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What’s Hot in 2009: Threats

maple_leaf_foods_logo This week on The Bigg Success Show, we’re taking a look at opportunities and threats in 2009. Today, we continue the five-part series by looking at threats.

We recently posted an article where we shared seven threats facing us in 2009. We’ll discuss two of them today.

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Downturn expected to hit higher and harder

The first threat is the recession. It is now expected to be deeper, longer, and different than any other downturn that we’ve witnessed in our lifetimes. As with any recession, layoffs will be part of the mix.

In the past, layoffs have occurred mostly at the lower end of the career spectrum. What makes this recession different, and the reason we feel it’s important to emphasize this to the members of our community, is that this recession is expected to hit hardest at the upper end.

It was recently suggested in an article on Harvard’s site that this recession be dubbed “The Great Disruption.” It certainly has been disruptive, hasn’t it? It appears that volatility is something we need to get used to going forward.

Moving out is moving up

Another important threat is continued outsourcing. This is also something that we feel may disproportionately affect the people in our community in the coming year.

We’ve already witnessed it, but jobs outside manufacturing are now at risk. It was interesting to see manufacturing start coming back onshore as the price of fuel rose. With the digital revolution, the cost of moving information around the world costs practically nothing. So white-collar jobs may be the most at risk now.

We’ve seen that already with lower skill jobs. Now it seems that some higher level careers may also be at risk. We see two factors in jobs that are safe:

  • an on-site presence is necessary to perform the work
  • face-to-face contact produces better results

The article also mentions a great resource that describes occupations that are and aren’t likely to be moved offshore as well as the other five threats. Check it out!

We like to think positively, but it’s also important to realistically assess those impediments to achieving our goals. We call that positively real thinking … that’s what it takes to succeed bigg!

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Get the tips and tools you need to be a BIGG success when you
subscribe to the Bigg Success Weekly – it’s FREE

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We’re really grateful that you took time out of your day to read our post today. Join us next time when we look at some questions which will help you tie the opportunities and threats to the right career or business for you. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00303-010708.mp3

Related posts

What’s Hot in 2009: Careers

What’s Hot in 2009: Businesses

(Image in today's post by MISHA)

What's Hot in 2009: Threats

maple_leaf_foods_logo This week on The Bigg Success Show, we’re taking a look at opportunities and threats in 2009. Today, we continue the five-part series by looking at threats.

We recently posted an article where we shared seven threats facing us in 2009. We’ll discuss two of them today.

___

___

Downturn expected to hit higher and harder

The first threat is the recession. It is now expected to be deeper, longer, and different than any other downturn that we’ve witnessed in our lifetimes. As with any recession, layoffs will be part of the mix.

In the past, layoffs have occurred mostly at the lower end of the career spectrum. What makes this recession different, and the reason we feel it’s important to emphasize this to the members of our community, is that this recession is expected to hit hardest at the upper end.

It was recently suggested in an article on Harvard’s site that this recession be dubbed “The Great Disruption.” It certainly has been disruptive, hasn’t it? It appears that volatility is something we need to get used to going forward.

Moving out is moving up

Another important threat is continued outsourcing. This is also something that we feel may disproportionately affect the people in our community in the coming year.

We’ve already witnessed it, but jobs outside manufacturing are now at risk. It was interesting to see manufacturing start coming back onshore as the price of fuel rose. With the digital revolution, the cost of moving information around the world costs practically nothing. So white-collar jobs may be the most at risk now.

We’ve seen that already with lower skill jobs. Now it seems that some higher level careers may also be at risk. We see two factors in jobs that are safe:

  • an on-site presence is necessary to perform the work
  • face-to-face contact produces better results

The article also mentions a great resource that describes occupations that are and aren’t likely to be moved offshore as well as the other five threats. Check it out!

We like to think positively, but it’s also important to realistically assess those impediments to achieving our goals. We call that positively real thinking … that’s what it takes to succeed bigg!

___

Get the tips and tools you need to be a BIGG success when you
subscribe to the Bigg Success Weekly – it’s FREE

___

We’re really grateful that you took time out of your day to read our post today. Join us next time when we look at some questions which will help you tie the opportunities and threats to the right career or business for you. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00303-010708.mp3

Related posts

What’s Hot in 2009: Careers

What’s Hot in 2009: Businesses

(Image in today's post by MISHA)

3 Questions for a Brighter Future

questions You and you alone create your future. You are the only person, place or thing with that power. With that being the case, it's up to you to create the future of your dreams.

One way to do that is to look back so you can look forward. Reflecting upon the past and pulling lessons away so your future is bigger and brighter. With the New Year upon us, now is a great time to review last year so next year lives up to its promise for you.

There's a simple three-stage framework for performing this exercise. It involves asking yourself three questions:

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What?

Start with the actual events of this year. What happened? Describe major events in your life. As you record your answers, test your perceptions to make sure they reflect the reality of the situation. If it helps, pretend that you are a reporter objectively recording the facts of the event.

So what?

At this stage, you move from reporting to understanding, from logic to emotion. That's why it was so important to get the facts right in the first step. What did this experience mean to you? How did it make you feel? Why did you feel that way? What have you learned?

Now what?

The previous two questions lead to this one. How will you apply the lessons you learned? What specific actions will you take as a result of the events you've outlined?

These three simple questions serve as a great outline to review major events in your life and develop forward-thinking plans to be a bigg success.

Let’s look at a couple of examples, using events from 2008.

Example: Volatile stocks

What?
The stock market can be very volatile.

So what?
I can lose money if I don’t understand the risk and how to manage it.

Now what?
I will learn more about investing and asset allocation. I won’t invest money in stocks that I will need in the next ten years. I will pay closer attention to my quarterly reports to make sure I maintain the proper asset allocation given my age and goals.

Example: Layoffs

What?
Times are tough at work; layoffs are possible.

So what?
It makes me nervous. I think I could lose my job.

Now what?
I will look for ways to help my company save money. I will make sure my boss is aware of the projects I complete successfully. I will look for opportunities to add additional skills so I’m more competitive.

Solid goals

In our examples, the “Now what’s” are a little bit fuzzy. You really want to refine them to turn them into solid goals. For instance, looking at the second example, instead of saying “I will look for ways to help my company save money,” turn that into “I will find one way to save my company $X (you pick a relevant amount) in the next 30 days.”

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Would you like more help turning your thoughts into concrete goals? Get our FREE Goal-Setting Workbook when you subscribe to the Bigg Success Weekly – it’s FREE too!

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We really appreciate you taking the time to read our post today. Join us next time when we look at the most important people of 2008. We think you’ll be surprised at our choices! Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00297-123008.mp3

Related posts

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(Image in today's post by nookiez)

When It Comes to Investing, Time is on Your Side

time_money On Tuesdays, we usually talk about time issues – time management, productivity and getting things done. But today, with the volatility of the stock market, we thought we’d take a look at how time affects your investments.

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It took many years to create a portfolio of value. It’s been frustrating to see that value fall so quickly. But we’re reminded of a Gordon Gekko quote from the movie Wall Street:

“Don’t get emotional about stocks. It clouds the judgment.”       

Yet that’s exactly what we tend to do. We get emotional and do the opposite of what we should do. We should buy low and sell high. We buy high on exuberance and sell low in a panic.

The smart money does just the opposite. It buys low in the panic and sells high on exuberance.

A look back at the Dow

We ran some calculations to see if there is a benefit to buying and holding for a period of time. We specifically looked at the Dow Jones Industrial Average because it’s the basket of stocks with the longest history.

Going all the way back to 1896, we assumed we bought the Dow on the last day of every year right before the close. We looked at every period up to December 31, 2007. Then we looked at holding periods of:

  • 1 year
  • 2 years
  • 3 years
  • 5 years
  • 10 years

We looked at two specific things for each holding period: our return and our chance of losing money.

Risk and return results

We found that the longer we held the Dow stocks, the better our return with one exception – the average 3-year return was lower than the average 2-year return.

Even more interesting, we found that the longer we held, the less likely we were to lose money:

  • In one year increments, we had a one in three chance of losing money.
  • Over five year time frames, we had a one in four chance of a decline in the value.
  • Of the ten year periods, we only lost money in one out of five cases.

Then we looked a little deeper – to the size of the volatility. The range of highs and lows went down over time, so the downside was as follows:

  • About 14% for the 1-year increments
  • About 2.75% if we invest over 5-years
  • 0.55% for the 10-year ranges

So based on these historical numbers, the longer you hold your portfolio, the less likely you are to lose money and, if you do, the less you are likely to lose.

Just remember – the past doesn’t necessarily predict the future. However, it’s not unreasonable to use it as a guide.

Beyond the Dow

You’ll most likely invest in a bigger basket than the Dow. You’ll also probably want to invest in more than just U.S. stocks. You’ll also almost certainly invest in bonds and other assets. As a general rule, the more diversified you are, the more likely longer time periods will work in your favor – even beyond what we’ve shown here.

You, CIO

Here’s something we can’t possibly emphasize enough – no one will look after your money like you will. You are the Chief Investment Officer for you and your family. So it’s important to understand investing basics.

DIY doesn’t work

Having said that, do-it-yourself investing doesn’t work well for most of us. So plan to outsource and inspect. Your most critical decision, then, is the hiring decision. You’re not trying to figure out specific stocks to buy, how to allocate your assets among stocks, and those kinds of decisions.

Turning to professionals

With full knowledge of investing basics, you’re ready to work with a certified financial planner to help you plan your retirement portfolio. You’re also ready to invest in mutual funds with proven managers.

Time is money in the bank

As we saw with the Dow, time is money in your account. So keep investing – month after month or paycheck after paycheck. In times like these, you’ll get a sweet deal. The smart money is getting it too! You’re buying low so you can sell high later.

That puts time on your side!

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Subscribe to the Bigg Success Weekly – it’s FREE!

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Why Your Brain May Not Be the Best Money Manager

Morningstar, one of the most respected names in financial information, recently held their annual investment conference.

There was a great deal of discussion about the volatility of the market and how jittery it’s making many investors. Jittery investors like to do something, but the problem is they don’t make the best decisions in troubling times.

 

We have met the enemy!

One of the speakers was Jason Zweig, who is also the author of Your Money and Your Brain. Our brains can be our own worst enemies when it comes to investing. He said there are two parts of our brain – the reflexive (emotional) part and the reflective (logical) part. The emotional side is ever-present; we have to consciously call upon the logical part.

Obviously, we want to buy low and sell high. The problem is, with the emotional part of our brains running rampant, we may tend to buy high and sell low!

So don’t get in a hurry to sell in times like these. Stay the course if your investment horizon is five or more years, because research shows that a broad portfolio of stocks tends to go up as long as you hold them for five years or more. If you need the money (e.g. you plan to retire or send a kid to college) within the next few years, talk to your investment advisor to determine your best move.

You can make money with a stock that goes nowhere!

Let’s say that you have $100 to invest each month. You decide to invest it in a broad index fund (e.g. the S&P 500).

NOW: Assume that shares of that fund are selling for $20 right now. So you buy 5 shares.

Month 1: Assume the price falls 50% to $10 per share. But you keep investing. You buy 10 more shares with your $100 monthly contribution. So you’ve invested $200 total and your 15 shares are worth $150. You’re in the red. But you don’t care – you’re in it for the long-term!

Month 2:
Assume shares of this fund are now selling for $20 again. With your $100 monthly investment, you buy 5 more shares bringing your total to 20 shares, worth $400. But you’ve only invested $300. You’re $100 ahead, even though the share price is the same as it was when you started!

Reacting logically may mean not reacting at all!

It’s very difficult (if not impossible) to predict what the stock market will do. However, research has shown time and again that staying the course is usually the most profitable path for most people.

It’s understandable that you might be worried right now with the market being so turbulent. But don’t panic – react logically … which may mean not reacting at all!

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Diversify, Diversify, Diversify

By Bigg Success Staff
09-26-08

Bigg Success with Money

diversify

One of the most important tenets of investing is to diversify, diversify, diversify. However, it’s a principle that’s been around for a long time – remember “don’t put all your eggs in one basket?”

By diversifying, we earn the greatest return over time with the least volatility. There are three ways to diversify your portfolio:

#1 – Diversify across asset classes
Your portfolio should include a variety of stocks, bonds, cash, real estate and more. A rule of thumb is to subtract your age from 120 to determine how much of your money should be invested in stocks (or more likely, stock mutual funds). Most of the rest should go into bonds (or bond mutual funds).

#2 – Diversify within asset classes

Within each of these asset classes, you also want to diversify. For example, you don’t want to own a single stock, or even just stocks in a single industry. You don’t even want to just own domestic stocks. Own multiple stocks in multiple industries in multiple countries.

#3 – Diversify over time
There’s one thing that’s certain about the market – it will go up and down. By investing some amount of money at regular intervals (e.g. with every paycheck), you diversify over time. This principle is known as dollar-cost averaging.

When the market is up, you’ll buy less of the same than when it’s down. So you’re buying less when prices are high and more when prices are low. Doesn’t that make sense? Isn’t that what you would like to do with anything else you purchase frequently?

Two simple solutions

One relatively easy way to diversify is through mutual funds. Pick no-load funds with low annual expenses and good performance. Diversify between stock funds and bond funds. Pick domestic funds and international funds. Then re-balance every year to keep your assets allocated properly.

An even easier way to do this is to pick a no-load mutual fund with a targeted retirement date. Then let them do all the rest. The downside is you may get a little better performance by selecting funds from more than one fund family. The upside is you have pros constantly watching over your portfolio. All you have to do is watch over the pros!

Diversification smooths out performance. When stocks go down, bonds often go up and vice versa. So you get the best possible returns without the volatility of a single class of financial assets.

Take More Risk to Earn Greater Returns

By Bigg Success Staff
06-10-08  

Bigg Success with Money

coins 

There’s something that men seem to do better than women – accept more risk to earn a higher return.

Now granted, anytime we stray into generalizing about the sexes, or any other group, we risk over-generalizing. But long-standing research seems to support this notion.

Women may be too risk-averse. One of the basic tenets of modern financial theory is that taking greater risk should lead to greater rewards. Granted, it may be a rough ride with more volatility, but in the end it pays off.

Especially if you’re investing for the long-term.

Research shows that risky assets (e.g. stocks) overcompensate for the risk taken over long periods of time (e.g. five years). So if your investment horizon (i.e. the time before you’ll need the money) is five years or more, you can probably afford to accept more risk.

It can make a bigg difference. For example, let’s say that one 22-year old new college graduate invests $500 a month in stocks while another invests only in treasury bills. It’s not unreasonable to expect a 6 percent premium per year, after inflation, for the stock investor.

What’s the difference if they both retire at 65?

Over $1.2 million!

This figure is based on commonly reported historical returns. If anything, it’s understated based on historical standards, but hopefully the $1 million difference gets your attention anyway!

It pays to take some risk if time is on your side.

Hear today's lesson and laugh on The Bigg Success Show. 

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