Category Archives: Investing
I have spent a lot of time trying to find out more about Marcus Lemonis’ personal story. Finally I found a speech he gave to an Inc 5000 conference. They titled it…
The key question I wanted answered was how did he even start Camping World. The usual snippet story is that he was an orphan from Lebanon who became the son of someone who was in the car business. His extended family owned a rather big car business, and that Lee Iaccoca was a family friend. Presumably this story makes it sound like his family helped him out a ton.
Listening to him tell his story you quickly realize that his family only indirectly was responsible for his success. The real story is that he ran for a Democratic office when he came back from college and his grandfather was a Republican so for embarrassing the family he fired him and wished him luck.
He eventually did lose the election but someone told him that if he ever wanted a job he should give him a call. That person I believe was Wayne Huizenga, owner of AutoNation. If it wasn’t Wayne himself, he eventually connected with Wayne.
They eventually asked him if he wanted a promotion and he said yes, of course. They requested that he help them buy his grandfather’s car business. He eventually pulled it off, and was additionally told to fire all the slackers. He pulled that off too and eventually let slip in his story that he made it to a point where he was pulling in $900k a year in the car business!
Wikipedia puts it this way…
“Starting in 1997, Lemonis held several sales and managerial roles for AutoNation. From June 2001 to February 2003 he served as CEO of Holiday RV Superstores Inc. Following that, he co-founded a company called FreedomRoads and began acquiring RV dealerships. In 2006, the company merged with Camping World with Lemonis as CEO, then in 2011, merged with Good Sam Enterprises, Lemonis again at the helm. Lemonis attributes Camping World and Good Sam’s success to the three P’s: people, process and product.” Source: Wikipedia)
2003 to 2005 was a very intense period for Marcus. He pooled his own money with some other investors to start the company Freedom Roads, Inc., then used $400 million in bank loans to speed up acquisition and consolidation…
“So, in 2003, Mr. Lemonis pooled his money with funds from several investors and started buying up dealerships, consolidating them under one banner — a practice he says helped “legitimize” the industry.
The idea was to make RV lots look more like car dealerships, such as Florida-based AutoNation, where he worked from 1997 to 2001, rising to regional manager in charge of 65 stores in 11 states by age 27.
Using multiple bank loans, Freedom Roads spent $400 million in June to expand inventory at all its dealerships and push the company to the $2-billion mark in annual sales. It’s now at $1.4 billion.” (Source)
Pretty much the main conclusion I can come to is that the old sayings go with business. “It’s not what you know, its who you know.” “It takes money to make money”. My own saying is,… “If you wanna play with the big boys, you gotta join the big boys club.”
Marcus certainly learned many lessons on the road to success. His success at AutoNation bred more success and each experience helped feed the next. The key in his life was getting noticed by the right people. Some would call him lucky, but he himself says that he is simply blessed.
If you haven’t seen the CNBC show “The Profit” then you absolutely must. Marcus Lemonis is a business genius and he is learning and becoming smarter every single day with every single new deal he makes. The show’s basic premise is that Marcus comes and visits a potential business and determines if he can make a deal with the owners to become and active investor in the company and teach them how to become very profitable.
Since discovering this show I have absolutely fallen in love with it. This guy actually has my dream job. Part of the reason I chose the jobs that I did over the years was to expose myself to multiple different industries. To learn how they work, and to satisfy my deep curiosity for how a variety of businesses operate and become successful.
My dad is a sales guy through and through. He left the coal mines to strike out on his own because he just couldn’t take being in the mines anymore. He wanted to determine his destiny and knew the sales path was it. As long as he believed in the product he knew he could sale it. Recently one of my dad’s friends mentioned that my dad could sell ice to an eskimo. It is kind of a compliment to someone’s sales ability to say that, but I know my dad could never really sell anything he didn’t believe in and people respect him for it and trust him deeply.
Since I was a teenager I have been influenced by my dad immensely and have sought out other experienced business men and women that I could learn from. If I wasn’t making connections with business owners I was reading about them. I’ve read business classics such as Think and Grow Rich by Napoleon Hill and The Richest Man in Babylon by George Clason to more modern books such as The Millionaire Next Door, and hundreds if not thousands of others. For all intensive purposes I am one of the world’s experts on business without having ever actually started my own business. I say that not to puff myself up with pride, but to actually berate myself for waiting forever to start my own business to put all I know to the test.
The truth of the matter is that some people are just born to lead. They have to do their own thing. They must be in charge and they must determine their destiny. And most importantly, they must be in control.
That is one of the constant themes in the show. These business owners are full of pride, both to their benefit and to their detriment, the classic double edged sword. Marcus himself is a so called “Type A” personality. Someone who needs to be in charge, and wants it done his way. As I watch the show I see it over and over again. Will the prideful business owner let their pride fall down and allow Marcus to call the shots, or will they let their pride keep them from turning their business into something really great?
Which brings up one of the greatest lessons I have ever learned in the business world. It is repeated in all the business literature over and over and yet I really don’t believe people really get it. The ability to lead is also the ability to follow. To learn to lead one must first learn how to follow. Over and over again it is repeated and falls on mostly deaf ears.
Marcus focuses on three things: people, process, and product. Out of the three, people is far and above the most important thing. Yet you can have great people and still get the product and process wrong. That is the opportunity Marcus looks for. The chance to work with great people and improve their product and process by investing his money into the business to change it for the better.
I think we can all recognize that people is the most important thing. Think about your years as an employee or even a business owner. Some of us have left great jobs that had horrible bosses. And some of us have stayed in horrible jobs because we worked for great people. Business owners number one complaint is that they can never find good people to work for them. And as my dad always said, “All business is people business”.
So where do we go from here? I am still thinking about why I haven’t started my own business. My excuse is that I haven’t found a good idea, but I have tons of ideas. Perhaps my excuse is that no idea is good enough. Or that I might be happier just being an employee. It has worked this long. Why not just keep progressing in my career, and keep jumping to different industries when I get bored?
Maybe my biggest fear is that I would get stuck in something I would come to hate. However, I do think that is just another excuse. I am trying to cross a bridge I haven’t even come to yet.
At the end of the day, I pretty much have no choice but to do it. I have spent the better part of my life, starting as a teenager, studying what it takes to be a successful entrepreneur. I am more prepared than practically any other business owner that starts a business. Another lesson is that a leader has a strong proclivity for action even without a lot of information to go on. I suffer from the classic “analysis paralysis” disease.
The time has never been more ripe then now. I just need to take the leap. Starting a business will certainly be the biggest personal development course I could ever take in my life. It will certainly be eye opening and help show me what I am really made of. It is my greatest challenge yet, and there really is nothing to it but to do it.
I am currently reading The Intelligent Investor by Benjamin Graham and I thought this concept deserved some attention.
The rule of opposites is basically this…
“The more enthusiastic investors become about the stock market in the long run, the more certain they are to be proved wrong in the short run”
Buy low, sell high is the best strategy for any type of arbitrage, but our emotions end up making us do the exact opposite of that strategy. We get excited when we see stocks going up so we buy them on the way up. Then we let fear rule when we see stocks going down so we start selling.
The smart investor will actually do the opposite. Start selling stocks as their prices rise, and buy stocks that have fallen in price. Simple theory, hard to practice.
The flip side is the same. When everyone is predicting an awful bear market you have to think twice. Bear markets simply mean stocks go on sale.
As Jason Zweig would put it, “Considering how calamitously wrong the “experts” were the last time they agreed on something, why on earth should the intelligent investor believe them now?” Being a contrarian is one of the best ways, if not the only way, to profit in the stock market.
Been going through the old articles for Mr. Money Mustache, and found this little gem I wanted to post as a reminder.
The whole premise is that the average weighted P/E ratio of ALL S&P 500 companies has been 16.4. You use this number as a buy signal for when an S&P 500 index or even individual stocks fall below this price. You can possibly use it as a sale signal when stocks go above this ratio.
Granted this is one single number to use in a much more thorough stock analysis, but its certainly one of the better ones to use.
As a side note, I started following Mr. Money Mustache after he was mentioned on ERE (Early Retirement Extreme). I would suggest following both of their blogs and forums if you are interested in being your own best financial adviser.
I think having dividend stocks is one of the most underrated ways to become financially independent at an early age. Or make your retirement in your 60’s much more successful.
I really enjoyed a recent post by dividendmantra.com and specifically enjoyed this quote…
“There’s thousands of publicly traded stocks out there. But, according to David Fish’s Dividend Champions, Contenders, and Challengers document, there’s only 543 businesses out there that have been able to raise their dividends for at least five consecutive years. Of that, only 106 have raised their dividend for 25 or more consecutive years. So you’re taking thousands of stocks out there and condensing that down into a few hundred or so. That makes research much more manageable.” Source: Dividend Mantra
I like this idea. Some people spend their entire lifetimes learning stocks. How to pick them, how to be a professional investor. It really is true however that the “proof is in the pudding”. A company that can pay dividends year after year is obviously being profitable year after year and it is a wise investment.
For instance, Cola-Cola has been around a long time, and Warren Buffet himself has mentioned that Berkshire Hathaway owns a large portion of Cola-Cola shares. Now you obviously need to do your own research, but this is the essence of value investing. Cola-Cola stock has a high value to it, and if you can buy the stock when it is relatively cheap because of some market movement, then you are getting it at a steal. On the flip side, even if you buy it at a relatively expensive price it is probably still worth it because it will still be valuable in the long run.
I’ve decided to start a new online business. One that will hopefully provide me with a lot of case studies and other experience that I can write about here @ jeremymday.com
The business is called Lokolee and it will serve two purposes…
This is the primary function of the website Lokolee.com
All local businesses will be able to enjoy the benefits of free business listings. And they will be able to include any coupons or deals they are currently running too. Essentially Lokolee.com will help market a company’s local coupons and/or local deals in a much more cost effective manner than any current competitor out there.
On the back end I will be partnering with a select few companies to help improve their web presence, and to give them excellent email marketing support. Online marketing campaigns can be both cost effective and achieve big results if they are done right. Unfortunately, many companies are doing it wrong, or not even attempting to do it at all.
Lokolee will provide a ton of free information about how a business can increase their online presence through our blogand newsletter. However, Lokolee members will receive one on one support and training to achieve even greater results.
Sometimes a few more sales every month is what will make or break a business. And one of the best ways to increase sales is to strengthen your marketing efforts. Online marketing is a big piece of that, and getting bigger every day. It is wise to do what you can to help make your business a great one!
I just read this article on Slate by Esther Dyson called Not Everyone Can Be Bill Gates…
It is sub-titled “The world doesn’t need more entrepreneurs. It needs more people for entrepreneurs to hire.”
This didn’t sit well with me. Kind of like how a 3 day old bean burrito doesn’t sit well with me.
After I read the article I realized where she was trying to go with this, but I think she is completely oblivious to anything that could be called a “start-up” outside the tech industry.
Her argument is that why start a new business when you will have trouble getting qualified people to help you run it? Good point Esther… In fact, why should we start a business at all?
Maybe to add some value back to society?
Maybe to hire people who wouldn’t otherwise get hired elsewhere?
Maybe because we have a product or service that doesn’t require a “high tech” education or experience?
Maybe because the business model makes sense, and won’t require a lot of start up capital to get cash flow positive?
Or maybe people are simply tired of working for big corporations who count them as a number and lay them off at will?
Maybe because they want to work for a smaller yet more sustainable business that is going to see them as a valuable person where they won’t get laid off?
Come on Esther, I think I could do this all day!
Now I will be the first one to tell you that small businesses have a lot of problems that larger businesses or even start-ups don’t have. In a word, capital. But I have news for you, not every entrepreneur wants to start a “high tech” company.
A recent NY Times article reported that “Once a Dynamo, The Tech Sector Is Slow to Hire”
If you want employees then check out where people are most hired…
Here is the BLS listing of the jobs that employ the most people… Occupational Employment Statistics
Now if I wanted to start a business where I was guaranteed to find the labor I needed it would potentially be in one of these categories…
1. A retail store
2. A restaurant
3. A clinic
4. A janitorial service
5. A bookkeeping or accounting service
6. A tutoring service
7. A truck driving company
Now of course all these businesses will have problems of their own, but please don’t say the world doesn’t need more entrepreneurs. Don’t assume a smaller local or regional company can’t service my needs better then a worldwide conglomerate. And please don’t assume your one little sector of the economy, no matter how hot it is, is the only place that start-ups are happening.
So yes, if you are an entrepreneur please go start your business! The world does need you!
To QE or not to QE, that is the question…
As many of you know the U.S. Federal Reserve has been kicking around the idea of doing a second round of Quantitative Easing… Scratch that… Its a done deal…
In simple terms, this just means increasing the money supply so as to artificially create inflation. This is one of the main weapons the Fed has to use in a deflationary environment…
In an inflationary environment the Fed often raises interest rates to help slow inflation. By raising interest rates they make it less preferable for businesses to borrow and thereby artificially slow growth.
Currently, we have interest rates that are practically ZERO and we are still precariously close to a deflationary environment. Why? It’s not that people can’t borrow, its that they don’t want to…
When we have high inflation it encourages people to borrow more because they can pay of the debt in the future when their money is worth more. When there is deflation it destroys people with debt because the money they have now is worth less then when they originally borrowed it. They essentially are losing money on the deal, regardless of the interest rate they borrowed at.
Think about it. If you borrow money at 4% and inflation is moving along at 3-4% then inflation quickly overcomes anything you might lose through paying the interest. Assuming you are still making money at today’s inflated rates.
“Deflation benefits low debt consumers and those on fixed incomes, because they receive a fixed number of dollars but can buy more with each dollar.” – InflationData.com
All these things go hand in hand…
U.S. citizens went from a negative savings rate to a savings rate as high as 6% because they were hedging their bets against inflation. If you have high inflation it makes no sense to save money that will simply be worth less in the years to come. However, if deflation is occurring the money you save now will be worth more in the years to come.
Back to QE2… Why is it happening? What does our government have? LOTS of debt! What environment benefits debtors the most? An inflationary environment. What does QE do? It puts more money into the money supply thereby creating artificial inflationary pressures. Therefore, it is pretty safe to say, the U.S. will continue to do everything it can to create inflation.
Now let’s look at China real quick…
They don’t want to let their currency appreciate. Why? They are the savers of the world. They will benefit more by keeping their money supply where it is at rather then letting it appreciate. All the money they have saved and invested will be worth less if their currency becomes inflated.
It is a financial war that is going on not unlike the Cold War. Except this time it is a war over who has the most money stockpiled rather then nuclear arms. The U.S. has always won this game by creating inflation. Will China bend to their will or try to play the game on their own terms?
Time will tell, but for now, I would certainly say that inflation will continue and we should plan for it…
Three most important things needed for success…
Of the three, the most important is Integrity, because you really don’t want to do business with someone who is intelligent, energetic, but lacking integrity.
Warren really just spews wisdom… (Hope you don’t mind the word picture) 😉
Some good points…
1. More money doesn’t do much. Warren lives much like we live even though he is much richer.
2. Take a job that you would take even if you were independently wealthy.
3. Warren likes businesses he can understand… which narrows it down about 90%
4. If you are right about WHAT, then you don’t have to focus too much on the WHEN.
I found an interesting article on the mises.org website today. It is a really long read, but an interesting insight into libertarian economic theory.
Mainly Kel Kelly talks about how money supply really affects the stock market and the economy. With an increase in money supply comes inflation. And he argues that this isn’t normal consumer products inflation because the money never really makes it to the consumer.
Instead the new money added by the government tends to flow into the financial markets.
This increases prices for things such as houses and other asset classes, but it doesn’t seem to affect normal consumer items such as food or gas. I would argue that it would if people could continually take out home equity loans. We should almost be thankful that home prices stopped their insane climb.
If you want to educate yourself more on this topic take the time to read the full article. It is worth it!