Calm Down: Economic "Bubbles" Are Nothing New

Monday, August 20, 2012
Lost in all of the media frenzy surrounding Wall Street, the “meltdown” and the sub-prime lending debacle are certain lessons from history that can offer some useful perspective — and even have a calming effect. Economic “bubbles” are nothing new, and contrary to what the media might have you think, they don’t signal the end of Western Civilization, either.

In his book, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay wrote, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

That fact is as true today as it was when originally penned in 1841. Even then, speculative market bubbles had come and gone. One of the most curious spread through Holland some 200 years earlier, in the early 17th century. It was a financial epidemic that’s come to be known as “Tulipmania.”

When Carolus Clusius planted that first tulipbulb in the Botanical Garden in the Netherlands in 1593, no one could have predicted the absurd financial maelstrom that would eventually culminate in the “Great Commodity Crash of 1637.” By 1620, tulips had become a status symbol in the wealthiest of circles.

About that time word spread among high society that a mysterious plant virus had infected some of the bulbs. But rather than spelling the imminent demise of the tulip, the virus actually created unusual and beautiful streaks of vibrant color throughout the petals, making the new varieties even more coveted. The rich and famous always clamor for the rare and exclusive, so the prices for all tulip bulb varieties shot sky high. Greedy speculators came from far and wide looking to make a profit; the stage was set for a thundering herd approaching on the horizon.

There was so much excitement that tulip bulbs began trading on the local market exchanges, which operated much like modern-day commodity exchanges. Soon, the fever spread to the Dutch middle class, and everyone from noblemen to chimney sweeps was jumping on the tulip bulb bandwagon. They hadn’t suddenly developed green thumbs or a desire to take up floral arranging — far from it. They were swept up in the mass hysteria, hoping to strike it rich by buying low and selling high. A few did, but most did not.

A single bulb cost as much as a house

The bulb market rocketed out of control so fast it was not uncommon for the price to escalate 20-fold in a single month. In 1637, a single bulb of a particularly popular variety cost 10,000 florins. To put this in perspective, the same amount of money would have bought a nice little house along a canal in Amsterdam.

People who had worked their entire lives for the few possessions they owned began trading everything they owned — including that nice little house on the canal — just to purchase a single bulb. According to journals kept at the time, one person offered the fee-simple of twelve acres of building ground for a single Harlaem tulip. An Amsterdam variety fetched 4600 florins, a new carriage, two grey horses, and a complete suite of harness.

Munting, an author of that day, preserved the following “bill of lading” delivered in exchange for a single root of a rare species called the Viceroy:

Two lasts of wheat
Four lasts of rye
Four fat oxen
Eight fat swine
Twelve fat sheep
Two hogsheads of wine
Four tuns (barrels) of beer
Two tuns (barrels) of butter
One thousand lbs. of cheese
A complete bed
A suit of clothes
A silver drinking cup

As the mania spread, major local exchanges continued trading the bulbs without letup, and even expanded the market by offering option contracts to speculators. In essence, this gave those with less money to spend an opportunity to lose even more. Using leverage, one could purchase an option for a fraction of the cost of the actual bulb.

Leverage is risky business, especially if you’re putting your prize possessions on the line and hoping that the price will rise enough to not only make up for what you still owe but also to return a sizable profit when you sell.

But people swept up in herd mentality don’t stop to consider the risk/reward ratio — or, rather, the risk/ruination ratio. Otherwise, they might never have leveraged themselves so fully. They would have stopped to think that the slightest drop in price could mean not only losing their initial investment but going into debt — or even complete ruination. But of course, bolstered by lusty and mindless hope, people were mesmerized into believing that prices could go nowhere but up.

When a few of the more savvy speculators heard rumors that the Dutch government would soon attempt to set controls on the market, they started pulling out. Thus began the big unraveling. Buyers balked, sales slowed and prices faltered. But nothing can stop Mother Nature; there were still bulbs in the ground ready to be harvested.

Soon the bulb supply outweighed demand, and a slow downward price spiral began picking up speed. Panic set in. The once vibrant, if unrealistic, market for tulip bulbs quickly lost its luster. In less than six weeks, it ended in a resounding crash.

After sorting through all the bankruptcies and defaults, the supreme judges of Amsterdam simply declared tulip bulb speculation nothing more than gambling. All contracts negotiated during the frenzy were made null and void. In other words: worthless.

There were winners, of course — those who jumped in early, understood the psychology of the herd mentality, and got out in time, leaving fools in the rubble. When you compare Tulipmania to the recent “bubble” in real estate, you’d be hard pressed to find a more fitting aphorism: “Those who fail to learn from history are destined to repeat it.”                

Economic Stimulus Hypnosis?

Monday, August 13, 2012
Everywhere I’m hearing or seeing the words “economic stimulus.”

Today I received a flyer and an email announcing an economic stimulus sale from an office-supply store. Unfortunately, 10% off paper and pens will stimulate little more than the chain’s own bottomline.

But I believe we can stimulate our economic situations -- a lot or a little -- by how we think. As a consulting hypnotist who “walks her talk,” I’m already seeing the fruits of this attitude.

- What To Tell Yourself In A Weak Economy

Start by getting rid of the words “weak economy.” Replace them with: new economy, modern economy, an economy that’s re-building, re-starting, resurging, re-growing, refreshing, refocusing, recharging itself.

Find your own favorite phrase that creates a mindset about refreshing your opportunities. Tell yourself you’re up for the challenge, you’re opening yourself to new approaches, possibilities, alliances, and just mixing it up all around.

Make economizing fun. We’ve found a new slew of ethnic restaurants and stands, and guess what -- the food is highly flavored, fresh, and tasty. Cool!

I may never return to the old set of eateries, except for that one amazing sushi place.

- Get Back To Basics In Your Business

Business basics are value, fairness, service, trust, and continuing to know your consumer, including changes in the way he thinks and acts and what he needs now.

Discover which changes you can satisfy. Which would you like to satisfy but don’t know how yet?

Is there a way to make a new purchase freer of risk? I’m looking at new ways to reward loyalty, new referral programs, and opportunities to give new clients a “taste” instead of requiring heftier commitments.

- To Stimulate Your Economics, Tickle Your Mind

Where can you save, make do, create new uses, enjoy simpler pleasures?
Stimulate your personal economy by saving more money and investing it in yourself.

If you’re like most of my clients, this exercise will bring new joy to your life and a sense of creativity and wellbeing.

One client dusted off her crockpot and made inexpensive, delicious stews she hadn’t eaten since college. She invited neighbors who declared it “the best night we’ve had in years!”

Another client pulled out clothes she hadn’t been using, wore three of her older suits with contemporary necklaces, and got more compliments than she had dreamed.

One dad told his kids “no more movies this month” and spent close family time fed by
unlikely inventions and simple activities like make-your-own sundae.

Use these questions to stimulate your own thoughts:

In which areas of my life do I have “all I need and more”?

Am I rich in friends, in love, in ideas and ingenuity? Might I share these with others?

Am I willing to brainstorm ways to enrich the people around me emotionally, spiritually, financially or intellectually?

Can I trade DVD’s so my friends and I can see more movies without buying them?

Can I do potluck dinners, take long walks in a group, share exercise equipment, trade clothes my family has outgrown or tired of?

Now how much can I save with all that?

And how much of the savings can I use to enrich myself and those I love?

- Should Old Acquaintances Be Remembered?

This may be a good time to re-stimulate interest in friends and family members who dropped away from your social circle while you focused on material things: purchases, trips, home improvements. Maybe they couldn’t quite keep up with you, or you with them.

Does it feel appropriate to reconnect and rediscover each other? If it does, do!

You needn’t be a monk to choose simpler foods and activities, re-discovering how wonderful they truly are -- when you have a different attitude.

If you haven’t been attending your church, synagogue, temple or mosque, return for a trial period. You may connect with new people in different ways or re-connect with folks you’ve been too busy -- or distracted -- to see.

-Brainstorm New Contributions To Make To Yourself and Others       

Expert brainstormers let their minds flow, dismiss analysis for the moment, and free themselves to unleash possibilities they hadn’t considered before.

When you use your imagination, you allow for new futures that are not yet concrete.

The more you imagine them, the more real they become to you. And like history’s richest entrepreneurs, after seeing them, feeling them, and hearing them so concretely, you almost can’t help but make them real. (From the first McDonald’s stand to the cool music you purchased this week, these successes were dreamed up out of thin air.)

- Use Economic-Stimulus Hypnosis

The White House may be hoping to stimulate the economy by encouraging spending , but you don’t have to play it that way. The feeling of wellbeing doesn’t come from dollars and cents but from the sense of having all that you need.

As a hypnotist, I want you to know that there is a kind of daily “hypnosis” that doesn’t involve sitting in a hypnotist’s office. You provide it to yourself everyday during most of your waking moments.

It’s your moment-by-moment self talk. Similar to hypnosis, self talk floods you with suggestions about how things are and will be.

Like professional hypnosis, repetition is involved. Repetition strengths the possibility that what is being said to your subconscious mind will stick.

Often hypnosis involves picturing a situation the way you want it to be, making it feel real so the image will permeate your subconscious.

Now here’s the important question about the suggestions you’re currently making to yourself, and the images you’re projecting on the movie screen of your mind….

…are they positive, useful, desirable images of what you want in your life, what you desire and prefer – or do they represent your worst fears, worries and dislikes?

Read that again.

It’s important to know what you don’t want. But don’t dwell there. Take those don’t-wants and explore the do-wants that are their flip side. “I don’t want to be poor” becomes perhaps “I want a stable financial life that supports my goals for myself and my family.”

Get the difference? What you think, say, and picture leads you. Where would you prefer to be led? (I’d recommend the “stable financial life” or better.)

So….about the current thoughts and phrases you’re repeating to yourself: are they what you want or what you fear?

Are they about cutbacks, worries, and projected sacrifices or about new opportunities, deeper emotional connections, old talents revisited and shared?

I insist upon directing the mind toward what is desired, not what is despised. In my office, we accomplish this with words, pictures, and lots of repetition. All of it is positive and within the realm of possibility. (Nothing about sprouting magical wings and flying away from reality.)

Do the same in what you say to yourself because repeated negative thoughts become unintended hypnosis that can produce precisely what you don’t want.

Here’s great news: since you already know how to give yourself negative suggestions (“I’m poor,” “My life is sad,” “I’ll lose my job”), you undoubtedly know how to give yourself positive suggestions.

- Examples Of Positive Suggestions:

Everyday I am moving closer to my financial goals, and I am enjoying the process.
Everyday, I am appreciating my life, my family, and my friends more, and I feel lucky.
Everyday, I’m learning more about myself and getting better.
Everyday, I am appreciating my life more deeply and I enjoy learning and sharing with others.
Everyday, I am becoming a fuller, richer person.
Everyday, I am learning about new ways of living and appreciating, and it’s fun.
Everyday, I find new ways I like my life.

Create more for your unique life. Repeat one or two of these 5-10 times when you would be tempted to lead yourself into despair. Make positive, enticing mental pictures to accompany your thoughts. Enjoy the process of your self-directed economic (and emotional!) stimulus.

And when you receive those flyers directing you to buy more?

Consider them scrap paper and use them to jot down phone messages from friends who want to schedule some great potlucks! © 2008 by Wendy Lapidus-Saltz. All rights reserved.                                              

How To Protect Yourself In An Economic Crisis

Friday, August 10, 2012
Does the current economic crisis have you worried? Are you wondering how to achieve financial freedom so you can protect yourself and your family from the coming financial crash? Here is what you need to know.

The first thing you need to understand is what the word economics means in terms of thinking about your family, and how you can use what it means to your financial advantage.

Forget what the media says about economics when they talk about the roller coaster ride of the stock market, supply and demand, inflation, banking industry mortgage defaults and the unemployment rate. Those are ‘economic characteristics’ that measure an area much larger than you can control.

What you can control is your own household economics. The definition of economics I am using is the original one; meaning “the art or science of managing a household or business.” And that is something that you, as an individual, can control.

There is an art to managing a household. It takes having certain skills and abilities, like organizing things so they run smoothly. There is a science of managing a household, especially in the area involving money. Here is what you can do to make sure that the economics of your household are strong and stable, even though the economy of the country may be on the slippery slide to disaster.

1 – Spend Less Than You Make

Take a lesson from your parents or grandparents who made very little, but lived very well. Keep expenses down to a level below what you bring home in your paycheck after taxes. The fastest road to financial disaster is spending more than you make. It’s possible to maintain your quality of life while cutting optional spending. This can be done by doing something as simple as renting a movie and making popcorn at home instead of going to the theatre, to buying a new used car instead of a brand new car.

2 – Pay CASH

Every time you purchase something using credit cards that you cannot pay off as soon as the statement arrives, you are committing your future earnings to the credit company. Those future earnings will be needed to pay your regular household expenses, so you end up in economic slavery known as the credit trap. The exception is purchasing property that increases in value, such as buying a home or investing in a commercial building that puts more income in your pocket.

Tip: When paying with cash; negotiate a cash discount. When the economy is sliding down and credit is harder to get, the guy with the cash is king. In addition, find out how to buy wholesale instead of retail to further lower your cost.

3 – Make the Money BEFORE Spending It

If there is some large purchase you need to make or want to make in the future, start putting small amounts in a savings account towards that purchase and keep that up until you have the cash to pay for it. If you have 10 years before your child enters college, then find out what the tuition will be and figure out how much you have to put away every week to have the cash the year they graduate from high school. Plus apply for every student scholarship, grant or financial aid package you can locate.

4 – Stash Some Cash for Emergencies and Living Expenses

Nothing will make you sleep better at night than the financial freedom of having some cash tucked away for emergencies like having to get the car repaired, needing some unexpected dental work or losing a job. When you have a cash cushion you can get your hands on immediately, then magically, you stop worrying about money, your attention goes back on living life and enjoying it, and making money suddenly gets easier.

The only thing you have to fear in an economic crisis is not having some cash reserves in a savings plan you can immediately get your hands on. Did you know that more millionaires were made during the Great Depression in the United States than during any other era in our history? How did that happen? In that time, the economy crashed, the stock market crashed, inflation took prices of everything through the roof, the unemployment rate went sky high as businesses closed, and people who lost their jobs also lost their homes.

The people who had cash stashed away were able to buy houses, property and whole companies for pennies on the dollar. They ended up being millionaires because they had enough cash to weather the storm called the Depression.

Out of every bit of income that comes in the door, immediately carve off 10% and put it in a savings account that you have designated for your cash cushion. Even if you have to work an extra job and cut expenses on top of that, JUST DO IT! As the weeks roll by you’ll find you sleep better at night and walk through life with a lot more confidence knowing you have achieved financial fre               

Automotive Sales Training

Sunday, August 5, 2012
In automotive sales training, lectures about relationship building and how vital it is to the life of a successful car dealership abound. But how many salespeople actually remember or apply what they've learned? Over and over again, it's been proven that the level of understanding and application of relationship building basics will separate the successful salespeople from those who are just okay at what they do.

Most successful salespeople don't reinvent the wheel. Instead, they study the examples of others who were successful, and simply duplicate their techniques. This saves time and allows them to move toward their goal.

Are you ready to transform your sales from mediocre to magnificent by using relationship-building techniques? Here are a few ideas to get you started.

You don't have to sacrifice the customer's benefit to make a sale. For example, listening is the basic building block of any long-lasting and profitable relationship. If a customer doesn't think you are listening, they will be less likely to want to spend time with you, and less likely to buy from you as a result. You have to show the customer that you understand what an emotional decision they're making and earn their trust over time.

Be proud of what you do. Take advantage of every opportunity to show the customer how much you know about the industry and its products. Present yourself not so much as someone who wants the sale, but as an expert in your field; someone the customer can feel comfortable coming to at any time.

Once you've built a relationship, it's time to complete the 5 steps that will move you closer to achieving the sale, also known as the AIDA principle:

1. You must somehow get the prospectivecustomer's attention

2. You must pique the prospective customer's interest by showing the product in an appealing light

3. You must create a desire in the prospective customer's mind for the product

4. You must back up the positive points of the product with some form of evidence

5. You must inspire the prospective customer to take action and buy the product

Even if your techniques haven't worked immediately, you will have planted a seed that the customer will find difficult to ignore. But don't let it germinate for too long! Keep in regular contact with the customer, making yourself completely accessible via cell phone, email, or the dealership. Encourage them to make an appointment with you. Not doing so could send them right into the arms of your competitor.

Before the appointment, you should do your homework and be ready to address the customer's needs. Allow them to communicate, and never ever rush a sale. Instead, ask questions that will help you to serve them better. Uncover their motivations for wanting a better car. If time or money is the issue, reschedule the appointment. This will ensure that they don't feel pressured into buying something right away, and will give you time to think about how you're going to close the sale.

No matter what else happens, you have to make 100% sure that your customer understands absolutely every single benefit of the vehicle you are trying to sell them. This may be a given for many salespeople, but you'd be surprised at how many more actually miss it!

If you make a promise to the customer, keep it. Following through is vital, and will go a long way to showing them you care. Don't assume that a customer will get over it if you don't call or give them a heads-up about something; they won't. When your customer is ready, go with your gut; by now, you should be comfortable enough with your customer to know how they would best respond to any given closing technique.

Finally, if a problem arises, opt for explaining to the customer why the problem has occurred rather than giving them an excuse as to why you can't meet their needs. This way, you'll help the customer to understand more about the problem, which may reduce some of their frustration.

Following these basics of relationship building can help to ensure you are getting the most from your automotive sales training, and that your customers are getting the most from you.