Thursday, July 31, 2008


Until 1984, I had all four grandparents living, so I was well into my 20's when the first one passed. At that point, I was young, and totally focused on myself and my life. It never occurred to me that at some point, I would be the last generation standing.

Today, all four grandparents are gone. My parents are with us, but I see them aging. While my parents are in good health for being in their 70's, I watch as they slow down, and especially as their brothers and sisters age and pass.

It has occurred to me in the last couple of years that the time is not far away that I will be the oldest living generation. It's a different thought, as there has always been the sense of stability that comes from knowing that there is a generation ahead of you.

For many of us, the generations ahead of us provided an example to look to, in order to see how to live life, or how a marriage should work so it would last 60 or more years. By example, we were taught lessons about investing time in the succeeding generations, and how to give to others, regardless of the benefit to us.

Am I ready to step into that role?

Until next time...


Monday, July 28, 2008

What Would It Be Like?

Over the weekend, I got $20 cash back from a purchase at the grocery store. I still marvel at the convenience. It was 1977 when I saw my first ATM, and it's only been the last ten years that the cardswiper at every retailer has become common.

Would our world work, and if so how, if we used only technology that was available in the 50's, or the 60's, or the 70's? What habits would we need to change? How would our work be different? What about communication?

It was definitely a different world. But the good old days? Well, perhaps for those unprepared for change. Most technology changes over the last thirty years have been improvements. LP's gave way to eight tracks, then cassettes, then CD's, then downloads. How sweet is that?

Communication went from letters to party lines to private lines to mobile phones to cells. In the not too distant future, we will be able to, if we choose, have a very small receiver implanted underneath our skin, and be able to communicate at will, on a handsfree basis.

What would be different in our world without our current technology? What will our world look like in the next ten years with developing technology?

You are welcome to share a thought.

Until next time...


Saturday, July 26, 2008

Creativity and Change

For years, I feel as if I've been running hard to keep up with technology, and it has stayed three steps ahead of me. I used to use the excuse that I graduated from high school with a slide rule, and paid $100 for my first handheld calculator. That excuse doesn't connect so much anymore, because few people have seen a slide rule, and even fewer know what one is.

It occurred to me several years ago that the world I grew up in doesn't exist anymore. Once I came to that realization, I was able to relax, and enjoy this very novel and interesting journey called life.

There are tremendous tools in the marketplace with which to connect electronically, and I am learning what they are and how they work. Personally, I'm grateful that most of the staff is half my age, as they are totally attuned to how these things work, and patient enough to teach me.

This blog, for instance, is an interesting forum. The word blog still makes me think of being on the Georgia coast in the summer time, yet it's such a fascinating tool.

What's exciting is the opportunity to learn, and even more, the opportunity to deploy these tools in ways that are both good for business, and have a positive impact on the lives of others. That's a win I can get excited about!

Until next time...


Friday, July 25, 2008

Options for Money

What options do we have with our available cash flow? Essentially, there are four things each of us can do with the money we have. We can spend it, share it, save it, or invest it.

Most of us understand the spending part, and according to most economists, those of us in North America have mastered that art. John Maynard Keynes, the economist of the early 20th century whose work most federal monetary policy is based on, suggested that consumers would reach a point at which they would have what they want, and no longer consume bigger and better things.

The only challenge with this philosophy is that it flies in the face of human behaviour, and is therefore based on faulty assumptions. If you've wondered why government decision making is so messed up with regard to how taxes work, and the role of government, this is part of the reason.

Another thing we can do with money is to share it. According to any number of studies, Americans are the most giving people in the world. It is a part of our culture, and a part of how we identify ourselves. This, in my opinion, is an excellent attribute. Part of our responsibility for the space we take on this earth is to share what we have to ease another's journey.

The third thing we can do with money is save it. Saving is the art or discipline of setting aside a portion of our income, very consistently. It comes from the thought that there may be days in our future where we are unable to work, or choose not to, and therefore we need to be prepared. Saving comes from a mindset that we should be prepared, as best we can, for future contingencies. This mindset isn't common in our culture, in large part because we have enjoyed relative affluence for several decades. This mindset is still very common in the Asian cultures, especially first generation immigrants.

The fourth thing we can do with money is invest it. Investing is the process of putting money to work, and expecting a return. The old Economics 101 class explains it as "money at work" versus "man at work", which is what most of do each day. Many people get caught up in the investment process looking for the next big thing, or shortcuts, or homeruns, and fail to understand the process itself.

All investments are investments in people, as it generally takes three things to create a solid return on investment. These three things are money, ideas, and people. The easiest thing to find is the money. Otherwise there wouldn't be trillions of dollars sitting in money market accounts.

The most difficult thing to find are people. Many people are willing to show up on a regular basis as long as they are provided a job and work to do. To find those people who will take responsibility for an organization, and someone else's investment in them, is rare.

We could talk more about this, and will, but that's enough for today.

Until next time...


Wednesday, July 23, 2008

Travel Tales

This falls into the "I should know better" category. Yesterday, I made a trip to Chicago for a meeting this morning. Since I booked the ticket less than two weeks out, Delta, American, and Airtran all wanted about $600 for the roundtrip.

Being closely related to the original tightwad, I thought I could do better. An internet search turned up a $375 fare, with one stop in Charlotte. We left Atlanta on US Air, and changed planes and airlines to United in Charlotte.

Since the Atlanta to Charlotte trip is only four hours by car, US Air was using a puddle jumper, a bus on wheels, for the journey. My standard carryon is a rolling briefcase with a telescope handle. You've seen them.

The flight was full and there wasn't room for my briefcase either overhead or underfoot. So, I grabbed my laptop, ac cord, and mouse, and released my bag to the workers on the bridge. I've done this many times before, and when the flight has landed, the bags are available as we walk across the bridge from the plane to the terminal.

This time, however, the flight attendants and orange vest guys said the bag would be checked to Chicago. I released the bag with some reservations, since it hadn't gone through the formal checkin process at ticketing. Three minutes after I released it, I realized I had left my cell phone in it.

That was the last time I saw my briefcase until 6pm today. It didn't arrive with my other checked bag Tuesday evening. Since I didn't have my phone, I had the opportunity to look for pay phones (they still exist) and to hunt for quarters to plug them.

It's interesting what we get used to. With cell phones and other PDA's, we become used to the everpresent ability to communicate. I like that ability, and the option to turn the phone off when the day is done.

It was a different kind of day, as I didn't spend the day on the phone. Rather, after the morning meeting, I invested the afternoon attempting to determine the status of my bag, and deciding how and when I was going to get home.

If you travel much, you have your own set of travel stories. The lesson for me? I won't be releasing carryon bags to connecting flights again. I'll find a better way.

What's your travel story?

Until next time...


Monday, July 21, 2008


In the last couple of days, we have been discussing income, wealth building, and issues of the sort. Let's talk about the expense side for a couple of minutes.

The single largest expense for most families is housing. How do you decide how much to spend on a house? Keep your mortgage to two times your annual income, and you should be fine. Yes, you can most likely be approved for a larger loan, and the realtor may be mortified that you plan to stop far short of your purchasing potential. That's not the point. The point is keeping you in your home, and giving you some margin.

Next, buy only vehicles that are two years old or older, or if you choose to buy a new one, keep it for 10 years or more.

Save some amount from every dollar that passes through your life. I like the 10% rule. Save 10%, and give away 10%, of every dollar that passes through your life.

If you are unable to save 10% and give away 10%, chances are incredibly high that you are spending far too much for housing costs, and most likely more than you need to on automobiles.

What's the solution? Sell your home (in this market?), and find something that fits your income, or get a second job so your income will cover the ratio.

Until next time...


Sunday, July 20, 2008


What will the world look like in 20 years? Let's start these observations by looking at where we are today.

The U.S. is still the place to be, although that may not always be the case. America is at risk of marginalizing itself on the world stage if it doesn't address its legacy costs, shore up the dollar, find its own oil, and open the door to immigration. However, those immigrants must come to work, be productive, learn English and be U.S. citizens. There appear to be no leaders on the scene at the moment who are willing to address these issues.

Japan at the moment is dying. The average age in Japan is north of 50, and the birth rate is half of what's required to maintain a population.

China and India appear to be growing by leaps and bounds. Western Europe is stagnating, due to low birth rates, and a distinct lack of leadership. Where are the Churchills and the Reagans?

The Middle East is experiencing phenomenal growth. Birthrates are high, billions of dollars are pouring in from a world hungry for oil, and physical infrastructure is being put in place at an unprecedented rate.

If the issues mentioned aren't addressed, here is what we can expect to see within 20 years.

Japan will be a second tier country at best, with a declining population, very low property values, and a diverse culture. The diversity for the Japanese won't be a planned or desired outcome, but will simply be the result of needing to import workers from the Hispanic countries in an effort to maintain their economic engine.

The U.S. could well be a second tier country, as it continues to marginalize itself on the world stage. Three pillars have made America great. These are economic opportunity, political liberty, and religious freedom. It is very possible that economic opportunity will be taxed out of the country, a la Western Europe. The U.S. is a post-Christian culture, becoming less tolerant of open expressions of faith with each passing year. This doesn't bode well for the health of the country.

China may have peaked, and if not, it will peak within the next ten years. China must change its one child per family laws, if it intends to compete long term. Otherwise, it will go the way of Japan. Business costs on the coasts have been increasing to the point that they risk being non-competitive. Inland China has lower costs, but transportation to the coast cannabilizes much of the savings.

India could be an interesting spot to watch. Stay tuned for more on this.

Russia will once again become a dictatorship, and they are just a few years from making this formal. Putin and his allies are returning Russia to its early and mid twentieth century roots. Russia will also raise its head as a military aggressor.

Western Europe, without a new brand of leadership, will return to the Dark Ages. They will be, within a few years, approaching third world nation status.

The Middle East will be the place to be. The population is exploding, and the owners of the wealth are investing for a solid future. Substantial oil reserves will be found in Israel, making this country once again an attractive target for all sorts of evil operatives.

Iraq will be rebuilt, and will become one of the wealthiest countries in the world. The ancient city of Babylon will be rebuilt, and will rival in wealth and beauty anything ever seen in the world. Iraq will become a top rated tourist destination.

Iran will join with Russia to irritate the rest of the world.

Who country and person(s) will be the new world leader?

Stay tuned.

Until next time...

Saturday, July 19, 2008

How Money Works

There is a good bit of confusion concerning how money works. Let's talk about the income part now, and the expense part at another time.

There are three types of income; earned, passive or portfolio, and system. Just about everyone is familiar with earned income. It comes from a job, or professional fees, or some environment that involves us trading time for money. One way to say it is time equals money. When you hear that, the person speaking is familiar primarily with earned income.

Passive or portfolio income is income derived from money at work. Some people save money from earned income, or receive it from other sources, and choose to invest it. Depending on what they know about money, or are told by others who may hold themselves out as professionals, it's possible that this invested money could create income in the form of interest, dividends, or capital gains. When someone says it takes money to make money, you will know they live in this world.

The third type of income is unfamiliar to all but about 2% of the population. System income is derived from the development of a business system, and such income is not dependent necessarily on a 40 to 50 hour week for 40 years, nor does it need to require very large amounts of capital. When you think of system income, think of Michael Dell, Bill Gates, Rich DeVos, Sam Walton, and Howard Schultz. Each of them have built businesses that generate income for them personally. While each of these businesses require some oversight, the amount of time required of each of them is nominal, compared to the very substantial cash flow these businesses generate for the owners. The Walton and DeVos families most likely invest the least time relative to income, based primarily on time, and the business structure that is in place. System income is ideas and business structure at work.

Very few people understand system income or how it works, which is why most people struggle financially. Too many investors either fear loss of capital, and therefore shortchange opportunities, or are driven by the desire to find shortcuts to wealth, and constantly trade, looking for the next Microsoft.

Those who are prepared to learn, to work with people, and to understand how to conduct proper due diligence can become as wealthy as they choose to be, both in time and money. This group I call the fellowship of the 2%.

One question I'm asked from time to time is "What sector, industry, or stock should I invest in today?". My question is, why do you want to invest in that sector or stock, and what will it do for you in terms of helping you reach your goals?

What most people haven't stopped to consider is why they save and invest to start with. I've yet to meet anyone who can take their 401k statement, or the deed to their home, or title to their car, and scan it in the card reader at Publix to buy groceries. The point? What people need is not assets, but cash flow. The reason people save and invest is to develop assets that will generate income when they reach a point that they would rather roll over instead of roll out. Their hope is that these assets will generate the income, instead of them having to get up everyday and sit in traffic.

So...if the point is income, or cash flow, then perhaps the question becomes, "What is the best way to build cash flow?". Now we can have a meaningful conversation. There are individuals, whom most of us will never know, who have mastered the understanding of how to create cash flow. Some of them live very extravegant lives, others live lives of service. In all their circumstances, they have achieved personal control of both time and money.

So how? Here is the key. If you invest time, then invest time to develop people and infrastructure, so the combination of the two generate income. If you invest money, invest money in business enterprises that allow you to receive ongoing cash flow from a one time investment. There will likely be some type of ongoing oversight, even after the cashflow is fairly secure. This oversight however, is a completely different exercise than having earned income, or owning a job, which is what 95% of franchisees do.

Until next time...


Thursday, July 17, 2008

Market Performance

Most consumers with brokerage accounts and retirement plans have received their statements for the end of June. Most look at them, others file them without even opening the envelope. Provided this second group has a very good advisor, they most likely have the portfolios that have performed the best.

Many other consumers are in shock. Most of these are the ones who follow the talking heads on TV who provide entertainment under the guise of investment advice.

The U.S. equity markets have been in the tank for about ten years now. Let's take a 40 year look at history. From 1969 to 1982, the Dow Jones Industrial Average of 30 stocks, most commonly called the Dow, returned just over 5% annually. From 1982 until 2000, the Dow's return was in the double digits, starting at 882 on January 4, 1982, and finishing at 10,786 on December 29, 2000, for an annualized return of 14.10%.

On January 1, 1999, the Dow stood at 9184, and closed at 11,350 on June 30, 2008. This represents an annualized return of 2.3%, most of it attributable to calendar year 1999. Over the same time period, the Standard & Poor's 500 averaged a return of just 0.40% per year, and the NASDAQ Composite did the same, returning about 0.40% annually.

Simply put, the equity markets over the last almost ten years have gotten us almost nowhere. Of course, built into these returns is the worst bear market, the tech meltdown of 2001-2002, since the early 70's.

If you are in positive territory with your portfolio, on an annual basis, over the last ten years, be grateful. If you don't know whether you are or not, or whether your portfolio is moving you to where you need to be financially, it may be time to find a new advisor.

In the current conditions, what should our approach be? Now is the time to be diligent in making selected purchases. Many solid companies are on sale, and we believe this to be a most excellent time to buy, not sell.

What's your take?

Until next time...


Wednesday, July 16, 2008

Economic Fix

Everyone that can get in front of a camera or get their words in print has a thought about how we fix what ails us. What is it that ails us?

Let's start with the price of gasoline, which is hitting all of us in the pocketbook. We can then add the enormous ripple effect of subprime loans, which has dried up liquidity as never before, and the value of the dollar relative to other currencies.

Looking long term, we have enormous legacy costs at the federal level, due to continuously increasing entitlements. These legacy costs have the ability to drowned our country. So...what do we do? Here are several steps our elected folks can take that would help.

1. Shore up the dollar. This will involve raising interest rates, among other things. However, it will increase our competitive posture worldwide, and help bring gas prices down.

2. Eliminate corporate tax rates, and if we must have an income tax, lower cap gain taxes to 10% or less, and cap personal income taxes at 15%. There is more than enough evidence to confirm that every time tax rates are lowered, federal and state tax collections increase.

3. Encourage creation of a futures market for oil, to remove some of the volatility of the spot market.

4. Allow limited drilling in the ANWR, as well as offshore, and encourage utilization of nuclear power.

5. Stop, immediately, the federal bailout of corporate America. This includes Freddie, Fannie, Bear Sterns, any and all of their friends, Chrysler, and any other mismanaged corporate entity that cries to Washington for help. They need to die, whether a fast or slow death, to keep the air clean for the survivors.

6. Allow all taxpayers born in 1975 and later to make decisions about the investment of their social security withholdings.

7. Do away with the deductibility of health insurance at the corporate level. Have all consumers purchase health insurance on their own, with premiums fully tax deductible. Mandate a 10% premium surcharge to provide a state funded and administered health fund for the uninsurable. Absolutely and under no circumstances can this plan be funded or administered at the federal level.

8. Encourage Health Savings Plans that allow deductibility of up to $5000 per person per year of deposits to an HSA.

9. Mandate that all federal and state entitlement programs be used only for citizens of the United States.

10. Enforce the immigration laws by sending home all illegal immigrants at their expense.

11. Loosen the immigration rules, such that those from other countries who want to come to America, to work, become citizens, pay taxes, invest in their future, and learn English as their primary language, are encouraged to come. Those who don't want to participate in and assimilate to the dominant culture should be denied entrance.

These steps, taken together, will send tax collections straight up, ignite the formation of new business and wealth, create employment, reduce the drag on federal and state funds, and put more citizens in control of the health and their retirement.

Until next time...


Sunday, July 6, 2008

A Name

Meeting people is interesting. The trend in most casual settings seems to be first name only. The folks I've met this way all seem as nice as they can be, as well as courteous, well meaning, and fairly together.

What happened to our last name? Mine is Brunson, and I'm proud of it. Haven't always taken such good care of it, but time and good decisions can bring restoration to a name.

Not sure where the trend toward first names only came from, or if it's unique to certain geographic or age groups. Haven't really given the matter any substantial study. It also doesn't seem to matter if it's a restaurant, ballgame, or church, folks seem to ignore their last name.

In a business setting, when someone is calling on us, or identifying themselves as a potential client or employee, last names are common. They should be.

Is the first name thing a function of too many nights out? Are we as a society embarrassed by or ashamed of our last name? For many, it's the only thing of value that could be passed to the next generation. Have we begun to believe that we as humans are just one more species, on a plane with the animals, and that personal identification doesn't matter?

Personally, I still prefer to do business with those who have a name, and who value it enough to take care of it. A wise man said one time that a good name is better than great riches. Have we lost our way to the extent that we believe the name has no value?

I'd enjoy hearing your input, as I try to figure this out.

Until next time...