From John Forde
August 27, 2007

In John Forde's always interesting Copywriter's Roundtable, he talked about writing under pressure and setting deadlines this month. His main point was that you can get a lot of writing done if you sit yourself down in a chair and get to work. You don't need lots of time. You don't need inspiration. You just need a strong work ethic and a willingness to work under the pressure of deadlines.

John lists the following people as exemplars:

- Trollope, the novelist, churned out volumes of worthy fiction, writing in the few hours before work every day.
- Einstein discovered the theory of relativity during lunch breaks and evenings, while working as a postal clerk.
- Wallace Stevens, the poet, did his best work in his head, while walking to his office at the insurance company.
- William Carlos Williams, on the other hand, wrote his poems on the back of prescription pads - while waiting for patients in his medical practice.

Even celeb author J.K. Rowlings - John points out - wrote her first Harry Potter book in short daily bursts, while her kids took naps. Now she's the world's first writer-billionaire.


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posted by M. Masterson @ 11:40 AM, ,




Where is the Market Going?
August 23, 2007

For a while, the US market was going up. The stock portion of my portfolio was too. Then on July 17 it started to slide. The newspapers were saying it was driven by financial stocks and "a crisis in the sub prime lending sector and the CDO and the BS markets."

I got out of the overvalued residential US real estate market before it peaked. But I didn't realize my stocks would suffer from it because I didn't realize how many companies had big positions in residential real estate.

They are down to where they were at the beginning of the year. The question everybody is asking is will they keep going down or will they act like they did in 1998, when they dropped sharply and then recovered strongly towards the end of the year?

It's impossible to predict the future, but there are times when you have to try. Now is one of those times.

I'm betting that they will continue to decline - maybe another 30%. My reasoning is simple: real estate prices haven't nearly bottomed yet - that's for sure. If stocks continue to trail real estate, then it seems more likely they'll drop that much than settle where they are now or go up again.

I'm hearing real estate stories every day. And almost none of them are good. Most of the time they are stories about people bailing out of investments, leaving banks and developers with property that won't sell even if they were given away at cost.

In Florida especially the situation is dire because of the increases in property tax, mortgage rates and flood insurance. Those three factors alone are more than most homeowners can tolerate. People are hanging on, but they are losing their grip.

DR, for example, came to me with a four-bedroom house that he bought for "investment purposes" six months ago. It was built cheaply and his cost is only $150 a square foot - a cost you couldn't touch a year ago. Since he's sunk $134,000 into it already, he'd like to hang on to it and wait for the market to turn around. But he'd have to go negative on cash flow at almost $2000 a month to do that. He can't afford that kind of cash outlay.

I looked at the deal, hoping I could help him out. But it didn't work for me - even if I were willing to take 5% on my cash, which I could get with much less risk from a bank. So DR is going to take a $13,000 hit. And the developer will take an even bigger one if he wants to sell it. That will mean that two people will be spending that much less on other products this year - cars, golf clubs, and roast beef sandwiches. There are hundreds of thousands of people in DR's position right now all over America. That means billions and billions of dollars that will not be supporting thousands and thousands of businesses.

When I talk to investors they tell me that they don't want to trade in their stocks for cash because they don't want to miss out on an upside swing. I think that's understandable, but what if the market drops another 30 or 40 percent?

Personally, I would feel pretty bad about that. That's why I'm converting my stock money into cash. I will continue to invest in real estate because there still are some great stories out there, including a recent private placement offered by Justin Ford that returned a 90% ROI in a single year.

Justin is smart. He's investing in the right local markets. I might take some of my stock money and put it there. Or buy some gold. Or invest in China.

I'm not sure what I'll do, but I'm sure I won't stick with the stock portfolios I have now. I'll look to the investment experts at ETR and see what they have to say.

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posted by M. Masterson @ 3:08 PM, ,




How Fast Can a Business Grow?
August 22, 2007

The promise behind Seven Years to Seven Figures - that you can create a seven-figure net work in seven years or less - has been challenged by some of the people who have read the book as unrealistic.

I don't think it is. And every time I help somebody start a new business, it seems to work out that way. The last business I started, for example, was in February of last year. The first month's income was $4,249. In the 6 months that followed, the monthly income jumped to $18,853 and then to $35,753 three months later and then to $95,611 by the following January and then $223,000 by April and $260,000 last July.

By the end of its second year that business will have more than $4 million in revenues with a gross profit margin of more than 15%.

Based on past experiences, I expect that business to double at the end of its third year and then double again - to $16 million - by the end of five years. It could do better than that.

Why is this business having so much success?

Because the guy who is running it is smart and hard working. And because he listens to my good advice. During the first 12 months he focused primarily on building a file of 10,000 email customers. That's the goal I set for him when we began. I told him that 10,000 would give him about a million dollars in cash flow - that wouldn't make him profitable, but it would be enough to pay for the development of new products and the employees he needed to do so.

He kept trying new things - products and promotions that would sell on the front end. After about nine months, he struck on something. The company took a big jump then. From about $50,000 a month to double that.

After that he was able to hire some new people and start testing more products, back-end products as well as front-end ones. The result was a steady increase in revenues.

The nice thing is that he is over the hump now. He has the three things you need to get over the hump: 1) a base of loyal customers, 2) a business structure that allows him to test lots of new product ideas and 3) the marketing ability to sell them.

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posted by M. Masterson @ 2:27 PM, ,




Letter From an ETR Reader
August 17, 2007

JS, an ETR reader wrote in recently:

"I just finally had to write you. I've been reading your newsletter, I believe, from the beginning. I partially agree w/your politics, but disagree on some. I do enjoy the health and investment advice. It's very thought provoking. But, I've considered unsubcribing many times because of your flippant comments about making money and starting a business. A couple of paraphrased examples: if you want to build a seven figure net wealth you need to make at least $150,000. If you're only making $50,000 you need to increase your income by $100,000. Another way to seven figures is start a business. Ah, if it were that easy, everyone would do it. Just double your income. Brilliant. I wishI had thought of that. Most people work at jobs that will not double or triple your income no matter how good you are.

Don't get me started on starting a business. I've tried, and failed three times. The simple fact is anyone could, but not everyone can. Start an internet business? You're crazy. How can you make money whenthere are 10's of thousands of people everywhere in the world trying to sell the same merchandise that you are and probably buying from the same manufacturer or wholesaler? The only possible way I can seemaking money is marketing a unique product that you manufacture."

I am amused and perplexed by J's comments. Here's a guy who is getting an amazingly valuable service for free and he wants to cancel it because he doesn't like some of the comments.

What kind of world is he living in? I'd like to be there.

If I were getting a service for free and liked some of the advice I got for free I'd be very grateful. I certainly wouldn't be upset because I didn't like some of the comments.

It makes me like J. I don't know why. There is something beautifully naive in his thinking. His world revolves around him.

If J had really been reading ETR since the beginning he would know that, although I am sometimes flippant, I am very serious about what it takes to start and create a successful small business. This is something I know as much about as anybody on the planet. J has failed several times so he knows it can't be done. I have succeeded and so I know it can be done.

The particular point - was about building wealth. Most wealth gurus give bad advice. I have explained this many times. They tell you that you can become wealthy by scrimping and saving or by investing on an income of $50,000 or less. This is sheer lunacy and irresponsible advice.

J likes the investment advice he gets because it allows him to dream about getting wealthy without doing the hard work...boosting his income.

He says that my statement that you need to double your income is flippant...but he is dead wrong...It is the only real and serious statement that can and should be made about wealth building in a world where so many wealth seekers are spending money on advice that promises to turn their debt into wealth...

And if J has really been reading ETR all this time he would have read miles of material on how to generate more income...but it all involves working more and working smarter...and most of it does indeed mean that you have to create a second income by consulting or starting a business...

J should buy a copy of my next book...Ready...Fire...Aim. It contains everything I know about starting and growing a small business...I've started dozens of them successfully including two whose revenues exceeded $100 million...


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posted by M. Masterson @ 4:46 PM, ,




If I Were King: How I Would Solve the Homeless (and the Religion) Problem
August 7, 2007

All over America churches are being built.

Millions and millions of square feet of valuable property are being gobbled up by private institutiions that say they are doing God's work. But what do they actually do?

Two things:

First they produce events and literature whose purpose is to persuade their customers that they are the best place to invest their spiritual capital. Each institution has its own unique selling proposition. They are usually very good at selling that.

Second, they collect revenues by either charging for these events and literature or by giving them away for free and then requesting contributions at some other time. They are usually very good at this critically important part of any business.

What separates them from other businesses that profess to do good (including ETR) is that they don't have to pay the US government taxes on the income they make. As religions, they are tax-exempt organizations.

If you belong to a religon, you usually believe that your church deserves this tax-free treatment because you believe its USP: that they are doing good is some special way that is better than the next church down the block. Yet when you hear about religions whose practices don't appeal to you (such as beheading chickens or worshipping satan or stoning young girls who won't marry whoever their brothers choose for them) you think: they shouldn't get tax-free exemption because they are not really a true religion. They are a scam business in spiritual clothing.

It is a tough thing to sort out: who deserves tax exempt status?

For many years I have tried to understand Scientology. As best as I can tell it's sort of a kooky, whacky version of ETR. Hundreds of thousands of people who have banded together to make themselves healthier, wealthier and wiser. Only difference is L Ron Hubbard and his crew don't have to pay taxes.

I have been thinking of converting ETR into a religion. I'd like the tax benefits and I'd be very happy to invest the money the way most religions do: into real estate.

Religions in America have ammassed enormous wealth through the government's tax-free real estate acquisition scheme. ETR could really benefit from that.

The trouble is: what would I do with all that church property? When I look around at other churches in America, it's plain to see that most of the churches are unoccupied most of the time. That doesn't seem like a good use of space.

If ETR becomes a religion, we are going to have to fill that space somehow. Hmm.

The other problem I have with becoming a religion is that I don't want to be a god or even a demigod or a prophet. I've thought about it, but it's just not for me.

What I'd like to be, if you must know, is to be king.

And if I were king, I might be able to solve that vacancy problem. Here's how:

To retain their tax-free status, I'd tell churches that they have to change their primary purpose. Instead of spending 80% of their time and money convincing the faithful to cough up more money, they should become institutions to house and feed the poor. All that church space should be turned into homeless shelters. And all those preachers and rabis and imams and ministers should be required to spend 80% of the time ministering to the poor. By ministering I mean teaching them, not filling their heads with guilt and foolish notions.

The poor and homeless should be required to stay off the streets. No more begging. Addicted homeless should be kept locked up and given the drugs they want until they die. Crazy homeless would be given whatever treatment they needed, but would not be let out without supervision by a proven-to-be trustworthy, non-crazy homeless person. The only street beggars allowed would be certified poor people who have taken and passed courses on sidewalk entertainment such as dancing, singing, playing musical instruments and painting yourself up like the Statue of Liberty.

They would also be permitted to sell artwork in approved places. Also knock-off designer leather goods, watches, perfumes and jewelry, except that they would be required to pay a royalty to the brands they were knocking off.

I think that's about it. Oh, yes. Tax exempt status would be denied churches whose clergy are not allowed to marry or whose doctrines permit spousal abuse.

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posted by M. Masterson @ 2:06 PM, ,




Raise the Mimimum Wage More...Much More!
August 6, 2007

The federal minimum hourly wage has been increased to $5.85. Whoopee! They are scheduled to rise to $6.55 in July 2008 and to $7.25 in 2009. About six in ten small-business owners said they didn't think the increases will hurt business. But 44% said they thought they would. That seems like total lunacy to me. Where in the USA can you get someone competent to work for you for less than $10 an hour? Illegal immigrants charge more than that to dig holes. Maybe it's those pimply faced, greasy haired kids that work a fast food restaurants. Are they working for $5 an hour? I doubt it. The whole debate is silly.

It just shows you two things: how stupid it is to get too distracted by politics (people arguing about issues that have no basis in reality.) and how cheap and miserly four out of ten business owners are (Get a grip!) If I believed in political solutions to economic problems, I'd raise minimum wage way up - to $10 or $12. How can you call yourself a god-fearing Christian/Jew/Muslim and pay anybody less?

But I don't have much hope for this law or any of its kind. So long as there are lazy, stupid and uneducated people there will always be low-paid workers. So long as there is overt racism there will be low paid workers. The only way congress could possibly help these people is to significantly reduce taxes and regulations for small business owners. They are the people who are employing minimum wage earners. More importantly, they are the people that are creating job growth in America.

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posted by M. Masterson @ 2:27 PM, ,




US Airlines Trying to Compete.
August 3, 2007

United has upgraded its business class cabins on its international flights. Maybe they too are getting the message: high prices and bad service don't "blend" as Marisa Tomei said to Joe Pesci in My Cousin Vinny. Most importantly, United is installing lie-flat seats. Also, personal TVs and noise-cancelling headphones.

American Airlines and Delta Airlines have announced that they are going to upgrade their business-class service. We'll see what they do.

But none of these upgrades will matter unless they lower the rates too. Frequent flyer miles have destroyed first class service because three out of four people in first class are not paying for their seats. That means those that do have to pay much more than they should.

Branson offers a better deal. He sells his businsss and first-class seats for about half of what the other airlines charge. That is still more than they should be. A round trip, first-class ticket from New York to England should cost about $1600 or $1800 dollars. That would be enough to provide a good profit and low enough to create a good market. But you can't do that when you are giving away most of the seats.


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posted by M. Masterson @ 8:41 AM, ,




When Will Branson Come to South Florida?

Virgin Atlantic has come to America. Yippee! If they run their US business like their transatlantic service, the fares, accommodations and service will be top notch. Virgin Atlantic is the best carrier from the USA to London. The planes are clean and well-fitted; the staffs - both the ground and cabin crews - are exceptionally pleasant. The schedule seems to run well and on time. And they offer first-class fares at half of what other airlines charge. I saw an interview of Branson recently where he promised that Virgin America will set the standard for US carriers and I am sure he's right. I sometimes wonder why US service is so bad. Only problem: Virgin America is based in San Francisco and most of its flights will start or end there.

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posted by M. Masterson @ 8:36 AM, ,




Asian Whales
August 1, 2007

The New York Times reports that all the best suites in Vegas are occupied by Asians. That's not news to me. I remember sitting next to an architect on a plane ride to Florida 15 years ago. He told me, then, that the 2,000-square-foot luxury suites he designed for Atlantic City hotel/casinos were done in Oriental styles to accommodate the Asian "whales" that play there.

Recently, The Times says, this trend has accelerated: "Casinos have become much more aggressive in wooing Asians both domestically and abroad. They are aiming not just at the newly wealthy from China, who in recent years have emerged as Las Vegas's best customers, but also Asian-Americans and recent immigrants from the Pacific Rim."

Las Vegas Sands Corp, the owner of the Venetian in Las Vegas, is building a sister hotel in Macau, China. But this one is bigger and better. It will have 3,000 rooms, 700 gambling tables, four swimming pools, and an underground city to accommodate customer needs. Its high-end retail shops, The Wall Street Journal reports, will employ 16,000 people and occupy a million square feet of space, an "area big enough to host simultaneous football games by all 32 teams in the NFL."

I think about my friends who are doing business in China. They are in the right place at the right time.

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posted by M. Masterson @ 8:33 AM, ,