The Intelligent Investor (Chapter 1: Investment versus Speculation)

July 26, 2012

Devon Sampson Business , , , , Leave a comment

["The Intelligent Investor: The Definitive Book On Value Investing" was written by Benjamin Graham, with commentary in the latest edition by Jason Zweig.]
 
Graham’s definition of investing: “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.” (35)

Many people think that they’re investing when they’re really only speculating.

“[Speculating is] the worst imaginable way to build your wealth. That’s because Wall Street, like Las Vegas or the racetrack, has calibrated the odds so that the house always prevails, in the end, against everyone who tries to beat the house at its own speculative game.

“On the other hand, investing is a unique kind of casino – one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor. People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.” (36)

“An investor calculates what a stock is worth, based on the value of its businesses. A speculator gambles that a stock will go up in price because someone else will pay even more for it.”
 

A cynic knows the price of everything, and the value of nothing.
-Oscar Wilde

 
However, Graham does acknowledge: “Without speculation, untested new companies would never be able to raise the necessary capital for expansion. The alluring, long-shot chance of a huge gain is the grease that lubricates the machinery of innovation.” (21)

While speculation can certainly be intelligent, it can also be unwise if you’re:
1. Speculating when you think you’re investing.
2. Doing it as a career without the requisite knowledge and skill.
3. Risking more than you can afford to lose.

“Never mingle your speculative and investment operations in the same account, nor in any part of your thinking.” (22)

“To enjoy a reasonable chance for continued better than average results, the investor must follow policies which are [1] inherently sound and promising, and [2] not popular on Wall Street.” (31)

“It seems that any intelligent person, with a good head for figures, should have a veritable picnic on Wall Street, battening off other people’s foolishness. So it seems, but somehow it doesn’t work out that simply. Buying a neglected and therefore undervalued issue for profit generally proves a protracted and patience-trying experience.” (32)

“If you look at a large quantity of data long enough, a huge number of patterns will emerge – if only by chance.” (45)
 

The intelligent investor has no interest in being temporarily right. To reach your long-term financial goals, you must be sustainably and reliably right. (37)

The Psychology of Selling – Brian Tracy (Techniques)

July 5, 2012

Devon Sampson Business, Human Psychology , , , , , , Leave a comment

“Your job as a salesperson today is that of an advisor, and that of a counsellor, and that of a consultant.”

“[Prospects] don’t need someone to try to sell them something, they need someone to teach them how what the product can do for them.”

Maslow’s hierarchy of needs is a useful framework to have in the back of your mind when performing need analysis.

Before you start selling something, ask yourself:
-What are the top 5-10 features of my product?
-What customer needs do these satisfy?
-Why buy it from our company?

 

Approaching the Prospect

 
When prospects say no, it’s usually because they were preoccupied. But we are always preoccupied with SOMETHING; break the preoccupation or you will never get attention.

“Your opening question should answer the question: ‘Why should I listen to you?’ It should then generate the question: ‘What is it?’“

If they don’t ask, “What is it?” then your opening question isn’t good enough to get your prospect’s attention and break their preoccupations.

A major prospect concern is that you’ll use high-pressure tactics like all of the other mediocre salespeople they’ve encountered; you must convince them that you won’t.

The most important thing to do in an opening call is to get a solid appointment.

Call to confirm a few days before to inoculate against flakes and make a new solid appointment if something has come up for them.

Never sell your product on the phone – the best thing you have going is CURIOSITY.

If you’re asked to send something, say that you’ll deliver it personally and ask if they’ll be there on that day.
 

Way of Being

 
Interacting with people that are too different from ourselves moves us out of our comfort zone.

We stand upright and have attentive body language so we represent our product/business well but also because our prospect is likely to mirror these behaviors.

“The essence of selling is personal vitality.” (so always get a good sleep)

“Smile into the phone.”

Never knock the competition.

One aspect of being a good listener is pausing 3-5 seconds before replying, then ensuring that your reply sounds calm and contemplative.

Great question to elicit further detail: “How do you mean?”

Telling is not selling.
 

Handling Objections

 
Interpret objections as questions (ie: “I can’t afford it” = “Show me how I can afford it”)

Be prepared for the common objections to your product.

In sales, the term “condition” is used to refer to an unbreakable barrier to purchase, for example: someone with no legs is going to be difficult to sell shoes to.

“Many people, when they voice an objection, think it’s a condition. Your job is to find out whether or not it’s [truly] a condition.”

Hear out every objection, even the one’s you’ve heard 1000 times before.

Compliment people on their objections (ie: “That’s a very good QUESTION…”)

“Did I explain myself clearly?”

Always be impressed with how knowledgable people are on your subject.

Customers will sometimes hold on to objections until late because once those objections are obliterated, they know they’ll have to buy.

Response to non-verbal hesitancy late in the game: “Mr. [Prospect], there seems to be some question in your mind that’s causing you to hesitate about going ahead right now, do you mind if I ask what it is; is it the money?” [price is the most common objection, but prospects are often shy about admitting it; adding "is it the money?" makes it more acceptable for the prospect to admit it]

When asked about the price, state your answer to include all of the benefits – so that in the prospect’s mind, the price is never divorced from the value it represents. For example: “This system, with x, y, and z, and including a, costs…”

“Yes, ours is more expensive than our competitors, would you like to know why?”

Use “if” and “what if” responses to state creative solutions to objections. For example:

Prospect: “Our budget is used up”
You: “Well I’ll tell you what, if you take it now we won’t bill you until your next budget period.”
 
Eliciting hidden objections, then using them to help you close:
-“…and in addition to that, is there any issue keeping you from going ahead right now?”
-“Just suppose that wasn’t an issue, is there any other reason we can’t go ahead?”
-“If (x condition was satisfied) would you take it right now?”
 

Closing

 
Let them give you the closing condition.

“Any noticeable change in attitude, posture, or demeanor can indicate that a buying decision is near.”

You have to transition smoothly into the close, don’t take a breather or hesitate for too long.

When you close you should be happy and enthusiastic.

“The only pressure you use in a professional selling presentation is the pressure of the silence after the closing question.”
 

A man convinced against his will is of the same opinion still.

 

The 48 Laws of Power (Law #48 – Assume Formlessness)

July 3, 2012

Devon Sampson Social Dynamics , , , , , , Leave a comment

 

When you want to fight us, we don’t let you and you can’t find us. But when we want to fight you, we make sure that you can’t get away and we hit you squarely…and wipe you out.

-Mao Tse-tung

 
“The human animal is distinguished by its constant creation of forms. Rarely expressing its emotions directly, it gives them form through language, or through socially acceptable rituals. We cannot communicate our emotions without a form.

“The forms we create, however, change constantly – in fashion, in style, in all those human phenomena representing the mood of the moment. We are constantly altering the forms we have inherited from previous generations, and these changes are signs of life and vitality. Indeed, the things that don’t change, the forms that rigidify, come to look to us like death, and we destroy them. The young show this the most clearly” (424-5)

People rise to power by using their creativity to create new forms – but then they tend to get attached to these forms, develop fixed identities, and lose their power as the public gets bored and demands newer forms.

“When locked in the past, the powerful look comical – they are overripe fruit, waiting to fall from the tree.” (425)

“To be formless is not to be amorphous; everything has a form – it is impossible to avoid…formlessness is in the eye of the enemy who cannot see what they are up to and so has nothing solid to attack. This is the premier pose of power: ungraspable”

“The first psychological requirement of formlessness is to train yourself to take nothing personally. Never show any defensiveness. When you act defensive, you should your emotions, revealing a clear form.” (426)

“When you find yourself in conflict with someone stronger and more rigid, allow them a momentary victory. Seem to bow to their superiority. Then, by being formless and adaptable, slowly insinuate yourself into their soul. This way you will catch them off guard, for rigid people are always ready to ward off direct blows but are helpless against the subtle and insinuating.” (427)

“In evolution, largeness is often the first step towards extinction. What is immense and bloated has no mobility, but must constantly feed itself. The unintelligent are often seduced into believing that size connotes power, the bigger the better.” (428)

“It is not a matter of mimicking the fashions of youth – that is equally worthy of laughter. Rather your mind must constantly adapt to each circumstance, even the inevitable change that the time has come to move over and let those of younger age prepare for their ascendancy.” (429)

“Never forget, though, that formlessness is a strategic pose. It gives you room to create tactical surprises; as your enemies struggle to guess your next move, they reveal their own strategy, putting them at a decided disadvantage. It keeps the initiative on your side, putting your enemies in the position of never acting, constantly reacting.”

“Rely too much on other people’s ideas and you end up taking a form not of your own making. Too much respect for other people’s wisdom will make you depreciate your own.”

Reversal: Formlessness will make your enemies scramble and scatter their forces (mental as well as physical) to find you. But once you do engage them, hit them with a powerful, concentrated blow.