i) goals and achievementno matter how much of it you do or how good you get at it, you will never...

I) Goals and Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Michael Masterson — The Junkie’s SecretBrian Tracy — The Journey to HappinessRobert Ringer — Common Sense

II) Marketing, Sales, and Entrepreneurship . . . . . . . . . . . . . . . .12Jay Abraham — The Greatest Upside Leverage ImaginableBob Bly — 12 Ways to Get People to Want to Do Business With YouPaul Lawrence — The Magic of “Other People’s Money”Matt Furey — The One Good Thing I Learned in CollegeMarc Charles — There’s Never Been a Better Time to Start a BusinessBob Bly — Get Paid a Premium Price for Your Product or ServiceMichael Masterson — How to Sell ANYTHING

III) Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Michael Masterson — The Ideal Retirement PortfolioSteve Sjuggerrud — ETFs: A Better Way for Sector InvestingPorter Stansberry — How Baseball Games Are Won — and Fortunes MadeAndy Gordon — Getting the Feel of the Markets

IV) Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Justin Ford — Home Equity to Launch Your Real-Estate Investing Career?Tom Phelan — Buy Real Estate with Your IRA... and Finally Retire RichJustin Ford — Will You Be Protected When the Bubble Bursts?

Supplement: Become an Automatic Wealth Builder . . . . . . . .51

NOTICE — ALL CONTENTS OF THIS DOCUMENT ARE COPYRIGHT 2005 BY ETR, LLC. ALLRIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITEDWITHOUT THE EXPRESS WRITTEN CONSENT OF EARLY TO RISE.

Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}:Infringements can be punishable by up to 5 years in prison and $250,000 in fines.

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©2005 Early To Rise

IGoals and Achievement

The Junkie’s SecretBy Michael Masterson

As a teenager I had the impulses of a junkyard dog. If someone looked at me “wrong” I startedbarking. This resulted in many scraps — most of them against bigger and more skillful fighters. Imanaged to “win” a great many of them however, simply because I knew how to tap into somethinginside me — some form of fury, I suppose — that fueled my aggression. I was an unschooled butsuccessful fighter.

Something like that exists in the realm of wealth building. There is something that burns — or atleast glows — inside you that can turn you into a money making machine. If you can tap into it, youwill never have another sluggish moment, never feel confused about what you need to do, andnever hesitate to do it.

I like to think of this “something” as the Junkie’s Secret.

Consider the Humble Coke Addict...Take your prototypical urban dweller. Let’s make him a man in his 20s. He’s a high-school

dropout, which means he’s functionally illiterate. Having been deprived of a good family, he is alsolazy, foul-mouthed, and, yes, let’s make him stupid.

What is this young man likely to do for a living? You guessed right — nothing. But if he were towork . . . if you could convince him that it was in his interest to do so ... how much money could hepossibly hope to make in a day? I’d guess about $48 a day or $6 an hour — before taxes.

Now take that same man and give him a good crack-cocaine addiction. What can he make?Somewhere between $300 and $900 a day, depending on how heavily addicted he is.

What does this young man do to increase his income between 600% and 1,800%?

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Three Habits of a Highly Successful Crackhead...

1. He works longer hours. Junkies hustle for money every waking hour.

2. He works with a single-minded purpose. Nothing matters except getting the money he needsfor his fix. And so he is never diverted from his goal. He can’t be.

3. Most important: He does WHATEVER IT TAKES to get his dough.

If you study the lives of America’s most successful people you will discover that they all didthe following:

n worked long and hard

n managed to be enormously focused

n did what it took to succeed

Something to think about, isn’t it?

Working long and hard is important to success. And having determination and focus is importanttoo. But to achieve really big goals . . . to climb into a whole new category . . . you have to do more.

If you took away his crack addiction, our illiterate young burger flipper could work as hard as hewanted . . . but he’d never make $600 a day. That can come only from the willingness to do whateverit takes, including things that are risky, uncomfortable, new, worrisome or even dangerous.

Junkies don’t get the respect they deserve.

Imagine what the addict’s life is like. You wake up on a park bench smelling like urine. You stretch,rub the sores on your face and forearms, and say to yourself, “Up and at ‘em, boy. Today you are goingto go out there — to that cold and unfriendly city — and get your hands on six hundred bucks.”

Could you do that? Day after day? I couldn’t. Not unless I was addicted to something.

My Gift To You — The Unappreciated Power of the Junkie...You can have the junkie’s gift. And you don’t even have to smoke pot to get it.

Somewhere inside you there is a fire burning. It’s your core desire. Left untapped it will scorch yourinside. Vented, it will give you the energy, the imagination and the boldness to do what it takes to win.

It is damn hard to get a new venture going, to launch a new career, or to really break away from thepast. It is difficult because it is different. And because it requires you to go beyond your “comfort zone.”

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Take a look at your “to-do” list for today as an example. There is probably something there youdon’t want to do. You know it is important. You have highlighted it. Yet you are reluctant to do it.

Maybe it is making a difficult phone call. Or performing a tedious task. It is highly likely it issomething you are not comfortable with. That’s why you haven’t done it so far. And that’s probablywhy your competitors haven’t done it either.

If you want to achieve more than you have ever achieved, you have to be willing to do more thanyou have ever done before. You need to commit yourself, put in the hours, stay focused, and, yes,do that unpleasant but very necessary task.

[Michael Masterson has developed a loyal following through his writings in Early to Rise(www.earlytorise.com), an e-newsletter published by Agora that mentors more than 400,000successoriented individuals to achieve their financial goals. Masterson has been making money forhimself or others for almost four decades. In that time, he’s only taken two breaks-each time for twoyears.The first was after a stint with the Peace Corps where he came to appreciate relative valuesand the joy of teaching. The second came at age 39, when he retired from the $100 million-plusbusiness that he and his partner built. Over the course of his remarkably successful businesscareer, Michael has been involved in the development of dozens of successful businesses,including two that grew beyond $100 million. At one time or another, he’s owned and run companiesthat were public/private, onshore/overseas, local/international, service/product-oriented,retail/wholesale/ direct mail, and even profit/not-for-profit.]

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The Journey to Happinessby Brian Tracy

From Aristotle in 340 B.C. through to the thinkers, speakers, and writers of today, the key tohappiness has hardly changed at all. It is both simple and complex. And it is the same for virtuallyall men and women, in all countries and situations, and in all walks of life.

The key to happiness is this: Dedicate yourself to the development of your natural talents andabilities by doing what you love to do and continuing to do it better and better.

Since you can’t be truly happy until you are clear about your inherent possibilities, it’s very importantthat you take some time on a regular basis to analyze yourself and identify your strengths andweaknesses. One of the best ways to do this is to start by asking yourself two powerful questions.

The first question is my favorite: “What one great thing would I dare to dream if I knew I could not fail?”

Imagine that you are absolutely guaranteed of success in the pursuit of a particular goal, big orsmall, short-term or long-term. Imagine that you had all the money, all the time, all the education, allthe contacts, all the resources, and everything else that you could possibly need to achieve any onebig goal in life. In other words, imagine that you had no restrictions.

What would your goal in life be?

The second question to ask yourself is this: “How would I spend my life if I learned today that I onlyhad six months to live?” In other words, if you could only do one or two things before your time on earthwas over, what would they be? Where would you go? Who would you spend your time with?

These questions help you assess your values. They go right to the very heart of the person youreally are ... and of what is really important to you.

Getting these insights into yourself is the first step toward understanding what you should bedoing with your life. The next step is to find a career that will make you happy. And this is whereidentifying your natural talents and abilities comes in.

Dr. Viktor Frankl, who wrote the book “Man’s Search for Meaning”, suggested that you can do itby dividing the things you could do in life into four categories.

n The first category consists of the things that are hard for you to learn and hard for you todo. An example in this category for many people is mathematics. Many of us struggledwith math in school, and still struggle with bookkeeping, accounting, financial statements,and tax returns as adults. If you find mathematics hard to learn and hard to do, this is the

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sort of activity for which you are clearly not suited. No matter how much of it you do or howgood you get at it, you will never achieve any lasting satisfaction or happiness from it.

n The next category consists of things that are hard for you to learn but easy for you todo. Riding a bicycle and driving a car are hard to learn but easy to do once you’vepracticed enough. Tying your shoes is another example. These are seldom the sorts ofactivities that make you feel terrific about yourself when you engage in them. They donot demand your best.

n The third category consists of things that are easy for you to learn but hard for you to do.Physical labor falls into this category. Digging a ditch with a shovel or chopping wood withan ax are easy to learn but they are hard to do. And they never get any easier.

n The fourth category is the one you’re looking for. These are the things that are easy foryou to do and easy for you to learn. You seem to have a natural proclivity for them. Whenyou are engaged in these activities, time flies. These are the things that you should bedoing with your life. They indicate where your natural talents and abilities lie and what willmake you happy. It is engaging in these activities with your whole heart, and committingyourself to becoming better and better at them, that will give you all the joy and satisfactionyou could ever want.

Everyone has an area of excellence. Everyone has something that he or she can do in anoutstanding fashion. It may take weeks, months, and even years for you to develop yourself in yourarea of excellence — but you will be strongly attracted to that sort of activity from the beginning.

You will enjoy reading about it and talking about it and thinking about it. You will find yourselfadmiring people who are already outstanding at doing it. You will look longingly at that field andwonder what it would be like to be in it and to be successful at it. And that’s how you’ll know thatyou have found your heart’s desire.

You were put on this earth with a special purpose, programmed with unique talents and abilitiesthat have not yet been fully tapped and utilized. When you focus all of your energies on unlockingyour true potential, you can claim your ultimate birthright: happiness.

And remember ... excellence is not a destination; it’s a lifelong journey. It is when you continueto grow, becoming better and better at something that is important to you, that you really feel aliveand in touch with your world.

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[Editorial note: Brian Tracy is an internationally renowned speaker and best-selling author When itcomes to achievement and wealth, Brian knows what he’s talking about. At age 25, he built a 95-person sales force covering six countries and generating sales of more than $1 million a month.

Brian was chief operating officer of a development company with $265 million in assets and $75million in annual sales. He started and built an automobile import company from nothing to $25million in sales in less than 3 years.

He has started, built, managed, or advised more than 300 businesses, large and small, and speaksto more than 100,000 people a year on sales, management, and business development. His best-selling Nightingale-Conant audio programs include Getting Rich in America, The Psychology ofAchievement, and Ultimate Goals Program.]

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Common Senseby Robert Ringer

Awhile back, I heard Oprah’s grandest creation, Dr. Phil, say something that really struck a bellwith me. The interviewer asked Dr. Phil if it bothered him that so many critics accused him ofoversimplification.

Dr. Phil answered that it didn’t bother him at all. He even volunteered that one fellow had recentlyaccused him of saying things that were really nothing more than common sense. To which Dr. Philresponded, “Golly, that’s great. Do you mind if I use it as a testimonial?”

It was a very clever way of turning a negative into a positive. And the nice thing about it was thatit’s true. The greatest teachers have a knack for demystifying complex issues by applying commonsense to them.

A good technical definition of common sense is “sound judgment not based on specializedknowledge.” In other words, you don’t need a Ph.D. to exercise common sense. It’s a trait youdevelop through purposeful awareness and habit.

Common sense equates to wisdom, whereas an academic understanding of specific areas of lifeequates to knowledge. In simpler terms, what common sense boils down to is a soundunderstanding of how life works.

I believe most people have a reasonably good understanding of the right thing to do in any givensituation. In other words, they know the difference between responsible and irresponsible actions.

The problem, however, is that too many of these same people — at the moment of truth — havea habit of ignoring their intellect and acting on emotion instead. Kids — especially teenagers — havea tendency to make this mistake more often than adults. But teenagers have an excuse: They’reshort on experience.

With each passing year, an adult has more and more experience under his belt, and thus lessand less justification for acting on impulse. At some point in time, an adult has to learn through hisexperiences or be willing to live a Wile E. Coyote kind of life (as in, “Beep, beep!”).

When I watch the daily news, it amazes me how many sad, even tragic, stories are a result of people’scommon sense taking a leave of absence when they most need it. I always try to focus on the common-sense angle of these stories and file away the lessons I learn in my subconscious filing cabinet.

My hope is that by doing so I will be able to avoid similar lack-of-common-sense mistakes in myown life. As a result, I often find myself thinking of these mistakes at critical moments.

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The whole Terri Schiavo tragedy is a perfect example of supposedly responsible adults ignoringcommon sense. With the possible exception of the cast of Survivor, everyone is familiar with themultitude of facts in the Schiavo case, so they need not be repeated here.

Forget about the alleged broken bones and bruises. Forget about all the testimony paintingMichael Schiavo as the reincarnation of Darth Vader. Forget about his recovered memory regardingTerri’s wishes after a seven-year mental lapse. Instead, let’s just cut to the common-sense chase ofthis sad spectacle.

Even if Michael Schiavo is a kind, gentle, well-meaning saint, the reality is that he is married (sortof) to another woman with whom he has fathered two children. This being the case, Judge Greer’scommon sense should have concluded that Terri Schiavo’s husband had a conflict of interests whenit came to her well-being.

Common sense also should have dictated to him that guardianship be handed over to her birthparents, who had no such conflict of interests and whose love for her was uncompromised andunconditional. Further, since Terri Schiavo had no living will, and since there was a mountain ofcontroversy concerning her wishes on the question of choosing between life and death, commonsense should have led Judge Greer to err on the side of life.

Finally, and contrary to what the pundits kept saying on television, a living will may not haveresolved the Terri Schiavo debate. Why? Because there was a major controversy over whether ornot she was even in a persistent vegetative state. Enter common sense: Again, when in doubt, erron the side of life.

Then there’s the bizarre trial of Michael Jackson. Again, let’s assume that Jackson is completelyinnocent — that he has never molested a child in his life. Even so, if a lack of common sense werea felony, he would almost certainly be sentenced to life in prison.

A normal person’s common sense would tell him that it’s not a real good idea to have young boyssleep in your bed. Common sense would tell him that it’s an even worse idea to say, in a worldwidetelevision interview, that one of the most loving things you can do is share your bed with a child.

Unfortunately, Jackson’s common sense deteriorated even more after his indictment. Being 45minutes late for his first day in court was not a great way to win over the judge. Neither was hishaving a photo op while standing atop an SUV and waving to his fans outside the courthouse.

And shouldn’t his common sense have told him that jurors were not likely to be favorablyimpressed with his bodyguards? Or by his calling into Jesse Jackson’s radio show to complainabout being the victim of racism before his trial had even begun? Michael Jackson is, indeed, veryfortunate that he isn’t on trial for exhibiting a lack of common sense.

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And how about common sense and steroid usage? Who would knowingly inject a dangerousdrug into his body and, to boot, do so with the knowledge that he’s cheating?

Further, as part of the fallout from the steroid scandal, how about living legend Mark McGwire’sdestroying his Paul Bunyan image by essentially invoking his Fifth Amendment rights beforeCongress? Had his common sense overridden his attorney’s bad advice, he may very well havewalked away with his hero status intact.

To quote the King of Siam from the classic musical The King and I, “Etcetera, etcetera, etcetera.”The examples of high-profile people displaying a lack of common sense at critical moments areendless. And, unfortunately, the rest of us are not immune to this human defect.

One of the reasons I became so enamored with Albert Einstein’s quote “Nothing happens untilsomething moves,” is because it is the epitome of profound common sense. Tens of millions ofpeople seem to be waiting around for something good to happen in their lives, while expendingenormous amounts of energy complaining about their “bad luck.”

As I’ve written so often, most people tend to miss the obvious things when it comes to successin any area of life. While in search of the magic formula for success, they mistakenly overlook theimportance of something as simple as common sense.

Employing common sense on a consistent basis doesn’t guarantee success, but a lack of it cancome pretty close to guaranteeing failure. Deferring to common sense before making decisions isnothing more than a habit — and, fortunately, all habits can be learned by anyone who bringswillingness to the game.

[Editorial note: Robert J. Ringer is a successful publisher, direct-response entrepreneur, businessowner, speaker, and one of the best-selling self-help authors of all time, with such New York Timesbest-sellers as Looking Out for Number One and Winning Through Intimidation and his latest #1best-seller, Action! (M. Evans & Company).]

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IIMarketing, Sales, And

Entrepreneurship

The Greatest Upside Leverage ImaginableBy Jay Abraham

Imagine if you could get any activity, any investment, any opportunity, and any effort of people orcreative intellectual capital to produce for you — and your business — at a much higher, bigger,better, more profitable yield or result than it otherwise would.

You will be able to do exactly that if you know precisely what mechanisms, vehicles, andelements are the highest upside-leverage-producing “drivers” of exponential business growth.

I’ve identified and refined my understanding of these drivers over the course of the last severalyears. I’ve analyzed and examined how the highest-performing businesses were driving theirgrowth, profitability, and competitive superiority.

So, for the next few weeks in ETR, let’s look at what those drivers are. And let’s examine howthose drivers directly relate to your business efforts, activities, and opportunities. We’ll look at thefirst — and perhaps most important — one today: marketing.

I have long said that in your marketing you have the greatest upside leverage environmentimaginable. Why?

Simple. It costs you the same fixed effort, expense, time, and opportunity to:

1. Have a salesperson in the field making calls, whether he or she secures five appointments aday, 10 appointments, or 15. It costs you the same fixed amount whether that salespersoncloses one out of 10 people, one out of five, one out of three, or one out of two.

2. It costs you the same fixed opportunity cost, effort, and expense to run an ad, whether the adpulls one response, 10 responses, or 110. It costs you the same to generate those responses,whether you close 2%, 10%, or 65% of them. It costs you the same to close those people,whether they buy a $100 unit of sale, a $500 unit of sale, or a $1,000 unit of sale.

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3. It costs you the same to mail a sales letter or a direct-mailing package, whether it pulls a 0.5%response, a 1% response, or a 6% response. If they’re lead-generating responses, it costs youthe same, whether you convert 2%, 10%, or 22% of them.

4. It costs you the same to participate in a trade show and have a display booth, whether thebooth attracts 10, 100, or 500 people an hour. It costs you the same to secure leads at thatbooth, whether you close none of them, 1 out of a 100, 1 out of 25, or 1 out of 10.

I can go on and on. But you can see what would happen if you could get your ads that were pulling“x” to pull “2x” . . . if you could get people who were selling 1 out of 7 prospects to sell 1 out of 3.

The sales leverage available to you is profound if you could get sales letters that were pulling0.5% to pull 4% . . . if you could get people who were buying $250 to now buy $400 . . . if you couldget people who were buying once a year to buy once every quarter or once a month . . . if you couldget people who weren’t referring anyone to you to start referring five new customers each a year.

The combined effect of that kind of marketing leverage is exponential growth.

That’s exactly how you increase your business, your revenue, your sales, your profits, yourwealth, and your net worth by factors of 10 times or more. That really is.

So marketing is one of your first and best upside leverages in business. And if you don’t recognizeit and harness the extraordinary impact and value that marketing holds for you, it’s shameful.

But how do you do it?

It’s actually quite simple.

First thing you do is an internal marketing audit and inventory. You identify all the marketingactivities, processes, and elements going on . . . and then you start looking at the best-performingways to improve upon them.

How do you find them?

There are three approaches:

1. Look within your organization and see who else does what you want to do better. Model,codify, and replicate what the highest-performing people in your company are doing in termsof various selling or marketing processes. And get everyone else in the organization to startapplying or adding the best elements of their methods to what they have been doing.

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2. Go outside your company. Look at other enterprises in the same field outside your market (oreven in your market) that have better ways of marketing, of selling, of lead generating, ofconversion, of re-selling, and of up-selling — and borrow their success processes.

3. Go outside your industry to related industries, and look at their best practices. Look at thespectrum of opportunities out there that other people have found, uncovered, discovered,refined, and are using each and every day with massive success — to either identifyprospects, sell direct, run ads that pull greater response, make better sales presentations, getappointments, or attract people to trade shows. Then borrow, adapt, adopt, and directly funneland apply those processes and approaches to your business.

Start doing this exercise as a regular, ongoing process in which you measure, monitor, analyze,quantify, and figure out how many different things you can add to your current success approach byeither adding new elements or replacing underperforming ones that are not justifying their time, theireffort, their opportunity cost, or their existence.

That simple philosophy taken to the “nth” degree will produce for you increases in yourrevenue, in your sales, in your performance, in your profit, and in the size of the business youdo. It will increase the number of clients you attract, the number of transactions you do withthem, the referrals they generate, and every other key upside-leverage metric that your businesscan ever dream of harnessing.

[Editorial Note: Called “America’s #1 marketing wizard” by Harvey MacKay, Jay Abraham regularlyworks marketing miracles for his clients. During his 24-year career, he has worked with over 5,000individual businesses in 165 separate industries. He is the author of Getting Everything You CanOut of All You’ve Got, published by St. Martin’s Press.

Jay spent the last 25 years solving problems and significantly increasing the bottom line of more than10,000 clients in over 400 industries worldwide — ranging from one-person operations to some of theworld’s largest corporations, including Weyerhauser, Coldwell Banker, Prudential-Bache, Dun andBradstreet, Citibank, and Sears Roebuck & Company. He specializes in successfully identifying andethically exploiting a company’s hidden, marketable assets to create windfall profits for his clients.]

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The Magic of “Other People’s Money” by Paul Lawrence

Have you ever had a great idea for a business but brushed it off as a crazy dream because youdidn’t have enough money to get it started? Well, guess what? There’s a whole world of businessopportunities you can tap into that, at a first glance, may appear to be out of reach for theentrepreneur who has little or no capital.

The principle — which can easily be applied to any small-business venture — is the same asthe principle used to buy a house with “no money down.” It’s not that no money is changinghands. The seller isn’t giving away his property. It’s just that the funds are coming from a sourceother than the buyer’s pocket.

What I’m saying is this: Even though you may need a significant amount of capital to start yourdream business, that money doesn’t have to come from you.

That doesn’t mean you can just run down to your local bank and ask them to cut you a check. Infact, unless you can fully collateralize the loan . . . and you have really strong credit . . . and youhave a couple of years of profitable operating history behind you . . . you probably shouldn’t eventry to get a business loan from your bank.

What am I suggesting you use? OPM (“other people’s money”).

Private investors are probably the best source of small-business financing. And you would besurprised by how many people you know — even on a casual basis — who may have capital thatthey’d be willing to invest in your small-business venture. Better yet, you don’t necessarily need toknow someone “rich” to get into a business that requires capital.

Let me tell you about one business that I successfully started without dipping into my pocket forone dime. Some years ago, I was interested in getting into the beverage-vending business. I hadeven met with a few sales reps. However, their companies wanted buyers who had at least $10,000in cash to invest . . . money I didn’t have.

Furthermore, the numbers didn’t add up. At $2,500 each, even with $10,000, that would give meonly four machines. Even if each machine did $100 gross ($50 net) per week (which is what myresearch said an average vendor might make at a typical retail location), that would be only $200 aweek profit! Not nearly enough for me to be able to squeak out a living.

Still . . . I really wanted to be in this business. So, I located some local suppliers and discoveredthat I could get a fully functional used soda machine from one of them for only $500 instead of the

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$2,500 that the manufacturers’ reps wanted for their new machines. This meant that for that same$10,000 investment I could have 20 soda machines and reasonably expect to net $1,000 a week.

I asked the supplier if they could provide any help with financing — and, to my surprise, they saidthey would finance two-thirds of the purchase if I made a cash down payment for one-third of theprice. So, now all I needed was $3,333.

With my goal getting closer — and beginning to look as if it might actually happen — I did a littleresearch about the vending business. Then I prepared a business plan that included financialprojections and provided support for my numbers.

When you’re planning to approach private investors, I can’t put too much emphasis on howimportant it is to have paperwork that makes a good argument for why they should put their moneyinto your business. You’re not going to be pitching to sophisticated venture capitalists, so don’t worryif it doesn’t look like a formal prospectus. But it must be logical and look presentable.

A well-prepared, professional proposal will make a good impression on any potential investor —even your uncle or your neighbor. And while he may not decide to invest with you this time, there’sa good chance, if you have represented yourself well, that he’ll want to go in with you on your nextventure (although you may not need him at that point).

Be persistent. Keep on presenting your proposal to financing prospects and, eventually, you’llfind one who will want to help you out.

At the time in my life when I was trying to get my vending-machine business started, I was quiteyoung — and far from what you would call a good salesman. I really didn’t know anyone with money.Still, I managed to come up with a list of possibilities.

One of the people I thought of was a former manager at a company I did a brief stint with aftercollege. So I gave him a call. I told him I was working on a new business deal that I was reallyexcited about — and that I was looking for a partner. I asked if he had a few minutes to hear aboutit, and he agreed to meet with me. After I showed him my paperwork, he immediately agreed, to myamazement, to loan me the remaining $3,333 that I needed to get started.

And that’s how I became the owner of a profitable business that consisted of 20 sodamachines — without putting in a nickel of my own money!

[Editorial note: Paul is a nationally published author, business consultant, entrepreneur, and anaccomplished screenwriter. After working in management for a national rental company, helaunched one of the most successful independent ballroom dance instruction companies in Florida.]

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The One Good Thing I Learned in CollegeBy Matt Furey

The most successful people I know in every field of endeavor are never content to rest on theirlaurels. They are continually refining what they know. Hour upon hour is spent in practice — mentalas well as physical — looking for a minor tweak that may take what IS and transform it intosomething BETTER.

This is something I do to this day as a copywriter and marketer. But truth is, I learned it in acollege wrestling room. One of the all-time greatest practitioners of this “never-stop-learning” habitwas my wrestling coach at the University of Iowa, Dan Gable.

Gable was the 1972 Olympic champion and a two-time Olympic coach. He is also considered bymany to be the “god” of amateur wrestling. His skills were unparalleled. Yet, Gable lived bysomething marketing expert Dan Kennedy calls “the Principle of the Slight Edge.” In Gable’s world,“A technique that is perfect must be further refined.”

Why is this so? It is so because a perfect technique does you no good unless you can executeit perfectly more often. It’s all about results.

Gable spent time each day watching technique videos, studying the latest books, analyzingcompetitions. He kept a yellow pad nearby to make notes. And he brought those notes into thepractice room when he trained.

I’ll never forget the time he came back from a tournament in the former Soviet Union, in the cityof Tbilisi. He was there as the head coach for the U.S. team — and while coaching, he also tookmental notes that he later committed to paper.

When Gable was back in the Iowa wrestling room, he began going over each detail that hediscovered in Tbilisi. And to the team’s amazement, he was executing moves that we’d never seenbefore. And he was doing them, at least from our vantage point, flawlessly.

How Gable was able to watch something at a tournament, make note of it, then perform it soeffortlessly amazed me to no end. I told a fellow coach on the squad how stunned I was and he said,“Gable has been at this game so long that he’s literally like a human sponge. He just soaks it up,even when he’s not trying. He notices every detail that no one else even sees.”

When I heard this said about Gable, I made a mental note — a note I have never forgotten. Thatnote mirrors the three levels that Michael Masterson teaches with regard to acquiring ANY skill:competence, mastery, and virtuosity.

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And here’s how it plays out: Because of the time Gable had already put into the sport of wrestling(at that time, it was close to 30 years), he could literally implement what he observed with very littlepractice. In other words, in wrestling, Gable is at the virtuoso level of skill.

Wouldn’t you like to achieve mastery or virtuosity in your chosen field? Well, you can . . . if youfollow a couple of guidelines. I’ve used these as both an athlete and as an entrepreneur. Study thislist and think how each one applies to your situation.

1. No matter how good you are, stay open-minded. You can ever get to the point where you canno longer learn something new or refine what you already know.

2. Ask questions. When you see a technique being done a certain way, ask yourself questions like:

n “Why is he doing it that way?”

n “Do I know for a fact, from actual experience, that what he is doing is good? Bad?”

n “What would happen if I tried it?”

n “Is there a better, easier, faster, or quicker way to do what he is doing? If so, what is it?And can what I think of as ‘better’ be improved too?”

3. When practicing, literally be “outside of yourself,” observing what you are doing.

4. After practice, look back on what took place and determine what your flaws were, what you cancorrect. Also, look at what you did right — and think of ways to do the right thing more often.

5. Spend time each day thinking about the level of skill you want to attain — then get to work.

[Editorial note: After winning both national and world championships as a martial artist, Matt Fureychanneled his passion for teaching martial arts into a highly profitable business writing andmarketing information products throughout the world via his websites and offline ads. Matt has over30 products to his credit, on topics ranging from fitness to fighting, marketing to money making.]

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There’s Never Been a Better Time to Start a Businessby Marc Charles

Despite the doom and gloom coming from business forecasters (whatever the heck they are) and“think tanks,” there’s never been a better time to start a business.

Many years ago, I worked in the sub-sub-basement (three floors below the street) at a top bank inMinneapolis. My job consisted of stocking shelves with official bank forms. Out of the corner of my eye,I could see the “money counting room” across the hall. I was convinced this was a form of torture.

On Day 50, I was called into the VP’s office for my first quarterly review. I thought I was doing apretty good job, so imagine my surprise when my pay grade was lowered. On top of that, I was nowrequired to work on Saturdays.

I remember thinking, “This job is just not going to work for me.”

Two weeks later, I started my first “real” business — washing mobile homes with a portable powerwasher at $14.50 a pop. Within three weeks, I was making four times as much as I had at my bankjob. Plus, I was able to take weekends and most of the winter off.

I’ve started dozens of businesses since then.

I prefer businesses that don't require a lot of start-up capital (at least, not my own), and that havelow overhead and substantial profit margins. I also like those that can be run from anywhere in theworld. (I have chosen to work from my home on the coast of Maine.)

With the advent of the Internet, these types of opportunities are everywhere you look.

Take a website like Alibaba.com, for example. There are a myriad of possibilities associated withthis one website alone.

Alibaba.com has become the No. 1 import/export website in the world. Forbes named it "Best ofthe Web" five years in a row. And Alexa says it is one of the Top 50 sites on the Internet in terms oftraffic and popularity. Alibaba.com has more than 4.8 million active members (in 240 countries).What's more, it's growing at a rate of 18,000 new members per day.

Entrepreneurs from around the world — buyers and sellers of every type of product you canimagine — are coming to Alibaba.com in droves to make deals and earn money. Take Chester Chou.

Chester uses the site to sell a unique golf device. His company recorded more than $100,000 inwholesale sales on Alibaba.com last year. More important, thanks to Alibaba Chester has builtrelationships with professional buyers in the UK, Germany, Korea, China, the U.S., and Holland.

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Chester's niche is only the tip of the iceberg when it comes to the business opportunities that canbe found on Alibaba.com.

n Pete Patel from Tennessee sells branded clothing and handbags to wholesale buyersaround the world on Alibaba.com. Pete receives about 35 qualified inquires a week fromtrade leads on Alibaba.com, and in three months he has closed more than 45 deals.

n Markus Siegrist from Switzerland receives more than 30 qualified buyer inquires a week forhis products. Markus sells wine, liquor and specialty oils. On top of that, Markus also usesAlibaba.com as a buyer and has purchased decorative bottling from 20 different sellers.

n Brian Park is the CEO of Bruce & Brian Co. in South Korea. He joined Alibaba.com in late2003. His company average 20-30 inquires per week, and in just the first month onAlibaba.com Brian closed $11,000 in sales. More important, he is now being contacted bylarge companies interested in far more substantial deals.

As I said, this is just one website. There are many more. And it's not just on the Internet. Thereare an unlimited number of profitable ventures that can be started for next to nothing.

I'm the editor of a business-opportunity alert called "Profit Center Dispatch." Every week, Iuncover legitimate businesses that you can start with very little capital or experience — and thatrequire minimal overhead. Most of these businesses also have substantial profit potential. In the lastfew months alone, I have shown my readers:

n How to cash in on real-estate opportunities in the new "exurbs"

n 12 different ways to tap into the $85 billion travel market

n An Internet twist on the pre-foreclosure real estate market, and

n How to get in on the billion-dollar self-storage business

And that's just for openers.

There has never been a better time to start your own business. So if you have an idea for onethat you'd like to get into, don't wait.

If you're thinking about an eBay business, for example, just do it. There's never been a bettertime. If you fail . . . so what? Throw in the towel and start another eBay business after lunch.

A friend of mine has three separate eBay businesses going. Prior to this, he sold Beanie Babiesonline. That business failed when the Beanie Babies craze (see "Word to the Wise," below) ended.

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But he didn't give up on making money online. He kept trying different things. And now he's asuccessful entrepreneur.

Every time you take action on an idea, you learn something about building a business that youdidn't know before.

In 1997, I had an idea and acted on it. I interviewed top technology and software CEOs over thephone or by e-mail, reprinted the transcripts, and sold them back to the CEOs and/or theircompanies. Eventually, I started selling these interviews to top business and technology publishers.And three years later, I sold the business for a profit.

So if you want to create life-changing wealth, do what two-thirds of the world's millionaires havedone. Start a business. There's never been a better time than right now!

[Marc Charles is often referred to as “The King of Business Opportunities”. Marc has a launchedmore than 40 successful businesses over past 20 years (and advised on many, many more).One business (an ad rep agency) produced more than $4 million in sales in 30 months with astart-up budget of less than $2000.

Marc began his Internet adventure in 1993 by reviewing websites for Yahoo! Unplugged, whichbecame a best selling book, online resource and interactive CD. His website reviews (more than7500) were featured in Wired, Bloomberg Personal, Internet World, Internet Edge, Web Digest andBusiness 2.0.

In 1999 he developed the first email newsletter advertorial. Email advertorials continue to be one ofthe most powerful marketing tools on the Internet.

Marc was also an accomplished commodity and currency futures trader.

Marc’s passion is identifying great digital and Internet business opportunities for start-upentrepreneurs. Marc is the editor of Profit Center Dispatch, which features businesses opportunitiesthat can be launched with little, or no capitol but have unlimited profit potential.]

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How to Charge — and Get Paid — a Premium Price for YourProduct or ServiceBy Bob Bly

I have never liked the discount business or any business operating on a tiny profit margin. Tome, it's more rewarding to command a higher price, charge premium fees — and get paid very,very well for what you sell.

But in a competitive world where many other businesses seemingly offer products and servicessimilar to yours, how do you command a premium price?

There are five factors you can control or exploit to enable you to charge a much higher price thanyour competitors in virtually any field — and have more customers than you can handle waiting inline, cash in hand, to pay it.

1. Supply and demand.

According to simple economics, the greater the demand for something and the more limited thesupply, the more the seller can charge and get paid for it. Since you're not OPEC, you probably can'tcontrol the supply of your product. So what you have to do is create the perception of anoverwhelming demand for it.

If you're selling your own services, perhaps the easiest way to do this is to position yourself asthe pre-eminent expert or authority in your field. If people view you as THE guru in property taxes,hazardous waste cleanup, or whatever your field is, they will come to you first, knocking one anotherover to hire you instead of your lesser-known competitors.

2. Your market niche.

The rule of thumb is that the narrower your market niche is, the more you can charge.

Specialists can always charge more than generalists. If you are a marketing consultant handlingany small-business clients that you can get, you have lots of competition and great difficultycommanding a premium fee.

On the other hand, if you specialize in the marketing of, say, accounting practices, accountantswill pay a premium to get your advice because it applies directly to their own situation.

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3. Value.

If your competitors all sell audiocassette albums with six cassettes for $79 and you want tocharge $300 for an album with six cassettes on similar topics, why should the buyer pay it?

One way to differentiate your product is to add value. In the above example, you could include aCD-ROM with software programs of use to the buyer and related to the topic of the audiocassettealbum. (If, for example, the album is about time management, the CD-ROM could include a personalday planner.) The material cost is only a dollar or so per CD-ROM. But the perceived value of thesoftware is easily $100 or more, enabling you to charge a premium price for your package

And that's the trick: to add extras that have a high perceived value but don't cost you much.

Years ago, when I was selling business-writing seminars to Fortune 500 corporations, I charged$3,500 a day. Many other trainers charged anywhere from $1,500 to $2,500 a day for similar programs.To add value to my seminars, I offered an unlimited, free 30-day follow-up service. Attendees could callme for advice and to ask questions without charge for a full month after the seminar date.

While this follow-up service had a high perceived value (I described it as a $1,000 value in mysales literature) and training directors loved the idea, in reality very few seminar attendees tookadvantage of it — so it cost me almost nothing to deliver.

4. ROI (return on investment).

If you design your product or service so that it generates a large ROI that is easy to see andmeasure, it will be much easier to sell at the price you want to get. As consultant Jay Abraham says,"Will you give me a quarter if I give you a dollar?" If you can prove a 4:1 ROI from your product orservice, it's like selling a dollar for a quarter — an easy sale to make.

Let's say you're marketing a gadget that vacuum-seals food. Show your prospect that, eventhough it costs $99, he'll save at least $500 within six months because, instead of having to spendmoney on expensive restaurant meals, he'll have a freezer that is stocked with freshly sealed anddelicious frozen dinners (or leftovers) waiting to be eaten at any time.

5. Sales resistance.

You can control your customer's concern about whether he'll be satisfied with your product byoffering a money-back guarantee.

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Guarantees overcome sales resistance. If you guarantee that the customer will be happyand that you will refund his money if he is not, he will be more than willing to pay your price —no matter what it is.

And there you have it. Increase demand for your product or service . . . target a verticalmarket niche . . . add value . . . generate a good ROI . . . and guarantee satisfaction, andcustomers will gladly pay your price — even if it's 50% to 100% more than what yourcompetitors charge. Believe it or not.

[Editorial note: Bob Bly is a popular Early to Rise columnist, self-made multi-millionaire, and theauthor of more than 60 books, including The Complete Idiot's Guide to Direct Marketing (AlphaBooks) and The Copywriter's Handbook (Henry Holt), which was voted a "mini-classic of directmarketing" by the Direct Marketing Club of NY. His monthly e-zine, The Direct Response Letter, hasmore than 50,000 subscribers.

Bob has 25 years of experience as a direct-response copywriter, working for such clients as IBM,Medical Economics, Forbes, KCI, Ken Roberts Company, and the American ManagementAssociation. McGraw-Hill calls him "America's top copywriter."]

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How to Sell ANYTHING — Including Your Ideas and Yourself By Michael Masterson

It doesn't matter whether you are writing an invitation, an e-mail asking for something, a memooutlining a proposal, a speech presenting your ideas, or a note to your sweetheart asking forforgiveness, the basic rules apply:

n The message is about the reader and his interests, needs, and desires — not you andyour wants.

n It should contain some significant promise of benefits (again to the reader), implicit or stated.

n The benefits should be concrete — easy for your reader to imagine.

n Any claims you make should be supported by facts.

n Difficult concepts should be included only if you can clearly illustrate them withexamples and analogies.

n Simple is better. One overriding idea presented repeatedly in different ways and withbuilding evidence is much stronger than a string of related but distinct ideas.

If you can remember to put these rules into play in all your communications, you'll notice anamazing change in your life. Suddenly, doors that have been long closed to you will start to open.People who seemed resistant or remote will become friendly. Problems you couldn't resolve will getfixed quickly. And you'll make a lot more money too.

A small example is on my desk in the form of a letter written to AWAI by a student. After finishingjust the first section of the copywriting course, she had written two ads — one that sold an antiquetrailer on eBay for seven times what she had paid for it and one that sold a mediocre home, in asingle week, for 20% more than she had paid for it five months earlier. (And this was at "the wrongtime of the year in a slowing housing market.")

Another example: Yesterday, I had lunch with Paul. He and I have two decent-sized propertiestogether, and they're throwing off some good income — but he has been reluctant to do any moredeals with me because of various concerns he has about the market. I wanted to persuade Paul tomake a positive decision, because I felt sure he would not only make a lot of money but also havea lot of fun with it. So, to prepare myself for our lunch conversation, I read over some recent ETRmessages in which Justin Ford had recounted various real-estate deals that he'd taken part induring the last several months. I also made a mental list of some good deals I'd done that Paul didn'tyet know about and a few done by other, mutual friends.

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I was armed with a plethora of real-estate success stories, all of which I hit him with during thecourse of our meal. I wanted Paul to picture himself in a new, less troubling, more fun andfinancially rewarding business in a year's time — and I repeated this single "big" idea over andover again during our conversation. By the time he was done with his salad, I could see in hiseyes that the message had taken root.

I didn't dwell on all the problems and hurdles we'd face. Instead, I tried to help him imagine thebenefits this new business would bring him by presenting him with concrete details. Here's some ofwhat I told him:

n You won't be tied down to the office for eight or 10 hours a day. You'll work like Peter (afriend), driving around in your convertible, looking at homes, and enjoying the fresh air.

n You won't have to hassle with all those faceless government regulators you deal with now.As a local real-estate guy, you'd get to know all the bureaucrats — and you'll soon havethem charmed and bending over backward to help you out and invite you to ball games.

n Before you know it, you'll be making a fortune. Look at the money Frank McKinney (anextremely successful Florida real-estate developer) has made. You're as smart as orsmarter than he is. I can see you surpassing him in two or three years and being on thecover of the Miami Herald ("South Florida's New Land Baron!").

You get the idea. I was doing the basics:

n Presenting Paul with a simple, powerful idea — that he could transform his life in a shorttime by getting into real estate.

n Talking about his benefits, not mine.

n Making the benefits concrete.

n Supporting my claims with facts.

I wanted Paul to get more involved with real estate and, since I knew he was naturally resistantto the idea, I took the time to plan what I was going to say. What I said was right out of the AWAItextbook. And it worked.

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IIIInvesting

The Ideal Retirement Portfolio: Good Returns. Little Work.No Worry.by Michael Masterson

Today, I'm going to give you the ultimate retirement portfolio. And this will be coming fromsomeone who has already retired . . . twice!

But, first, I'm going to start by saying this: You SHOULDN'T retire.

Forget about the fantasies you have about spending your golden years basking in the sun,putting around a golf course and/or visiting exotic tourist destinations with your spouse or temporary"playmate." Although you've had a lot of fun indulging yourself in such activities before, they won'tkeep you happy in retirement.

To sustain your personal happiness for any length of time, you need a sense of purpose. Amusingyourself is not a purpose. So whatever you may think you want to do now, keep this thought in mind:You don't want to retire from a purpose-driven life.

In fact, there are two very fundamental needs you need to meet in order to have a successfuland enjoyable retirement:

1. Meaningful work.

2. Sufficient income.

Meaningful work can include the time, energy, and love you give to your family, your friends,or strangers. It can include projects you care about and hobbies that inspire you. It can involvevolunteer work or part-time employment. But what it must include is something only you canprovide — your heartfelt belief that what you are doing means something.

Sufficient income depends on your lifestyle. In previous messages, I've suggested this verysimple formula for deciding how much money you need to retire: Figure out how much you spend

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each year to maintain your current lifestyle. Add to (or subtract from) that number what you'd need(or not need) to have an enjoyable life in retirement. And multiply that number by 10.

If you can be happy on a pre-tax income of $100,000, you'll need a retirement nest egg of $1million. If you think you'll need about $300,000 a year (again, pre-tax) to live your dream life, you'llneed about $3 million in savings.

If you are smart, when you hit that number, you'll radically change your life so that you can havemore time to enjoy those things that really matter to you.

Let's assume that you are there already. How should your retirement portfolio be set up?

My recommendation is very simple. I suggest you have your wealth invested in a combination of:

1. stocks and stock index funds

2. fixed-income instruments

3. managed rental real estate

4. precious metals

5. cash

6. play money

Let's take a look at these, one at a time.

1. Stocks and Stock Index Funds:

As I've pointed out before, you won't need much money in stocks if you have a reasonableamount in real estate. On the average, stocks will give you a 10% return. Real estate should giveyou more than that.

I will probably never have more than 10% of my money in equities (of any kind), because I don'tget any enjoyment out of equity investing. But for people who do like the fun of watching the stocksthey pick go up and down, I believe a 20% commitment is reasonable.

I wouldn't recommend more than that — even for a 50- or 60-year-old retiree. Why? Because thestock market, generally (and individual stocks, especially) is unpredictable in the short term. Andwhen you are living out your golden years, everything is short-term.

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2. Fixed-Income Instruments:

I like bonds. Even in today's low-yield environment. Quality bonds give you the peace of mindthat you should be looking for in retirement. I like all sorts of bonds, but I'm particularly fond ofmunicipal bonds. They are very safe and offer tax-free income. So a return of 4.5%, for example,might be worth as much as 7% if you are in a top tax bracket.

The thing I like best about bonds is how simple they are. If you hold them till they mature, as Ido, they are the perfect, zero-hassle, zero-worry investment. You know what return you are gettingwhen you buy them . . . and that's the end of it.

Bond funds are a good alternative if you want to diversify a bit. Like individual bonds, they cangive you a fixed rate of return, simplicity, and peace of mind.

What percentage of your retirement portfolio should be in bonds? If you have enough money tolive well off a yield of, say, 4.5% or 5% after taxes, you can have most of your money in bonds. Myclosest financial adviser, Sid, has all his retirement funds in bonds.

Chances are, you will need to earn a higher return. If so, I recommend allocating between 40%and 50% of your funds to bonds.

3. Managed Rental Real Estate:

Rental real estate can offer some very impressive rates of return — depending on how youmeasure them.

A $75,000 investment in a triplex 10 years ago in my hometown in South Florida would be worthabout $300,000 today. With a net rental yield of about $20,000 a year (after property taxes, upkeep,and management fees), that investment is earning either 27% or 7.5%, depending on whether youcalculate from the original investment or the appreciated value.

In a case like this, you might be better off selling the property and investing the money in bonds.If you could get a 5% return and were in the highest tax bracket, your effective yield would be 7.5%or better. (These are very rough calculations. I'm not taking into account depreciation, continuingappreciation, other write-offs, etc.)

But most of the real estate deals I bought seven to 15 years ago are producing rental yields ofbetween 10% and 15% of their current (admittedly conservative) estimated value. That higher yield,combined with the continuing appreciation of property in general, is why I recommend a 20% to 40%commitment to managed rental real estate.

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4. Precious Metals:

I'm not a gold bug, but I do like the idea of having some bullion (see "Word to the Wise," below)hidden in a safety deposit box in case of emergency. I don't think you need a ton of gold — I'm notthat worried about what the future might bring — but I do think having between 2% and 5% of yourinvestable net worth in gold is a sensible approach.

5. Cash:

We all need some cash "just in case." I recommend a sum that's equal to about three months'worth of what you typically spend.

6. Play Money:

Retirement is supposed to be fun. And some fun — not the best kind of fun, but some fun — costsmoney. I'm not talking about money that you spend on golf and vacations. Your general retirementfunds are supposed to take care of that. I'm talking about the fun of trying new businesses orconverting passions or hobbies into profit centers.

If you are good and lucky, you'll have fun and make some money. But if you don't make moneywith this portion of your portfolio, that's OK too.

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Exchange Traded Funds: A Better Way for Sector InvestingBy Dr. Steve Sjuggerud, Ph.D.

In his business bestseller The Bull Hunter, my good friend Dan Denning refers to exchangetraded funds (ETFs) as "Precision-Guided Investments."

Dan raves about the benefits of exchange traded funds in his book... "Imagine a single securitythat allows you to buy an entire sector or industry or even country — in just one stock. ETFs are across between individual stocks and index mutual funds, and they offer the best of both worlds..."

I agree with Dan, but I've been frustrated with some of the opportunities available in exchangetraded funds... until now...

Three weeks ago, a handful of "PowerShares" sector exchange traded funds were introduced.These things are fairly revolutionary in the ETF market, and I'm excited about them.

If Dan liked exchange traded funds before, then he'll really like PowerShares. Let me explain...

Are PowerShares Better Than Exchange Traded Funds? I Think So...

Traditional exchange traded funds are, as Dan described, single investments that allow you tohold an entire sector (like the energy sector, for example) in just one stock.

Investors looking for information about exchange traded funds should know that ETFs are like amutual fund, in that they hold a basket of stocks with a similar theme (energy stocks, for example).And they're generally most like index funds, in the sense that they just hold a fixed portfolio ofcompanies in that theme.

Lastly, and importantly, exchange traded funds generally hold the stocks in proportion to the sizeeach stock makes up in its sector.

To me, this is where the problem comes in...

Exxon and Chevron, for example, make up nearly half of the iShares Energy Sector exchangetraded fund. So are you really holding a basket of stocks representative of the energy sector?NO... It just so happens that Exxon and Chevron are so huge, based on their market value,they're the industry giants.

So if you buy the iShares Energy Sector ETF, you're not getting diversification in energy stocks...you're really just buying Exxon and Chevron.

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If I want a basket of 30 or so energy stocks, I want all 30 of them to contribute to the performanceof my portfolio. However, in the case of the iShares Energy Sector ETF, if Exxon and Chevron losehalf their value, I'm bound to lose a lot of money no matter how the other 28 stocks perform.

Why Some Exchange Traded Funds Are a Real Scam

To me, the whole point of investing in exchange traded funds is to get broad exposure to a sector(like 30 stocks) in just one buy... all with low fees, easy trading (just like a stock) and tax benefits.But consider the flip side. While the low fees, easy trading, and tax benefits are definitely there, thebroad diversification promised by exchange traded funds is a bit of a scam in some cases...

For example, take the semiconductor exchange traded fund with the symbol SMH...Intel andTexas Instruments make up nearly half of this ETF. Like the Energy ETF above, by buying SMHyou're not buying a basket of semiconductor stocks.

You're really just buying Intel and Texas Instruments, as their performance is going to makeup most of the performance of this ETF. As far as diversification goes with these kinds ofexchange traded funds, it's a sham.

The worst offender might be the ETF with the symbol BBH. BBH is a biotech ETF where two-thirdsof the ETF is made up of just two stocks — Genentech and Amgen. That's terrible... When you buyBBH, you're not getting a diversified portfolio of biotechs. You're really just buying these two stocks.

The "promise" of exchange traded funds is this: diversified exposure to an entire sector in justone stock. I don't know how these exchange traded funds above went so wrong. But a relatively newETF manager, PowerShares, seems to have gotten it right...

Broad Exposure, Dropping the Losers, and Other Advantages

It seems to me that PowerShares actually started out by asking, "What would the customer want?"

As the customer, I want broad exposure to a sector (maybe 30 stocks). Don't mess with it toomuch, please. But if you must mess with it, please kick out the "dogs" every once in a while, anddon't just passively sit by and watch them go to zero.

And please don't load up on overpriced stocks simply because the market value of these stockshas gone up. I don't want the fund to buy more and more of what's already become superexpensive. PowerShares fulfill both of these objectives...

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Each PowerShares sector ETF actually contains 30 stocks. And most importantly to me, no stockcan make up more than 5% of the portfolio. So the biotech PowerShares, for example, couldn'tpossibly have two stocks make up two-thirds of the assets. Simple stuff. But great stuff.

Thankfully, the dogs can also be kicked out... stocks that appear attractive (based on quantitativemeasures) can be let in... and the super-expensive stocks will still never make it to more than 5%of the portfolio. That's because instead of holding a fixed portfolio, the PowerShares portfoliochanges quarterly based on dynamic underlying indexes, called "Intellidexes."

The Bottom Line on PowerShares

Let me get to my bottom line here... PowerShares allow me to invest in sectors the way I want...where all 30 stocks in the fund actually affect the performance, which is exactly the diversification Iexpect from investing in exchange traded funds.

If I want to buy biotech, I don't want to own Amgen and Genentech. I want to own the 28 otherstocks that have bigger upside potential than the two giants. I don't want to own BBH... I want thebiotech PowerShares.

Also, the fact that the PowerShares portfolio changes quarterly is actually attractive to me... it'sa way to kick the dogs out of a portfolio early on, instead of waiting for some stuffed-shirt committeeto finally (and arbitrarily) decide to kick a dog out.

So, to my friend Dan: if you like exchange traded funds, I think you'll love PowerShares. And soshould anyone else looking for truly broad exposure to a sector.

[Editorial Note: A Ph.D. in finance and a former V.P. in charge of trading for a $50 million globalclosed-end fund. Dr. Sjuggerud has also worked as a stockbroker, an international hedge fundmanager, and the director of several research departments. He is editor of the monthly newsletterTrue Wealth, president of Investment University, and an advisor to The Oxford Club. He has beenquoted in Barron's, The Washington Post, and The Wall Street Journal online, and is a highly ratedspeaker at conferences around the world.

Steve's investment philosophy is simple: "Three things I look for in an investment — super-cheap,hated, and in an up trend. You buy something of extraordinary value at a time when nobody elsewants it. And you sell it at a time when people are willing to pay any price to get it."]

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How Baseball Games Are Won — and Fortunes MadeBy Porter Stansberry

It was an investment parable, in the form of a baseball game.

I speak of the Oakland A's game five loss to the Boston Red Sox in the recent American Leagueplayoffs. To most viewers, the game ended when A's outfielder Terrence Long struck out looking, inthe bottom of the ninth, with two outs.

But the game was lost long before that.

As you'll see, the contest was decided when A's catcher Ramon Hernandez got to first baseearlier in the last inning.

Not one in a thousand baseball fans knows why his reaching first base was the poisoned dagger.But Oakland General Manager Billy Beane certainly does. And that's why Oakland's team managerKen Macha will soon be fired.

I can explain this riddle. And when I do, you'll see how this relates directly to investing. You mighteven begin to invest in a whole new and dramatically more profitable way.

First, if you haven't read Michael Lewis' fantastic book "Moneyball", you're missing out on a trueintellectual classic. The book is a stunning account — and an explanation — of Billy Beane'sbaseball dominance. For those of you who don't follow baseball, the Beane-led Oakland A's havewon more regular season baseball games in the last five years than any other baseball team everbefore. But, even more impressively, they have done this with only the 12th-largest payroll — as oneof the poorest teams in the game.

Beane's accomplishment is similar to the track records of great value investors. He gets bigresults (profits) with few costs (volatility). Interestingly, too, value investors and Beane derive theiredge with smart, contrarian thinking.

Value investors ignore market sentiment and what's popular. They buy only what's safe andcheap, no matter how ugly it might be. Beane literally does the same thing. He eschews good-looking, high-priced players with headline-grabbing batting averages. Instead, he buys rejects likethe A's set-up man Chad Bradford for pennies on the dollar.

Bradford is a pitching freak. He throws the ball underhanded. With only an 84-mile-an-hourfastball and perhaps the ugliest release in the history of the game, Bradford was on his way out ofthe majors when, out of nowhere, Beane picked him up and made him one of the A's most-importantplayers. Beane didn't look at Bradford's motion — he looked at his results.

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Bradford's stats showed he got hitters out more often than just about anyone else in the game.How? He releases the ball lower than anyone else. Sometimes, in fact, his knuckles literally scrapethe ground. Therefore, his pitches travel a significantly shorter distance to the plate. Thus, to hitters,who are used to seeing the longer-traveling ball, Bradford's pitches seem to be going much fasterthan they really are; hitters say Bradford's fastball appears to be going near 100 mph.

Another example: Beane took an injured catcher (Scott Hatteberg) whose career was over andturned him into a starting first baseman.

And perhaps the most unusual thing about Beane is what he won't do. Unlike every other generalmanager in the majors, Beane won't draft high-school players — no matter how talented. Instead,he mostly buys experienced players who are ignored or under-appreciated because they're fat, orslow, or look awkward when they're playing.

Beane's strategy is based on knowledge other general managers either don't have or refuseto acknowledge. And it's simply this: Outs are the most important statistic in baseball. Hitters whodon't get outs (who have a high on-base percentage) are the most important ones to own — nomatter if they're short or fat or broken in some way. Likewise, pitchers who can get outs are thebest — no matter how fast or how slow they sling the meatball. Amazingly, even die-hard baseballfans typically have no idea which player statistic (on-base percentage) is most highly correlatedwith winning baseball teams.

Again, this is a lot like smart value investors who know that the only statistic that really mattersin investing is price-to-book. Value investors don't buy promising early stage growth companies(high-school prospects). They don't buy expensive blue chips (all-stars). They don't pay attention toglorified stats that have no statistical relevance to long-term results (batting average, stolen bases).Meanwhile, like baseball fans, enthusiastic investors typically have no idea which investmentmetrics are correlated with high future returns.

What I like so much about Beane and the world's top value investors is that they don't care — atall — what anyone else is doing. They know how "the world works" and can prove it, logically andempirically. Bud Selig called Oakland's success an "aberration." That's the highest praise I've seenBeane garner yet. (When morons castigate [see "Word to the Wise," below] your success, there'sno surer sign that you're right on target.)

So . . . what does all this have to do with the last A's vs. Red Sox game? Let me walk you throughthe bottom of the ninth inning and I'll show you.

The first batter up for the A's was Scott Hatteberg. This was fortuitous . . . because whileHatteberg's batting average is only .253, his on-base percentage is much higher — .342. The

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difference is, of course, walks. According to Billy Beane, earning a walk to first base is the mostvaluable offensive play in all of baseball. It cannot lead to an out.

If you're Scott Hatteberg and you know that by not swinging you have a much better chanceof getting on base, what would you do? Right. You wouldn't swing. Nevertheless, most major-league glory hounds (especially blue-chip players) dream of hitting the tying home run. Theyswing away regardless and end up losing a lot of games. Fortunately for the Oakland A's, Scottis a seasoned pro and earned a walk.

Thus, the winning run came to the plate with no outs. The A's were now in a really good position.

Jose Guillen, another well-coached player, came up to the plate.

Guillen bats .311 — an impressive figure. But, again, rather than swinging, he too earned a walk,the safe play. The A's were now in a great position. NO OUTS. Two runners on — one in scoringposition. All they needed to win was a single. Or two more walks.

But . . . instead of making the smart play, as they'd done all night (and all season), Ken Macha,the A's team manager, decided he had to "manufacture" a run. He instructed the next hitter, EricHernandez, to hit a sacrifice bunt toward third. It's totally contrary to "value" baseball to intentionallyearn an out. But that's exactly what Macha did.

Imagine if Warren Buffett suddenly decided to start buying shares of Microsoft . .

Hernandez, whose on-base percentage is an excellent .322, should have done his best toearn a walk — and, if he got the right pitch, he should have swung away. Almost any hit wouldhave scored the tying run. Plus, even if the worst thing happened (a double-play ball), the teamwould still have a runner on base and the game wouldn't be over yet. With only three outs leftin the entire season, spending an out intentionally to advance a runner already in scoringposition was incredibly stupid.

And what happened next proved it.

Adam Melhuse, a rookie, made a rookie mistake. He struck out looking with runners at secondand third. And then Chris Singleton — a savvy pro — came to the plate. Not surprisingly, he got onbase — earning a walk and loading the bases. This walk would have scored the tying run if, insteadof sacrificing, Hernandez had gotten on base with a walk or a hit.

Singleton should have been a hero. Macha could have been the winning coach. And the A's couldhave played the Yankees and maybe gotten to the World Series.

But that's not what happened.

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With the bases loaded, the next batter, Terrence Long, unexplainably struck out looking. Long willbe remembered as the guy who cost the A's the game. But that burden really belongs to Macha.The tying run should have already scored.

[Editorial Note: Porter Stansberry is founder of Stansberry & Associates, a group of financialadvisories that 70,000 investors rely on to make their investment decisions. He is best known forpredicting the demise of AT&T and as an expert in technological innovation and value stocks.

Porter is a successful practitioner of an investment methodology practiced by superstarinvestors Warren Buffett and the late Benjamin Graham, which he uses to find undervaluedcompanies and own them at a fraction of their true value. Using this method of identifying,owning, and holding undervalued stocks, Buffett built a small investment in Berkshire Hathawayin 1965 to a personal fortune of more than $44 billion, making him the second-richest man in theworld, just behind Bill Gates.]

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Getting the Feel of the Marketsby Andy Gordon

In 1841, Charles Mackay, author of "Extraordinary Popular Delusions and the Madness ofCrowds", wrote "Men, it has been well said, think in herds; it will be seen that they go mad in herds,while they only recover their senses slowly, and one by one."

And thus the art of contrarian speculation was born.

"The idea is simple: When everyone else is in a state of panic, frantically selling shares, yougo against the crowd and buy. That way you get the stock at a dirt-cheap price and set yourselfup to make a fortune. Skittish investors end up kicking themselves in the long run," says DanFerris, editor of Extreme Value.

Alternately, when people are buying stocks with wild abandon, as they did in the late 1990s, youwant to stand aside, looking to take profits before the market begins to collapse.

Trading against the crowd is never psychologically easy. It forces you, as Warren Buffett hassaid, to "be brave when others are afraid and afraid when others are brave." Nonetheless, morethan one trader has made a huge fortune by not following the herd.

Two indicators you can employ to discern the pulse of the markets are:

n The Put/Call Ratio

n Bullish Ads

Not only are they easy to use and simple to understand, but, more importantly, they can help youimprove your trading performance.

The Put/Call Ratio

An extremely effective standard for measuring market sentiment is the put/call (P/C) ratio, aninvention of legendary money manager Marty Zweig, author of the best-selling book "Marty Zweig'sWinning on Wall Street". The ratio signifies how many investors have bought put options relative tothose who have bought call options.

Options are the right to buy or sell a stock within a certain time at an agreed-upon price. Thereare two kinds of options: puts and calls.

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Call buyers are usually bullish on the market; put buyers, bearish. If the overwhelming majorityof options buyers are buying puts, they are, in the aggregate (see "Word to the Wise," below),markedly bearish — and pessimism will pervade the mood of the markets. If, instead, they arebuying calls in substantially greater numbers, optimism will begin to dominate.

Most options buyers find themselves on the wrong side of the market — and almost alwaysfor the wrong reason. They buy when they should be selling and sell when they should bebuying. Far too often, options buyers are trying to make a killing in the market.

The leverage and potential for massive profits that options trading dangles before them areirresistibly alluring. In short, options trading is for too many investors nothing more than a get-rich-quick scheme — and the ultimate sucker's bet.

So it follows that what you want to do is the opposite of what the majority of options buyers are doing.

When the ratio of put buying to call buying is abnormally high and the majority of traders buyingputs is swelling, a reversal in market direction is near at hand and you should, instead, be buying calls.

Conversely, if the ratio of call buying to put buying is excessively high, the market is far toooptimistic. Don't follow the herd. Think irrational exuberance. Think about the toll such exuberancehas taken on so many investors' portfolios. You should be looking for further signs of a market topand be preparing to buy puts.

Calculating the P/C ratio yourself is easy enough: It's simply the total put volume divided by thetotal call volume on the Chicago Board of Options Exchange (CBOE).

If you are going to calculate the number yourself, either with a calculator or a spreadsheet, it's agood idea to create a four-week moving average of the ratio. Simply add up the P/C ratio for eachof the past 20 days and divide by 20. (There are typically 20 trading days in any four-week period.)If you are a shorter-term trader, you may want to use a 10-day moving average.

Better still, let others do the math for you. The P/C ratio can be had for free at the Chicago Boardof Options Exchange website (www.cboe.com). Click on the "Data" link and then on the "CBOEVolume Put/Call Ratios" link. In addition, the ratio can be found inside the pages of Investor'sBusiness Daily and Barron's.

When the P/C ratio is above 0.7, market pessimism over the latest downtrend is excessive andyou want to look for upcoming signs of a reversal to the upside and a buying opportunity. When it'sless than 0.4, optimism is peaking, so start looking for a place to sell and maybe even go short.

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Bullish Ads Are for the Bears

Another way to measure market sentiment, also devised by Marty Zweig, is to count the numberof bullish advertisements in Barron's.

Zweig observed that many market advisers and money-management firms tend to place ads thatreflect what the public wants to believe. If the public is bullish or bearish, their ads correspondinglymirror those sentiments.

Get a recent copy of Barron's. Count the bullish ads. (You could also count the bearish ads butthere are usually far fewer of them. Ignore neutral ads.) Smooth out the occasional wild fluctuationsof the data using a four-week moving average. "As a rough guide," says Zweig, "I would suggestgetting cautious when the number of bullish Barron's ads reaches about 13 per week on a four-weekbasis and I would tend to get more bullish when the figure drops to about 7." If the number of bullishads reaches 20 or more, a market peak may lie ahead.

Don't use one sentiment indicator alone. "It's too much to expect one indicator always to be correct.What you look for are tendencies. When enough indicators are showing tendencies in the samedirection, it's time to believe that those indicators, working in concert, will be correct," says Zweig.

In fact, Zweig keeps an index of 30 sentiment indicators! But while there's no need for you to gothat far, you should follow at least two or more sentiment indicators and give them credence only tothe extent that they all are signaling the same message to you. Although just two sentimentindicators will give you some insight into the feel of the market, you'll ultimately want to add more ofthem to your analytical toolbox as you become more familiar with how they work.

Regardless of which sentiment indicators you choose to use, always remember that they are notinfallible. A sentiment indicator can express excessive pessimism or optimism about the markets forfar longer than you can imagine. So buying or selling merely on market sentiment can be aprescription for portfolio disaster. Always remembers Lord Keynes' dictum: "The markets can stayirrational longer than you can remain solvent." Sometimes a lot longer.

Instead, let price action be your primary decision-making guide. Everything else — includingmarket sentiment indicators — should be secondary. For example, suppose you have a hunch thatthe market is excessively bearish. You check your hunch by seeing whether or not it is confirmedby your sentiment indicators. The put/call ratio is, say, 0.9, and you can't find a bullish ad in thepages of Barron's. Get ready, but don't jump the gun. Enter the market only when your tradingstrategy sends you a "buy" signal. If the indicators don't confirm your hunch, you sit tight and wait.Remember, you don't make money off indicators. You make money by correctly assessing the priceaction, entering and exiting the market as your trading strategy dictates.

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[Editorial Note: Andrew M. Gordon has authored several books, including The World Coal Market(Pasha Publications), Telecommunications in Russia and China (Frost and Sullivan), Global Offsetand Countertrade Practices (First International Corp.), and China's Oil and Gas Industry (McGrawHill). He's also ranged far and wide in his business experience: The huge property project in centralJakarta...the road construction project in southern Sumatra...the vapor recovery project inShanghai...the environmental missions all over Asia...the maritime telecom project for the MalaccaStraights. And Mr.Gordon has contracted for a number of companies, including the chemical andpetrochemical companies (DOW Chemical, Allegheny Petroleum, X-Chem, and others)...the steelcompanies (Crucible Steel, Bethlehem Steel, and others.

Mr. Gordon was the Director of the State of Maryland's International Business Office for severalyears. Building on his varied experience, he recently started an international environmentalconsultancy practice. And between overseas trips, he managed to teach marketing and financecourses at the state university in Maryland. He has an M.Sc. from the London School of Economics.]

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IVReal Estate

Should You Use Some of Your Home Equity to Launch YourReal-Estate Investing Career? By Justin Ford

There's a big difference between good and bad debt. Bad debt is money borrowed to buy "stuff"that rapidly depreciates in value. Good debt is money borrowed to buy assets that appreciate invalue and produce income greater than the carrying cost of the debt.

The perfect example of good debt is to tap some of your home equity and use it to buy a goodpiece of property at a good price.

Let's say you bought your home for $100,000 with $20,000 down five years ago. Today, it's worth$140,000 and your mortgage has been paid down from $80,000 to $75,000 . . . so your equity inthe property has risen from $20,000 to $65,000. (The $140,000 value minus the $75,000 balanceon the mortgage leaves $65,000 in equity.)

You take out a $25,000 home-equity loan to buy a piece of rental property. You hunt out propertybargains and strike a deal on a property for $200,000 that has $25,000 in gross rental income.You're borrowing 90% of the purchase price, or $180,000, from a mortgage lender. The other $5,000you're using for closing costs. (There are ways to keep your closing costs this low — 2-1/2% or lessof the purchase price — which I'll cover in a future ETR message.)

You make an allowance of 10% of the gross rental income ($2,500) for vacancy and 1% of thepurchase price for maintenance ($2,000). That's $4,500 that you subtract from the $25,000 youwould expect in ideal conditions. So now you're counting on $20,500 in annual rental income, orabout $1,708 a month.

You borrow the $180,000 at 6.5%, so your monthly principal and interest payments are $1,140.Taxes work out to, say, 1.5% of the purchase price — which is $3,000 a year, or $250 a month.Insurance is $1,200 a year, or $100 a month. In addition to this, you pay interest-only on the home-equity loan at 4.5%, or about $105 a month.

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So your total monthly PITI (principal, interest, taxes, and insurance payments) is the sum of allthese — or $1,595 a month. Yet, your monthly rental income — after making an allowance forvacancy and maintenance — is $1,708.

This means that, after your major expenses and allowances, you're cash-flow positive by$113 a month — even though you bought the property with 100% financing . . . and evenfinanced the closing costs!

When doing a deal like this, you should be sure to have sufficient savings (four months of PITIas a minimum) in case unexpected expenses come up. But if you manage the property well, youshould be able to keep vacancy far below 10% and increase your net monthly income.

Now, let's see what happened.

When you did the deal, you took out $25,000 in equity from your home and turned it into$20,000 in equity in your investment property. (It's only $20,000, because $5,000 was consumedby closing costs.) So your net worth initially declined by $5,000. But there are costs to anytransactions. Was this one worth it?

Well, let's say the property goes up by the long-term national average of about 6%. After ayear, it's worth $212,000. And on a 30-year amortizing loan, the mortgage has decreased byabout $2,000. So, on a property that was 100% financed and has paid for itself, you've picked up$14,000 in equity in a year.

After five years, at 6% annual appreciation, the property is now worth about $68,000 more thanyou paid, and the loan balance has declined by about $11,000. So you've now picked up $79,000in equity on a property.

If you bought undervalue and the market is rising a bit faster than the long-term average, youmight get 8% annual appreciation. This would boost your equity by about $105,000 over five years.

At the same time, rents tend to go up 5% to 6% a year. Yet, the bulk of your costs (your mortgageloan) can remain fixed or capped at a lower rate of increase. This will tend to increase the netincome you receive from the property ever year.

To make this work, you have to buy right. Be a sharp buyer first and a creative and sharpborrower second.

My example supposes a gross rental yield of 12.5%. (The gross rental income of $25,000 is12.5% of the $200,000 purchase price.) That's very hard to find right now in my market; 4% to 5%is more the norm. Yet, when you know how to scout out values, you can do it.

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Four of the properties I've bought in the past year had yields ranging from 10% to 13%. Andthose yields are rising, as local rents are increasing.

What's more, in certain "distress" sales, you may be able to pick up properties with 15% to25% gross yields. These can provide very healthy net cash flow from the very beginning, evenwhen 100% financed.

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Buy Real Estate with Your IRA… and Finally Retire RichBy Thomas Phelan

Imagine if you didn’t have one red cent in a traditional savings or checking account, but you couldsimply "write a check" to:

n Purchase Real Estate

n Lend Money On Real Estate

n Purchase An Option On Real Estate

n Purchase A Real Estate Lease

n Consummate A Short Sale

n Purchase A Foreclosure

n Make A Personal Property Loan

With a little-known but extremely powerful investing technique — it's called a Self-DirectedIRA — you can do all that…and more.

The Self-Directed IRA is undoubtedly the most misunderstood and underutilized wealth buildingtool in America. When you learn how to use this technique it could radically transform the way youview and manage your financial future, starting almost immediately.

U.S. Appeals Court Justice Learned Hand once observed “In America there are two tax systems,one for the informed and one for the uninformed. Both systems are legal.” Justice Hand could justas well have said “In America there are two IRA Plans, one for the informed and one for theuninformed. Both IRA Plans are legal.”

Today there are 42 million IRAs in America with ten trillion dollars in investments. Only 1% ofthose 42 Million IRAs hold real estate.

Are you just a little bit curious why?

For three decades, 99% of the American public has shied away from the Self-Directed IRA eventhough it is a proven, powerful retirement wealth building tool.

The reason most Americans don’t have a Self-Directed IRA is simply because they don’tunderstand how it works and how it can help them retire years, even decades, younger than theyever dreamed possible and with more monthly income than they ever dreamed possible.

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When did this widespread ignorance begin? What caused the myths to grow?

ERISA (the Employee Retirement Income Security Act) was enacted in 1974. ERISA’s goal wasto correct the abuse of mismanaged private pension plans. It shifted the responsibility of retirementsavings and investing from employers to employees.

ERISA stated that taxpayers must take distributions from their IRAs at age 70.5. The objectivewas to have the average retiree save money during his/her lifetime then systematically drain thesavings or investments by the time he/she passed away.

Unfortunately when Congress passed ERISA it neglected to provide any educationalrequirements or guidelines.

Retirement industry giants quickly recognized the educational void and stepped in to voluntarilyeducate the public about the "proper" investments to make with the earnings they were placing intheir IRAs. The stock brokerage firms, mutual fund companies and financial planners all began tooffer goods and services to Americans eager to place their contributions in IRAs.

Robert Kiyosaki, author of "Rich Dad Poor Dad", calls the dynamic of Congress allowingsomeone who would directly benefit by educating people to only buy its products tantamount to,“Letting the fox guard the henhouse.”

Ten trillions dollars are at stake today and Wall Street intends to keep it all. They spend millionsannually to perpetuate the myth that the financial markets are the only place IRA dollars should beinvested and that any investment not in the realm of the financial market is neither prudent nor practical.

The Organization of Certified Financial Planners of American stated in a recent Wall StreetJournal article that Americans should have NO MORE than 5% of investment real estate in theirentire investment portfolio. Guess where it suggests the remaining 95% of your dollars go?

Into stocks. That is where most people put their IRA money. And that’s where a big problem lies.Not only are they missing out on the huge wealth-building potential of real estate… they’ve createda ticking time bomb of sorts. Here’s why…

The IRS also mandates that distributions from traditional IRA (the kind most people have)must begin at age 70.5. This seemingly harmless requirement will someday create a dilemmaof dramatic proportions.

In the year 2016 an estimated 2.5 million Baby Boomers reach age 70.5 and another 2.5million each subsequent year for more than a decade. This translates to over 25 million babyboomers by 2026.

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If the current trend remains constant, i.e. that 99% of the 42 million IRAs across America hold tentrillion dollars worth of financial products, then there will be an unprecedented forced sell off offinancial products, e.g. stocks, mutual funds etc. beginning in 2016.

Imagine 2.5 million baby boomers calling their stock brokers, mutual fund salespeople or financialplanners and saying: “Sell.”

Sometime after 2016 sellers of stocks, mutual funds, etc. will outnumber buyers. The problem willonly worsen by another 2.5 million new forced sellers each year thereafter.

Robert Kiyosaki calls this eventual financial market bust "The Perfect Financial Storm." And hepredicts that sometime after 2016 an aging baby boomer generation will create the biggest stockmarket crash in history.

Sound farfetched or crazy? I don’t think so.

If I had all of my IRA holdings in the financial market (stocks, mutual funds etc.) I would begin toliquidate and convert my financial market portfolio into non-financial market products like real estate.

But the problem is you need a Self-Directed IRA. That’s an IRA that gives you more CONTROL.

Many Americans believe because their custodian bank or stock brokerage firm trustee offersthem a menu of financial products to buy (e.g. mutual funds like Dreyfus, Fidelity, Putnam etc.), thatthey have actual control over their IRAs.

This simply is not true.

With most IRAs, the choice of products is restricted to financial products sold to you by astock broker, mutual fund salesperson or financial planner. This is how they earn a living. So,for them, suggesting you set up a Self-Directed IRA so you can buy real estate is counter-productive. Stock brokers, mutual fund salespeople and financial planners will not get paidcommissions if you purchase real estate.

The IRA/LLC Check Book Control Self-Directed IRA allows you to maintain a LLC checkingaccount where you decide what to purchase, (within IRS Guidelines) when to purchase it, how tomanage it, how long to hold it and when to sell it.

With an IRA/LLC Check Book Control Self-Directed IRA you could immediately write an IRA/LLCcheck to purchase real estate, lend money on real estate and any of the other real estate relatedinvestment options we mentioned in the bullets above.

With a Self-Directed IRA you can even own real estate that is encumbered with a mortgage.

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What kind of IRAs can be Self-directed?

n Traditional IRAs (where contributions are deducted from income)

n Roth IRAs (where contributions are made with after-tax dollars but withdrawals are tax-free)

n SEP and SIMPLE IRAs (generally used by the self employed and small businesses, andallowing much larger tax-favored annual contributions than Traditional IRAs or Roths)

[Editorial note: Justin Ford is an active real estate investor and creator of Main Street Millionaire, areal estate education program. He has also published, edited, and written for over a dozeninternational investment newsletters, including the U.S. edition of The Fleet Street Letter, the oldestcontinuously published financial newsletter in the English language.]

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Will You Be Protected When the Bubble Bursts?By Justin Ford

I love investing in real estate. It's a fair amount of work, but I enjoy just about every aspect of it.

I've been fortunate enough to realize triple-digit profits on properties several times in undera year — as the result of leveraged appreciation, net rents, and amortization. On otherproperties, I expect to get at least 15% to 20% annual compounded returns, doubling mymoney every four to five years.

I don't know where else you can get numbers like that without taking on a lot more risk.

But as an investor in real property today, you have to be especially careful. Prices in manyareas have doubled in the last three to five years, though real estate traditionally doubles in valueabout once every 12 years.

That means you may be buying after much of the easy-money appreciation has already occurredin your neighborhood — and if you get caught up in a bidding frenzy, you could get hurt.

That's why it's critically important to become an expert in gauging the true value of a property ifyou're going to be a profitable, but risk-avoiding, real-estate investor.

But even if you do all the right things, that won't answer the question that a lot of people areasking these days: "Are we in the midst of a real-estate bubble that's about to burst?"

Some of the best advice I've seen on investment timing comes from Steve Sjuggerud, editor ofTrue Wealth, an excellent investment publication, and an investment panelist for the Oxford Club.In an article he wrote a few weeks ago, he provided a hint as to his current thinking when he quotedYale economist and investor Irving Fisher:

"Prices have reached what looks like a permanently high plateau. I do not feel there will soon, ifever, be a break from present levels, such as [bears] have predicted. I expect to see the market agood deal higher within a few months."

Fisher wrote those words, referring to stocks . . . in early October 1929.

In Steve's hometown neighborhood, as well as mine, everybody seems to believe that real-estateprices can only rise. He says, "There is nobody here who believes that real-estate prices can fall .. . which is exactly my cause for concern. Longtime readers of mine know that I don't think U.S. realestate is wildly overpriced . . . yet. But I think it's about to be."

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I too am becoming very cautious. Everywhere I look, the market is getting extremely expensive.Many neighborhoods in my area have doubled in value in just the past two to three years.Traditionally, real estate doubles in value about every 12 years.

Bubble? It's the Goodyear blimp. Or will it prove to be closer to the Hindenburg?

I'm not so sure the current boom in real-estate prices can last much longer. If it goes more thananother year, I'll be surprised. And if interest rates do start to rise, if unemployment skyrockets,or if there's some terrible turn of events in the global political situation, things could go badquickly. Trees don't grow to the sky.

That said, what am I doing?

I'm buying real estate. But, in this market especially, I "wait for my pitch," as the baseball sayinggoes. I don't chase balls that are way out of the strike zone, "hoping" to connect.

To put it in terms an equity investor can easily grasp, think of the approach Jimmy Rogers took.He's the former co-manager (with George Soros) of the astronomically profitable Quantum Fund,which produced something like 31% compounded annual returns over about two decades.

Rogers has said that his approach to investing is to wait and watch for the right investment —one loaded with value. He looks for a situation, he says, where he practically finds a pile of moneyjust sitting in a corner . . . and all he has to do is walk over and pick it up. This is, basically, theapproach I try to use with my property investments.

I probably see listings on 100 properties before I find three or four that might be worth looking at.Then, when I see one that might be a deal, I do even more homework and make an offer that I'mconfident will give me plenty of downside protection and upside potential.

Fortunately, even in today's frothy market, this has been working for me. And I'm in South Florida,where properties have really skyrocketed. Using this approach, I've been able to add threeproperties in just in the last two months.

In a negative-case scenario, rents could drop 15%, housing prices could stall or fall double digits,and I would not be pressured to sell a single property.

I could hold them as long as I want (and my preference is for the very long term) and in the worstcase simply have my tenants pay off the property for me.

I'm also focusing on neighborhoods where there is a great deal of immigration from other partsof the state and country, buoying demand.

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Now, more than ever, you have to be a sharp buyer. Lately, I've heard property investors sayingthings like "You can't lose in real estate." Those are the words you hear at the times when you canlose the most.

And what if you're currently holding significant amounts of real estate in your portfolio? This agood time to review the cash flow of each investment and consider unloading any that will hurt youif the bubble bursts and your rental income drops significantly.

Just because the market may have peaked doesn't mean there's not a ton of money to be madein real estate — if you do it right.

Take care of your downside first, make sure you know your local market cold, and the profits willfollow from there.

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Become an Automatic Wealth Builder!

Dear Reader,

Last year, 72 men and women went to a very special wealth-building event — Early to Rise's FirstAnnual Wealth-Building Conference.

They spent an entire weekend absorbing the money-making ideas and philosophies of some ofthe nation's leading experts in getting rich, led by self-made multi-millionaire Michael Masterson.

And what they learned put them on the road to financial freedom and independence … andchanged their lives forever.

"I was amazed that these very different people, all with different skill sets and business models,were giving us basically the same steps to follow," says attendee Mark Mauldin. "Obviously, it works.So I'll be putting those steps to work for me right away."

"I went through a complete paradigm shift in just three days!" writes Kim Langen. "I came awaynot just with new ideas, but with a whole new way to think about business."

"I went to the Conference with one question in mind: What can I do in real estate, part-time, thatwill spin off substantial amounts of second income?" says Doug Worden, an ENT surgeon. "Thanksto you, I realized that I can achieve my goal by forming limited partnerships and being the generalpartner. And thanks to you, I am motivated to move forward with my plans. I am excited that afterseveral years of looking for ways to build a second business, I have finally settled on one."

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You may have missed this life-changing event …

But now you have a second chance to become really rich.

And not many years from now. But within the next 7 to 15 years (and it could easily happen in aslittle as 3 years), you will have attained total financial independence. That is, you'll have enoughmoney in the bank to never again have to work another day in your life!

Read This Special Report for More: …

http://www.wealthbuildingconference.com/

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i) goals and achievementno matter how much of it you do or how good you get at it, you will never...

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