Friday, June 05, 2009

I GOT A GUY

Here in Chicago, whenever you're looking for help or specifically a referral, you'll here, "Oh yeah, I got a guy." It's one of our favorite colloquialisms and is used in jest by me whenever I make a referral (sheesh at least once a day!).

Yesterday, however, I got a notice in the mail as a reminder from my guy. Because of this I wanted to remind you that now is the time to start thinking about buying calendars for your clients if you do that.

My guy has a summer special - "The Early Bird Gets the...." - and it says you can send your production-ready orders by July 1, 2009 to take advantage of their early order pricing. They'll hold your order for you and ship it free of charge.

So if you've "got a guy," be sure to contact him or her about your calendar needs now. This economy is offering all business owners opportunities to manage your funds in a way that's a little more fluid than in times past.

Happy Weekend!!

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posted by The Office Grapevine at 8:43 AM 0 comments

Wednesday, December 10, 2008

How Bad Can It Get?

This is reprinted with permission from Bridget Sullivan Mermel. This really helps us to keep perspective on the current economic times.

So I revisited an article that Bert Whitehead published recently. Originally written in 2001 after 9/11, the article addresses the often unacknowledged fears that the country as a whole is experiencing. Yes, even the upbeat folks like me and my clients share the fears. Bert has been in the business since the 1970s, and his home base is outside of Detroit, which I think both contribute to his broad perspective. So, after I reread his recent article, I decided to scrap what I planned, and send along what Bert has to say in full.

It's time to get our heads out from under the covers and face our worst fears. The financial crisis is world-wide, and the U.S. is actually better off than most countries. Iceland is bankrupt, and others (including Russia) are teetering. What happens when a crisis turns into a complete collapse?

Keep in mind that the worst possible outcomes are short-term. We'll take a look at those and
then look at the reality of the long-term.

Short-term Possibilities:

Scenario #1: Complete Financial Collapse.
Likelihood = 1% - 2%.

This could rival the Great Depression scenes we see in old movies with bread lines, tent towns of
homeless, etc. You're not able to use your credit cards, or write checks. In the worst case, where
faith in US dollar evaporates, bartering or using gold becomes the basis of commerce.

This extreme outcome could be produced in our current economy if one or two extremely destructive exogenous events occur in the next year or so. These traumatic events could be anything from a huge California earthquake, Al Qaeda usurping power in Saudi Arabia and
strangling the world's oil supply, or severe weather changes brought on by global warming, etc.

We have suggested that clients who are genuinely concerned about this worst-case scenario keep 1-2% of their portfolio in gold bullion.

Scenario #2: World-wide Deflation.
Likelihood = 5-20%.

Countries try to protect their economies using tariffs, which sets off retaliation in other
countries so global commerce dries up. Shortages become a way of life. Widespread
deprivation kindles violence, terrorism escalates, and a large scale war may loom.

Even in this case, the dollar would likely be the world's safe haven. Decreasing prices enable
those who have cash or U.S. Treasury bonds to survive and prosper.

Scenario #3: Recession Reaction.
Likelihood = 15-35%.

Panic sets off contraction in consumer spending which cascades through the economy. Classic
recession response, including lay-offs, unemployment of 10-15% in US, higher in other countries. The Euro may be destabilized by conflicts in monetary policies of member nations. Cutbacks in inventories closes factories; bankruptcies increase. Portfolio Panic Reaction leads many people to take foolish risks.

We work closely with clients to manage their endogenous risks, rebalance portfolios accordingly, make sure that adequate liquidity is maintained.

Scenario #4: Volatility Eruption.
Likelihood = 25-40%.

We are likely experiencing this phase now. Market prices in securities, commodities, housing, etc. take huge swings in waves of panic trading. Investors retreat to the sidelines, so trading volumes vacillate. This is how the market finds price balance, by testing the extremes. This could be a relatively short phase followed by onset of recession which could be severe, or gradually recover as markets begin to bounce back.

This is most difficult time for investors. In today's economies this scenario usually stirs
government intervention in the markets. This brings the danger that the money supply is
increased faster than productivity gains which can trigger spiraling inflation. Having a long-
term fixed rate mortgage is the best protection against inflation. Survival in this phase requires
clients to turn off the TV.

Scenario #5: Bounce Back.
Likelihood = 15- 35%.

If governments are successful in shoring up confidence in their economies, and adequate
liquidity is available in capital markets, stable commerce will again emerge. Housing prices
will drop to the point where entrepreneurs can buy up excess inventory and rent out homes
with a positive cash flow. New business formations provide most new employment
opportunities.

The stock market is likely to start rebounding a year or so before this phase kicks in. Clients
guided by Functional Asset Allocation, which we preach, will prosper in this stage since they
will not have sold off their stock holdings. Those who have continued dollar-cost-averaging, (e.g. through their 401-k's, etc.) will enjoy rapid accumulation in their portfolios.

Long-term Outlook:

Likelihood = 98-99%.

As this downturn is relatively severe, it may take another 2-3 years to substantially recover.
Then we will enjoy approximately 5.5 years (on average) of prosperity, which we will soon take
for granted. On the next downturn, we will be again surprised. We will go through though
another down-cycle as we have for the past century. Again we will think that 'it is different
this time.' A year or so into that downturn we will again anguish about "How Bad Can It
Get?" Then I will send out this article again, as I did seven years ago in Nov. 2001…

Sleep well tonight! Bert

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posted by The Office Grapevine at 9:21 AM 0 comments

Thursday, November 27, 2008

Getting Back Into the Swing Early

It has been over a year since I've posted to my own blog. A friend of mine just recently commented on this to me and said, "Either get something up there or take it down."

As we head into the holiday season, one thing that always comes up is how much family, friends and significant others really mean. We talk about the need to stay in touch more, the desire to start out the new year as a new you, etc.

From a business perspective, this usually means getting budgets and plans in order. My first question is always, do you have any of these completed? If you don't then it's time to consider doing these things.

They can be done very easily through a quick analysis of your business financials. Run a quick Profit & Loss statement. You'll know where you're spending your money and you'll know where you can cut just by getting that macro-level look. I always start there.

Next, look at how you are spending your business dollars. Are you tracking how the money being spent is coming back to you in new business or upgraded business from your current client base? This is another key area that will help you grow your business over the long term.

With the amount of bookkeeping for small business that we do, this is one area where we focus so we can help our clients make smarter choices on expenses. You may not be at that corporate-style budget stage in your business, but that does not mean you can keep spending like your business is a hobby.

This current economy is going to be a challenge but business will continue to be done. Those of us who are ready, have plans in place and maintain good customer service will come out as strong businesses with a great profit to show for it.

With that in mind, you can get that extravagant gift tomorrow morning if you are a Black Friday shopper. Now, click here, so you can plan your early Friday morning shopping.

Cheers,
Virtual Cathy

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posted by The Office Grapevine at 9:00 AM 0 comments