Make Cold Callers Pay You

It’s something many of us have imagined doing, but one micro-businessman in Britain has changed his home phone line into a pay-to-call number.

Fed up with companies calling him without invitation and since his family and friends usually use his mobile number, he changed to a premium line. Now, when they call, they pay 10p per minute and he receives 7p of that.

It cost him £10 to set it up and he has earned £300 in the two years since he made the change. Another benefit is the number of calls received has dropped from 20 or 30 per month to 13.

He said it was not an easy thing to set up. The phone company says it does not encourage more people to follow his example. But I think more people will do this if they realize it is possible.

I haven’t been bothered lately by cold callers. If it became a problem again, I probably wouldn’t bother to do this. My standard technique is to ask them to hold the line (while I make myself a cup of tea)..

I’m thinking this could be a nice little side business. If you have expertise in a particular subject, opening your phone line for the public to call in could make a useful service. What would be a useful topic to provide a paid call-in service for?

 

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9 Ways to Tell if the Company’s Management is Good.

530 words

Great companies can be ruined by poor management. Struggling companies can be lead to greatness when they are guided by great managers.

Here are some questions to ask yourself when judging the management of a company.

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Why Restaurant Lobster is Expensive

A short article by James Surowiecki in the New Yorker notes how the price of lobster has fallen in the supermarkets but not in restaurants. The reasons he gives for this are quite interesting.

The climate has lately been good for lobsters in the US. So much so that some fishermen are going broke. The price of Maine lobster off the boat has fallen from $6 per pound in 2005 to around $2.20. Yet restaurant prices haven’t changed.

The article cites three reasons for this:

  1. Expense is linked to enjoyment. We enjoy some things more when we think they are more expensive. Blind tastings of wine often find the cheaper bottles to be superior to premium wines. Yet when the prices are already known, even experienced tasters rate the wines in line with their prices.
  2. Suspicion. Restaurant owners fear customers will think there is something wrong with the lobster they serve if it is noticeably cheaper than the price at other restaurants.
  3. Comparison shopping. Studies have shown that where there are two products, one cheap the other mid range, customers will buy similar amounts of each. But if a third product is introduced which sold at a premium to the other two, customers will have a much greater tendency to buy the mid range product. Lobster occupies the ‘premium’ role on the restaurant menu.

Another interesting point made in the article is that lobster was originally considered to be poor people’s food. It was abundant and cheap. But as the lobsters were over fished they became expensive and the high prices changed people’s perceptions of them and so they became a luxury.

Personally, I try to avoid shellfish. But I had some a little while ago when the restaurant held a promotion. I found I enjoyed the company I was with more than the lobster meat.

What other luxury items do you think are luxuries only because of their price? Let me know in the comments.

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How to Build a Priceless Art Collection on a Low Income

 

660 words

Herb and Dorothy Vogel were not from rich families and never earned more than an average income. Yet they were among the most successful and influential art collectors of the twentieth century.

Herb worked for the post office, Dorothy was a librarian. They did not advance their careers and they did not talk to their office colleagues about their extraordinary hobby. But the artist community knew them well. If the Vogels bought a painting, it could launch an unknown artist’s career – other collectors would follow.

Their collection was so valuable that after only ten years of collecting, they could have sold their paintings and retired to a millionaire’s lifestyle. But they never sold a single work. By the time they finished, their collection was described by a curator at the National Gallery as “literally priceless”.

I have identified some of the methods the Vogels used to build their collection:

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Enron: The Smartest Guys in the Room

The story of Enron’s spectacular rise and collapse is a foreshadowing of the 2008 financial crisis. In the movie Enron: The Smartest Guys in the Room, we learn how a small company takes advantage of a change in the laws to puff itself through fraud and bluff into the sixth largest company in the USA only to collapse overnight.

Although the film is a documentary, the story is so amazing it held my attention throughout its 110 minutes. It contains many practical investment lessons. There is, however, some nudity, swearing and the depiction of a suicide.

This article is 1500 words, if you don’t have time to read it now you can skip to the bottom to find my list of market lessons.

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Surrender Control to Achieve Your Purpose.

700 words.

After talking on the phone for a couple of hours, my colleague turned to me with a satisfied smile and said “she finally got the message.” He had been considering her application to be accepted as a charity and this phone call was his attempt to settle months of letters and emails back and forth with her.
This philanthropist was trying to establish a charity with the fortune she built through years of hard work and careful investment. But she didn’t want to risk losing control of it. She didn’t understand why there needed to be a committee of independent persons to oversee the institution she was going to establish. Not only that, there were a lot of other, to her mind, ‘minor nuisances’ that my colleague wanted her to comply with and which would put her money further out of her reach. Not that she would use the donations for her own purposes, but that the final decisions would be made by a committee.
Towards the end of their conversation, a light must have gone on. The lady started to thank him for refusing her original application and turning her plans upside down. She realized that for her charity to survive after her death, she had to give up control of it now.

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Protect Your Brain, Improve Your Career

Fortune Magazine published a short article noting that some of the habits psychologists say we should adopt to avoid dementia in later life are also the kind of habits which will make us more successful in the office workplace. They are:

  1. Never stop learning;
  2. Immerse yourself in another culture, learn a new language;
  3. Seek out stretch assignments (ask your boss for harder jobs);
  4. Manage stress; and
  5. Have lots of friends.

I think they’re good ideas for new year’s resolutions. Useful whether you work in an office or not.

On point 5, they say the maximum number of friends anyone can keep track of is 120. I don’t think I have anywhere near that number. I wonder what they mean by ‘friend’? I’m going to start counting. In the meantime, how many friends do you have? What is the best way to make new friends? Leave your thoughts in the comments.

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Consumed

 

This documentary could have been twenty minutes shorter without losing much of its message. But it’s worth watching as an introduction to thinking about adopting a more minimalist lifestyle.

It discusses how consumerism developed and took hold after the second world war by appealing to our psychological impulses. None of this is new, but it helps remind us that material possessions do not bring happiness.

I disagree with the gloomy assessment that we are populating the planet to infinity, peak oil etc. Yes, we are continuing to destroy nature, but as we become more prosperous, population growth declines and we take more interest in ‘green’ issues. I am hopeful that scientific advances will allow us to have less impact on our world. However, our individual contributions to conservation, recycling, minimalism, localism etc. are not insignificant.

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Getting a Job – How to Follow Up After the Interview.

530 words.

You’ve got your heart set on getting that job. You’ve had the interview and given it your best shot. But the interviewer was non-committal, told you they’d let you know in a few days.

But every day seems like an eternity. Surely they know by now? Maybe they lost your file? You want to phone them, just to put yourself out of your misery. But maybe they’ll get annoyed and you’ll lose any chance you had?

Here’s what to do.

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Understand Your Emotions to Make Money

1540 words

Successful investors are able to ignore their emotions when they make a financial decision. This is particularly true with shares. In this synopsis of an essay ‘The Emotions of Risk’ by Richard A. Geist, a psychologist, we think about some of the different kinds of emotions we feel about our investments. Recognizing these emotions and their likely sources can help us improve our decision making skills.

The result of any investment decision is always uncertain because of these unpredictable factors:

  • the company and its management;
  • other investors in the marketplace;
  • the randomness of world events; and
  • the psychological reactions of investors and our own reactions to the above factors.

An investors attitude depends on experience. Someone born on the plains expects the ground to always be even, constant, predictable. Someone born in the mountains is much more careful when he goes for a walk, expecting a landslide at every incautious step. It’s the same with investors, some have had an easy ride, others have memories of disaster. They carry their experiences with them as if what happened in the past will continue into the future forever without end.

Definitions of Risk

The way we measure risk is by volatility. If a company’s price is always falling and rising by 20% more than the market, then it is a risky, or volatile, investment. Investors who buy volatile stocks need to be compensated by expecting a higher reward than they would get from the general market (market return).

When looking back at our trading results, in addition to the profit or loss, we should also think about:

  • how long the investment lasted;
  • how greatly the loss of the investment would have affected our wellbeing;
  • the amount of fear we experienced; and
  • how much volatility we accepted

among other things.

Some techniques we can use to lower the chance of loss include:

  • dollar cost averaging;
  • hedging;
  • low expenses;
  • minimum turnover;
  • diversification;
  • careful asset allocation;
  • buying with a margin of safety;
  • sell disciplines;
  • careful fundamental evaluation; and
  • valuation of companies.

The Psychological Capacity for Assuming Risk

There are two types of risk: systemic risk and company risk.

Systemic risk includes factors such as interest rates, inflation and credit crunches. These are the unavoidable risks which come simply from being in the market.

Company risk includes all the factors that affect individual companies, such as management, product, services, industry and business decisions.

Company risk can be diversified away by owning 10 to 15 stocks in different industries. but this is no guarantee against loss, only against losing everything at once.

How much risk you are willing to take depends on your age, income, savings, future needs for cash, investment time horizon etc.

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