Saturday, September 5, 2009

Bribing Your Way through Central America


MM Journal

Saturday - September 5, 2009  

Dear Investor's Daily Edge Member,

As a member of Investor's Daily Edge you've already gotten a full week of powerful, actionable advice that will change the way you grow and protect your wealth. Today, we continue that theme with the Michael Masterson Journal. It's part of your subscription to Investor's Daily Edge. And it's totally free.

Michael Masterson is a self-made multi-millionaire and the founder of Early To Rise, our parent company. The Journal is him at his most direct. You'll get no-holds-barred guidance and first crack at his latest breakthrough business ideas. If the Wall Street Journal got it wrong, he'll expose it. If the Fed needs to be knocked down a peg, he's ready.

And if there is something you should be doing right now to accelerate your wealth, health and success, Michael will tell you about it. The Michael Masterson Journal will arrive in your inbox each Saturday. Don't miss it!



MaryEllen Tribby
Publisher and CEO, Investor's Daily Edge

I am dumbfounded by the "Cash for Clunkers" program.

But I am not an economist. I'm a businessman. So perhaps some smart economist out there can explain it to me.

Here's how I look at it ...

Wealth is stored value. When you create something of value -- something that lasts over time -- you create wealth. When you destroy something that has lasting value, you destroy wealth.

Think of the Roman roads. When I was in Turkey two summers ago, I walked on a road that was built 2,000 years ago. It was still in perfectly good shape.

When the Romans built their roads, they invested a great deal of money in them. They did so because they believed their empire would last for thousands of years. They understood the arithmetic of value, and so they engineered them to last and used marble to make sure they did.

Nothing is built to last today. But since the 1980s, cars have gotten much better. They can easily last 20 years and 200,000 miles.

If the Cash for Clunkers program really was about clunkers I'd understand its value. But most of the cars being turned in still have years of life in them.

They may not be fuel-efficient. But building a new car is enormous in terms of energy consumption. And destroying a car when it still has good life in it can't possibly be ecologically sensible.

From an economic perspective, it seems downright idiotic.

You can't create wealth by destroying something that has value. Yes, those cars will be replaced by new cars. But the net arithmetic has to be negative.

It's like trashing all the antique furniture in your house and replacing it with new tables and chairs. It may give you the feeling that you are somehow richer. But if you took the time to do the math, you'd realize you had less net wealth than you did before.

That's how I see it. If I'm missing something, write me at:

The Justice Department is cracking down on bribery by enforcing the Foreign Corrupt Practices Act (a post-Watergate law that was ignored during the Bush administration) with missionary zeal.

I think it's a bad move. Bribery is an efficient way to get some things done ... and it's fun.
In Nicaragua, for example, if you get stopped by a cop for making an illegal pass you have a choice: Lose your car for two days or give him your license with a $20 bill wrapped around it. If you are smart, you take the second option. It's neat, clean, and beneficial for all concerned.

Compare that to the cumbersome process we have in the U.S. Here, a traffic ticket is run through a complicated system that can involve not only the police but government bureaucrats, the courts, and who knows what else.

Either way, you're paying a toll. But in Nicaragua, you know that most of your money is going directly to some relatively poor cop who will spend it in his relatively poor neighborhood. That doesn't feel bad. It feels good.

If you've ever done business in the third world, you know that you can't get anything done without bribery. If U.S. companies are unable to use it, they will be less competitive overseas. And who will that help? I don't get it.

Hieu, my wife's Lexus dealer, is the perkiest salesperson I know.

I wondered how he stays so energized. "You must get loads of sleep," I said.

"Actually," he said. "I sleep only four hours a night."

I looked at him skeptically. His eyes were beaming. His skin was clear. He was brimming with life.

"You're not serious," I said.

He was serious. Most of us need seven to eight hours of sleep to be at our best. Countless studies have confirmed that. But there are those rare people like Hieu who perform at a peak level without much sleep. They are the exceptions that prove the rule.

New research, Melanie Segala informs me, suggests that a genetic mutation may explain why Hieu does so well on so little sleep.

In Total Health Breakthroughs, she quotes Paul Shaw, a neurobiologist at Washington University in St. Louis, Missouri. "We've believed for a long time that there's a genetic basis. But scientists have only recently begun to ferret out which genes are responsible."

In 2005, geneticist Ying-Hui Fu uncovered a mutation, DEC2, that appears to affect sleep duration. Specifically, she says, it controls circadian rhythm, the internal clock that regulates the sleep-wake cycle.

Lab tests on mice and fruit flies confirm her findings.

I saw an advert for a "combat training class" in a NYC cab. The class is run by a woman. She wears fatigues. So do her students. Not entirely unique. (My sister was doing the same thing 30 years ago.) Still, it distinguishes her from the crowd.

What is more interesting is that she is selling a six-week course for which she offers a 100 percent, money-back double guarantee. (She guarantees both weight loss and satisfaction.)

It is a strong guarantee for a six-week program. And it occurred to me that I hadn't seen any guarantees on fitness or martial arts programs. Most offer free introductory lessons. But once you sign up, there are no refunds.

It's a tough business. They have fixed overheads and have to fight to make a profit. So I can understand why they don't want to offer guarantees.

Which is exactly why this ad caught my interest. And since it has been running for a while (I've seen it four times), I can only assume it's working.

The first time I saw it, I sent an e-mail to several of my friends who are fitness and martial arts instructors, suggesting they might benefit from this simple marketing technique.

Half of them thought it was a good idea. But the other half had reservations. They were afraid people would take advantage of them.

I don't think they would. It's hard to ask for a refund face-to-face if you know you've been getting good service. It would be a very rare individual who would dare to do so. If I had to guess, I'd say the bad debt would be less than five percent.

That's a small price to pay for a considerably higher rate of response to your ads.

Joe Seta sent me the following quotation by the late Adrian Rogers. I thought you might enjoy reading it.

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.

"When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

From the Economist comes a report that broadcast television (the big four networks -- ABC, NBC, CBS, and Fox) is sliding further into oblivion.

Faced with fewer viewers (half as many tuning in during prime time as 10 years ago) and big-spending advertisers pulling out left and right (local stations have seen revenues drop as much as 40 percent), the industry is struggling to reinvent itself.

As Early to Rise CEO and Publisher MaryEllen Tribby and I wrote in Changing the Channel, advertising on TV has been mainly the province of large companies that have brand recognition -- e.g., Coca-Cola and major national retailers. And it is still the best marketing channel for them.

If you have a smaller business, you can try direct-response marketing on TV. (Think infomercials or 15-second spots sending viewers to an 800 number or website.) Thanks to the recession, advertising rates have never been better.

But for the most part, you should be online or in print. That's where consumers are actively looking for information about the products or services you're selling. As we wrote in Changing the Channel:

"Because television advertising is passive, it has to try harder to capture interest and motivate. This is why creative advertising usually doesn't work. By disguising itself as (or fully becoming) entertainment, it further relaxes the consumer's already zoned-out brain and sends the message: 'This is just for fun. You don't have to remember any of this.'"

Worried about a tax audit? You shouldn't be. If you make more than $500,000 a year, your chances are about 5 percent. If you make less than that, they are considerably lower.
All other things being equal, you might be audited once every 20 years. That's not bad. And the odds are tilting in your favor because the IRS has had to divert staff to handle billions of dollars in stimulus checks.

Audits are never pleasant. But they can be downright nasty if you have something significant to hide. The most important rule in avoiding problems, I've been told, is to always report 100 percent of your income. You can fight about deductions, but if you under-report your income you could land in jail.

A reader writes in for advice on promoting his website. He's built a site, put in meta-tags, and has filled it with keywords. But nothing has happened. He's considered starting a pay-per-click (PPC) ad campaign, but finds the process "confusing and un-assuring."

He asks if we have any suggestions on how to get the word out about his website to potential customers.

We get letters like this from Early to Rise readers almost every day.

It's obvious that this guy is new to Internet marketing and new to ETR. If he had been reading us for some time he wouldn't be asking such a basic question. We have published thousands of pages of specific advice and information about Internet marketing in the past few years. And we offer numerous services for people who have a serious interest in this subject.

You are not going to learn how to market your Internet business by asking one, big, oversimplified question. There are hundreds of ways to jumpstart your website and get your business in front of customers: search engine marketing, social media, e-mail marketing, teleseminars, viral campaigns, insert ads, joint ventures, co-registration, banner ads ... the list goes on.

The point is, you have to invest money and time into educating yourself. Here are some of the programs ETR is offering right now:

* Internet Money Club: Independent Learner Edition. This is a step-by-step guide for anyone who wants to do business online ... but doesn't have a clue as to how to get started.

With the Internet Money Club: Independent Learner Edition, you don't need any technical skills or business experience. You'll learn everything you need to know -- from setting up your website (as easy as using a word processor, thanks to the XSitePro software that's included) to writing profit-producing sales copy to setting up blockbuster marketing campaigns. It's only $695. 

* The Secrets of Easy Internet Money. At $97, this low-cost product shows you how to find and profit from public domain works by turning them into your own information products. It is ideal for people who don't have their own products and want to get started fast.

* Instant Internet Income. This is a great program for people with little marketing experience and little time to devote to an online business, but a desire to set up nearly automatic streams of side income that could turn into life-changing amounts of money.

You don't need a fancy website or any technical knowledge to learn to broker the Internet deals you'll learn about in Instant Internet Income. One of ETR's most popular programs, it's available for only $77.

From The Wall Street Journal comes word that commercial real estate is in trouble. Commercial property foreclosures are rising. As we saw with residential real estate, that's bad news for commercial-mortgage-backed securities. And there are $700 billion of them out there.

The Feds are scrambling. If this market collapses, the economy will take a huge hit. But who could have predicted this mess? Who could have foreseen any problems with commercial real estate?

Well, I've been saying it since December. Here is Prediction #3 from the Christmas edition of Ready, Fire, Aim (the previous incarnation of the Michael Masterson Journal):

"The commercial real estate market will definitely fall apart in the second half of 2009. In the past 10 years banks have made hundreds of billions of loans to develop strip malls, 'big box' stores, fast-food eateries, movie theaters, office parks, warehouses, and parking garages.

"Commercial real estate loans are generally short-term: five to seven years. Many of these will be coming due starting next year. The government will attempt to force banks to extend credit, but the credit will go only to A properties. The B and C properties (strip malls and office parks and warehouses) will go belly up. This, in turn, will spur more retail bankruptcies and spike unemployment."

I've told you many times that I'm not an expert in stock investing. And options and futures are definitely out of my realm.

But I am a bit of an expert at building wealth off Wall Street. That's how I made (and still make) the vast majority of my money.

What do I mean by off Wall Street wealth building?

* Starting little businesses that grow into large ones

* Starting little businesses that stay small and provide steady income

* Helping other people start businesses and getting income from them

* Investing in real estate (apartment complexes, commercial property, and single-family homes)

* Investing in real estate development with partners

* Investing in overseas properties and businesses

* Investing in gold and other precious metals

* Investing in art and other collectibles

* Investing in natural resource development deals in special situations

Over the years I've acquired a substantial degree of wealth by focusing on these non-traditional investments.

I have invested in stocks. And I will invest again -- probably very soon. But my strategy has always been to put 80 percent of my disposable income into businesses that I can both understand and control. That is the best way I know to increase my returns and reduce my risk.

I put the other 20 percent in stocks and bonds. And those are positioned very conservatively.

One of the nice things about my strategy is that I don't have to worry too much about what happens on Wall Street. My money is invested elsewhere -- in places where I have more (if not total) control over the returns. That's because I'm in charge -- not the "market forces."

You can learn all about "off Wall Street" opportunities like these with an exciting new Early to Rise service.

It's called The Liberty Street League. The editors seek out "against the grain" market trends that provide above-average ROIs with greatly reduced risk.

Right now, for example, they are looking at property in some of the world's hottest tourist areas -- for pennies on the dollar. They're teaching direct marketing on the Internet -- no technical knowledge required! They're talking about investing in gold and precious metals. It's all covered.
And all these moneymaking opportunities have one thing in common: low cost of entry and the potential for huge returns.

Get the details here.

Scamsters have been coming out of the woodwork in record numbers. You know about Madoff, of course. Hedge fund manager Arthur Nadel was indicted back in April for his $360 million scheme. Then there are "smaller" fish like Beau Diamond. The Sarasota man has just been charged with running a $37 million Ponzi scheme. He defrauded 200 investors.

There is something about this Great Recession that's been flushing out the vermin. But don't get the idea that they eventually will be gone for good. Thieves will always be with us.

It's relatively easy to avoid being badly burned by scam artists if you follow three simple rules:

1. Never invest in anything you don't understand.
2. Never invest in anyone without checking him out on Google.
3. Never invest more than 5 percent of your liquid net worth in anything.

[Ed. Note: Michael Masterson welcomes your questions and comments. Send him a message at]

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