By Edward Leone Jr.DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
I just happened to read a great article by Charles Murray in the Wall Street Journal yesterday. He does a great job of describing the impact of capitalism on global economics and social well-being. “From the dawn of history until the 18th century, every society in the world was impoverished, with only the thinnest film of wealth on top. Then came capitalism and the Industrial Revolution. Everywhere that capitalism subsequently took hold, national wealth began to increase and poverty began to fall.” “Capitalism has lifted the world out of poverty because it gives people a chance to get rich by creating value and reaping the rewards.” We currently find the capitalist system facing head winds created by government over regulation and corruption in my opinion. Many in our society feel that because you have prospered you have made someone else poor! What will it take to get our society back into the entrepreneurial spirit which got us to the great status we have enjoyed until recent times?
Banks have positioned themselves in a more favorable status as a result of TARP and other Federal Reserve activities. There are still concerns over the mortgage mess and housing prices along with potential loan losses. The low-interest rate environment has banks struggling to generate revenue. It may be that banks will engage in higher risk activities to generate revenues. For those of us in small business ventures, there are many head winds to growth and development. The following contrarian approaches to business development may be necessary to consider in future business engagements:
1. Prospecting for business is absolutely necessary.
2. Generating a positive income stream is imperative.
3. Tune out current events. The economic noise around us is temporary in my judgement. Think long-term.
4. Be aware of the future effects of inflation on pricing and purchasing power.
5. Valuation exercises will be a constant challenge, but must be performed as current conditions change.
6. Risk aversion can be over done.
7. Move toward you projection for the future. Don’t plan with the present as a foundation.
8. You will be recognized in the future for your contrarian approach to business at a point in the future.
9. The more you experience rejection in your approach, the more you can be assured that you may be correct.
Above and beyond the necessity for a business plan as opposed to just letting businesses float to success, a personal plan for financial success is imperative. One area which I observe as severely lacking in the area of personal planning is estate planning. My concerns regarding deficient planning are as follows:
1. No estate planning in place is very bad practice.
2. No awareness of future legislation’s potential impact can be troublesome.
3. The appropriate title of property ownership needs attention.
4. Awareness of gift tax rules is important.
5. Development of appropriate estate planning documents is essential.
6. The need for correct beneficiary designations is imperative.
7. Periodic review of estate plans is essential.
It appears that a more unified banking system is being considered in the Euro Zone. Considerations for plans to address bank failures, new banking regulations, commonality of new fiscal rules and a tighter centralized European Union are likely in the works. Optimism is being reflected in equity market indexes over this last week.
For The Record:
DJIA 13,081.98
NASDAQ 2,962.91
S&P 500 1,386.01
Suggested Reading: “Currency Trading for Dummies” by Brian Dolan
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