How Warren Buffett Makes Decisions – The Secret to His Investing Success.

How Warren Buffett Makes Decisions – The Secret to His Investing Success.

By Michael Lewis.

Warren Buffett is considered by many to be the most successful stock investor ever. Despite the occasional mistake, Buffett’s investing strategies are unrivaled. In 1956, at age 26, his net worth was estimated at $140,000. MarketWatch estimated his net worth at the end of 2016 to be $73.1 billion, an astounding compound annual growth rate of 24.5%. By contrast, the S&P 500 has grown at an average rate of 6.79% and most mutual funds have failed to equal the annual S&P 500 return consistently.

Buffett has achieved these returns while most of his competition failed. According to John Bogle, one of the founders and former Chairman of The Vanguard Group, “The evidence is compelling that equity fund returns lag the stock market by a substantial amount, largely accounted for by cost, and that fund investor returns lag fund returns by a substantial amount, largely accounted for by counterproductive market timing and fund selection.”

Since the evidence shows that Buffet has been an exceptional investor, market observers and psychologists have searched for an explanation to his success. Why has Warren Buffett achieved extraordinary gains compared to his peers? What is his secret?

A Long-Term Perspective. Why Some People Are More Successful Than Others.
Philosophers and scientists have long sought to determine why some people are more successful than others at building wealth. Their findings are varied and often contradictory.

For centuries, people believed their fate, including wealth and status, depended upon the capricious favor of pagan gods – more specifically, the favor of Tyche (Greek) or Fortuna (Roman). Expansion of the Judeo-Christian-Islamic religions and their concepts of “free will” led to the general belief that individuals could control their destiny through their actions, or lack thereof.

Modern science, specifically psychology and neuroscience, advanced a theory of biological determinants that control human decisions and actions. This theory suggests that free will might not be as “free” as previously thought. In other words, we may be predisposed to certain behaviors that affect the ways we process information and make decisions.

Evolutionary biologists and psychologists have developed a variety of different theories to explain human decision-making. Some claim that the ability to make superior decisions with favorable outcomes is the result of eons of natural selection, which favors individuals with exceptional genetics, such as those with high IQs.

Despite the perception that a high IQ is necessary for building wealth, study after study indicates that the link between super-intelligence and financial success is dubious at best:

Dr. Jay Zagorsky’s study in the Intelligence Journal found no strong relationship between total wealth and intelligence: “People don’t become rich just because they are smart.”
Mensa members rank in the top 2% of the brightest people on earth, but most are not rich and are “certainly not the top 1% financially,” according to an organization spokesperson. A study by Eleanor Laise of the Mensa Investment Club noted that the fund averaged 2.5% per annum for a 15-year period, while the S&P 500 averaged 15.3% during the same time. One member admitted that “we can screw up faster than anyone,” while another described their investment strategy as “buy low, sell lower.”
Buffett has never claimed to be a genius. When asked what he would teach the next generation of investors at the 2009 Berkshire Hathaway annual meeting, he replied, “In the investing business, if you have an IQ of 150, sell 30 points to someone else. You do not need to be a genius . . . It’s not a complicated game; you don’t need to understand math. It’s simple, but not easy.”

He later expanded the thought: “If calculus or algebra were required to be a great investor, I’d have to go back to delivering newspapers.”

Economists’ Rational Man.
Economists have historically based their models upon the presumption that humans make logical decisions. In other words, a person faced with a choice balances certainties against risks. The theory of expected value presumes that people facing choices will choose the one that has the largest combination of expected success (probability) and value (impact).

A rational person would always model the industrious ant in Aesop’s fable, not the insouciant grasshopper. The idea that people would make decisions contrary to their interests is inconceivable to economists.

To be fair, most economists recognize the flaws in their models. Swedish economist Lars Syll notes that “a theoretical model is nothing more than an argument that a set of conclusions follows from a fixed set of assumptions.”

Economists presume stable systems and simple assumptions, while the real world is in constant flux. Paraphrasing H.L Mencken’s famous quote, there is always a simple economic model [well-known solution] for every human problem. This notion is neat, plausible, and wrong.

Psychologists’ Natural Man.
According to Harvard professor Daniel Lieberman, humans are naturally inclined to seek the solutions that require the least expenditure of energy.

In the real world, we have difficulty deferring immediate gratification for future security, selecting investments best suited to our long-term goals and risk profile, and acting in our best financial interests. Psychological research suggests that the difficulty is rooted in our brains – how we think and make decisions.

Researchers Susan Fiske and Shelley Taylor postulate that humans are “cognitive misers,” preferring to do as little thinking as possible. The brain uses more energy than any other human organ, accounting for up to 20% of the body’s total intake.

When decisions involve issues more remote from our current state in distance or time, there is a tendency to defer making a choice. This impulse accounts for the failure of people to save in the present since the payoff is years in the future.

As far as we know, Mr. Buffett’ brain is similar to other investors and he experiences the same impulses and anxieties as others. While he experiences the tensions that arise in everyone when making decisions, he has learned to control impulses and make reasoned, rational decisions.

Our Two-Brain System.
The studies by Daniel Kahneman and Amos Tversky provide new insight into decision-making, perhaps the key to Buffett’s success. They theorize that each human uses two systems of mental processing (System 1 and System 2) that work together seamlessly most of the time. Khaneman’s book, “Thinking, Fast and Slow,” outlines these two systems.

System 1 – Think Fast.
System 1, also referred to as the “emotional brain,” developed as the limbic system in the brain of early humans. Sometimes called the “mammalian brain,” it includes the amygdala, the organ where emotions and memories arise.

Neuroscientist Paul MacLean hypothesized that the limbic system was one of the first steps in the evolution of the human brain, developed as part of its fight or flight circuitry. Through necessity, our primitive ancestors had to react quickly to danger when seconds could mean escape or death.

The emotional brain is always active, capable of making quick decisions with scant information and conscious effort. It continuously makes and remakes models – heuristic frames – of the world around it, relying on the senses and memories of past events.

For example, an experienced driver coordinates steering and speed of an automobile on an empty highway almost effortlessly, even casually. The driver can simultaneously carry on conversations with passengers or listen to the radio without losing control of the vehicle. The driver is relying on the decisions of System 1.

The emotional brain is also the source of intuition, that “inner voice” or gut feeling we sometimes get without being consciously aware of the underlying reasons for its occurrence. We rely primarily on this system for the hundreds of everyday decisions we make – what to wear, where to sit, identifying a friend. Paradoxically, System 1 is a source of creativity as well as habits.

System 2 – Think Slow.
System 2, also called the “logical brain,” is slower, more deliberate, and analytical, rationally balancing the benefits and costs of each choice using all the available information.

System 2 decisions take place in the latest evolutionary addition to the brain – the neocortex. It is believed to be the center of humans’ extraordinary cognitive activity. System 2 was slower to evolve in humans and requires more energy to exercise, indicating the old saw “Thinking is hard” is a fact.

Kahneman characterizes System 2 as “the conscious, reasoning self that has beliefs, makes choices, and decides what to think about and do.” It is in charge of decisions about the future, while System 1 is more active in the moment. While our emotional brain can generate complex patterns of ideas, it is also freewheeling, impulsive, and often inappropriate.

Fortunately, System 1 works well most of the time; its models of everyday situations are accurate, its short-term predictions are usually correct, and its initial reactions to challenges are swift and mostly appropriate.

System 2 is more controlled, rule-based, and analytical, continuously monitoring the quality of the answers provided by System 1. Our logical brain becomes active when it needs to override an automatic judgment of System 1.

For example, the earlier driver proceeding casually down the road is more focused when passing a semi-truck on a narrow two-lane road or in heavy traffic, actively processing the changing conditions and responding with deliberate actions. His or her mental effort is accompanied by detectable physical changes, such as tensed muscles, increased heart rate, and dilated pupils. In these circumstances, System 2 is in charge.

The logical brain normally functions in low-effort mode, always in reserve until System 1 encounters a problem it cannot solve or is required to act in a way that doesn’t come naturally. Solving for the product of 37 x 82 requires the deliberate processes of System 2, while the answer to a simple addition problem, such as the sum of 2 + 2, is a System 1 function. The answer is not calculated, but summoned from memory.

Neuropsychologists Abigail Baird and Jonathan Fugelsang’s 2004 study indicates that System 2 does not fully develop until adulthood. Their findings suggest the reason that adolescents are more likely to engage in risky behavior is because they lack the mental hardware to weigh decisions rationally. For most people, the two systems work together seamlessly, transitioning from one to the other as needed.

The Buffett Style.
The Oracle of Omaha’s key to investing is understanding and coordinating the two systems of decision-making. Buffett relies upon System 1 to intuitively seek out investments he finds attractive and understands.

When deciding on a possible investment, he recommends, “If you need a computer or a calculator to decide whether to invest, then don’t do it – invest in something that shouts at you – if it is not obvious, walk away . . . If you don’t know the business, the financials won’t help at all.”

Avoid the Traps of Thinking Fast.
Master investors like Buffett simplify their decisions by relying upon System 1, and it serves them well in most cases. However, they recognize that their emotional decision-making system is also prone to biases and errors, including:

Mental Framing.
Our brains, equipped with millions of sensory inputs, create interpretive mental “frames” or filters to make sense of data. These mental filters help us understand and respond to the events around us. Framing is a heuristic – a mental shortcut – that provides a quick, easy way to process information. Unfortunately, framing can also provide a limited, simplistic view of reality that can lead to flawed decisions.

The choices we make depend on our perspective, or the frames surrounding the problem. For example, research shows that people are likely to proceed with a decision if the outcome is presented with a 50% chance of success and decline if the consequence is expressed with a 50% chance of failure, even though the probability is the same in either case.

Most investors incorrectly frame stock investments by thinking of the stock market as a stream of electronic bits of data independent of the underlying businesses the data represents. The constant flow of information about prices, economies, and expert opinions triggers our emotional brains and stimulates quick decisions to reap profits (pleasure) or prevent loss (pain).

Buffett recommends investors not think of an investment in stock as “a piece of paper whose price wiggles around daily” and is a candidate for sale whenever you get nervous.

Short-term thinking – System 1 – often leads to trading stocks, not investing in companies. Day traders – those who buy and sell stocks within a single market session – are unusually unsuccessful, according to day trading studies by the University of California-Berkeley:

80% of all day traders quit within the first two years.
Active traders underperform the stock market average by 6.5% annually.
Only 1.6% of day traders make a net profit each year.
Financial data is especially susceptible to framing. Companies always express earnings and losses positively, either as an increase compared to past results or a smaller loss than previous periods. Trends can be manipulated based upon the comparison point and time interval.

Even the words we use to describe a choice establish a frame for assessing value. Characterizations like “high growth,” “turnaround,” or “cyclical” trigger the subconscious stereotypes we have for such terms without regard to the underlying financial data.

Framing can lead rational people to make irrational decisions based upon their projections of the outcome. This accounts for the difference between economics’ rational man and psychology’s natural man.

Buffett has learned to frame his investment opportunities appropriately to avoid short-term, arbitrary outcomes:

“We [Berkshire Hathaway] select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business.”
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it 10 minutes.”
Loss Aversion.
Kahneman and Tversky determined that in human decision-making, losses loom larger than gains. Their experiments suggest that the pain of loss is twice as a great as the pleasure from gain. This feeling arises in the amygdala, which is responsible for generating fearful emotions and memories of painful associations.

The fact that investors are more likely to sell stocks with profit than those with a loss, when the converse strategy would be more logical, is evidence of the power of loss aversion.

While Buffett sells his positions infrequently, he cuts his losses when he realizes he has made a judgment error. In 2016, Buffett substantially reduced or liquidated his position in three companies, because he believed they had lost their competitive edge:

Wal-Mart: Despite his regrets that he had not purchased more shares earlier, he has been a long-time investor in the company. The rationale for the recent sales is thought to be due to the transition of the retail market from bricks-and-mortar stores to online. A Pew Research Center study found almost 80% of Americans today are online shoppers versus 22% in 2000.
Deere & Co: Buffett’s initial purchases of the agricultural equipment manufacturer began in the third quarter of 2012. By 2016, he owned almost 22-million shares with an average cost of less than $80 per share. He liquidated his shares during the last two quarters of 2016 when prices were more than $100 per share. Buffett may have felt that farm income, having fallen by half since 2013 due to worldwide bumper crops, was unlikely to improve, leaving the premier provider of agricultural equipment unable to continue to expand its profits.
Verizon: Having owned the stock since 2014, he liquidated his entire position in 2016, due to a loss of confidence in management after the company’s questionable acquisition of Yahoo and the continued turmoil in the wireless carrier market.
Our distaste for losses can create anxiety and trick us into acting prematurely because we fear being left out in a rising market or staying too long in a bear market. Buffett and Munger practice “assiduity – the ability to sit on your ass and do nothing until a great opportunity presents itself.”

Representativeness.
People tend to ignore statistics and focus on stereotypes. An example in the Association of Psychological Science Journal illustrates this common bias. When asked to select the proper occupation of a shy, withdrawn man who takes little interest in the real world from a list including farmer, salesman, pilot, doctor, and librarian, most people incorrectly chose librarian. Their decision ignores the obvious: there are many more farmers in the world than librarians.

Buffett focuses on finding the “inevitables” – great companies with insurmountable advantages – rather than following conventional wisdom and accepted patterns of thinking favored by System 1’s decision-making process. In his 1996 letter to investors, he defines Coca-Cola and Gillette as two companies that “will dominate their fields worldwide for an investment lifetime.”

He is especially wary of “imposters” – those companies that seem invincible but lack real competitive advantage. For every inevitable, there are dozens of imposters. According to Buffett, General Motors, IBM, and Sears lost their seemingly insurmountable advantages when values declined in “the presence of hubris or of boredom that caused the attention of the managers to wander.”

Buffett recognizes that companies in high-tech or embryonic industries capture our imaginations – and excite our emotional brains – with their promise of extraordinary gains. However, he prefers investments where he is “certain of a good result [rather] than hopeful of a great one” – an example of the logical brain at work.

Anchoring.
Evolution is the reason humans rely too heavily on the first or a single bit of information they receive – their “first impression.” In a world of deadly perils, delaying action can lead to pain or death. Therefore, first impressions linger in our minds and affect subsequent decisions. We subconsciously believe that what happened in the past will happen in the future, leading us to exaggerate the importance of the initial purchase price in subsequent decisions to sell a security.

Investors unknowingly make decisions based on anchoring data, such as previous stock prices, past years’ earnings, consensus analyst projections or expert opinions, and prevailing attitudes about the direction of stock prices, whether in a bear or bull market. While some characterize this effect as following a trend, it is a System 1 shortcut based on partial information, rather than the result of System 2 analysis.

Buffett often goes against the trend of popular opinion, recognizing that “most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” When making a decision based on historical data, he notes, “If past history was all that is needed to play the game of money, the richest people would be librarians.”

Buffett’s approach is neither to follow the herd nor purposely do the opposite of the consensus. Whether people concur with his analysis isn’t important. His goal is simple: acquire, at a reasonable price, a business with excellent economics and able, honest management.

Despite considering IBM an “imposter” in 1996, Berkshire Hathaway began acquiring the stock in 2011, consistently adding to Buffett’s position over the years. By the end of the first quarter in 2017, Berkshire owned more than 8% of the outstanding shares with a value greater than $14 billion.

While his analysis remains confidential, Buffett believes that the investors have discounted the future of IBM too severely and failed to note its transition to a cloud-based business might lead to brighter growth prospects and a high degree of customer retention. Also, the company pays a dividend almost twice the level of the S&P 500 and actively repurchases shares on the open market.

The growing IBM position – quadrupling since the initial purchase – is evidence that Buffett isn’t afraid to take action when he is comfortable with his analysis: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Availability.
Humans tend to estimate the likelihood of an event occurring based on the ease with which it comes to mind. For example, a 2008 study of State lottery sales showed that stores that sell a publicized, winning lottery ticket experience a 12% to 38% increase in sales for up to 40 weeks following the announcement of the winner.

People visit stores selling a winning ticket more often due to the easy recall of the win, and a bias that the location is “lucky” and more likely to produce another winning ticket than a more convenient store down the street.

This bias frequently affects decisions about stock investments. In other words, investor perceptions lag reality. Momentum, whether upward or downward, continues well past the emergence of new facts. Investors with losses are slow to reinvest, often sitting on the sidelines until prices have recovered most of their decline (irrational pessimism).

Conversely, reinforcement from a bull market encourages continued purchasing even after the economic cycle turns down (irrational optimism). Therefore, investors tend to buy when prices are high and sell when they are low.

The S&P 500 fell 57% between late 2007 and March 2009, devastating investor portfolios and liquidating stocks and mutual funds. Even though the index had recovered its losses by mid-2012, individual investors had not returned to equity investments, either staying in cash or purchasing less risky bonds.

At the time, Liz Ann Sonders, Chief Investment Strategist at Charles Schwab & Co., noted, “Even three-and-a-half years into this bull market and the gains we’ve seen since June [2012], it has not turned this psychology [of fear] around.” In other words, many individuals took the loss but did not participate in the subsequent recovery.

Buffett has always tried to follow the advice of his mentor, Benjamin Graham, who said, “Buy not on optimism [or sell due to pessimism], but on arithmetic.” Graham advocated objective analysis, not emotions, when buying or selling stocks: “In the short run, the market is a voting machine [emotional], but in the long run it is a weighing machine [logical].”

Affect.
We tend to assess probabilities based on our feelings about the options. In other words, we judge an option less risky solely because we favor it and vice versa. This bias can lead people to buy stock in their employer when other investments would be more appropriate for their goals. Overconfidence in one’s ability magnifies the negative impact of affect.

For example, Buffett invested $350 million in preferred stock of U.S. Airways in 1989, despite his belief that airlines and airline manufacturers had historically been a death trap for investors. The investment followed a dinner with Ed Colodny, the CEO of the airline, who impressed Buffett. Certain that the preferred stock was safe and the airline had a competitive seat cost (around 12 cents per mile), he made the investment.

Buffett later admitted his analysis “was superficial and wrong,” perhaps due to hubris and his like for Colodny. An upstart Texas airline (Southwest Airlines) subsequently upset the competitive balance in the industry with seat costs of 8 cents per mile, causing Berkshire Hathaway to write down its investment by 75%.

Buffett was lucky to make a significant profit on the investment ($216 million), primarily because the airline subsequently and unexpectedly returned to profitability and was able to pay the accrued dividends and redeem its preferred stock.

Final Word.
Mr. Buffett’s investment style has been criticized by many over the decades. Trend followers and traders are especially critical of his record and philosophy, claiming that his results are the result of “luck, given the relatively few trades that made him so wealthy.”

Hedge fund manager Michael Steinhardt, who Forbes called “Wall Street’s Greatest Trader,” said during a CNBC interview that Buffett is “the greatest PR person of all time. And he has managed to achieve a snow job that has conned virtually everyone in the press to my knowledge.”

Before following the advice of those who are quick to condemn Buffett’s investment style, it should be noted that no investment manager has come close to rivaling Buffet’s record over the past 60 years. While Steinhardt’s returns are similar to those of Buffett, his were for a period of 28 years – less than one-half of Buffett’s cycle.

Despite their antipathy, both men would agree that System 2 decision-making is critical to investment success. Steinhardt, in his autobiography “No Bull: My Life In and Out of Markets,” said that his results required “knowing more and perceiving the situation better than others did . . . Reaching a level of understanding that allows one to feel competitively informed well ahead of changes in ‘street’ views, even anticipating minor stock price changes, may justify at times making unpopular investments.”

Buffett appears to agree, insisting on taking the time for introspection and thought. “I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make fewer impulsive decisions than most people in business.”

Do you take the time to gather facts and make carefully analyzed investment decisions? Perhaps you are more comfortable going with the flow. What is your decision-making preference and how has it worked out for you thus far?
Do you know anyone who has owned the same stock for 20 years? Warren Buffett has held three stocks – Coca-Cola, Wells Fargo, and American Express – for more than 20 years. He has owned one stock – Moody’s – for 15 years, and three other stocks – Proctor & Gamble, Wal-Mart, and U.S. Bancorp – for over a decade.

To be sure, Mr. Buffett’s 50-year track record is not perfect, as he has pointed out from time to time:

Berkshire Hathaway: Pique at CEO Seabird Stanton motivated his takeover of the failing textile company. Buffett later admitted the purchase was “the dumbest stock I ever bought.”
Energy Future Holding: Buffett lost a billion dollars in bonds of the bankrupt Texas electric utility. He admitted he made a huge mistake not consulting his long-term business partner Charlie Munger before closing the purchase: “I would be unwilling to share the credit for my decision to invest with anyone else. That was just a mistake – a significant mistake.”
Wal-Mart: At the 2003 Berkshire Hathaway shareholder meeting, Buffet admitted his attempt to time the market had backfired: “We bought a little, and it moved up a little, and I thought maybe it would come back. That thumb-sucking has cost us in the current area of $10 billion.”
Even with these mistakes, Buffett has focused on making big bets that he intends to hold for decades to come. A longer time horizon has allowed him to take advantage of opportunities few others have the patience for. But how has he been able to make these successful bets in the first place?

source : https://www.moneycrashers.com/warren-buffett-decisions-secret-investing-success.

August 14, 2020

Ten Ways to Create Shareholder Value (part 1).

Ten Ways to Create Shareholder Value (part 1).

by Alfred Rappaport.

It’s become fashionable to blame the pursuit of shareholder value for the ills besetting corporate America: managers and investors obsessed with next quarter’s results, failure to invest in long-term growth, and even the accounting scandals that have grabbed headlines. When executives destroy the value they are supposed to be creating, they almost always claim that stock market pressure made them do it.

The reality is that the shareholder value principle has not failed management; rather, it is management that has betrayed the principle. In the 1990s, for example, many companies introduced stock options as a major component of executive compensation. The idea was to align the interests of management with those of shareholders. But the generous distribution of options largely failed to motivate value-friendly behavior because their design almost guaranteed that they would produce the opposite result. To start with, relatively short vesting periods, combined with a belief that short-term earnings fuel stock prices, encouraged executives to manage earnings, exercise their options early, and cash out opportunistically. The common practice of accelerating the vesting date for a CEO’s options at retirement added yet another incentive to focus on short-term performance.

Of course, these shortcomings were obscured during much of that decade, and corporate governance took a backseat as investors watched stock prices rise at a double-digit clip. The climate changed dramatically in the new millennium, however, as accounting scandals and a steep stock market decline triggered a rash of corporate collapses. The ensuing erosion of public trust prompted a swift regulatory response—most notably, the 2002 passage of the Sarbanes-Oxley Act (SOX), which requires companies to institute elaborate internal controls and makes corporate executives directly accountable for the accuracy of financial statements. Nonetheless, despite SOX and other measures, the focus on short-term performance persists.

In their defense, some executives contend that they have no choice but to adopt a short-term orientation, given that the average holding period for stocks in professionally managed funds has dropped from about seven years in the 1960s to less than one year today. Why consider the interests of long-term shareholders when there are none? This reasoning is deeply flawed. What matters is not investor holding periods but rather the market’s valuation horizon—the number of years of expected cash flows required to justify the stock price. While investors may focus unduly on near-term goals and hold shares for a relatively short time, stock prices reflect the market’s long view. Studies suggest that it takes more than ten years of value-creating cash flows to justify the stock prices of most companies. Management’s responsibility, therefore, is to deliver those flows—that is, to pursue long-term value maximization regardless of the mix of high- and low-turnover shareholders. And no one could reasonably argue that an absence of long-term shareholders gives management the license to maximize short-term performance and risk endangering the company’s future. The competitive landscape, not the shareholder list, should shape business strategies.

The competitive landscape, not the shareholder list, should shape business strategies.

What do companies have to do if they are to be serious about creating value? In this article, I draw on my research and several decades of consulting experience to set out ten basic governance principles for value creation that collectively will help any company with a sound, well-executed business model to better realize its potential for creating shareholder value. Though the principles will not surprise readers, applying some of them calls for practices that run deeply counter to prevailing norms. I should point out that no company—with the possible exception of Berkshire Hathaway—gets anywhere near to implementing all these principles. That’s a pity for investors because, as CEO Warren Buffett’s fellow shareholders have found, there’s a lot to be gained from owning shares in what I call a level 10 company—one that applies all ten principles. (For more on Berkshire Hathaway’s application of the ten principles, please read my colleague Michael Mauboussin’s analysis in the sidebar “Approaching Level 10: The Story of Berkshire Hathaway.”).

Principle 1.

Do not manage earnings or provide earnings guidance.
Companies that fail to embrace this first principle of shareholder value will almost certainly be unable to follow the rest. Unfortunately, that rules out most corporations because virtually all public companies play the earnings expectations game. A 2006 National Investor Relations Institute study found that 66% of 654 surveyed companies provide regular profit guidance to Wall Street analysts. A 2005 survey of 401 financial executives by Duke University’s John Graham and Campbell R. Harvey, and University of Washington’s Shivaram Rajgopal, reveals that companies manage earnings with more than just accounting gimmicks: A startling 80% of respondents said they would decrease value-creating spending on research and development, advertising, maintenance, and hiring in order to meet earnings benchmarks. More than half the executives would delay a new project even if it entailed sacrificing value.

What’s so bad about focusing on earnings? First, the accountant’s bottom line approximates neither a company’s value nor its change in value over the reporting period. Second, organizations compromise value when they invest at rates below the cost of capital (overinvestment) or forgo investment in value-creating opportunities (underinvestment) in an attempt to boost short-term earnings. Third, the practice of reporting rosy earnings via value-destroying operating decisions or by stretching permissible accounting to the limit eventually catches up with companies. Those that can no longer meet investor expectations end up destroying a substantial portion, if not all, of their market value. WorldCom, Enron, and Nortel Networks are notable examples.

Principle 2.

Make strategic decisions that maximize expected value, even at the expense of lowering near-term earnings.
Companies that manage earnings are almost bound to break this second cardinal principle. Indeed, most companies evaluate and compare strategic decisions in terms of the estimated impact on reported earnings when they should be measuring against the expected incremental value of future cash flows instead. Expected value is the weighted average value for a range of plausible scenarios. (To calculate it, multiply the value added for each scenario by the probability that that scenario will materialize, then sum up the results.) A sound strategic analysis by a company’s operating units should produce informed responses to three questions: First, how do alternative strategies affect value? Second, which strategy is most likely to create the greatest value? Third, for the selected strategy, how sensitive is the value of the most likely scenario to potential shifts in competitive dynamics and assumptions about technology life cycles, the regulatory environment, and other relevant variables?

At the corporate level, executives must also address three questions: Do any of the operating units have sufficient value-creation potential to warrant additional capital? Which units have limited potential and therefore should be candidates for restructuring or divestiture? And what mix of investments in operating units is likely to produce the most overall value?

Principle 3.

Make acquisitions that maximize expected value, even at the expense of lowering near-term earnings.
Companies typically create most of their value through day-to-day operations, but a major acquisition can create or destroy value faster than any other corporate activity. With record levels of cash and relatively low debt levels, companies increasingly use mergers and acquisitions to improve their competitive positions: M&A announcements worldwide exceeded $2.7 trillion in 2005.

Companies (even those that follow Principle 2 in other respects) and their investment bankers usually consider price/earnings multiples for comparable acquisitions and the immediate impact of earnings per share (EPS) to assess the attractiveness of a deal. They view EPS accretion as good news and its dilution as bad news. When it comes to exchange-of-shares mergers, a narrow focus on EPS poses an additional problem on top of the normal shortcomings of earnings. Whenever the acquiring company’s price/earnings multiple is greater than the selling company’s multiple, EPS rises. The inverse is also true. If the acquiring company’s multiple is lower than the selling company’s multiple, earnings per share decline. In neither case does EPS tell us anything about the deal’s long-term potential to add value.

Sound decisions about M&A deals are based on their prospects for creating value, not on their immediate EPS impact, and this is the foundation for the third principle of value creation. Management needs to identify clearly where, when, and how it can accomplish real performance gains by estimating the present value of the resulting incremental cash flows and then subtracting the acquisition premium.

Value-oriented managements and boards also carefully evaluate the risk that anticipated synergies may not materialize. They recognize the challenge of postmerger integration and the likelihood that competitors will not stand idly by while the acquiring company attempts to generate synergies at their expense. If it is financially feasible, acquiring companies confident of achieving synergies greater than the premium will pay cash so that their shareholders will not have to give up any anticipated merger gains to the selling companies’ shareholders. If management is uncertain whether the deal will generate synergies, it can hedge its bets by offering stock. This reduces potential losses for the acquiring company’s shareholders by diluting their ownership interest in the postmerger company.

to be continued part 2.

July 25, 2020

How to Start Investing

How to Start Investing.

It is never too soon to start investing. Investing is the smartest way to secure your financial future and to begin letting your money make more money for you. Investing is not just for people who have plenty of spare cash. On the contrary, anyone can (and should) invest. You can get started with just a little bit of money and a lot of know-how. By formulating a plan and familiarizing yourself with the tools available, you can quickly learn how to start investing.

Part 1 Getting Acquainted with Different Investment Vehicles.
1. Make sure you have a safety net. Holding some money in reserve is a good idea because (a) if you lose your investment you'll have something to fall back on, and (b) it will allow you to be a bolder investor, since you won't be worried about risking every penny you own.
Save between three and six months' worth of expenses. Call it your emergency fund, set aside for large, unexpected expenses (job loss, medical expenses, auto accident, etc.). This money should be in cash or some other form that's very conservative and immediately available.
Once you have an emergency fund established, you can start to save for your long-term goals, like buying a home, retirement, and college tuition.
If your employer offers a retirement plan, this is a great vehicle for saving, because it can save on your tax bill, and your employer may contribute money to match some of your own contributions, which amounts to "free" money for you.
If you don't have a retirement plan through your workplace, most employees are allowed to accumulate tax-deferred savings in a traditional IRA or a Roth IRA. If you are self-employed, you have options like a SEP-IRA or a "SIMPLE" IRA. Once you've determined the type of account(s) to set up, you can then choose specific investments to hold within them.
Get current on all your insurance policies. This includes auto, health, homeowner's/renter's, disability, and life insurance. With luck you'll never need insurance, but it's nice to have in the event of disaster.
2. Learn a little bit about stocks. This is what most people think of when they consider "investing." Put simply, a stock is a share in the ownership of a business, a publicly-held company. The stock itself is a claim on what the company owns — its assets and earnings.  When you buy stock in a company, you are making yourself part-owner. If the company does well, the value of the stock will probably go up, and the company may pay you a "dividend," a reward for your investment. If the company does poorly, however, the stock will probably lose value.
The value of stock comes from public perception of its worth. That means the stock price is driven by what people think it's worth, and the price at which a stock is purchased or sold is whatever the market will bear, even if the underlying value (as measured by certain fundamentals) might suggest otherwise.
A stock price goes up when more people want to buy that stock than sell it.  Stock prices go down when more people want to sell than buy. In order to sell stock, you have to find someone willing to buy at the listed price. In order to buy stock, you have to find someone selling their stock at a price you like.
The job of a stockbroker is to pair up buyers and sellers.
"Stocks" can mean a lot of different things. For example, penny stocks are stocks that trade at relatively low prices, sometimes just pennies.
Various stocks are bundled into what's called an index, like the Dow Jones Industrials, which is a list of 30 high-performing stocks. An index is a useful indicator of the performance of the whole market.
3. Familiarize yourself with bonds. Bonds are issuances of debt, similar to an IOU. When you buy a bond, you're essentially lending someone money.  The borrower ("issuer") agrees to pay back the money (the "principal") when the life ("term") of the loan has expired. The issuer also agrees to pay interest on the principal at a stated rate. The interest is the whole point of the investment. The term of the bond can range from months to years, at the end of which period the borrower pays back the principal in full.
Here's an example: You buy a five-year municipal bond for $10,000 with an interest rate of 2.35%. Thus, you lend the municipality $10,000. Each year the municipality pays you interest on your bond in the amount of of 2.35% of $10,000, or $235. After five years the municipality pays back your $10,000. So you've made back your principal plus a profit of $1175 in interest (5 x $235).
Generally the longer the term of the bond, the higher the interest rate. If you're lending your money for a year, you probably won't get a high interest rate, because one year is a relatively short period of risk. If you're going to lend your money and not expect it back for ten years, however, you will be compensated for the higher risk you're taking, and the interest rate will be higher. This illustrates an axiom in investing: The higher the risk, the higher the return.
4. Understand the commodities market. When you invest in something like a stock or a bond, you invest in the business represented by that security. The piece of paper you get is worthless, but what it promises is valuable. A commodity, on the other hand, is something of inherent value, something capable of satisfying a need or desire. Commodities include pork bellies (bacon), coffee beans, oil, natural gas, and potash, among many other items. The commodity itself is valuable, because people want and use it.
People often trade commodities by buying and selling "futures." A future is simply an agreement to buy or sell a commodity at a certain price sometime in the future.
Futures were originally used as a "hedging" technique by farmers. Here's a simple example of how it works: Farmer Joe grows avocados. The price of avocados, however, is typically volatile, meaning that it goes up and down a lot. At the beginning of the season, the wholesale price of avocados is $4 per bushel. If Farmer Joe has a bumper crop of avocados but the price of avocados drops to $2 per bushel in April at harvest, Farmer Joe may lose a lot of money.
Joe, in advance of harvest as insurance against such a loss, sells a futures contract to someone. The contract stipulates that the buyer of the contract agrees to buy all of Joe's avocados at $4 per bushel in April.
Now Joe has protection against a price drop. If the price of avocados goes up, he'll be fine because he can sell his avocados at the market price. If the price of avocados drops to $2, he can sell his avocados at $4 to the buyer of the contract and make more than other farmers who don't have a similar contract.
The buyer of a futures contract always hopes that the price of a commodity will go up beyond the futures price he paid. That way he can lock in a lower-than-market price. The seller hopes that the price of a commodity will go down. He can buy the commodity at low (market) prices and then sell it to the buyer at a higher-than-market price.
5. Know a bit about investing in property. Investing in real estate can be a risky but lucrative proposition. There are lots of ways you can invest in property. You can buy a house and become a landlord. You pocket the difference between what you pay on the mortgage and what the tenant pays you in rent. You can also flip homes. That means you buy a home in need of renovations, fix it up, and sell it as quickly as possible. Real estate can be a profitable vehicle for some, but it is not without substantial risk involving property maintenance and market value.
Other ways of gaining exposure to real estate include collateralized mortgage obligations (CMOs) and collateralized debt obligations (CDOs), which are mortgages that have been bundled into securitized instruments. These, however, are tools for sophisticated investors: their transparency and quality can vary greatly, as revealed during the 2008 downturn.
Some people think that home values are guaranteed to go up. History has shown otherwise: real estate values in most areas show very modest rates of return after accounting for costs such as maintenance, taxes and insurance. As with many investments, real estate values do invariably rise if given enough time. If your time horizon is short, however, property ownership is not a guaranteed money-maker.
Property acquisition and disposal can be a lengthy and unpredictable process and should be viewed as a long-term, higher-risk proposition. It is not the type of investment that is appropriate if your time horizon is short and is certainly not a guaranteed investment.
6. Learn about mutual funds and exchange-traded funds (ETFs). Mutual funds and ETFs are similar investment vehicles in that each is a collection of many stocks and/or bonds (hundreds or thousands in some cases). Holding an individual security is a concentrated way of investing – the potential for gain or loss is tied to a single company – whereas holding a fund is a way to spread the risk across many companies, sectors or regions. Doing so can dampen the upside potential but also serves to protect against the downside risk.
Commodities exposure is usually achieved by holding futures contracts or a fund of futures contracts. Real estate can be held directly (by owning a home or investment property) or in a real estate investment trust (REIT) or REIT fund, which holds interests in a number of residential or commercial properties.

Part 2 Mastering Investment Basics.
1. Buy undervalued assets ("buy low, sell high"). If you're talking about stocks and other assets, you want to buy when the price is low and sell when the price is high. If you buy 100 shares of stock on January 1st for $5 per share, and you sell those same shares on December 31st for $7.25, you just made $225. That may seem a paltry sum, but when you're talking about buying and selling hundreds or even thousands of shares, it can really add up.
How do you tell if a stock is undervalued? You need to look at a company closely — its earnings growth, profit margins, its P/E ratio, and its dividend yield — instead of looking at just one aspect and making a decision based on a single ratio or a momentary drop in the stock's price.
The price-to-earnings ratio is a common way of determining if a stock is undervalued. It simply divides a company's share price by its earnings. For example, if Company X is trading at $5 per share, with earnings of $1 per share, its price-to-earnings ratio is 5. That is to say, the company is trading at five times its earnings. The lower this figure, the more undervalued the company may be. Typical P/E ratios range between 15 and 20, although ratios outside that range are not uncommon. Use P/E ratios as only one of many indications of a stock's worth.
Always compare a company to its peers. For example, assume you want to buy Company X. You can look at Company X's projected earnings growth, profit margins, and price-to-earnings ratio. You would then compare these figures to those of Company X's closest competitors. If Company X has better profit margins, better projected earnings, and a lower price-to-earnings ratio, it may be a better buy.
Ask yourself some basic Question : s: What will the market be for this stock in the future? Will it look bleaker or better? What competitors does this company have, and what are their prospects? How will this company be able to earn money in the future? These should help you come to a better understanding of whether a company's stock is under- or over-valued.
2. Invest in companies that you understand. Perhaps you have some basic knowledge regarding some business or industry. Why not put that to use? Invest in companies or industries that you know, because you're more likely to understand revenue models and prospects for future success. Of course, never put all your eggs in one basket: investing in only one -- or a very few -- companies can be quite risky. However, wringing value out of a single industry (whose workings you understand) will increase your chances of being successful.
For example, you may hear plenty of positive news on a new technology stock. It is important to stay away until you understand the industry and how it works. The principle of investing in companies you understand was popularized by renowned investor Warren Buffett, who made billions of dollars sticking only with business models he understood and avoiding ones he did not.
3. Avoid buying on hope and selling on fear. It's very easy and too tempting to follow the crowd when investing. We often get caught up in what other people are doing and take it for granted that they know what they're talking about. Then we buy stocks just because other people buy them or sell them when other people do. Doing this is easy. Unfortunately, it's a good way to lose money. Invest in companies that you know and believe in — and tune out the hype — and you'll be fine.
When you buy a stock that everyone else has bought, you're buying something that's probably worth less than its price (which has probably risen in response to the recent demand). When the market corrects itself (drops), you could end up buying high and then selling low, just the opposite of what you want to do. Hoping that a stock will go up just because everyone else thinks it will is foolish.
When you sell a stock that everyone else is selling, you're selling something that may be worth more than its price (which likely has dropped because of all the selling). When the market corrects itself (rises), you've sold low and will have to buy high if you decide you want the stock back.
Fear of losses can prove to be a poor reason to dump a stock.
If you sell based on fear, you may protect yourself from further declines, but you may also miss out on a rebound. Just as you did not anticipate the decline, you will not be able to predict the rebound. Stocks have historically risen over long time frames, which is why holding on to them and not over-reacting to short-term swings is important.
4. Know the effect of interest rates on bonds. Bond prices and interest rates have an inverse relationship. When interest rates go up, bond prices go down. When interest rates go down, bond prices go up. Here's why:
Interest rates on bonds normally reflect the prevailing market interest rate. Say you buy a bond with an interest rate of 3%. If interest rates on other investments then go up to 4% and you're stuck with a bond paying 3%, not many people would be willing to buy your bond from you when they can buy another bond that pays them 4% interest. For this reason, you would have to lower the price of your bond in order to sell it. The opposite situation applies when bond market rates are falling.
5. Diversify. Diversifying your portfolio is one of the most important things that you can do, because it diminishes your risk. Think of it this way: If you were to invest $5 in each of 20 different companies, all of the companies would have to go out of business before you would lose all your money. If you invested the same $100 in just one company, only that company would have to fail for all your money to disappear. Thus, diversified investments "hedge" against each other and keep you from losing lots of money because of the poor performance of a few companies.
Diversify your portfolio not only with a good mix of stocks and bonds, but go further by buying shares in companies of different sizes in different industries and in different countries. Often when one class of investment performs poorly, another class performs nicely. It is very rare to see all asset classes declining at the same time.
Many believe a balanced or "moderate" portfolio is one made up of 60% stocks and 40% bonds. Thus, a more aggressive portfolio might have 80% stocks and 20% bonds, and a more conservative portfolio might have 70% bonds and 30% stocks. Some advisors will tell you that your portfolio's percentage of bonds should roughly match your age.
6. Invest for the long run.  Choosing good-quality investments can take time and effort. Not everyone can do the research and keep up with the dynamics of all the companies being considered. Many people instead employ a "buy and hold" approach of weathering the storms rather than attempting to predict and avoid market downturns. This approach works for most in the long term but requires patience and discipline. There are some, however, who choose to try their hand at being a day-trader, which involves holding stocks for a very short time (hours, even minutes). Doing so, however, does not often lead to success over the long term for the following reasons:
Brokerage fees add up. Every time you buy or sell a stock, a middleman known as a broker takes a cut for connecting you with another trader. These fees can really add up if you're making a lot of trades every day, cutting into your profit and magnifying your losses.
Many try to predict what the market will do and some will get lucky on occasion by making some good calls (and will claim it wasn't luck), but research shows that this tactic does not typically succeed over the long term.
The stock market rises over the long term. From 1871 to 2014, the S&P 500's compound annual growth rate was 9.77%, a rate of return many investors would find attractive. The challenge is to stay invested long-term while weathering the ups and downs in order to achieve this average: the standard deviation for this period was 19.60%, which means some years saw returns as high as 29.37% while other years experienced losses as large as 9.83%.  Set your sights on the long term, not the short. If you're worried about all the dips along the way, find a graphical representation of the stock market over the years and hang it somewhere you can see whenever the market is undergoing its inevitable–and temporary–declines.
7. Consider whether or not to short sell. This can be a "hedging" strategy, but it can also amplify your risk, so it's really suitable only for experienced investors. The basic concept is as follows: Instead of betting that the price of a security is going to increase, "shorting" is a bet that the price will drop. When you short a stock (or bond or currency), your broker actually lends you shares without your having to pay for them. Then you hope the stock's price goes down. If it does, you "cover," meaning you buy the actual shares at the current (lower) price and give them to the broker. The difference between the amount credited to you in the beginning and the amount you pay at the end is your profit.
Short selling can be dangerous, however, because it's not easy to predict a drop in price. If you use shorting for the purpose of speculation, be prepared to get burned sometimes. If the stock's price were to go up instead of down, you would be forced to buy the stock at a higher price than what was credited to you initially. If, on the other hand, you use shorting as a way to hedge your losses, it can actually be a good form of insurance.
This is an advanced investment strategy, and you should generally avoid it unless you are an experienced investor with extensive knowledge of markets. Remember that while a stock can only drop to zero, it can rise indefinitely, meaning that you could lose enormous sums of money through short-selling.

Part 3 Starting Out.
1. Choose where to open your account. There are different options available: you can go to a brokerage firm (sometimes also called a wirehouse or custodian) such as Fidelity, Charles Schwab or TD Ameritrade. You can open an account on the website of one of these institutions, or visit a local branch and choose to direct the investments on your own or pay to work with a staff advisor. You can also go directly to a fund company such as Vanguard, Fidelity, or T. Rowe Price and let them be your broker. They will offer you their own funds, of course, but many fund companies (such as the three just named) offer platforms on which you can buy the funds of other companies, too. See below for additional options in finding an advisor.
Always be mindful of fees and minimum-investment rules before opening an account. Brokers all charge fees per trade (ranging from $4.95 to $10 generally), and many require a minimum initial investment (ranging from $500 to much higher).
Online brokers with no minimum initial-investment requirement include Capital One Investing, TD Ameritrade, First Trade, TradeKing, and OptionsHouse.
If you want more help with your investing, there is a variety of ways to find financial advice: if you want someone who helps you in a non-sales environment, you can find an advisor in your area at one of the following sites: letsmakeaplan.org, www.napfa.org, and garrettplanningnetwork.com. You can also go to your local bank or financial institution. Many of these charge higher fees, however, and may require a large opening investment.
Some advisors (like Certified Financial Planners™) have the ability to give advice in a number of areas such as investments, taxes and retirement planning, while others can only act on a client's instructions but not give advice, It's also important to know that not all people who work at financial institutions are bound to the "fiduciary" duty of putting a client's interests first. Before starting to work with someone, ask about their training and expertise to make sure they are the right fit for you.
2. Invest in a Roth IRA as soon in your working career as possible. If you're earning taxable income and you're at least 18, you can establish a Roth IRA. This is a retirement account to which you can contribute up to an IRS-determined maximum each year (the latest limit is the lesser of $5,500 or the amount earned plus an additional $1,000 "catch up" contribution for those age 50 or older). This money gets invested and begins to grow. A Roth IRA can be a very effective way to save for retirement.
You don't get a tax deduction on the amount you contribute to a Roth, as you would if you contributed to a traditional IRA. However, any growth on top of the contribution is tax-free and can be withdrawn without penalty after you turn age 59½ (or earlier if you meet one of the exceptions to the age 59½ rule).
Investing as soon as possible in a Roth IRA is important. The earlier you begin investing, the more time your investment has to grow. If you invest just $20,000 in a Roth IRA before you're 30 years old and then stop adding any more money to it, by the time you're 72 you'll have a $1,280,000 investment (assuming a 10% rate of return). This example is merely illustrative. Don't stop investing at 30. Keep adding to your account. You will have a very comfortable retirement if you do.
How can a Roth IRA grow like this? By compound interest. The return on your investment, as well as reinvested interest, dividends and capital gains, are added to your original investment such that any given rate of return will produce a larger profit through accelerated growth. If you are earning an average compound annual rate of return of 7.2%, your money will double in ten years. (This is known as "the rule of 72.")
You can open a Roth IRA through most online brokers as well as through most banks. If you are using a self-directed online broker, you will simply select a Roth IRA as the type of account while you are registering.
3. Invest in your company's 401(k). A 401(k) is a retirement-savings vehicle into which an employee can direct portions of his or her paychecks and receive a tax deduction in the year of the contributions. Many employers will match a portion of these contributions, so the employee should contribute at least enough to trigger the employer match.
4. Consider investing mainly in stocks but also in bonds to diversify your portfolio. From 1925 to 2011, stocks outperformed bonds in every rolling 25-year period. While this may sound appealing from a return standpoint, it entails volatility, which can be worrisome. Add less-volatile bonds to your portfolio for the sake of stability and diversification. The older you get, the more appropriate it becomes to own bonds (a more conservative investment). Re-read the above discussion of diversification.
5. Start off investing a little money in mutual funds. An index fund is a mutual fund that invests in a specific list of companies of a particular size or economic sector. Such a fund performs similarly to its index, such as the S&P 500 index or the Barclays Aggregate Bond index.
Mutual funds come in different shapes and sizes. Some are actively managed, meaning there is a team of analysts and other experts employed by the fund company to research and understand a particular geographical region or economic sector. Because of this professional management, such funds generally cost more than index funds, which simply mimic an index and don't need much management. They can be bond-heavy, stock-heavy, or invest in stocks and bonds equally. They can buy and sell their securities actively, or they can be more passively managed (as in the case of index funds).
Mutual funds come with fees. There may be charges (or "loads") when you buy or sell shares of the fund. The fund's "expense ratio" is expressed as a percentage of total assets and pays for overhead and management expenses. Some funds charge a lower-percentage fee for larger investments. Expense ratios generally range from as low as 0.15% (or 15 basis points, abbreviated "BPS") for index funds to as high as 2% (200 BPS) for actively managed funds. There may also be a "12b-1" fee charged to offset a fund's marketing expenses.
The U.S. Securities and Exchange Commission states that no evidence exists that higher-fee mutual funds produce better returns than do lower-fee funds. In other words, deal with lower-fee funds.
Mutual funds can be purchased through nearly any brokerage service. Even better is to purchase directly from a mutual fund company. This avoids brokerage fees. Call or write the fund company or visit their website. Opening a fund account is simple and easy. See Invest in Mutual Funds.
6. Consider exchange-traded funds in addition to or instead of mutual funds. Exchange-traded funds (ETFs) are very similar to mutual funds in that they pool people's money and buy many investments. There are a few key differences.
ETFs can be traded on an exchange throughout the business day just like stocks, whereas mutual funds are bought and sold only at the end of each trading day.
ETFs are typically index funds and do not generate as much in the way of taxable capital gains to pass on to investors as compared with actively managed funds. ETFs and mutual funds are becoming less distinct from each other, and investors need not own both types of investment. If you like the idea of buying and selling fund shares during (rather than at the end of) the trading day, ETFs are a good choice for you.

Part 4 Making the Most of Your Money.
1. Consider using the services of a financial planner or advisor. Many planners and advisors require that their clients have an investment portfolio of at least a minimum value, sometimes $100,000 or more. This means it could be hard to find an advisor willing to work with you if your portfolio isn't well established. In that case, look for an advisor interested in helping smaller investors.
How do financial planners help? Planners are professionals whose job is to invest your money for you, ensure that your money is safe, and guide you in your financial decisions. They draw from a wealth of experience at allocating resources. Most importantly, they have a financial stake in your success: the more money you make under their tutelage, the more money they make.
2. Buck the herd instinct. The herd instinct, alluded to earlier, is the idea that just because a lot of other people are doing something, you should, too.  Many successful investors have made moves that the majority thought were unwise at the time.
That doesn't mean, however, that you should never seek investment advice from other people. Just be wise about choosing the people you listen to. Friends or family members with a successful background in investing can offer worthwhile advice, as can professional advisors who charge a flat fee (rather than a commission) for their help.
Invest in smart opportunities when other people are scared. In 2008 as the housing crisis hit, the stock market shed thousands of points in a matter of months. A smart investor who bought stocks as the market bottomed out enjoyed a strong return when stocks rebounded.
This reminds us to buy low and sell high. It takes courage to buy investments when they are becoming cheaper (in a falling market) and sell those investments when they are looking better and better (a rising market). It seems counter-intuitive, but it's how the world's most successful investors made their money.
3. Know the players in the game.  Which institutional investors think that your stock is going to drop in price and have therefore shorted it? What mutual fund managers have your stock in their fund, and what is their track record? While it helps to be independent as an investor, it's also helpful to know what respected professionals are doing.
There are websites which compile recent opinions on a stock from analysts and expert investors. For example, if you are considering a purchase of Tesla shares, you can search Tesla on Stockchase. It will give you all the recent expert opinions on the stock.
4. Re-examine your investment goals and strategies every so often. Your life and conditions in the market change all the time, so your investment strategy should change with them. Never be so committed to a stock or bond that you can't see it for what it's worth.
While money and prestige may be important, never lose track of the truly important, non-material things in life: your family, friends, health, and happiness.
For example, if you are very young and saving for retirement, it may be appropriate to have most of your portfolio invested in stocks or stock funds. This is because you would have a longer time horizon in which to recover from any big market crashes or declines, and you would be able to benefit from the long-term trend of markets moving higher.
If you are just about to retire, however, having much less of your portfolio in stocks, and a large portion in bonds and/or cash equivalents is wise. This is because you will need the money in the short-term, and as a result you do not want to risk losing the money in a stock market crash right before you need it.

Community Q&A
Question : I have low money, how I can get rich?
Answer : Expect it to take many years to get rich. Follow any or all of the steps outlined above.
Question : How do I find a broker to invest in the stock market?
Answer : There are several discount brokers online who charge a small fee for buying stock for you. There are also stockbrokers in most cities you can deal with in person. They charge a bit more, but they can offer you more personal service and help you choose stocks if you'd like.
Question : What if I have a stock in mind, but don't want a broker/brokerage firm? How do I actually purchase stock from that particular company, immediately?
Answer : Look online for the company's investor-relations department phone number. Call and ask if they offer direct stock purchases. If so, they will give you instructions for purchasing their stock. They may take a credit card, or you can write them a check.
Question : How do I start investing? Do I need an agent? Can Canadians invest in US Stocks?
Answer : Canadians -- and anyone else -- may invest in U.S. stocks. The typical way it's done is through a stockbroker. A good way to start investing is to consult with an experienced, fee-based financial advisor. A fee-based advisor does not make money by convincing you to make a particular investment.
Question : What is the difference between "ex-dividend date" and "record date"?
Answer : A "record date" is the date a dividend distribution is declared, the date at the close of which one must be the shareholder in order to receive the declared dividend. An "ex-dividend date" is typically two business days before the record date. When shares of a stock are sold near the record date of a dividend declaration, the ex-dividend date is the last day on which the seller is clearly entitled to the dividend payment.
Question : Is a financial planner really necesary?
Answer : Not if you can supply your own financial acumen and practical level-headedness. If you are not clueless about finances, or if you're personally acquainted with someone with considerable financial experience to share with you, there's no need to pay for advice. Having said that, however, the more money you want to place at risk, the more a fee-only advisor is worth hiring.
Question : How do I initiate an investment process after I open the account?
Answer : Your broker can explain the process to you. It's just a matter of telling the broker which investment(s) you want to buy. A full-service broker will help you make that decision if you'd like.
Question : I want to buy Exxon stocks right now online. What's the best way?
Answer : See Part 3 of Buy Stocks.
Question : If my company is closing, can I withdraw the 401k without any penalty?
Answer : Your 401k is probably "portable," meaning you can take it with you without penalty if you switch jobs. In your case, you shouldn't have any trouble removing the funds (assuming you plan to deposit them in another similar plan).
Question : Is it OK to connect my stock market account with my savings account?
Answer : Yes, that's a safe place to keep your money while you're not using it to buy stock.

Tips.
One of the most painless and efficient ways to invest is to dedicate a portion of each paycheck to regular contributions to an investment account. Doing so can provide some great advantages:
Dollar-cost averaging: by saving a steady amount every payday, you purchase more shares of an investment when the share price is lower and fewer shares when the price is higher. That keeps the average share price you pay relatively low.
A disciplined savings plan: having a portion withheld from your paycheck is a way of putting money away before you have a chance to spend it and can translate into a consistent habit of saving.
The "miracle" of compound interest: earning interest on previously earned interest is what Albert Einstein called "the eighth wonder of the world." Compounding is guaranteed to make your retirement years easier if you let it work its magic by leaving your money invested and untouched for as long as possible. Many years of compounding can bring astonishingly good results.

Warnings.

If you intend to hire a financial advisor, make sure s/he is a "fiduciary." That's a person who is legally bound to propose investments for you that will benefit you. An advisor who is not a fiduciary may propose investments that will mainly benefit the advisor (not you).
When looking for an advisor, choose one who charges you a flat fee for advice, not one who is paid a commission by the vendor of an investment product. A fee-based advisor will retain you as a happy client only if his/her advice works out well for you. A commission-based advisor's success is based on selling you a product, regardless of how well that product performs for you.

June 04, 2020

How to Get Money Quickly Without Borrowing It

How to Get Money Quickly Without Borrowing It.

It can be difficult to come up with cash at short notice for an emergency. Fewer and fewer people have secure jobs and savings accounts to rely on during tough times or unexpected circumstances. Fortunately, there are still ways to scrape together necessary funds quickly.

Method 1 Doing Odd Jobs In Your Neighborhood.
1. Advertise your services. Build your own website or post on online pages such as Craigslist.
Specify in your advertisement what types of jobs you can do (home repairs, plumbing, electrical work, yard work, cleaning etc.), what you charge, and when you are available.
Provide multiple ways to contact you. If you can be reached by both phone and email, you might have a better chance at getting work.
2. Build your potential customer base. Speak to nearby friends and neighbors first.
Tell them that you need money and are willing to do light housework and yard work in the area.
Ask them to tell their friends and neighbors too, and recommend your services.
Your neighbors and friends may very well end up being your first customers. Be sure to tell them to spread the word that you do good work when you're finished.
3. Charge reasonable rates for your work. The main reason someone might consider hiring you over a professional service is that you're a lot less expensive.
Ask for a small amount of money that you can live with, rather than a large sum.
A good way to estimate what to ask for is to set a low hourly rate, say $8 or $10. Also, prorate your work to the nearest half hour. In other words, if you work for 6 hours and 33 minutes, just bill for 6 hours and 30 minutes. That keeps things simple.
4. Act professionally. Dress in clean clothes and smile when people answer their doors. Offer a handshake when you introduce yourself. Make eye contact.
Be sure to describe exactly what types of services you offer, whether its small home maintenance, yard work, cleaning etc.
Be willing to do jobs on weekends and evenings.
Return calls and job offers quickly and promptly.
5. Bring your own equipment. If you have specialized equipment you can bring, such as a toolbox for house repairs or a rake for leaves and grass, bring it with you.
Heavier items like ladders and lawnmowers can be left at home, but be sure to mention you have access to your own.
Don't accept jobs that you don't have the equipment to complete.

Method 2 Finding Short-Term Jobs.
1. Think about what your skills are. You might be able to find a short term job more easily if you have certain skills.
Bookkeeping and accounting jobs are often short term or temporary. If you have skills as a bookkeeper, you can often find a well paying position on a short-term basis.
Offices and human resource departments often look for part-time workers when they have an increase in paperwork or filing.
If you have tech skills, some firms or websites may hire on a short-term basis.
2. Check the local listings for short-term jobs. The online marketplace Craigslist features an “ETC” category under the Jobs heading local newspapers also often carry advertisements for quick, temporary work. Check everywhere you can and think about what you're able to do.
Take a job as a sign waver. All kinds of businesses hire sign wavers to stand outside for 8 or 10 hours and wave a large sign at passing cars. Used car lots, payday loan stores, and furniture stores in particular use this marketing technique and often pay in cash at the end of the day.
Help out with event work. Browse listings for people and small businesses who need help setting up, running, and tearing down booths for local events like farmer's markets and street fairs. These jobs often start early in the day and often pay the same day. Be prepared to do anything from construction to running a booth.
3. Participate in studies or surveys. This isn't a reliable way to make a lot of money, but if you're just a few dollars short, it can make up the difference. A Google search will help you find some online surveys.
Be sure you qualify for the study before you apply. For example, you won't want to apply for a study that is looking at the effects of smoking if you aren't a smoker.
Apply in person to expedite the process. In the case of some surveys, you'll be able to show up and do a paid survey right then and there. Studies usually last longer, but may provide compensation before the end of the study period.
4. Join a temp agency. Temporary work agencies place thousands of employees with daily work. If you have specialized work skills or previous experience in a field, you might have very good luck temping. There are a number of tips to help you get started with an agency.
Visit the agency. Tell them you want to work, and follow their instructions. There will usually be an application to fill out, followed by an interview where you go over your work history and qualifications.
Bring a resume with you. It will help the temp agency sort out what types of jobs you are qualified for.
Dress for an office environment. Business dress shows you are looking to be successful and will fit in a professional setting.
Meet your agent. He or she will work to find jobs for you every day. Try to be pleasant and get along with your agent; it could help your chances some.
Take any job you're offered. Temp agencies can't work miracles; they don't find work for every temp employee every day. If your agent finds work that you can do and offers it to you, take it immediately.
Sometimes, a temp in a longer-term contract can get hired on as a regular employee, so always treat it like a “real” job.

Method 3 Selling and Reselling.
1. Think about selling your car. This isn't a practical step for many people, but if you're lucky enough to live somewhere you don't need a car to get to work or the grocery store, you're sitting on a huge mound of cash in the driveway. There are some helpful steps to complete this process.
Gather your car's information. Find the title and registration, maintenance receipts and records, and a car history report. Also know the features of your car (CD Player, seat controls etc.)
Having regular receipts and records for oil changes and routine maintenance can show that your car was well cared for and can help you get a good offer.
Set a price for your car. To find the right price, you can look up the value of your car with Kelly Blue Book or look in the classifieds section of your newspaper to see what price cars like yours are selling for.
Advertise the car online and in newspapers. In your ad specify the model and year of the car, its features, its true condition (if it is in need of repairs be honest), your asking price, and acceptable forms of payment. Include lots of photos and multiple ways to contact you.
2. Have a yard sale. Advertise it for free on Craigslist, or for a small fee in the local newspaper. Clean and organize everything you intend to sell, and lay it out in front of your house or apartment on the morning of the day of the sale.
This approach works best for people who haven't previously sold things for cash out of necessity, and still have a lot of items to sell. People are more interested in bigger yard sales.
Price everything slightly high, but be willing to haggle down. Most yard sale items will reasonably sell for 1/3 to 1/2 of the original price, if the item is in good condition.
Keep your prices in $.25 intervals to keep change handling simple.
To make up the difference, try to feature some bigger items, like furniture and exercise equipment, that you can get a bigger chunk of change for. Place these items at the end of the driveway or yard to lure in buyers.
Many neighborhoods have a coordinated yard-sale day. It is a good idea to hold your yard sale during this event because it will draw in a large crown of potential buyers.
3. Sell your belongings online. There are two basic ways to do this if you need to turn a quick profit: Craigslist and eBay.
On Craigslist, post your item for sale in the appropriate section of the site. Be sure to post pictures if you can; people often don't bother with listings that don't have photos attached.
Use the word “firm” if you refuse to haggle on the price; use “OBO” to indicate you might be willing to go down on it a bit.
On eBay, you can set various time and purchase options, which may have fees attached to them.
If you choose to sell it at a fixed price with the Buy It Now option, you will have to pay a flat fee of a couple dollars in addition to a percentage of the sale price. Buy It Now allows you to control your selling price.
If you choose to sell your item at auction, choose a period of time the auction will be active. Sunday evening is said to be the most lucrative night of the week for auctions by frequent eBay sellers.
4. Sell to a pawn shop. Pawn brokers are people who will pay cash for just about anything you own that isn't disposable or perishable. Pawn brokers tend to pay very low amounts and won't haggle.
Bring your items with you to the pawn shop. Most pawn shops keep short hours for security reasons, so go before 4PM to be sure you get in.
Decide whether or not to accept the offer. Expect to get $60 for a $500 bicycle, and on down the line proportionally. In most cases, you should only visit a pawn shop if you absolutely need money right now and have no other options available as you won't get a good value on your items.
5. Resell to collectors. There are collector's markets for just about everything with any cultural significance, from commemorative plates to video games and old toys. If you arm yourself with knowledge, you can make a killing buying items for cheap and selling them to collectors at a profit.
Specialize in one type of collectible. You might specialize in retro toys or specialized glassware. Start by seeing what collectibles you already own and build from there.
Know your subject. Do the research to find out what an item in good condition looks like and is worth. Know which items are commonplace or super rare. Rare items will get a better price.
Visit cheap places. Yard sales and thrift shops are your best friends as a collectables reseller.
Use computer resources. Websites that specialize in collectibles can help you to gauge what collectibles are selling for in your area.
Sell online. You'll often get a better price online than you will selling to a local collector, and this can widen your customer base.
Get to know dealers and insiders. These people can be great connections for you to advertise your collectibles and get to know vendors who can help you sell your items.

Method 4 Using Unorthodox Approaches.
1. Perform on the street. If you're lucky enough to own an instrument and talented enough, busking is the art of musical street performance. A good busker in a busy spot can make a nice little pile of cash in an hour or two of playing. The following are some helpful tips for busking.
Get permission. Some cities and communities have ordinances that require a permit or fee for street performance.
Choose a good location. Avoid areas where there are other street performers but still have high traffic. Choose busy downtown areas in safe locations as a starter.
Choose your repertoire carefully. A good time of year to busk is during the holiday season. Jazz and popular music are also successful themes.
Be polite to your audience. Be warm and friendly with everyone who crosses your path. Smile and nod whenever you make eye contact with anyone.
2. Collect scrap metal. Iron, steel, and especially copper can be sold to scrapyards by the pound. To make a significant amount of profit, you'll need to bring in quite a few pounds, so be sure you have a vehicle with space for the metal.
Look around abandoned lots and derelict buildings for pipes and metal fixtures. Junk bins outside tech and office firms may have bunches of wire or other components that can be sold as scrap.
Be very careful if you collect scrap. Wear heavy gloves, bring a partner, and don't hunt for scrap at night.
Don't steal or strip metal from anything that's still in use.
Search neighborhoods in the morning before garbage collection. You can often find items that can be used for scrap or fixed up and sold.
3. Go rock hounding. There are guidebooks available in most areas that show where valuable rocks can be found. Fossils, geodes, and semi-precious gemstones are all widely available in some areas. Keep in mind though that this may take time to find a collection and might not be a fast solution to your money problem.
Learn different gemstone grades. If you're hounding for semi-precious gems, remember that coloration and size can sometimes make them quite valuable.
Bring a shovel or spade, gloves, a hat, and a pail or bucket. Very often, to find the better-quality rocks and fossils, you'll have to dig down into the ground a little bit. Be sure this is legal where you are; most places marked in a guidebook should allow it.
Be careful to stay off of private property, including mining claims.
Sell your haul to a specialty store. You won't get a whole lot, most of the time, but it's next to impossible to sell raw stones online.
4. Sell plastic bottles for money. It's possible to collect bottles from other people's recycling and sell them for money.
You'll have to collect quite a few of them before you can make a profit, so be prepared to put some effort into this method.
You'll also have to find a national recycling buyer that purchases plastic bottles in bulk. A simple Google search should help you find companies that you can work with.
5. Sell you hair. Believe it or not, there is a market for your hair. If you have "virgin" (non-dyed or treated) lengthy hair, you can earn quite a bit of money for it.
Your hair is an outgrowth of what goes into you, so if you eat healthy and don't smoke, you can sell your hair for a premium.
An online tool exists to tell you how much your hair is worth.

Community Q&A.

Question : Where can I sell foreign coins?
Answer : A local coin dealer might be interested. Try Craigslist, too.
Question : Do people really buy hair?
Answer : Yes, they do! Some people don't have hair, so real-hair wigs are very popular.
Question : How do I sell old and rare postal stamps?
Answer : Find the value of the stamps by doing some research online first. Then, look for local auctions, swap meets, or even antique stores where you could find someone to purchase the stamps. There are also plenty of places online where you could sell them yourself once you've found the value, like eBay or Craigslist.
Question : How can you do this if you are a kid?
Answer : Start with scrap metal. It is easy to do and is free.

Warnings.

Don't steal, blackmail, or counterfeit to get money. If you think it's a lot of trouble being broke, wait until you're broke and standing in a courthouse on a felony charge.
You may have to pay income tax or other taxes on your earnings, especially if you are working a second, or even third job. Don't fall into the trap of getting paid cash-in-hand for more than you are legally allowed to earn as having to pay the Inland Revenue, IRS or other agency a large amount of back tax is not going to improve you financial situation in the long or short term.
Don't gamble if you need money. The odds are even at the very best (and only in craps betting); generally speaking, odds are that you'll lose. There's a reason people call the lottery an “idiot tax.”

June 04, 2020

How to Find a Buyer for Your Annuity

How to Find a Buyer for Your Annuity.

Although an annuity is meant to provide steady income, particularly when you retire, there are circumstances under which you might decide to sell your annuity. For example, you might decide to sell your annuity in order to buy a home, invest in a business, or to cover the costs of an emergency. Perhaps you've done the math and discovered that your annuity isn't the best most profitable option for you, and you'd like to reinvest. To find the right buyer for your annuity, look for buyers who can give you the terms you desire. If time permits, get competing offers rather than going for the first buyer you find.

Part 1 Evaluating Your Annuity.
1. Determine whether or not your annuity is transferable. If your annuity is not transferable, then you cannot sell it under any circumstances. Check your contract to see if it is transferable. If you are trying to get immediate funds, list your nontransferable annuity as an asset or form of income and apply for a bank loan.
2. Determine if your annuity is a structured settlement. Check your contract or consult your accountant to learn about the laws in your state. Most states have laws that protect people trying to sell their structured annuity. If your state has a Structured Settlement Protection Act, your transaction will have to be approved by a state court. The Periodic Payment Settlement Act protects those who received a cash sum as a result of personal injury and wrongful death lawsuits, from spending the awarded money too quickly, which may then force them to turn to public assistance to meet their needs.
Don’t try to sell a structured annuity by yourself, especially if you are living in a state that does not have a structured annuity protection law. Talk to a trusted broker and attorney before you proceed.
3. Evaluate your annuity. Before you shop around for annuity buyers, find out what the resale value of your annuity is. Hire an accountant if you are unclear on the details of your investment and its relative worth. Keep in mind that selling your annuity always result in your receiving a lower amount of money from your annuity. You will get a lump-sum payment that is adjusted with a discount rate, meaning that you'll get about 8 to 14 percent less than you would if you waited for the payments.
4. Understand the tax implications of selling your annuity. All annuities offer tax-deferral from the time of your initial investment. Your distributions, however, are taxable. This means that your annuity grows tax-free in the accumulation phase, but is taxed as distributions are made to you. These payments are taxed as ordinary income.
Gains made by selling your annuity before it matures are taxable as ordinary income. However, losses on the sale are not tax-deductible as investment losses.
If you withdraw from an annuity before age 59.5, you are also charged a 10% tax penalty. However, exceptions are made in various cases, such as the death or disability of the annuity holder.
You can also trade your annuity for another qualified annuity contract without paying taxes on the first annuity. These "1035" exchanges can be tricky, so check with a tax accountant or investment adviser before proceeding.

Part 2 Finding a Buyer.
1. Search for potential annuity buyers. Your best source for locating a potential buyers is the insurance agent that first sold you the annuity. They understand the market well and will likely have contacts for this sort of transaction. Additionally, they may also charge you a reduced commission for finding a buyer, as you already paid them a commission when you purchased the annuity. Alternately, you can search for an annuity buyer online. Before working with any of these companies, make sure that they:
Have positive, independent reviews of their services.
Have excellent customer service.
Can make a competitive offer for your annuity.
Are licensed to conduct business and follow all appropriate regulations.
Communicate timelines and figures in a transparent way.
Recommend that you first consult with a financial professional before selling.
Try checking with the Better Business Bureau (BBB) to identify whether or not the company is reputable. Companies with poor ratings from the BBB should be avoided.
Some reputable buyers of annuities include JG Wentworth, Catalina Structured Funding, Peachtree Financial, and Stone Street Capital. These companies can be contacted by phone or through their respective websites.
2. Hire a broker. If you are having trouble finding potential buyers, or if you can't find the price you think is reasonable, hire a broker. You’ll have to pay a brokerage fee, but you may stand to gain from the expertise of the broker's negotiations. Choose your broker carefully. Check their certifications to ensure that they are licensed to negotiate the sort of sale you want to make.
Ask the broker you want to hire for a quote. If they quote you a percentage, calculate it before you agree.
Look up the name of a broker you haven't worked with before. Any violations or complaints they have might be online.
3. Get offers for your annuity. Try to obtain offers from at least five companies before you choose. When you find companies online, use their quote form to get a free quote from them. A quote is not necessarily the amount you would receive, and it may not include the fee that may be deducted when a settlement is reached.
When you fill out the free quote form, give them only the standard information. Your name, email address and the name of your annuity should be the only information they ask for.
Do not give your social security number, bank information, or pay any fees to obtain a free quote.
Give yourself as much time as you can to make the sale. A rushed sale is less likely to get you a good deal.
4. Pick the best offer. Getting an offer of about 80% of the value of your annuity would be considered a good deal. Do not take a deal in which your buyer expects you to pay fees out of pocket before a settlement is agreed upon. Once you have finalized your agreement, all agreed upon court costs, legal fees and commissions should be deducted from the final settlement.
5. Gather your paperwork. To sell your annuity, you will need copies of your original annuity application and your annuity policy. If you are already collecting on your annuity, you will need your most recent disbursement check and tax return. If you have a settlement agreement, you will need a copy of that. Bring your valid government issued id, such as a passport or driver's license, and a written declaration that you are selling your annuity of your own free will.
Gather any other documentation your buyer requires, such as a copy of a court judgment for a structured annuity, or copies of any release agreements.

Part 3 Deciding What Kind of Sale to Make.
1. Decide what type of funding you are trying to get from your sale. Investigate the various ways annuity buyouts are made. Remember that no matter what kind of deal you make, the buyer will get the better deal in the long term. You will likely be offered anywhere from 60% to 85% of the value of your annuity. With this in mind, consider alternatives to selling your annuity.
If you are just selling your annuity to free up some cash, taking out a loan might better serve your purposes.
2. Consider selling as a straight purchase. If you sell as a straight purchase, the buyer will give you one lump-sum payment for your annuity. You will not go on to collect future payments. Choose to sell as a straight purchase if you are trying to get the largest immediate sum possible, or if you have determined that your annuity is not serving its purpose.
If you sell an annuity contract, you will have to pay ordinary income tax on your annuity's earnings.
3. Consider selling as a partial purchase. In this case, the buyer purchases your immediate annuity payments for a set period. At the end of that time, you once again collect your annuity payments as scheduled. Consider this option if you have a temporary shortage of cash, but would like to continue investing in your retirement.
4. Consider selling as a reverse purchase. Sell several years of your annuity. For example, if you are now receiving $1,000 per month for the next 15 years, sell your payments from years 5 through 10 only. You will get a lump sum for those years, but still receive your current payments up through year 4. You will then receive no monthly payments in years 5 through 10, but they will resume in years 11 through 15.
Know that this will result in a lower overall payout from your annuity. You will get the money for the sold years up front, but it will be lower than the total value of the payments from those years.
You also need to be sure of the value of the future payments before any deals are made.
This might be a good option if you need money now, but know you will be able to support yourself during an upcoming time period.
5. Consider selling as split purchases. If your buyer makes a split purchase, they will receive part of your monthly payment. If you only need $500 a month and your annuity payment is $1,000, sell half your annuity; you will get an immediate lump sum for the half you don't need, and continue to receive monthly payments of $500.
Even though you've only sold half the annuity, you will still pay ordinary income taxes on the deferred earnings and any gains made on the sale.

Tips. 

Give yourself as much time as possible to make the best sale. Let the companies you deal with know that you are making casual inquiries. If you appear to be shopping around without rushing, you will be more likely to get better, more competitive offers.

May 04, 2020