Bizmaker: Make Money Run After You

(Originally published on August 3,  2011; reprints previous original material published in this section)

By Mark So

Don’t think for one second that because the world is in financial crisis, there is no money going around. The truth is far from it. The fact is that the world is literally overflowing with money. It may not seem like this applies today, but always remember this: money is never destroyed—only transferred.

Wealth, on a daily basis, is constantly transferred from those who do not know how to manage money to those who do. Even, and most especially, during a financial crisis, this holds true.

Let me take the recent financial crisis, break it down for you, and explain how wealth was transferred. I’ll show you the steps to begin the process of “wealth flow.”

This article will be the first of a series, with each article ending with an activity or task. If you seriously want money to run after you, I strongly recommend that you follow the assignments for every article and give me feedback along the way.

In the recentU.S.financial crisis that started June of 2007 and reached its peak in October of 2008, theU.S.stock market (and consequently the Philippine stock market) lost more than 50 percent of its value. Most people panicked and took out their money, or whatever that was left of it, for fear of losing even more. When they did that, they lost half of their wealth—which took a lifetime to build—in a span of days. As of

September 29, 2008, approximately $1.2 trillion was wiped out in theU.S.alone.

Let me repeat: The money was not lost. It was merely transferred.

During the same crisis, there were a few brave souls who bought those stocks at extremely low prices. They held on to it, and became a whole lot richer overnight. Warning: Do not be overwhelmed by what I am going to share next. Even if my examples are in billions of U.S. dollars, the principles I want you to pick up will and can be applied to your situation. More importantly, do not put in everything you have in any investment vehicle because of this. This is not the point of my example.

In theU.S.the most notable figure to do this was Warren Buffet, who bought a significant chunk of shares at Goldman Sachs in September 2008.

Despite the odds and the panic, Buffet bought the shares at basement bargain prices. He invested $5 billion, held on to it during the worst of the crisis (which was October 2008), and turned it into $8.7 billion very recently. Another similar story–although he did not buy stocks but rather bet against them (a.k.a. short trading)—is John Paulson of Paulson and Co., who made a killing by betting against the U.S. subprime mortgage market. He made $4 billion after the worst of the crisis was over. Although Buffet and Paulson were the few covered by the media, there were more who made killings, as well, but the public just didn’t know about it.

Now you might be thinking that those guys are professional investors—how can you ever come close to doing that yourself? Well, first let me explain that this is just one of many examples of “wealth flow transference.” You don’t have to be in stocks or investments to apply what I will be teaching you in the next few articles. For those of you who know me and have been following my column, you know that I will teach you how to do it in a very practical and “anybody-can-do-it” approach, so read on.

While I am not saying that you cannot be a billionaire, I will leave that option wide open for anybody willing to try; but before we think about billions, or even millions, let’s first come back to earth and start with the basics.

How and where do I Begin?

I’m designing this and the succeeding articles as thoroughly as possible so that you will not only understand it, but also experience it by applying it to your life, article by article. Of course you may opt to go faster and I will inform you how to do that in the very near future.

In the meantime, this should be your first “realization” for this particular article: Running after money if you do not know how to manage it will result in you forever chasing after it. Get your house in order first, build a strong foundation for money management, and you will see that the money will start running towards you—and staying with you.

Now to learn and apply this lesson, here is your first assignment:

1. Go to my blog http://www.markso.wordpress.com and subscribe to it.

2. Search for, read and comment on the following articles in the blog’s search box:

a. “The Most Important Advice About Money I can Ever Give You”

b. “Money Management Simplified parts 1 to 3”

Good luck—until the next article!

 

Mark So is a businessman, investor and educator. He is the chairman and CEO of BusinessmakerAcademy—a business, finance and corporate training center. He is the founder and Chief Forex Trainer of Forex Club Asia, a trading club of Forex Traders across Asia. He is also the founder and chief trainer of the Philippine Franchise Institute, which specializes in training and growing existing Franchise businesses. A sought after speaker for business and investing, you may e-mail your comments and questions to mhso@businessmaker-academy.com or call the office at (2) 687-4445/3416/4645 for a schedule of his seminars.

 

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