Categories
Wealth

How a High School Student Can Create $1 Million in Wealth

In this article I will explore how a teenager can set themselves up for retirement before even graduating high school. Indeed, it is possible to build over $1 million in future wealth before starting college.

Methodology

Most teenage students can manage part time work during the school year and full time work during the summers. With few expenses, the teen is able to invest every dollar earned. Of course, not all students will fit this profile. Some won’t find work. Others will be required to help with family expenses. But I think – with enough discipline  – many students can make this a reality.

I believe that the more hours you work at a part time job while in school the worse your academic performance. Therefore, I will keep weekly working hours during the school year at a very manageable level.

After all, this whole exercise is about setting up a successful future. That includes future earnings, which is dependent on a good education. So this experiment should not come at the expense of future earnings.

Also Read: Is Your Scarcity Mindset Holding You Back?

Assumptions:

  • Let’s assume that during the school year the student works one 8hr shift per week. 
  • School year is 40 weeks
  • During the summer, let’s assume the student works a 40hr week.
  • Summer is 8 weeks
  • Starts working in grade 9 through to grade 12
  • Earns $15/hr ($1 above minimum wage in Ontario, Canada)
  • No taxes or transaction costs

Based on these assumptions, the student would earn $9,600 each year (see table below) for four years.

But how does he turn this into $1 million by retirement?

Observations

If the student invests the $9,600 at the end of each of the four years and does nothing else, he could have over $1 million by age 65. The chart below illustrates how the investments would grow assuming average annualized returns of 5, 6 or 7%. (These are conservative estimates given long term historical returns are close to 10%.)

Of course, $1 million in the future will be worth less than $1 million today due to inflation. The chart below adjusts the investment returns to account for an annual inflation rate of 2%. Still, the student’s initial investment ($9,600 × 4) is worth between an estimated $166-430k by age 65 in today’s dollars.

That is more than most 40 year olds currently have saved for retirement. Can you imagine what this might look like if the student kept investing throughout his life?

The message here is simple. Start investing as young as possible and let the power of compounding grow your wealth.

Categories
Real Estate

Landlords Beware

Painting: Badminton House from Badminton Park by Giovanni Antonio Canal, 1748

Many, many people believe real estate is the key to wealth creation. While I agree that a leveraged investment in a (generally) stable asset is one way to gain wealth, I must warn you: landlording ain’t easy!

You can do everything right and still get screwed.

Let’s assume you’ve bought a property at a reasonable valuation in an area that has a low vacancy rate and good long-term prospects. Let’s also assume the potential rental income on the property leaves you in a ‘cash flow positive’ situation, meaning the rent covers the mortgage, insurance, utilities, property tax and a decent profit.

You Might Also Like: How to Become a Better Investor

So far so good. All you need now is someone to rent the property from you.

This is where things can go very wrong. I highly suggest you consider all the downsides before jumping into the rental game.

Below are 6 horror stories from various landlords around the country. If you’re thinking about becoming a landlord, read these accounts directly from landlords who have been to hell and back.

Reddit user krustyy:

We have always run credit and background checks from the beginning and once let our personal impressions of the potential renters skew our judgement, only to be hosed.

We had a renter who was a nice single mother looking to rent our small 2 bedroom apartment. Credit report came back at like 450 with a previous court judgement on her record. Since she was the only applicant at the time we decided to take the risk but asked both for first and last month’s rent as well as a larger deposit.

She wrote us a check. We gave her the keys.

Then the check bounced and we were stuck being strung along a 6 month eviction process. I think in the end we got 1 month of rent total.

Reddit User Monkey-Tamer:

Happened to my mom. I warned her, but she bought in to the woman’s sob story about being a victim of domestic violence. No credit check. She couldn’t pay first month rent and security deposit. My mom waived that condition in the lease. A month later I’m being called to do the eviction action since no rent is being paid. I told my mom I’d draft the paperwork but her or my stepdad would be paying the filing fees and appearing in court. I wasn’t going to burn vacation days going to a county two hours away after she didn’t listen to me. I had advised her to rent the house to college kids since it is mere blocks away from a university. The house has been vacant for years bleeding her in property taxes. It’s like she does the opposite of what I tell her. House has been on the market for 5 years.

Reddit user TMKF2:

Used to be in the property management business and had a renter who was so good at gaming the system that she managed to occupy the same apartment for nine months on having paid only three months rent.

Moves in, pays first month and security deposit. 30 days pass, no rent collected. Give the usual notices and process for eviction on day 49. She paid in full on day 64. So far three months collected.

Restarted the occupancy clock. 49 days later still no rent, start legal eviction again. (Day 113)

Court date gets set for day 138. She gets the court date pushed out due to her “disability” (day 160).

Applies for rent assistance and some disability benefit, and gets an extension on the court date to the end of the application process (day 180 ish).

Rent assistance comes through, of which she’s responsible for 60% of the rent, but we have to settle and close the case to collect the funds. We decline and move for judgement and eviction.

Judge grants the eviction, but not before griefing us for “dragging this out”, and not being accommodating. As a parting gift the judge gives her 6 weeks to move. She left the place empty, but filthy on day 274 and had the audacity to literally take the keys and lock off the door when she moved out.

I left the business later that year, but I’m certain the owners never recouped on the rent or damages.

We were the first of three properties she’d eventually do this to.

Reddit User alopgeek:

Happened to me… I had a vacant house, nice grandmother applied… Seemed super nice. She told me upfront that there were problems with her credit, and that I didn’t need to check it, because it was bad and she knew it.

Should have been the red flag, but I fell for it anyways. She gave me first month + deposit… and was OK for about 6months. Then she started being late, then there seemed to be “out of pocket” repairs that she had done without calling me, then she just stopped paying…

I ended up selling the house after a lengthy eviction

Reddit User deadinsidelol69:

My mom used to rent her 2nd house, she didn’t run the background check, but they gave her cash. Then they immediately brought their 4 pitbulls into the house, destroyed all the furniture, carpet, and walls over 6 months, then ditched the house and never contacted my mom again.

Reddit User GenericUserBot5000:

Even the background checks are not fool proof. I had a lady rent from me pass the criminal and credit check stiff me after the first month. She paid her sd and first months rent and I never got another cent.

The kicker was that it was a duplex and I lived in the other half. I saw her almost every day and made sure to ask for the rent when I saw her. Took 4 months to get her out and I’m still trying to get the 4k she owes me.

On a side note, if you are thinking of getting into the rental thing you NEED to have at least 3 months property expenses saved up. My goal is 6 and I’m at about 4. Also don’t include the sd in this as usually you need to give it back when the tenant moves out.

Also, and I can’t emphasize this enough, YOU WILL NOT GET RICH. At best you will break even or come out a little ahead until the mortgage is paid off. Maintenance costs money, things break, natural disasters happen. One years gain will supplement next year’s loss.


Categories
Wealth

Is $1 Million Still F.U. Money?

Painting: The Tribute Money by Masaccio (1401–1428)

Ask someone how much they’d need to quit their job and follow their dreams. For most people the magic number to walk away from it all is $1 million. That’s their F.U. (f@ck you) money.*

*F.U. money is the money you’d need to have saved to say “F.U.” to your boss and job.

However, people have been quoting that number for many, many years. Realistically – with inflation – $1 millions means less today than years ago. But it’s a nice clean amount so it has retained its status as the magic number.

Is $1 million still a lot of money?

Let’s not pretend to be stupid. A sudden inheritance of $1 million would be life changing for most people. You could take care of a lot of shit with that kind of money. But is it enough to buy a lifetime of freedom?

If you won $1 million, you’d probably first need to pay off your debts and mortgage. If you’re lucky to live in a an area with reasonable house prices you’d probably be left with about $700,000. (If you live in a place like Toronto, New York or Tokyo, consider moving to a city with a lower cost of living.)

If you invest that $700,000 in a balanced portfolio I think it’s fair to say you’d get a conservative return of 4-6%. If you didn’t touch your initial capital, you’d be generating $28-42k annually. This is livable, if you have your primary residence paid off. However, it might be an unreasonable range if it’s only 25% of your current income.

Of course, one must consider taxes in a situation like this. Often, income from investments is taxed more favorably than regular income. So $30k from investments might be worth more after tax than a $30k salary. Meaning, you might require slightly less capital to generate a desired level of after tax income. However, for purposes of simplicity – and because I don’t know who you are and where you live – I will ignore taxes.

A 75% cut in income would most likely require a substantial change in lifestyle. Moreover, the real value of that lower income will be eroded by inflation as time goes on. The longer remaining life you have the worse it’ll get.

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The previous example assumes you don’t touch your initial investment. If you change your strategy by withdrawing initial capital along with your gains you can draw a larger income. The downside is you will eventually run out of money.

For example, if you drew an annual income of $50,000 (assuming 5% rate of return), you would run out of money in 23 years. Increase that income to $60,000 and you’d run out in 17 years.

To achieve a consistent annual $50k income over 40 years you’d need $885k in starting capital (given a 5% return assumption). Again, that $50k is worth less and less as time proceeds, due to inflation.

For some, that amount and timing works perfectly. For others it doesn’t. If you can handle a $50k lifestyle and are well into retirement age, $1 million might be your magic number. However, $1 million no longer appears to be F.U. money for anyone with a considerable time horizon.

Additional sources of retirement income (e.g. government pension) will help, but it won’t amount to much for most people. Many people will require more.

After reading all this, if you’re anything like me, you’re thinking “well that’s just f@cking great – I’m going to be a corporate schmuck forever then.” Maybe. Or maybe there are other options.

For starters, you can take out a smaller income and supplement it with part-time work…perhaps a secret passion project. Or you can live like a student on ramen noodles and Pabst Blue Ribbon.

Cut and supplement. If you can’t do that, I’m afraid you might need to play the corporate game for longer. Because $1 million is no longer F.U. money.

Categories
Work

8 Essentials for More Productive Meetings

Meetings suck. Even though they may not show it, your colleagues (and even your boss) also think meetings suck. Few will admit it because most of your colleagues are playing the BS corporate game.

But you’re not alone.

You know who else thought meetings were great time wasters? Donald Rumsfeld, former Secretary of Defense under George W. Bush. Love him or hate him, you don’t get to Rumsfeld’s level without knowing how to get things done.

Peter Drucker – management consultant, educator, and author – also thought meetings were time vortexes. In the ‘Effective Executive’ he suggests “Meetings are a symptom of bad organization. The fewer meetings the better.”

But if you want to rise the corporate ladder or build your business empire, meetings are a fact of life. So here are 8 tips for making them as effective and efficient as possible. Stay strong.

1. Determine if the meeting is really required

If you’re simply sharing information, an opinion or a proposal that does not require debate, would an email be more appropriate? Would a leadership decision substitute for a meeting?

2. Minimize time

When booking a meeting, opt for less time than you think is required. Time-pressure helps ensure meeting time is used efficiently. Moreover, don’t stretch out meetings to fill the allotted time. Consider it a success if the meeting objective is satisfied using less than the allotted time.

3. Minimize attendees

Invite only those who need to be part of the discussion. A smaller group facilitates discussion. Moreover, consider the implied cost (hourly wages x time) of the meeting.

4. Determine and communicate the objective

When booking the meeting, summarize the expected content and outcome. Meetings with purpose help accomplish business objectives. Meetings without purpose simply fill time.

5. Start on time; end on time

Respect attendees’ time by starting on time. Those who are late can catch up later.

6. Ensure the meeting is productive

Stick to the agenda, come prepared, don’t regurgitate known information. If a discussion meanders into the irrelevant, add the item to a follow-up list and return to the agenda. If attendees are not prepared end and rebook the meeting.

7. Encourage people to share their views

Many feel uncomfortable talking in large group settings. Encourage participating by asking for opinions, contrary and similar. Reward participation with interest and appreciation.

8. Summarize and follow up

Meetings are fast forgotten. Ensure meetings drive business by summarizing the decisions made and actions required. Follow up with action-items to ensure accountability.

Categories
Investing

How to Become a Better Investor

Image: George Catlin, Cabane’s Trading House, 930 Miles above St. Louis (1832)

The sooner you realize you suck at investing, the sooner you’ll become a successful investor. Unfortunately, many people believe they are the exception. The truth is, most people barely achieve ⅓ of broad market returns due to their emotional decisions. 

This isn’t simply about stock picking or choosing a fund manager who will outperform. It’s about swimming against powerful market tides.

You Suck in Bear Markets

Bear markets are a form of psychological torture.  Believe me when I tell you that even seasoned investors are tempted to sell everything when markets are pummeled. The relentless and pervasive barrage of negativity goes on for months leading even the most resolute to question their own beliefs.

Whether you invest in stocks, index funds or active funds, do you have the intestinal fortitude to buy when the entire market is dying and everyone is screaming ‘sell’? It is easy to say ‘yes’ from the comfort of your armchair when unemployment sits at record lows and markets are near all-time highs. But it isn’t as easy when your friends and family are losing their jobs and people are going bankrupt. At that point in time, self preservation becomes paramount and one can easily rationalize selling underwater investments to protect what’s left. 

You Suck in Bull Markets

It is just as difficult to do the opposite (sell) when everyone around you is getting rich off the last vapors of a bull rally. The conservative investor that misses the final months (or even years) of a bull market is made to feel stupid. Meanwhile, your friends and family with sub-par IQs are rolling in dough as they plow every penny into risky assets.

These are precisely the emotions you need to combat even if you simply want to passively buy and hold low cost index funds to match market performance. Investing is simple…until it’s not. It’s simple until you start paying attention to the noise around you. Unfortunately, the noise is hard to ignore.

These emotional decisions cause investors to lock in losses and miss out on gains. Consequently, the average investor vastly under-performed the broad stock market over a 20 year period.

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How Does the Typical Investor Actually Perform?

According to Richard Bernstein of Richard Bernstein Advisors:

“The performance of the typical investor over this time period is shockingly poor. The average investor has under-performed every category except Asian emerging market and Japanese equities. The average investor even under-performed cash (listed here as 3-month t-bills)! The average investor under-performed nearly every asset class. They could have improved performance by simply buying and holding any asset class other than Asian emerging market or Japanese equities. Thus, their under-performance suggests investors’ timing of asset allocation decisions must have been particularly poor, i.e., investors consistently bought assets that were overvalued and sold assets that were undervalued.” 

BlackRock made similar comments back in 2012:

“Volatility is often the catalyst for poor decisions at inopportune times. Amidst difficult financial times, emotional instincts often drive investors to take actions that make no rational sense but make perfect emotional sense. Psychological factors such as fear often translate into poor timing of buys and sells. Though portfolio managers expend enormous efforts making investment decisions, investors often give up these extra percentage points in poorly timed decisions. As a result, the average investor under-performed most asset classes over the past 20 years. Investors even under-performed inflation by 0.5%.”

How to Become a Better Investor

So what can you do? Perhaps the more appropriate question is ‘how can you do less?’. Because it is the ‘doing’ – the unplanned activity – that causes investors to fall behind. 

The best way to avoid unnecessary and detrimental activity is to build a plan for how you want to invest, in good times and bad. Perhaps the simplest plan is to invest a percentage of your paycheck every month into a pre-selected set of investments that align with your risk tolerance and objectives. Your plan can be more elaborate if you choose – e.g. creating trading rules such as stop losses – but for most the simple approach is best because it doesn’t require expert knowledge and is easy to execute.

Most importantly, make the decision today about how you plan to behave when markets are plummeting or irrationally exuberant. Because when you’re in the heat of a bear market or bubble economy, emotions will take over and you won’t be able to make rational decisions.

Categories
Life

What Should My Kid Study?

Most people want their kids to succeed. But how? Of course, there’s the generic ‘work hard’, ‘study hard’ advice. But work hard at what?

I recently started attending open houses for high schools with one of my children. What stood out for me was how soon my child will need to make choices that will affect the rest of her life. Long gone are the days when you could coast aimlessly through high school. From day one, the entire experience is geared towards preparing kids for college, university or the workforce.

For example, to enter the ‘Media and Technology Arts’ stream, kids need to apply before starting high school. The application includes a questionnaire and mini-portfolio. At first, I was drawn in by the idea of learning practical skills at such a young age (they’d learn all the Adobe creative software). This stream would provide introductory training for someone pursuing a career in graphic design or video production. But then I got wondering: Does the stream lead students down a narrow path with few options? Does it actually provide students with highly marketable and flexible skills that last a lifetime?

The choices kids make at age 14 or 15 impact their lifelong career prospects. How would kids know what career they want at age 14? More importantly, how can you help your kids prepare to enter fields with bright long term career prospects? And how do you do this without unnecessarily narrowing the path by focusing on too specific an outcome?

A Function of Supply and Demand

One’s ability to succeed in a given field comes down to supply and demand. The lower the supply of workers relative to the demand for workers in a given field, the better the prospects for a rich, satisfying and meaningful career.

Anyone can learn to flip burgers in a couple of days – so there is a massive supply of potential burger flippers. That’s why burger flippers make minimum wage. (They’d make less if it were legal.)

The supply of workers in a given field is generally lower the more skill the field requires. However, sometimes even skilled fields are oversupplied with workers. These are usually the more ‘exciting’ fields like advertising, photography or the arts.

Now, the world needs artists so if your child is truly passionate and has artistic talent I wouldn’t dissuade him from exploring it to its fullest. But for every person making a successful living as an artist, there are hundreds more struggling to get noticed. Most artists will need to derive their primary income from a traditional 9-to-5. They might as well make that 9-to-5 as lucrative as possible, right? Moreover, you can (and probably should) develop art skills independently outside of any learning institution. Therefore, focusing on art in high school might be counterproductive.

Emphasize Broad, Marketable, In-Demand Skills

For the best career prospects, kids need to be guided towards fields with a mismatch between qualified workers and job openings. At the same time, it is important to keep the scope broad enough to allow for a variety of future – and likely unknown – paths.

In the business world, the skills mismatch is acute:

  • According to a survey done in the UK by Deloitte, only 18% of digital leaders in businesses feel that students are entering the workplace with the right digital skills and experience.
  • In a 2016 survey of The Business Roundtable, the association of U.S. CEOs, 59% of respondents struggled to find graduates with fundamental math skills. 75% couldn’t find STEM workers to fill roles ranging from cybersecurity to data analytics.
  • According to a recent study by the World Economic Forum, only 27% of small companies and 29% of large companies believe they have the right talent for digital transformation.

What you’ll notice is the de-emphasis on specific jobs. Instead, businesses need people with math, technology and digital skills. Those who possess these skills will be able to fit into a number of specific jobs and command high salaries. Indeed they will be treated well too, as companies can’t afford to lose people that are hard to find.

Of course, there is more to the world than just business – the public sector requires the same skills as the private sector.

Regardless of the industry or sector they end up in, it is clear that if high school kids invest their time in math, technology or sciences they will have a solid foundation that provides a multitude of options.

For example, someone with a math background could have a lucrative career in data science, statistical research, actuarial science, sales, accounting, finance, teaching and much more. The table below was created by PayScale in 2014 showing the 10 highest paying jobs in the US for people with math skills:

In contrast, a background in graphic design leads to…a job as a graphic designer. Possibly a great job, but a narrow path with little crossover into other roles and limited earnings potential. The median pay for a graphic designer today (according to PayScale) is $44,304.

So why would anyone nudge their 14 year old child down a path with few options and mediocre salary prospects? Instead, encourage them to study broad subject areas – like math, science and technology – with relatively few competitors and high employer demand.

Categories
Investing

The S&P 500: Biased and Misleading

You’ve seen headlines like these:

“S&P 500 crashes today”

” The S&P 500 rose as earnings optimism rises”

“Record year for stocks, as S&P 500 up double-digits”

…and so on.

The problem with these statements is that they’re using the S&P 500 as a proxy for the overall market. I’ll be the first to admit that no index completely represents the market at all times. But in this article, I’ll point out some of the issues with the S&P 500.

The S&P 500 index is a market-capitalization weighted index made up of 500 of the largest publicly-traded companies in the United States. The stocks within the index represent a significant portion of value of all companies in America.

I am a big fan of low cost index investing. So why am I shit-talking the S&P 500?

Three reasons:

First, the index is arguably actively managed. All indices have a pre-programmed set of rules to determine its constituents, weightings and rebalancing frequency. An index and its characteristics need to be defined – like everything else in life – and that definition is the creation of a human being (or team of humans) making some sort of decisions. The activity undertaken to create these rules (and the activity in executing these rules) means that indices (like the S&P 500 index) may not be as passive as investors believe. While an investor can make a passive allocation to an index, that investor must first understand and believe in how that index is constructed.

Second, the index is highly concentrated. The chart at the beginning of this articles shows that the largest 5 stocks of the S&P 500 accounts for the same market cap as the last 279 companies of the index. These five companies are Microsoft, Amazon, Apple, Alphabet and Facebook. While these companies may seem like behemoths that could survive anything – thus deserving their big weights in the index – one only has to go back as far as 2010 to see a completely different composition. In 2010, the largest five stocks in the S&P 500 included Exxon, GE and Berkshire Hathaway. Where are they now? This degree of concentration presents a risk to investors, as the success of index constituents waxes and wanes. Essentially, the performance of the S&P 500 is dependent on the success or failure of just 5 companies.

Third, the index is effectively a buy-high sell-low strategy. Put simply, to get added to the index a company needs to be meaningfully large. Companies aren’t born large, so by the time they are big enough to be added to the S&P 500 they have often experienced years of growth. In other words, companies are added to the index AFTER they have performed well and potentially already trading at elevated levels. In contrast, a company is removed from the index if it falls from grace and has shrunk considerably (or even gone bankrupt) due to years of weak performance. Ideally, investments should be bought BEFORE they perform well and sold BEFORE they start to underperform. The S&P 500 (and many other indices) does the opposite, and is effectively a buy-high sell-low strategy.

Takeaway: If you are looking for simple, diversified access to passive exposure to equities I would first look for indices that are well constructed. These well constructed indices may not be what you see in the newspaper headlines, and some are proprietary to mutual fund or ETF manufacturers. Look for investment products that provide ‘total market’ exposure while capping the weight of each underlying holding. Take a look at the top 10 holdings of whatever index ETF or fund you are researching to ensure they represent no more than 25% of the overall assets. Finally, also consider an index ETF or fund that includes small, mid and large cap stocks to provide exposure to all phases of company growth (i.e. not simply to companies that have already gotten big).

Categories
Work

Stephen A. Schwarzman: 25 Rules for Work and Life

Earlier today I was listening to an episode of the James Altucher podcast, during which James interviewed Blackstone Group CEO Stephen A. Schwarzman.

The Blackstone Group is a global private equity firm with almost half a trillion dollars in assets. Along with Peter Peterson, Schwarzman founded the company in 1985. Since then, Schwarzman has amassed a personal fortune of over $12 billion!

While I believe it is a fallacy to automatically equate wealth with wisdom, in this case I think it is warranted. I think it is wise to pay attention to the lessons about ambition, risk and success Schwarzman shares in his latest book, What It Takes: Lessons in the Pursuit of Excellence.

Here are Schwarzman’s 25 lessons:

  1. It’s as easy to do something big as it is to do something small, so reach for a fantasy worthy of your pursuit, with rewards commensurate to your effort.
  2. The best executives are made, not born. They never stop learning. Study the people and organizations in your life that have had enormous success. They offer a free course from the real world to help you improve.
  3. Write or call the people you admire, and ask for advice or a meeting. You never know who will be willing to meet with you. You may end up learning something important or form a connection you can leverage for the rest of your life. Meeting people early in life creates an unusual bond.
  4. There is nothing more interesting to people than their own problems. Think about what others are dealing with, and try to come up with ideas to help them. Almost anyone, however senior or important, is receptive to good ideas provided you are thoughtful.
  5. Every business is a closed, integrated system with a set of distinct but interrelated parts. Great managers understand how each part works on its own and in relation to all the others.
  6. Information is the most important asset in business. The more you know, the more perspectives you have, and the more likely you are to spot patterns and anomalies before your competition. So always be open to new inputs, whether they are people, experiences, or knowledge.
  7. When you’re young, only take a job that provides you with a steep learning curve and strong training. First jobs are foundational. Don’t take a job just because it seems prestigious.
  8. When presenting yourself, remember that impressions matter. The whole picture has to be right. Others will be watching for all sorts of clues and cues that tell who you are. Be on time. Be authentic. Be prepared.
  9. No one person, however smart, can solve every problem. But an army of smart people talking openly with one another will.
  10. People in a tough spot often focus on their own problems, when the answer usually lies in fixing someone else’s.

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  11. Believe in something greater than yourself and your personal needs. It can be your company, your country, or a duty for service. Any challenge you tackle that is inspired by your beliefs and core values will be worth it, regardless of whether you succeed or fail.
  12. Never deviate from your sense of right and wrong. Your integrity must be unquestionable. It is easy to do what’s right when you don’t have to write a check or suffer any consequences. It’s harder when you have to give something up. Always do what you say you will, and never mislead anyone for your own advantage.
  13. Be bold. Successful entrepreneurs, managers, and individuals have the confidence and courage to act when the moment seems right. They accept risk when others are cautious and take action when everyone else is frozen, but they do so smartly. This trait is the mark of a leader.
  14. Never get complacent. Nothing is forever. Whether it is an individual or a business, your competition will defeat you if you are not constantly seeking ways to reinvent and improve yourself. Organizations, especially, are more fragile than you think.
  15. Sales rarely get made on the first pitch. Just because you believe in something doesn’t mean everyone else will. You need to be able to sell your vision with conviction over and over again. Most people don’t like change, so you need to be able to convince them why they should accept it. Don’t be afraid to ask for what you want.
  16. If you see a huge, transformative opportunity, don’t worry that no one else is pursuing it. You might be seeing something others don’t. The harder the problem is, the more limited the competition, and the greater the reward for whomever can solve it.
  17. Success comes down to rare moments of opportunity. Be open, alert, and ready to seize them. Gather the right people and resources; then commit. If you’re not prepared to apply that kind of effort, either the opportunity isn’t as compelling as you think or you are not the right person to pursue it.
  18. Time wounds all deals, sometimes even fatally. Often the longer you wait, the more surprises await you. In tough negotiations especially, keep everyone at the table long enough to reach an agreement.
  19. Don’t lose money!!! Objectively assess the risks of every opportunity.
  20. Make decisions when you are ready, not under pressure. Others will always push you to make a decision for their own purposes, internal politics, or some other external need. But you can almost always say, “I think I need a little more time to think about this. I’ll get back to you.” This tactic is very effective at defusing even the most difficult and uncomfortable situations.
  21. Worrying is an active, liberating activity. If channeled appropriately, it allows you to articulate the downside in any situation and drives you to take action to avoid it.
  22. Failure is the best teacher in an organization. Talk about failures openly and objectively. Analyze what went wrong. You will learn new rules for decision making and organizational behavior. If evaluated well, failures have the potential to change the course of any organization and make it more successful in the future.
  23. Hire 10s whenever you can. They are proactive about sensing problems, designing solutions, and taking a business in new directions. They also attract and hire other 10s. You can always build something around a 10.
  24. Be there for the people you know to be good, even when everyone else is walking away. Anyone can end up in a tough situation. A random act of kindness in someone’s time of need can change the course of a life and create an unexpected friendship or loyalty.
  25. Everyone has dreams. Do what you can to help others achieve theirs.

If you have a chance, pick up a copy of his book and let me know what you think.