Zig When They Zag

First off, thank you to Donny Tiger and Gary West from WBVP-WMBA Radio in Beaver Falls for the terrific airtime last week! Plenty of great questions and I hope that I provided insightful answer. In fact, this was probably even better than the previous week on KDKA with Marty Griffin.

If your organization is looking for a guest speaker, give me a shout. I will often speak for free (or a peanut butter and jelly sandwich) if given ample opportunity of a week or more notice. Also, I can speak about most things, from investing and banking through raising two (somewhat) normal kids while writing weekly, speaking, teaching and going to school (I start my Ph.D in Finance in May.)

Now, onto.......THE BLOG...

Take a look around today and you will see a whole bunch of people trying desperately to be different from everyone else. The way they accomplish this is by their manner of dress, hair and jewelery choices. So many people are trying to be different, in fact, that everyone is pretty much the same.

Think about it for a minute. Take a look around as you're reading this, and the odds are good if you're at work, most folks dress just like you, talk just like you and have the same interests as you do. Not that you're a bad person, or that this is a bad thing. It's simply an observation.

Betcha your friends are a lot like you, too.

With that said, I'm going to go one step further and suggest that you probably follow a lot of your friends, counterparts, work associates, etc. when it comes to heeding financial advice. I'm going to suggest that you do something a little bit, dare I say, different, than the rest of the crowd. Remember, they aren't that different from you; therefore, they probably struggle to make ends meet, get the kids on the bus, argue about family and are concerned about their financial future just like you are.

Begin thinking for yourself and trust your gut instinct. What's the worst thing that could happen? Could you be wrong? Absolutely. But what if, through some minor miracle, you were actually right in your thoughts? What if everyone was selling umbrellas because it hadn't rained in three months, and you actually decided to BUY umbrellas because it hadn't rained in three months?

Is it EVER going to rain again? Absolutely. When it does, will your umbrellas be worth more than when you bought them? Absolutely! This is supply and demand. Would you rather buy an umbrella when it's raining or when it's not raining?

I like to buy coats in July and bathing suits in January (and NOT because I'm a member of the Polar Bear Club.) I like this method because I pay less when demand is down.

Guess what? We are in the middle of a blizzard in January and there are warehouses filled with bathing suits. Some of the suits that used to cost $10 now cost $4, or in some instances, even less. The odds are good it won't snow forever and in fact, the dog days of summer will be fast upon us again. Buy the suits now.

What does this have to do with investing? Glad you asked.

EVERYTHING.

Nobody is buying ANYTHING right now. I think it's almost time to start buying, but be smart about it.

Here's how I see this playing out.

We have already elected a new president, so that eliminates a little uncertainty. President-elect Obama will begin selecting cabinet members in the coming weeks, too, which should further reduce some uncertainty. Combined with an influx of bailout bucks, I think the economy is close to stabilizing. Remember, government figures look backwards, not forward.

I expect unemployment to rise about another .5% to 7.0%. Inflation will hit about 6-8% next year, but several factors are at play here to offset these trends.

1. Fuel prices are down. In fact, they are lower today than they were a year ago. And despite arguments to the contrary, we have short-term memories. Odds are good that by February or March of next year, we will have forgotten this past July when it topped $4 per gallon and folks were predicting $10 per gallon by the end of this year. Where are those folks, by the way?

2. Consumers get tired of waiting. I don't care what common sense says, no one likes to wait. The U.S. consumer has been waiting around for about a year already to buy major goods and services. By February or March of 2009, they will have waited around 15 months. That's longer than most of Britney Spears' marriages. At some point in time, the consumer is going to start buying because they want to, not because they can afford to.

3. Jobs will increase in March or April. President-elect Obama is going to force jobs down our throats if it kills us, and like it or not, unemployment will eventually go back down to 5.5%.

4. Finally, right from the "like it or not" barrel of fun is the bailout bucks. You can't ignore $800 trillion going into a bad economy. Whether you agreed with the bailout (I hated the bailout) or not, the money is going to trickle in. We will feel that in March or April.

With all of that said, I do suggest holding tight through the end of this year, as mutual fund managers begin dumping shares for tax reasons at the end of this month, and earnings season is still in full swing.

But remember, buy bathing suits in January.

There are TONS of sexy bathing suits out there right now. Notably, GE, Citibank, Pfizer, Altria (spinoff from Phillip Morris) and Caterpillar. Some simple tips to help you out.

First, the easy part. You're an expert in something, and before you shake your head and say "no way, Ola," I'm going to ask you to consider this. Do you do something regularly, like a hobby or something you enjoy, like going for a coffee, or shopping, or ice skating, or cooking? If you do, you are an expert. Nobody around you knows the cooking industry as good as you do, including egghead analysts on Wall Street. In fact, those folks don't know the difference between Cayenne Pepper and the Cayman Islands.

Look for a company that is doing great things in something you enjoy, like cooking. Then we can move onto analyzing their financials, and hope that they are paying a dividend of 5% or more and a Price/Earnings multiplier in the low teens or less. Finally, hope that the company has a Beta Coefficient (we covered those several blogs ago) below 1.00. If this company has growth estimates of 10% or more for the next five years, it's time to buy.

If analysts aren't covering your company, that's even better. They don't know the whole story and you do. To quote Homer Simpson, "WHOO HOO!"

If your company doesn't hit the criteria, you've at least begun thinking like an investor. Now you can run an industry analysis of something you enjoy, like cooking or hockey equipment, to find the industry leader that WILL fit the criteria.

And then don't look back. This is going to be a once in a lifetime opportunity. Don't be afraid. The worst thing that can happen is you'll have a surplus of umbrellas during a drought. Eventually, it will rain. It must rain.

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Election election

What to do on Tuesday... that seems to be a perplexing thought for many of us. And while the obvious thing for me to do is blog about what seems to be a never-ending campaign of change, mavericks and mudslinging (I live in THE swing state, PA) I think that I'd rather try to uncover nuggets of truths that can help you improve your business.

In order to do this, however, we need to take the opposite approach of each candidate - who seem to be promising immediate change on everything without really planning for long-term issues.

As business people, we need to step away from our personal feelings for a few minutes in order to plan. Set our emotions aside, our personal ideologies aside and really plan for "what if" scenarios. What if Senator Obama is elected? What happens if McCain is elected? What if... you get my point.

With that said, the best advice I can give you is to begin proper planning NOW based upon either scenario. In fact, this should have been done as soon as it became evident who each party's nominee would be. It's not too late, though.

Set up a network consisting of a financial planner, accountant, attorney, local politician, marketing guru, real estate expert, college administrator, teacher, advertising person and restauranteer. Add more if you would like, but this is my mix and it seems to give me ten different angles on any certain issue.

Then ask your experts to give you "what if" scenarios based upon both candidates. You will now have 20 different insights to the same problem.

NOW you can begin to plan accordingly for the next four years based upon something other than our your own personal subjectivity. In fact, you may gain insight into multiple political views, economic arguments, educational debates and taxing issues as they relate to YOUR business.

Does it sound like you have just improved your bottom line? You betcha.

Ask each of your sources to do a SWOT analysis on your business based upon their what-if scenarios. A SWOT analysis, in case you don't know, stands for Strengths, Weaknesses, Opportunities, Threats as they relate to any item; most notably your business. Again, with ten or more experts at your disposal, you will get many answers to your questions and their personal analysis of your business. That's powerful stuff.

The other indirect benefit of doing this is that you've just included yourself in a very exclusive club compromised of various professionals in multiple industries rather than surround yourself with folks just like you. And while it might be uncomfortable for a short-time, the long-term benefits of obtaining differing views will yield results you cannot even imagine. In fact, these views will likely lead you to new markets, products and business ventures you might not have ever imagined.

Get out and vote with your conscience, but use your brain when it comes to business planning.

Drop me a comment below and let me know what you think.