakage will be force to close down so contaminated soil can be removed and storage facilities improved. Finally, a new station is built on the site. What a problem for a new station owner!  Anyone seeking to buy gas station business opportunities is advised to insist that any purchase agreement require testing of soil samples, and that results show no contamination.

2. A related issue is condition of the storage tanks. Older steel tanks invariably begin leaking after years of use. Newly installed gas stations and those refurbished are outfitted with double-wall fiberglass tanks (referred to as DWFG in the industry). And the tanks are equipped with leak detection sensors. Any offer made to buy gas station businesses should include a provision requiring that up-to-date fuel storage is part of the deal.

3. The failure to determine who owns the property on which the station stands, before the purchase is complete, can lead to a terrible surprise. In many cases, even California’s major oil company franchisors have posted their large, familiar signs on property they don’t own. Imagine the distress for owners of name-brand oil company franchises who discover, the hard way, that the franchisor’s rights to the property were “on a short fuse.” A ten year sublease is meaningless if the sublessor – the oil company with the master lease – loses its right to conduct business at the locale.

4. It’s reasonable to expect when making an offer on a gas station that access to the property will continue to be as easy in the future as it was in the past. But what if the local government plans to bulldoze streets adjacent to the station for underground utilities repair or road improvement? Most business offers don’t include a contingency about getting satisfactory information from the city’s planning and development department. But a condition with that requirement ought to be included in any offer to buy gas station business assets.

5. The possibility of paying too much for an enterprise in this category is a major risk for someone ready to buy gas station business opportunities. It is a mistake to believe seller or broker claims that the appropriate price is determined by gross sales, or number of gallons pumped every month.

Like any small business, a gas station should be valued on the basis of the seller’s earnings before deductions for interest, taxes, depreciation and amortization. Pump volume or gross revenues may have no relation to earnings, and should not be considered when determining a station’s value. The buyer is safe using the earnings multiples applicable to most small businesses.

The top of the multiples range is about three times average annual earnings recorded the past three to five years, and it can be applied to a business with a seller ready to help finance, plenty of equipment in good shape and a long-term lease at market-competitive rates.

The purchaser who has “buy gas station business” on the to-do list, and is considering a company that doesn’t offer these benefits, should consider the right price to be about twice the annual earnings average. And many opportunities in the industry have a value using a multiple somewhere between two and three.

The entrepreneur wanting to buy gas station business opportunities might invest in a company or companies that are very profitable and not too complicated to operate. But the benefits will only accrue to a buyer who is cautious to avoid the risks inherent in purchasing this kind of business.