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Why the Right Place at the Right Time is Not Enough

gold rush | BIGG SuccessThe Gold Rush. The lives of hundreds of thousands of people were changed forever.

Today we face a new gold rush. It will forever change the lives of millions of people.

The Gold Rush of 1849 was global. People came from all over the world.

The Gold Rush today is also global. However, you can participate without ever leaving your home.

We want to briefly share the stories of two men, who each played significant – yet amazingly different roles – in the California Gold Rush.

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John Sutter

John Sutter came to America in 1839. Like many immigrants, he was a man with a dream – he wanted to build an agricultural empire.

Before long, he had over 12,000 head of cattle. He employed hundreds of people. He had his own fort on the American River.

He sent James Marshall, along with twenty other men, to build a saw mill near his fort. On January 24, 1848, fate changed Sutter’s life forever.

On that day, a shiny object in the river caught Marshall’s eye. Then another. And another.

Was this gold? He gathered up a few pieces and took it to Sutter.

The two men tested the shiny metal objects. Yes! It was gold.

Sutter was horrified. If word got out, his empire-building days would be over. People would rush to claim their stake.

So the two men promised to keep it a secret – just between them. As you know, word soon got out.

Sutter refused to alter his vision. It was a costly mistake.

He was at the source of nearly $12 billion of riches in today’s dollars. Yet he never even tried to capitalize on it. He didn’t make a single penny from the Gold Rush.

Sam Brannan

Sam Brannan never panned for gold either. He was a merchant in San Francisco.

Unlike Sutter, though, he saw opportunity in a gold rush. He bought up every pick axe, shovel and pan in the region.

Then he ran through the streets of San Francisco, with a bottle of gold dust in his hand, shouting, “Gold! Gold! Gold from the American River!”

It worked. In just nine weeks, he made nearly $900,000 in today’s dollars. He went on to become the richest man in California.

The right place at the right time isn’t enough

You often hear people say, “You just have to be in the right place at the right time.”

Yet here are two men who were there, with very different results.

One did nothing with it. He was too stubborn to change his plan. Not only was he not able to achieve his original dream, he failed to capitalize on one of the biggest booms of all time!

Make money alongside the moneymakers

The other made money around the boom. Isn’t it interesting that the person who made the most money from the Gold Rush never panned for gold? A lot of times, there’s more money – with more certainty – by serving the people who are going for the gold.

Is this the right time for you? Are you in the right place? If so, what are you doing about it? Maybe we can help.

Sources:

Idaho State University    
Legends of America
Inflation calculator

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How to Set Goals like John Kennedy

moon_footprint"Houston, Tranquility Base here. The Eagle has landed." ~ Neil Armstrong

Today we’re celebrating one of the biggest successes of all time. Forty years ago today, on July 20, 1969, three men – Neil Armstrong, Buzz Aldrin, and Michael Collins – landed a spacecraft on the moon for the first time.

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They had launched their mission 4 days earlier, flying 203,000 miles to get there.

About six-and-a-half hours after they landed, with one-sixth of the people in the world tuned in to watch, Neil Armstrong descended down the ladder of the lunar space module. As he became the first person to walk on the surface of the moon, he uttered those famous words:

That’s one small step for man, one giant leap for mankind.” 

We never get tired of hearing those words. It gives us goose bumps. They are so inspiring.

But we have to remember that it didn’t just happen. It began as a bigg goal over eight years before.

On May 25, 1961, President John F. Kennedy said:

I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” 
 

How to set goals like President Kennedy

President Kennedy’s goal was very well-stated. It was a SMART goal. SMART is an acronym for:

Specific
Measurable
Action-Oriented
Realistic
Time- and Resource-Constrained

Let’s look at each of these five components of a well-stated goal using President Kennedy’s goal as an example.

Specific
President Kennedy said that we were going to do two things:

  • land a man on the moon
  • return him safely to earth

You can’t get much more specific than that. In this case, it may be easier to think about what wouldn’t be specific. He could have said, “We’re going to land a man somewhere in space.” That’s not specific. He clearly articulated the destination.

Measurable
President Kennedy’s goal was clearly measurable. We would certainly know if a man had landed on the moon. We could certainly tell if he returned safely to earth.

Note, though, that landing on the moon and then not being able to get back safely would have meant the goal was not reached.

Let’s bring this point on being measurable safely back to earth. Here’s an example of a goal that is not measurable:

“I’m going to increase my income next year.”

What does that mean? If you increase it by $1, did you really accomplish what you set out to do? A well-stated goal would be:

“I’m going to increase my income by 5% next year.
“I’m going to increase my income by $2,000 next year.”

Now you’ll know if you accomplish what you set out to do.

Action-oriented
When President Kennedy called for this mission to send man to the moon [PDF], he made clear that it would take a tremendous commitment by the entire nation to reach this goal.

He called for innovation. He called for new money. He said it would take a concentrated effort for an extended period of time. But it would get done.

And get done it did. In a similar vein – with our personal goals or the goals we set for our businesses – we must commit to taking the necessary steps to achieve the goal.

Realistic

President Kennedy said, “I believe we have all the resources and talent necessary.” 

Your goals can and should be bigg goals. They should stretch you beyond anything you’ve ever accomplished before. But they have to be realistic.

Otherwise, they don’t lead to bigg success. They only lead to discouragement.

Time- and Resource-constrained

This one’s easy. President Kennedy said we would accomplish this goal by the end of the decade. It was 1961. The goal was reached July 20, 1969.

He made it clear that resources would have to be diverted from other good causes if this goal was to be reached.

When you set your goals, be sure to give yourself a due date. When will you accomplish this goal? What resources will be required to do it? Do you have them?

Goal-setting is not goal-getting

John F. Kennedy was able to reduce all of this into a simple goal statement of 31 powerful words that set this course of events into action.

Because he wasn’t just a bigg goal-setter, he was a bigg goal-getter.

Setting goals is just the first step in that process. We have a great tool – the Bigg Goal-Getter’s Workbook – which takes you through the entire six step process to put goal-setting and goal-getting to work for you. It’s free when you subscribe to our free newsletter, The Bigg Success Weekly

Just one final point:

Good goals have a reason behind them. They serve a bigger purpose. Every goal should lead you closer to the bigg success of which you dream. So we’ll close with John F. Kennedy himself explaining why sending a man to the moon was so important:

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.
 

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(Image and quotes in today's post from NASA)

Family Traditions

family_tradition.jpgBigg success is life on your own terms. The five elements of bigg success are money, time, growth, work and play. Today we’ll focus on play.

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marylynnGeorge and I were talking recently about family traditions. Two significant terms: family and tradition. Of course, when we think of family, we think of those closest to us.

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george
Whew … I wasn’t sure where you were headed with that last sentence, Mary-Lynn!

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marylynn
See, I was nice! Merriam-Webster says it’s the basic unit in society.

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george
Tradition is the handing down of customs or practices from generation to generation.

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marylynnWe’re familiar with the old saying, “Out with the old, in with the new.” That’s all well and good, but sometimes we should say, “In with the old.”

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georgeAt my advanced age, I’m glad to hear that. I’m in! You make a great point, Mary-Lynn. We have a tendency to think “old” is unnecessary. Out of style. Out of date. That “new” is better.

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We dismiss what’s always been done. However, family traditions bind us together with our past. They are an important part of understanding who we are.

They are part of our history. We study history to provide meaning to our present and guidance for our future.

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A bigg reunion

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georgeRecently, we attended a family reunion. It’s my dad’s mom’s side of the family. The picture on our post today is from the reunion. It’s my nephew, David, with his son, Collin, my cousin Johnny and me. This reunion’s been an annual event since before I was born. It’s still going strong.

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marylynnI love it … especially the annual softball game! Your family really gets into it. There’s a lot of taunting back and forth. Although, this year, we were outgunned pretty badly.

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george
But you made the catch of the game, Mary-Lynn.

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marylynnYeah, I caught a fly ball deep in right field. I earned a new nickname – Snowcone – because so much of the ball was showing out of my glove.

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It’s always a great time for catching up with extended family that we often only see this one time of the year. It’s a great tradition!

A bigg race

We have a friend who takes his son to the Indy 500 every year. When he was a boy, his Dad took him. He looked forward to it every year. He’s continuing the tradition with his own son.

A bigg start

While we’re on this subject of tradition, think about starting your own. All traditions had to start sometime, right? Plan an event at a regular interval, like every year. It’s a great way to make sure you spend time with those who are most important to you. Everybody gets it on their calendars because it’s a regular event.

What are your family traditions?

Share that with us by leaving a comment below, calling us at 888.455.BIGG (2444) or e-mailing us at bigginfo@biggsuccess.com.

Thank you so much for reading our post today. Consider making it a tradition by subscribing to our RSS feed or by subscribing to our show in Tunes! Click on one of the links below.

Please join us next time when we discuss a surprising way of saving money now without depriving yourself. Until then, here’s to your bigg success!

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Family Fun is No Trivial Pursuit

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(Pictured in today's post: George with his nephew David, great nephew Collin, & cousin John)

Should I Stick with Stocks?

mattress Last time, we talked about a new trend – people stuffing their mattresses the 21st century way. Baby boomers seem to be the main group behind this trend. They are buying treasury bills and gold coins as safe harbors from the volatile stock market.

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It’s understandable that baby boomers are looking for alternatives because many of them are so close to retirement.

But what if you’re not about to retire … should you stick with stocks?
We’ve heard a lot about how the recent decline in stock prices has wiped out all of the last ten years worth of gains. So it’s a really good question. We decided to do some analysis of our own.

Before we start, allow us to make one disclaimer: We’re going to provide an example to help you understand how the market works. Your decisions about your portfolio should be based on your specific situation. We recommend that you talk with a certified financial advisor to help you with that.

Stocks and Certificates of Deposit

To keep it simple, we looked at just two assets – stocks, represented by the S&P 500 (Source: Yahoo! Finance) and risk-free investments, represented by one-month CDs (Source: Federal Reserve) in FDIC-insured institutions.

There may be better assets to invest in (e.g. a broader stock market index), but we still felt that these represented risky assets and risk-free assets relatively well. We were curious about what has happened in the past, looking at various scenarios, with these two assets. This is a good place to insert a couple of caveats:

  • We are looking at historical numbers. We’re not psychic nor do we possess any other ability to project the future.
  • We used nominal pre-tax rates of return, so inflation and taxes have not been factored in to the returns we’ll discuss.

The last ten years
When we look at the last ten years (going back from December 31, 2008), we see that the stock market underperformed its historical average through almost the entire decade.

The best mix of these two assets for the last ten years would have been no mix at all. Investing 100 percent in CDs provided the best return. Even then, the return was not that great: 3.62% per year by our calculations. The worst return, as you might guess, was being 100 percent invested in stocks over the last ten years. They lost about one percent per year.

What about prior ten-year periods?
One ten-year period isn’t all that instructive. So we went back ten more years (January 1, 1989 to December 31, 1998) and looked at those returns. The highest returns in that period came from a portfolio of 100% stocks, which returned 17.28% annually.

So stocks are one for two. Let’s break the tie and go back another ten years. Can you hear the disco music playing?

A portfolio that was fully invested in stocks delivered the best return in that period (January 1, 1979 to December 31, 1988) as well. They earned a return of 14.36% per year.

Is ten years long enough?
Financial advisors have said for years that stocks perform best over longer periods of time. They used to tell us that we should have at least five years before we needed the money or we shouldn’t invest in stocks. Now we’re hearing more and more that ten years is the magic number.

But here’s the thing … we really shouldn’t even count on that as we’ve learned the last ten years.

How long until you retire?
Let’s think about this … if you’re 40-years old, you might have twenty years before you want to retire. At 30, let’s say you have 30 years. How have the returns looked over that period?

Looking back twenty years, even with the most recent decade, our best bet would have been to be fully invested in stocks. Our return would have been 8.14% annually. It’s ditto for the most recent thirty years. An all-stock portfolio returned 10.21% per annum, about its historical average.

So, our research shows that history shows that you should stick with stocks over the long term. But is there a way to lower your risk without sacrificing returns unjustly?

The price of a higher return
There is a price to pay to get a higher return. That price is more volatility and volatility equals risk. Riskier investments should pay more to compensate you for the risk you’re taking. Stocks are riskier than CDs; therefore, they should pay more.

The price of less risk
We just said that riskier investments generally offer higher returns as compensation for the risk. So why not just invest in CDs and other risk-free assets? Because they may not return enough to get you where you need to go. There is a better answer.

Diversification smoothes it out
When you diversify your assets – investing part of your portfolio in risky assets like stocks and a portion in risk-free assets like CDs, you smooth out the volatility, relative to just investing in stocks, while still getting a higher return than if you invested all your money in just CDs.

Example: A 50/50 Mix

As we discussed earlier, had you just invested in stocks over the last thirty years, you would have made about 10 percent per year on your investment. However, you would have lost about one percent a year in the most recent decade.

What if you can’t stomach losses like that?

Obviously, any money invested in stocks is at risk. However, if we had invested 50 percent in stocks and 50 percent in CDs over the last thirty years:

  • We wouldn’t have lost money over the last decade. In fact, we would have made 1.31% per year.
  • The thirty-year return on our portfolio would have been 8.32% a year. While it’s less than the 10 percent we could have earned by just investing in stocks, it’s not that much less. Looks pretty good right now, doesn’t it?

We want to emphasize again that we’re not saying a 50/50 mix is right for you. Consult your financial planner. We just picked 50/50 to see what would have happened with an even mix of these two assets.

Long on stocks
As you can see from the returns we quoted earlier, the experts are right – stocks are good long term investments. If you need the money ten years from now, you need to be careful. If you’re a 30- or 40-year old funding your retirement, a good basket of stocks as part of a well-diversified portfolio is a great place to stick your money.

Short on dollars
Going back to where we started, more people are investing very conservatively in treasuries right now. The problem is, if you invest too conservatively, you have to make a choice. Will you be short on dollars now or at retirement?

If you choose to fully fund your retirement, it means you’ll have to invest more now to reach your goal, which means you’ll have to sacrifice more now than is probably necessary.

We still don’t know if we’ve hit bottom on the stock market. But here’s what we do know – most market timers get it wrong most of the time. That’s why we won’t try!

If you have time until you need the money, invest in a well-diversified portfolio. You won’t be quite as happy in the good times, but you won’t be nearly as upset during the bad. 

We really appreciate you spending some time with us today. Join us next time when we interview John Jantsch, The Duct Tape Marketer, about how to make customers stick without busting the bank. Until then, here’s to your bigg success!

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Related posts

Mania in the Market and Rising Above the Crowd

When It Comes to Investing, Time is on Your Side

Squirrels, Nuts and Business Cycles

(Image in today's post by woodsy)

Mania in the Market and Rising Above the Crowd

buy_sell If you listen to our leaders, be they in business or government, it seems there’s a competition to frame our financial situation in the direst terms. Our media hypes the times so that we stay tuned in. We hear terms like meltdown, nose-dive, crash, collapse, and Great Depression.

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We found a great white paper by Marvin Bolt of Alpha Plus Advisors [PDF]. It’s well worth your time to read the full paper to understand historical mutual fund flows and market performance.

Specifically, he looks specifically at what individual investors did with their money during four recent periods:

Stock market crash

In the first quarter of 1987, individual investors placed a then-record amount into the market as stock prices rose. Of course, in October of that year, the stock market crashed. Individual investors responded by withdrawing record amounts of money as the market hit a low we haven’t seen since.

Gulf War & recession

In the second quarter of 1990, there was a huge inflow of funds as the market hit its high for the period. By the third quarter, investors were pulling money out just as the market hit another low point.

Dot.com bubble and 9/11

At the height of the dot.com bubble, investors poured a new record amount of money into the market in the first quarter of 2000. The S&P 500 hit a high in that same quarter. Things soon changed as the market began falling, reaching a low in the third quarter of 2002, just when individual investors were withdrawing record amounts of money.

Housing bubble & mortgage crisis
The market hit its high in 2007 as investors poured money in again amidst the euphoria. While all the data is not yet in, it appears that in October of this year, a new record amount of money was pulled out of the stock market.

Rising above the crowd
We want to buy low and sell high. History shows that the crowds tend to do the opposite – they buy high and sell low. They invest heavily during the bubble and get out during what we’ll call the crater.

Think about what’s happening right now. Stock prices have been falling. But for every seller, there has to be a buyer! Who’s buying and who’s selling? Morningstar has a great video that’s well worth your time to gain the proper perspective on this crucial point.

To rise above the crowd, you can’t think like the crowd. You have to do the opposite.

So take a deep breath. If you don’t need the money for five to seven years, the odds are heavily in your favor. If you need the money sooner than that, stocks probably aren’t the best investment for that money. Because we’ve relearned just how risky stocks can be in the short-run.

Educate yourself to maintain the proper perspective.
We can’t count on our media or our leaders to do this for us. Knight Kiplinger wrote a fantastic piece explaining all of the differences between today’s situation and the Great Depression. We highly recommend that you read this article to see why he thinks we’re not ready to jump over the cliff.

Market timing is a risky game. Since the crowd tends to get it wrong, perhaps the best way to get it right is to keep investing through the whole cycle. You’ll buy fewer shares when the market is up. You’ll get some great deals when the market is down like it is now. Over time, you’ll end up with a decent return.

Thanks so much for reading our post today. Join us next time as we discuss overcoming guilt about how you choose to spend your time. Until then, here’s to your bigg success!

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