House for Sale in Grandville – Not yet Listed with Realtor

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Simple Truths

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Dave Ramsey EntreLeadership Recap September 21, 2012

I just wanted to let you know what an inspiring day we had as business owners, leaders, parents, and individuals.  Dave Ramsey and his team of speakers brought us vital insights on the important aspects of leadership.   He took his usual simple yet profound message to communicate and challenge the audience to identify the positives and negatives that affect leaders which in turn affect your business.  Even if you are not an owner of a small business, Dave’s key ingredients to leadership can be applied if you are a leader in any area.

Here were some of his key points:

There are Five Main Enemies of Unity

    1. Poor Communication
    2. Gossip
    3. Unresolved Disagreements
    4. Lack of a Shared Purpose
    5. Sanctioned Incompetence

Elements of Good Decision Making

    1. Ask your spouse about all major decisions.
    2. Ask the experts; find several people who know more than you. 
    3. An expert is someone who has done it lately, not someone who has an opinion.
    4. Take time; proportionate to the impact of the decision; the larger the impact of the decision, the more time you take.
    5. Options and walking through the worst-case scenarios can virtually eliminate FEAR.
    6. Deciding not to decide can be the right decision!
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MONEYBALL – Movie Review by Steve Vanderwey

I am a harsh critic of movies in general and I do not watch many movies.  That’s why I thought I’d share one that I found worth watching.  I found themes and lessons in this movie that resonated with me (and baseball seems to lend itself to good stories – I don’t know why.) 

Put it on your watch list and let me know what you think of the movie.  Check out the movie review from the Dove Foundation for evaluating offensive content.

I could identify with the main character, Billy Bean.  He acts on his convictions.  He is passionate about his work.  He wants to win.  He is threatening the establishment simply by executing his strategy.  He is not distracted by short term results.

This movie has a lot of parallels to the Free Market Investing strategy we advocate for our clients’ invested savings.  I hope you like the movie as much as I did.  Here is what got me excited about the picture:

  1. Baseball and Investing.  This is a baseball movie and says little or nothing about investing savings.  However, the main character, Billy Bean (played by Brad Pitt) came to a place where he realized he could not win games using the traditional methods for acquiring players.  It was a multi-million dollar guessing game with no clear evidence for success.  The same is true for your investments!  This is precisely why we left the traditional methods for investing money.  Traditional money management is a loser’s game of speculating and gambling. 
  2. Perseverance.  Billy Bean believed in the strategy and stuck with it.  We need to believe strongly enough that the short term results (good or bad) don’t distract us.  Perseverance is a character trait built on faith and convictions.  To win in baseball and with investing you must persevere!
  3. Attacks.  A great quote in the movie “I know you’re taking it in the teeth out there, but the first one through the wall always gets bloody, always…”  When Billy begins to implement the new strategy, the baseball establishment feels very threatened.  Statistics and the academic research prove to be a superior method of picking baseball players for a winning team.  The same is true for Free Market Investing.  As Free Market Investing gains market share, we will be increasingly attacked and discredited.  A multi-billion dollar financial services industry and media will be exposed and they will not let go of their billions in fees without a fight.
  4. Purpose.  This has to be about more than money.  In another quote from the movie, Billy tells Peter, “I made one decision in my life based on money, and I swore I’d never do it again.”   The best decisions are not easy and they offer no quick payout.  Investing is no different.  Know your purpose!  I challenge you to consider your purpose in the light of absolute truth.  These are things that never change.  Truth and purpose clarify life’s most important decisions.

Enjoy the movie!  Let me know your thoughts about it.  Let me know of movies you found to be worth watching.

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Prediction Addiction

Americans are increasingly addicted to forecasts and predictions.  There are experts in every imaginable field predicting every detail of our future experience:  weather, politics, sports, finances, farming, global climates, etc.  Nothing is lacking a forecast today. 

 I see this first hand every day in the Financial Services industry.  There is an illusion that we are getting better at predicting financial and economic events.  However, the law of large numbers can explain the illusion.  With so many self-proclaimed prophets predicting every possible outcome there is always someone that can claim they accurately forecasted every event.  Consider a coin toss.  One person flipping ten heads in a row is very unlikely.  However, if 10,000 people all flip coins it is a statistical certainty that one of them will flip ten heads in a row.  Problem remains, predict in advance which one will be able to do it.  Successful financial predictions are not evidence of a good prophet but rather a product of the number of prophets predicting. 

Why this growing dependence on predictions?  Are we better forecasters of the economy now than in the past?  NO!  Statistics show that even in the most important financial predictions the experts are no better than a random guess.  Nonetheless, we keep turning to proven failures for another guess about tomorrow’s outcomes today.

This addiction to prediction is growing due to our increasing need to be able to control our experiences.   There is a strong sense that a surprise means we did something wrong; we missed a piece of data, let our guard down, or forgot to do something.  We expect our car to start when we turn the key, the room temperature to be just right, no long waits at the checkout line, and our investments to earn a healthy, steady, positive rate of return – or something failed.  Failure creates uncertainty and anxiety.  Our expectations for predictable outcomes seem so reasonable that we begin to demand certain outcomes.  Financial institutions have heard our demand and are working overtime to satisfy us with an overload of new predictions.  This guessing game feeds on our willingness to continue to pay for worthless advice.  It is time to STOP!  We need to stop giving our savings away to prediction junkies! 

The real solution is not easy but it is very simple.  It starts with knowing the truth.  With all the changes in the financial markets there are some things that never change, they are always true.  Our financial Peace of Mind comes from knowing and holding on to the things that are always true.

An example:  The Free Markets reward risk.  The truth is, you cannot remove all risk and expect to get a market return over time.  The truth is, diversified risk is good, it allows for long term returns on invested assets. 

The truth is, the markets are random and you and I can have Peace of Mind in our investments.   No forecasting necessary!

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