Joshua Saunders

To some, good ideas come quickly and easily.  To others, there is a strong desire to run your own business, but don’t have any idea of what to do.  That’s where franchises come in.

There are many great reasons why a franchise may be right for you.  You have the advantage of knowing the history of the company and its past success.  You have the power of a brand name behind you and a support system.  These are very important issues if you don’t have a lot of experience running a business; and even if you do have experience, they are still beneficial.  franchise opportunities are lower risk than new businesses, often have an established customer base, and can provide marketing support for the business.

There are franchises out there for everyone.  Some major franchises will require a strong background, significant liquidity and net worth, but there are also a ton of low cost franchise opportunities available.   Other than cost, there are business opportunities available for almost any industry.  From food service to cleaning to lawn care to automotive, there is sure to be something that interests you.

Before you jump into the deep end with franchises, you need to do your homework.  Spend time researching a large variety of franchises.  Check otu resources such as Inc. and Entrepreneur Magazine.  The magazines publish franchise information and rankings all the time.  You could also find information at the About page here.  Or check out this list of the Top 50 Franchises.  Finally, in your research, be sure to check out the International Franchise Association, which provides a lot of valuable information.

When the economy is struggling, the Fed lowers interest rates to encourage investment.  There are two major downsides to this for consumers.

1.  Inflation increases.  As we have seen, the price of many goods has increased.  Economics 101- As inflation increases, your purchasing power decreases, meaning you could now buy less with the same amount of money.

2.  Lower interest rates encourage investment.  If you are looking to borrow money, this is a great time to do so.  The flip side is that if you’re lending, you are getting a lower interest rate.  And when you put money in your savings account you are doing just that, lending money to the bank.

Savings accounts almost always pay very low interest rates.  For the average person, expect tenths of a percentage point from major banks.  You could do a lot better from specialty banks such as ING or Emigrant Direct.  Even these banks have significantly lowered there rates, ING is only offering 1.75% now for accounts up to $50,000.  If you have more money, you can do a little better with these or money market accounts.  But the fact remains, with low interest rates and high inflation, you aren’t in a good position.

In comes the stock market.  For newbies out there, dividends are cashflows paid to equity investors (shareholders) in the company.  Established, profitable companies often pay dividends to investors in return for their equity investments.  New, high-growth or unprofitable companies tend not to pay dividends.

While I always suggest investing in a diversified portfolio of investments for the long-term, investing in high paying dividend stocks and funds can also be a great way to save, for the short or medium term.  One thing to note, dividends are taxed, either as income or as a qualified dividend (based on holding period), so when considering the cashflow include the discount for the taxes you will pay on it.  There are tons of great stocks and funds that offer great dividends.  Some basic info you should know:

- Preferred Stocks: have first rights over assets of the company after debtors and are more like bonds - some pay decent dividends.
- Stocks: As I said earlier, some pay nothing at all, some pay great dividends.  Just because a stock pays high dividends, doesn’t mean its a great company, the stock price could still decline.  (Watch out Pfizer!!!)
- REITs: Real Estate Investment Trusts are vehicles used to invest in, you guessed it, real estate.  By law, REIT’s must pay out at least 90% of their profits in dividends, making them especially appealing.  However, they have tanked in recent years with the real estate bubble.  Watch for these making a comeback now though.
- ETF’s: Exchange Traded Funds are a collection of stocks, similiar to a mutual fund.  It is a great way to diversify holdings if you don’t have a lot of money to invest.  There are also some good ETF’s that pay decent dividends.
- Dividends and Dividend Yield: Dividends are specified in dollars per share.  So a divident of $1 will pay $1 for every share you own.  The lower the stock price the more shares you could buy obviously, so an important measure is the dividend yield.  This specifies the dividend paid divided by the stock price.  When comparing stocks, the dividend yield will directly show you which paid a higher dividend compared to its stock price.
- Dividends are paid to shareholders of record on a certain date.  This date is called the Ex-Dividend date.  It is not the same as the date the dividends will be paid.  And… companies are NOT required to pay dividends.  They can change their dividend at any time or simply not pay it.  Although this will have reprecussions on their stock price.

Hopefully, now you can see why dividends can be a good investment strategy for saving.  If you are looking to save as part of a long-term strategy, I would strongly advise you reinvest dividends.  This means you aren’t paid the dividends in cash, but instead get them in stock.  This additional stock compounds and leads to higher dividends and more stock ownership over time.  Right now is a good time to look at dividends that can make you more than a savings account.  There are endless options of investments with yields from 3% to 15% that may be good buys.

Tomorrow I’ll provide my own specific recommendations.

As my previous post focues on real estate investing, I thought I would share a little bit about some different types of online trading you may not be aware of.  As part of an investment strategy and portfolio, you should diversify your holdings according to the risk and return you are looking for.  There are many discount brokerages that can offer basic trading and options trading on the major exchanges, but there are also other opportunities abound.

As you’re aware, the price of oil is skyrocketed, up over $130 a barrel.  What is driving these prices?  The speculation on the futures market.  Investors are investing in oil contracts on large margins.  some are becoming quite rich, while only time will tell what happens to the others.  CFD Providers (Contracts for Difference) is a similiar trading methodology.  These offer trading on almost all exchanges, including Forex markets, futures markets, and soft commodities.  If these types of stock trading programs interest you, you may want to check out this online stock market trading broker.  A CFD is essentially a contract between two parties where one party pays the difference in the value of an asset between the current and contract time.  It is a type of derivative where you can take long or short positions without actually owning the equity, but unlike futures CFD’s have no fixed expiration or contract size.

As with any investment, especially ones that rely on high margins, you should be educated on what you’re investing in.  So I suggest learning all you can about futures, CFD’s and other derivatives before jumping in head first.

For years you have heard people talk about investing in real estate.  You had the very successful flippers in the early 2000’s that made off like bandits and you had the amateurs that jumped on the bandwagon that lost a lot of money years later when the homes wouldn’t sell.  Real estate can be a great (and sometimes risky) investment, but like other investments, you need to know what you’re doing.  That’s why you may want to check out Nouveau Riche University.

Portfolio theory suggests diversifying your investments as much as possible, and this should include investing in real estate.  But what kind of investments should you make?  Should you buy residential homes, commercial property, REIT’s, or something else?  And how do you go about learning all you need to know.  One such place to learn is Nouveau Riche, which offers education for adults to learn about real estate and build their wealth.  The courses offered teach you how and where to invest to maximize your return and is taught using proven educational methods.  One of the mosti mportant aspects to real estate is finding the right deals.  As is often said… Location, location, location!  To that end, you may want to check out Nouveau Riche, which includes a network of real estate acquisition specialists.  They help real estate investors be more efficient in building a real estate portfolio.

People are finally realizing that the results coming out of Google’s Search Engine for paid placements are low quality advertisements.  An article by Henry Blodget and the announcement by comScore of Google’s awful growth in paid clicks, should have investors worried.

U.S. paid-click growth in March was as bad as in February — up only 2.7% — rounding out a violent deceleration in Q1, says comScore (per Mark Mahaney at Citi). In all of Q1, Google’s U.S. paid clicks rose only 2% year-over-year versus 25% in Q4 and 48% in Q3.

According to Mark Mahaney at Citi, two factors are at play:

Potential Causes - Assuming the data is accurate, we could see two factors behind the Coverage Ratio decline:

1. Google’s ongoing efforts to improve both lead quality for advertisers and the user experience for searches.
2. A macroeconomic dampening of commercial queries by searchers [uh oh].

Deceleration Drivers - Consistent with 2 prior months, Paid Click growth deceleration to under 3% Y/Y was driven by another month of low-teens decline in Google’s Coverage Ratio and a low double-digit decline in Google’s Click Thru Rate offsetting the 33% Y/Y growth in March searches on Google’s U.S. Websites (an acceleration vs. roughly 30% Y/Y growth in February).

I recently was sent this powerpoint tutorial on the subprime mess and it is pretty damn funny.  It gives a very good overview of exactly what happened and why we are in the mess we are in.

Tutorial on the Subprime Mess

First, when recessions are building and when economic activity slows, the landscape always looks uniquely bleak. Commentators always say, “This time it’s different and this time it’s going to be another Great Depression.” It isn’t going to be another Great Depression, not by a long shot.

The Great Depression was caused by a Federal Reserve deliberately trying to slow down the economy and drastically overshooting its mark over and over again. This time, the Fed is actively stimulating the economy and flooding it with liquidity. To be sure, this effect is damped by the dim mood on Wall Street, but it always eventually gets traction and money starts to spread throughout society.

Unless the Fed is actively seeking to crimp economic activity — as it did in the late 1970s and early 1980s, when we had the worst postwar recession — there will not be a genuine depression. There could be a recession and there probably will be, but a real depression, with long-term unemployment over 15 percent, is a most unlikely prospect with a pro-expansion Fed.

Buy Now, Reap Later

In a word, this is going to be a rocky time for a while. Good people will suffer. But we’ll get through it, and there will be no Great Depression in the foreseeable future.

If you have a good, long time horizon, it’s time to buy European stocks, emerging markets, even our own market. But don’t let yourself get short of liquidity. If you have a few years of cash and bonds on hand, get some stock now while there’s blood in the streets. The good times will come back when you least expect them.

Article except written by my favorite economist, Ben Stein.

The economy is slumping and no market is looking good, whether it be the stock market, housing market, or the prices you pay at the grocery store.  But there are some things you can do to take advantage of the situation and prepare yourself for the future.  Here are some tips:

Pay down debt with your refund and stimulus check
Average tax refunds are over $2000 and the tax stimulus plan will put hundreds of dollars into ordinary American’s pockets.  The government intended for you to spend this money to stimulate the economy.  Don’t be tempted…  Pay off your high interest debt.  A majority of Americans have CC debt, pay it off now.  Don’t even save some of your refund to buy a gift…  lower your debt.  The government won’t always be this friendly and hand money back to you.

Take advantage of life insurance
Term life insurance has been declining in price over the last decade, 33% for some categories.  For as little as $30/month you can get a 20 year $500,000 policy.

Don’t take a loan out of your 401k
Let’s not be stupid here during the recession.  18% of people currently have a loan out of their 401k.  The problem with taking a loan out of your 401k is that you pull out pretax dollars, but pay it back with money you’ve already paid taxes on.  When you withdraw the money at retirement, you’re essentially double taxed.

Invest Long Term - Invest in the Stock Market
The best advice I could give here.  Sure the market is volatile and gaining and dropping hundreds of points a day.  But the market is correcting and at a low point right now.  Haven’t you ever heard “Buy low and sell high?”  The best time to buy is when the market is at the low point.  Is that low point right now, know one knows for sure, probably not.  But it’s definately going to go back up given time.  With that said, invest for 10-20-30 years down the road.  Diversify in international stocks and various indexes.

Ben Stein wrote a very good article a couple days ago that I completely agree with and have been spouting for months.  The economy plays on people’s fears.  the media hypes the falling economy because it is more newsworthy.  I am pasting this article verbatim.  Feel free to comment.

This is going to be a bit controversial. Bear in mind that I often make mistakes and could be wrong about some of this, but it’s all food for thought.

Irrational Pessimism

First of all, markets are made up of human beings, and human beings can be irrational. They can be irrational on the upside, they can be irrational on the downside.

We saw “irrational exuberance” in the late 1990s, and it led to a crash. I believe we’re now seeing highly irrational pessimism in the markets, especially the credit markets. The gloom comes from the bad results that banks and other lenders got when they loaned money on mortgage obligations in the form of collateralized mortgage obligations. These instruments were never meant to be as safe as AAA bonds, but they were thought to be much safer than they turned out to be.

Beware of Cold Stoves

There have indeed been major defaults in mortgages. Just as important, there’s been wild speculation on indexes tied to mortgages, and this speculation by itself has led to immense losses in mortgage-linked investments. To a large extent, these losses will be recovered when the subject properties are sold and when speculation goes to the long side. But for now, national and local banks are sitting on big losses.

This has scared them about lending on anything at all. It shouldn’t, but it does. It’s sort of like the old saw about the cat: Forever after jumping on a hot stove, it’ll be scared of hot stoves. But it’ll also be scared of cold stoves.

Fear Working Overtime

So, lenders are terrified of loans even to very sound borrowers. Just to give an example, banks are scared of lending even on Fannie Mae and Freddie Mac bonds — even though these bonds are backed by the federal government and can’t default by any likely standard.

This reluctance to lend is causing a credit crunch, and this is terrifying markets and newspapers everywhere. This fear has knocked down the Dow by over 2,000 points from its October high. It’s led to strong fears of a recession and to a slowdown in hiring and investment as businesses cut back their borrowing and spending.

By this point, the banks and bankers are terrified that they’ll be fired if they make bad loans, and that if by some lightning strike of improbability their loans to good borrowers fail, they’ll see their banks fail altogether. Again, that’s irrational human fear at work.

The problem is that even irrational fear can have real consequences, and can indeed cause a serious recession — even if the actual losses in mortgages aren’t large enough to cause one by themselves. In fact, that’s what’s happening right now.

Let the Healing Begin

So what to do? First, bear in mind that irrational markets eventually get a taste of reason. Also bear in mind that, as Warren Buffett says, markets are at first a voting machine, but always eventually become a weighing machine. Reality will triumph, and the credit markets will get their act together, loans will start to be made, and credit will begin to flow.

But why not get the healing process started today instead of waiting for a bad recession? Why doesn’t Mr. Bernanke call in the big bankers and tell them he’ll make sure none of them fails? Why not tell them the Fed will always be there to bail them out and recapitalize them if need be? Why not stop solvency-risk fears today? Why wait until another day? Why wait until a million or 2 million more people lose their jobs or homes or both?

Further, why not tell the banks that a condition for recapitalizing them is much stricter regulation about lending policies — not lending against bad collateral, not lending to borrowers with no credit history? Why not also impose rules about executive compensation to keep top brass from looting their own stockholders even as they kill their own companies?

Regulation to the Rescue

It’s a myth that all regulation is bad. In banking, regulation saves greedy, foolish people from killing their own banks and the economy in general. Let’s save the banks, save the economy, and lay the foundation for a smarter tomorrow — starting today.

And then let’s investigate what role speculation by hedge funds against the credit markets has played in our current problems. Some killers have made a bundle out of our troubles; let’s find out exactly what they did. It’s going to be a scary story, but that’s fear for another day.

According to a recent study conducted by ComScore, Starcom, and Tacoda, approximately half of all clicks on display ads are generated by only 6% of internet users.  So who makes up this 6%?

• 25 to 44 years old
• Income less than $40,000
• Spends a lot of time only, but not a lot of money
• Frequents auctions, job boards and gambling sites

Unfortunately, this group doesn’t exactly fit into most company’s target market.  So the next time you’re worried about how many clicks your ads are getting, cut that number in half.