Friday, March 28, 2008

The traditional way to build wealth

Building wealth — some people use "get rich quick" schemes others pursue transactions they might otherwise never consider.

To accumulate wealth over time, you need to do three things:

  • You need to make it. This means that before you can begin to save or invest, you need to have a long-term source of income that's sufficient enough to have some left over after you've covered your necessities.

  • You need to save it. Once you have an income that's enough to cover your basics, you need to develop a proactive savings plan.

  • You need to invest it. Once you've set aside a monthly savings goal, you need to invest it prudently.

Are billionaires a breed of their own?

Empire builders like Bill Gates and Sam Walton aren't just great businessmen. They are bona fide revolutionaries.

Self-made billionaires don't dominate industries — they transform them and spawn new ones. That takes more than intelligence, courage and luck. It takes divine-like vision.

Billionaire entrepreneurs are "not working within the confines of the current market," says Gerald Kraines, chief executive of the Levinson Institute, a business consulting firm in Jaffey, New Hampshire. "They're anticipating things much further afield. You have to see spaces that no one else sees."The world's self-made billionaires certainly have vision in spades, spanning everything from how computers work to how people shop. But the ability to see around corners isn't the only quality that separates the very accomplished from the stratospherically wealthy. To crack the US$1 billion barrier, you need total, unwavering belief in your vision — and an immutable will to pull it off. "[Billionaire entrepreneurs] need a deep passion and a point of view about the future," says Peter Skarzynski, chief executive of Strategos, a Chicago-based consulting firm that advises global companies, including Nokia and Whirlpool. "They fundamentally believe that they have a better way to solve a set of problems than how they're being solved now."Billionaires also have a seemingly ravenous appetite for risk. It's hard enough for many of us to muster the courage to abandon our cubicles and start a small company, let alone build an empire. And while the risks pile up as businesses expand, billionaires have a confidence bordering on arrogance that checks their fear and doubt, says Skarzynski. Are you a born billionaire? Before you tackle a serious growth strategy and all its attendant hassles, ask yourself some hard questions at the outset, says executive psychologist Debra Condren, who has worked with big names like 3M, Chevron and Hewlett-Packard. most important one: Why go big at all? Are you looking to cash out in a sale? Enamored of the thought of having your own stock ticker? Suffused with competitive desire? Whatever your reason, get a grip on it before you decide to kick your zealous pursuits into high gear.Next, ask yourself if you are willing to make tough decisions for the growth of your company. If you have an intense loyalty to the small group who helped get things off the ground, understand that those folks may not be able to come along for the ride. If you're not comfortable supplanting (or firing) them, stay small. For entrepreneurs who prize their independence, ask yourselves how much of it you're willing to give up. As the demands mount, both your schedule and decisions become less your own; worse, you may have investors and board members to appease. "It becomes very hard for company founders to accept that they are no longer the real boss," says Carl Robinson, a psychologist who works primarily with growing, middle-market companies. Like holding forth in public? You'd better, because companies of any significant size need a public face. Entrepreneurs who thrive on public performances--weekly meetings, shareholder gripe sessions, even television interviews--have an easier time than those who shun the spotlight. "You need to have the ability to fill a room and inspire people," says Condren. If public speaking isn't your thing, but you're still hankering to grow, find a confident substitute who can sell your story. Not only do you have to be able to communicate, you need a knack for building consensus. In most cases, the bigger your business, the more input you need from those around you — and that means being willing and able to marshal them to your cause. Have a my-way-or-the-highway mentality? Can your growth plans. In the end, chasing billionaire status — and not crashing along the way — is as much about knowing who you are as it is about knowing how to nab new customers or manage inventory. Who knows? Maybe a modest $100 million might be a better fit.

Tuesday, March 25, 2008

Slump offers bargains for investors

Some unloved stocks are now a third of the price that they deserve to be and the share market rout presents bargains for retail investors and corporate predators, analysts say.Cheap share market valuations have led to strong merger and acquisition (M&A) activity, particularly in the resources sector. The the most recent example is the Lihir Gold/Equigold NL combination announced on Friday, and a takeover bid by Indophil Resources NL for Lion Selection Ltd announced on Thursday."And we're going to be more of this, there is no doubt," said independent analyst Peter Strachan.CopperCo Ltd, which is merging with Mineral Securities Ltd, was a prime example of a company now priced at a third of its value, he said.Mr Strachan said many companies were trading at bargain basement, bottom-of-the-cycle levels."They're probably three to five per cent from the bottom in any continued downward movement, which I think we're going to get," Mr Strachan said."The stocks that stick out are property developers and property trusts, and also financials: the main banks, Suncorp-Metway and ANZ particularly."Those stocks have fallen 50 per cent."I know there will be profit downgrades from the banks ... but I still think, if you take a two or three year views, those stocks are looking particularly cheap."Mr Strachan said oil and gas producers such as Petsec Energy Ltd, Arc Energy Ltd, AWE Ltd and Roc Oil Company Ltd represented extraordinary value."Petsec ... would spit out the same amount of cash as you would pay to buy the company in about 14 months."While not yet producers, oil and gas explorers Otto Energy Ltd and Nexus Energy Ltd were also good value, he said."Any company that's got oil and gas assets, as opposed to undertaking pure exploration, looks cheap."Mr Strachan said the energy sector had lost favour with investors due to a lack of recent exploration success and operational woes at projects including AED's Puffin field and the Anzon Australia Ltd-operated Basker Manta Gummy joint venture.Mr Strachan said a string of high profile dusters - dry wells - included Adelphi Energy Ltd's Sugarloaf project in the United States and others in Mauritania and China's Beibu Gulf.He said some companies servicing the resource sector offered better value than others, with GRD Ltd, RCR Tomlinson Ltd and Monadelphous Group Ltd being the top picks.Among this sector, the most expensive stocks included United Group Ltd, Leighton Holdings Ltd and WorleyParsons Ltd, he added.
He said BHP Billiton Ltd and Rio Tinto Ltd, which comprise 20 per cent of the S&P/ASX 200, were highly priced."If Rio goes back to $80 and BHP goes back to $28 to $29, we'll see this market back at 4,800 points, and that's when I'd be looking to pick up some stock."In a research note on Sunday, brokerage DJ Carmichael said the companies that were merging were acquiring targets with large sums of cash."This makes sense in these difficult times of raising debt to build large projects," the brokerage said.
As for future M&A targets, DJ Carmichael singled out Murchison Metals Ltd and Mount Gibson Iron Ore Ltd, as potential targets.Murchison has cash and liquid investments of about $190 million and Mount Gibson, $120 million.
DJ Carmichael also pointed to Troy Resources NL, a 60,000 ounce-a-year gold producer with $80 million in cash and an enterprise value of about $100 million.Not only are companies including Moly Mines Ltd facing deferred project development as financing arrangements become increasingly hard to complete, new floats were drying up, DJ Carmichael resources analyst James Wilson said.While retail investors should be making the most of the current fire sale, they remained averse to risk, Mr Wilson said.There were "bargains galore" to be had, he said.

Tuesday, March 18, 2008

Investors in the market

Whether or not there's another rate rise or two this year - and the Reserve Bank obviously hasn't made up its mind yet - it'll be relatively short-lived.

In which case investors, attracted by rising rents, might wade into the market.

This will be helped by the fact that Self Managed Super Funds are now allowed to borrow for property so long as they structure it in the same way as an instalment warrant.

Currently, house prices are dropping in the mortgage stress areas of Sydney and Melbourne and the Financial sector is feeling very shaky and uncertain of it's future.

Monday, March 17, 2008

Where are we now?

LYDO Developments
a guide to creating wealth and keeping it.

We are in the last phase of the "Boom" where extreme wealth is transferred from the ignorant to the informed