Message #1202 Friday, August 27, 2004 "An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to pay attention to and what to ignore."
Edward de Bono *** * For Your Wealth: Three ways to limit your risk when you buy a stock * For Your Health: Catnip isn't just for cats. * To Make You Wiser: Become a creative thinker in 15 minutes a day. * Today's Essay: The Richest Man in Babylon, Part 3 Plus: * Today's Action Plan * A lesson about goal setting from an 8-year-old cancer victim * The secret of "reduction" * What the word "heady" means *Advertisement* Ralph's Cancer was the worst case the Mayo Clinic had seen in 20 years? Eight years ago, Ralph's cancer was so bad... they'd given him Last Rites. But a little known, non-drug therapy brought him back from the brink of death. Today, his doctors call him... The Miracle Man. Learn the natural secret that saved Ralph's life after drugs, chemotherapy, and everything else in conventional medicine's "bag of tricks" couldn't. http://www.agora-inc.com/reports/HSI/W6HSE812 WEALTH Three Ways to Limit Your Risk When You Buy a Stock If you've done your research and are sold on putting some of your investable funds into a certain stock, there are three ways to limit your risk: with a "market order," a "limit order," and/or a "stop-loss order." When you call your broker, here's what you tell him: 1. "Buy this stock at this price." (This is a "market order.") 2. "Buy this stock only if it hits this price." (This is a "limit order.") 3. "Sell this stock if it falls to this price." (This is a "stop-loss order.") HEALTH Catnip Isn't Just for Cats As we all know, catnip, a member of the mint family, gives cats a harmless "high." Though some felines seem to be immune, about 80% of them (including lions, pumas, and leopards) react to the intoxicating smell that the essential oils in the plant give off when the animal bites, chews, rubs against, and rolls in it. But catnip is also a natural remedy for several human ailments. When made into a tea, it promotes sweating and is beneficial for fighting colds, the flu, fevers, and infectious childhood diseases. It is soothing to the nervous system and calming to the stomach. It helps with flatulence, diarrhea, colic, and even morning sickness. And it is sometimes used as an enema to cleanse and heal the lower bowel. WISDOM Become a Creative Thinker in 15 Minutes a Day Developing the ability to think creatively, as with any other skill, is largely a matter of habit. Practicing daily is the best way to do it. Give yourself 15 minutes a day -- early in the morning or late at night. The only things you need are a problem to work on, a pad of paper, a pencil, and a quiet place to sit. Begin by listing, as rapidly as you can, all the ordinary and obvious possible solutions, even those you know in your heart won't succeed. Then draw up a second, shorter list of more innovative ideas. Try to come up with at least two or three. Finally, select the idea that seems best and list its strengths and weaknesses. The whole process shouldn't take more than 15 minutes -- and if you invest 15 minutes a day in this sort of problem solving, you'll be amazed at how good you get at it. *Advertisement* A Savings Account that Earns 32.7% Per Year You'll never hear about this account at your local bank: * There's No Minimum or Maximum Deposit * It Keeps Your Money 100% Liquid * It can pay you dividends, and? * Bring you 30 times the annual return of a Typical Savings Account With one phone call, the only savings account used by Wall Street's greatest investors can earn you 30%+ per year... with dividends as high as 124%. To find out more about the Expert's Savings Account, click here: http://www.agora-inc.com/reports/EVI/WEVIE722/home.cfm TODAY'S ESSAY: Introduction: Before we get into today's essay, let me ask you a quick question: How do you like our new format? Today marks one full week since it began . . . and we're really interested in your opinion. Let us know what you think on "Speak Out" by clicking here: http://speakoutforum.com/forum/ Now, let's get down to business. On Tuesday, when we left our friend Akard, the richest man in Babylon, he had just finished telling the wealth seekers Bansir and Kobbi the second secret of wealth building: that before you spend money on anything else (even on paying your taxes), give at least 10% of it to yourself. This is the money that you will invest in order to start building your fortune. Today, we learn another, equally powerful, secret of getting rich. The Richest Man in Babylon, Part 3: The Importance of Expert Advice As we said on Tuesday, it's almost impossible to build wealth unless you develop the habit of saving. And to do that, you have to "pay yourself first." That's what David Bach's book "The Automatic Millionaire" is all about -- and it is the lesson Bansir and Kobbi learned from Akard in the second chapter of "The Richest Man in Babylon". But then Akard goes on to explain to them why, though it is important, saving is not, by itself, enough to make you rich. He continues with his story: "I thought about what [Algamish] had said to me, and it seemed reasonable. So I decided that I would try it. Each time I was paid, I took one from each ten pieces of copper and hid it away. And strange as it may seem, I was no shorter of funds than before. I noticed little difference as I managed to get along without it. But often I was tempted, as my hoard began to grow, to spend it for some of the good things the merchants had displayed, brought by camels and ships from the land of the Phoenicians. But I wisely refrained. "A twelfth month after Algamish had gone, he again returned and said to me, 'Son, have you paid to yourself not less than one-tenth of all you have earned this past year?" Akard answered proudly, "Yes, master. I have." "That is good," said Algamish. "And what have you done with it?" "I have given it to Azmur, the brick maker, who told me he was traveling over the far seas and in Tyre he would buy for me the rare jewels of the Phoenicians. When he returns, we shall sell these at high prices and divide the earnings." "Every fool must learn," Algamish growled. "But why trust the knowledge of a brick maker about jewels? Would you go to the bread maker to inquire about the stars? No, you would go to the astrologer, if you had the power to think. Your savings are gone, youth. You have jerked your wealth tree up by the roots. But plant another. Try again. And next time if you would have the advice about jewels, go to the jewel merchant. If you would know the truth about sheep, go to the herdsman. Advice is one thing that is freely given away, but watch that you take only what is worth having. He who takes advice about his savings from one who is inexperienced in such matters shall pay with his savings." So saying, Algamish went away. I've witnessed Akard's sad story more times than I'd like to admit. In the more than 30 years that I've been marketing investment and wealth-building conferences, I've seen dozens of overeager investors lose fortunes. Some of them were separated from their money as the result of falling victim to cheating, lying, and other sorts of knavery. But all were guilty themselves of making some form of the stupid mistake Akard made during his early attempt to become wealthy: taking moneymaking advice from someone who didn't actually know anything about it. It's astounding how many people do that. Some time ago, I told you a story about a nice lady I know -- how she invested all her money with a broker because he was the son of a nice lady who did her nails. Other friends and family members lost thousands because they listened to the well-intentioned advice of a relative of mine who became enamored with the idea of Internet stocks and began pushing everyone he knew to do what he was doing -- to follow his lead and invest in the stocks he had been investing in. He didn't actually know anything about the stocks, but he had made some profits on them and that was enough to convince others. All told, this single source of well-meaning financial advice must have accounted for more than a million dollars' worth of eventual losses in addition to his own. So much for good intentions. Many self-proclaimed investment experts . . . and even state-authorized financial experts, for that matter . . . don't necessarily know what they are talking about. Brokers must pass a battery of tests before they can start selling stock, but none of those exams can predict how seriously they will study the stocks they recommend or how well those stocks will perform in the free market. Although some investment experts do have substantial and impressive track records (and we identify who those are for you regularly in ETR), most do not. Countless studies have shown that, over the long run, 80% of the experts out there can't beat market averages. That's an important fact to consider when it comes time to decide how you are going to invest your savings. Because you can't expect to get wealthy today unless you find a way to earn a moderately high, yet very conservative, ROI on your invested funds. As Arkad learned, you need expert advice . . . but how do you get it? First, recognize the difference between investing and wealth building. As Porter Stansberry said in a recent e-letter to his readers, "Investing is only one part of the formula for becoming independently wealthy. The other part is developing substantial streams of income to support your lifestyle and to provide capital to fund investments." If making wealth building your goal is the first secret to becoming independently wealthy and if developing the habit of saving ("paying yourself first") is the second secret, getting good advice about how to invest your savings is secret No. 3. Akard loses his savings by entering into a gem deal with a brick maker. The result was a disaster, as Algamish had predicted: "It was as he said. For the Phoenicians are scoundrels and sold to [my friend] worthless bits of glass that looked like gems." The good advice Akard gets from Algamish is simple: Get your financial advice not from someone who has simply heard about an investment but from someone who understands it, has personally profited from it, and is willing to share his knowledge and experience with you. The interesting thing about the world of financial advice is that the more valuable the advice is, the less you are usually asked to pay for it. This is an irony that I have talked about with many of the smartest financial experts I know. The really heady (see "Word to the Wise," below) knowledge -- the profoundest truths and most powerful secrets -- are available free and freely to all who want them. These are the time-tested, experience-proven truths that great books from Aristotle's "Poetics" to Ben Franklin's "Poor Richard's Almanac" to "The Richest Man in Babylon" have in common. The same secrets we talk about in ETR: * Make wealth building your goal and develop a detailed plan to achieve it. * Keep a part of what you earn. * Get advice from people who truly know what they're talking about. This sort of advice is what you get when you speak to people who have a lifetime of financial success behind them. Ask them a question about how they became so successful and they will usually give you an answer that sounds rather ordinary. I remember talking to a real-estate mogul -- a guy who had about a billion dollars' worth of apartment complexes and other rental properties. "You have to begin by buying cheap," I suggested. "And then you have to consider the tax implications . . . and then . ." I rattled off the half-dozen little secrets I had read about. "I don't know about any of that," he said modestly. "I've had only one rule in my career: "To buy . . . and then keep buying." So his advice . . . his very good advice . . . is so simple that you couldn't possibly charge money for dispensing it. The same is true in the world of stocks and bonds. The best advice that you can get in that area can probably be summarized in a single chapter of a single book. (And, with some help from a few friends, that's exactly what I'm doing in a new book on wealth-building that I'm writing.) The less-important advice -- what particular stock to buy . . . what bond gives you a quarter-point better yield . . . how to get 10% better financing on a rental property -- is the stuff of all the courses that are sold to wealth seekers. (And I include ETR's and Agora Publishing's programs in this group.) It's not that this more-specific advice is worthless . . . far from it, it can be very valuable. But it will never be nearly as useful as the simple stuff. *Advertisement* If You Have Children or Grandchildren Then You Absolutely Must Read This Letter It's about how you can give them something you probably didn't have -- a guaranteed lifetime of wealth. It's an amazingly simple yet brilliant program that will ensure that your children and grandchildren become financially secure--even wealthy--without getting lucky or even getting rich! http://www.seedsofwealth.com/etr1 TODAY'S ACTION PLAN So, back to the question: How do you get good wealth-building advice? 1. Eschew the advice of amateurs -- friends, family members, and the like. 2. Avoid experts who have earned their living teaching, never actually doing. 3. Be leery of commissioned salespeople. They are not all bad, by any means. But their compensation is tied to how much you invest, not how much you profit. 4. Don't go back and forth between advisers. Find one who is willing to give his best secrets free. Make sure those secrets make sense to you. Examine his track record for making recommendations. Commit only a small portion of your savings to his care until you have confidence in him -- and even then, increase the amount you put in his hands slowly. You'll get a lot of the best kind of advice -- good advice from people who really know what they're talking about -- at ETR's Wealth-Building Bootcamp to be held October 5-8 in Delray Beach, Florida. To find out more about the Bootcamp, click here: http://www.agora-inc.com/reports/700SETRBC/W700E883/ MOTIVATION A Lesson About Goal Setting From an 8-Year-Old Cancer Victim You may have read about Alexandra Scott, an 8-year-old Philadelphia girl who died from cancer early this month -- but not before setting a remarkable example. At the age of 4, she opened a lemonade stand to raise money for the hospital where she was being treated. She earned $500. The next year, she raised $12,000. Earlier this year, Alex inspired supporters to open "Alex's Lemonade Stands" for one day (June 12th). The effort brought in $200,000. By the time she died on August 1st, she had helped to raise $700,000. Volvo added $300,000 so Alex could reach her goal of $1 million. Her mother, Liz Scott, said this to the Associated Press about her daughter's achievement: "Talk about having a purpose in life! [Alex] defined that for us, for sure." LIVING RICH The Secret of "Reduction" Professional chefs know that reducing a liquid by boiling it down concentrates and intensifies its flavor. You can use this simple method to make a simple home-cooked meal taste like something served up by the pros at premium prices. For example, reducing a simple combination of inexpensive red wine and freshly ground black pepper produces a sauce that will make your steak taste like the ones you get in expensive restaurants. Saute some sliced mushrooms in butter, add the red-wine reduction to the pan, and pour the whole thing all over your steak or burger. Wow! WORD TO THE WISE Something that is "heady" (HED-ee) is intoxicating or exhilarating. Example (as used in today's essay, above): "The really heady knowledge -- the profoundest truths and most powerful secrets -- are available free and freely to all who want them." Michael Masterson Copyright ETR, LLC, 2004 ALL CONTENTS OF THIS E-MAIL ARE COPYRIGHT 2004 BY ETR, LLC. ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF EARLY TO RISE. Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to 5 years in prison and $250,000 in fines. Are you having trouble receiving Early to Rise messages? 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