A couple of years ago we had the real estate bubble burst which lead to a recession. Most recently or government couldn’t decide on raising the debt ceiling to keep the United States solvent threatening to lead us into an economic depression.

Today is hard to tell where the economy is heading. By being optimistic, I am certain the current economic conditions are a short-term situation and in the long-term the country will see growth and prosperity. That doesn’t mean we won’t have bad times along the way.

The thing to ask is are you able to take advantage of the good times and get through the bad times?

You have to expect both good and bad times. Fortunately there are steps you can take to improve your position in both. Here are five to get you started.

1 – Rid Yourself of Debt

The sooner the better!

When you’re mired in debt you aren’t able to take advantage of financial opportunities when they present themselves. During the bad time it magnifies the how bad you have it, as servicing your debt becomes a greater percentage of your expenses.

2 – Global Thinking

We can no longer afford to act and think locally, a broader vision is required to improve or financial well being. We have to learn to think about how our career, industry, and business fit into the global economy.

3 – Become an Entrepreneur

Now is the time of free agency. You must thin like an entrepreneur even when work in a large company. Experience and seniority are not as valuable as they once were. Getting results and producing profits is what matters theses days.

Both, “You, Inc.: The Art of Selling Yourself ” by Harry and Christine Beckwith and “Self Marketing Power: Branding Yourself As a Business of One” by Jeff Beals are great resources for developing an entrepreneurial mindset. At the time of this writing you can pick up either book for less than $3.00 “used” from Amazon.

4 – Be Capitalistic

Wealthy people own assets and the rest of the people have liabilities (stuff that cost to maintain and own). Capitalists own assets that produce income such as stock, businesses, or equipment. Eighty percent of the millionaires in America are self-made.

5 – Being Flexible

Today, business moves at an ever increasing pace, demand that you are adaptable. Thing do not stay the same, they don’t go back to the way they were either. You have to be able to asses your situation and quickly change direction.

The book “Who Moved My Cheese?: An Amazing Way to Deal with Change in Your Work and in Your Life“, written by Spencer Johnson, the coauthor of “The One Minute Manager”, shows that ‘Change can be a blessing or a curse, depending on your perspective’ (quote from Amazon review page).

Resources

• Becoming a Millinaire
• Dealing with good and bad times
• Debt management

Investor’s One Percent Risk Rule

Investors often follow the “one percent rule” to minimize their investment risk on any given single trade. So an investor, or stock trader, with a portfolio worth $100,000 would never make a trade that would put more than $1000 at risk of being lost per trade.

This keeps the maximum potential loss of a single trade at an acceptable level so no single trade will severally impact the investor’s portfolio. Traders and investors who us the one percent rule are less likely to be severally impacted by an unexpected losing streak compare to the person the risk a forth or more of their portfolio.

Two Step Calculation

The one percent risk calculation is a two-step process. Determine how much capital can be at risk, and then calculate the size of the trade:

1. amount to risk = portfolio value / 100
2. size of trade = amount to risk / ((purchase price – stop loss) x point value)

So if you were to purchase $75 stock in a $100,000 portfolio with a stop loss point of $70 the one percent rule would be calculated like this:

1. amount to risk = $100,000 / 100 = $1,000
2. size of trade = $100,000 / (($75 – $70) x 1 = 200 shares

In our example 200 shares is the trade size since the the shares could trade at the stop loss point and lose $5 each, totaling 1% of the portfolio.

Let’s do another example using a smaller portfolio:

1. amount to risk = $35,000 / 100 = $350
2. size of trade = $350 / (($40 – $35) x 1 = 70 shares

Summary

The one percent rule can be used in all types of markets (stocks, furtures, options, etc.). However, it is important that you use the correct point value (1) or you will risk losing much more than one percent.

What about you, do you have any trading tips to share? Leave them in the comments.

The Prize Is Always Right

Giving away a prize as an incentive to sell a product or solicit a donation is a time-tested marketing ploy that never fails. The only problem is that the market has become oblivious to sweepstakes.

Promoters are giving away the same old prizes time and time again. Without adding anything exciting to the sweepstakes, you might as well offer $10 million or your efforts (or your product or charitable cause) are likely to be ignored.

In this age of mega-million lotteries, the type or value of prizes offered speak the language of the market. If your product is just as good as that of your competition, or if your charity is just as worthy as any other that seeks donations, then you’d better spike your campaign with a sweepstakes that is unique as can be.

THE PRIZE

A few years ago, a church in Daly City, a bedroom community west of San Francisco was planning a fund raising campaign that involved selling “raffle” tickets to the congregation.

The plan was to sell the tickets for around $5 each, and for which one lucky ticket holder could win the grand prize of a brand new Toyota Tercel.

To say the least, the idea was worn out and unimaginative. A friend coordinating the project decided the raffle could be improved, and consulted me on what the fund raising committee can do to make the sweepstakes more attractive.

My suggestion was to give a different prize. Why not give away a business – a store!!!

VIDEO STORE PRIZE

We went to a new strip mall that was being constructed and leased a storefront for $1,100 a month.

Next we ordered signs and shelves and an initial inventory of 1,200 used video tapes for which we spent a total of $15,000.

For under $20,000, we were able to put together the basic framework of an operational video store. We hanged a banner outside that says “You can win this store. Call for info”.

$200 A TICKET

Because the church wanted to raise $25,000, we decided to sell 250 tickets at $200 each – for a total of $50.000.

Out of this amount, $20,000 will pay for the grand prize, $25,000 goes to the church and $5,000 for my friend for organizing the project which lasted for 6 weeks.

To achieve the same results, and using instead an $8,000 car as a prize, it would require the church to 8,000 tickets at $5 each, a much more difficult fund-raiser by comparison.