Stop Losing Business - - Profit Pointers=?ISO-8859-1?B?gSAg?= Curriculum, Issue 14

Stop Losing Business- - Profit Pointers™ Curriculum, Issue 14
Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide, including international best seller ‘In Pursuit of Profit.’

(For application of these principles to:  business, real estate, network marketing, personal development, see APPLICATION TIPS below.)

Hello all,

I learned an amazing profit pointer while running my business in London.  

A worldwide study shows that 75% of all potential new business is lost at ONE CERTAIN POINT in the customers contact with our businesses. Can you guess at which point this is?

Think about your business for a moment. Which points of contact do you think are most likely to lose a potential customer?

Well, here’s the answer – it’s the FIRST point of contact. Yes, that’s where 75% of potential new business is lost – never to be recovered again!

That’s a finding that can make you enormous profit!!! Think how much you have to gain from knowing that. Once you look at your own business and determine the most likely points of first contact, you can set about making sure that you plug that gap.

If you have employees, you can make them realize that without customers, there is no business, and therefore no paycheck.

If you run a consultancy, a small business or a network marketing business, you can be super sensitive to first contacts and treat every step like gold.

If you want to stop losing business needlessly, you need to look under every stone. List all the first contacts – those by phone, in person, with who – you or someone else. Then be creative and persistent in the way you change those first contact points to be more effective. When you do this, miracles will happen in your business! Customers will increase, profits will increase and business will prosper.

Remember, 75% of all your potential new business is lost on your customers first point of contact – plug that gap now...

3 MINUTE ACTION TIP: To dramatically increase your business, make a list of all possible first contact points that your prospective customers have with you and your company. Next make a list of all possible ways business can be lost at those points. Then be inventive about changing them.   

APPLICATION TIPS:

Business and sales, USE THIS ACTION TIP with customers to close more sales – ie increase profit.

Real estate, USE THIS ACTION TIP with your assistant, team members and yourself to improve buying and selling.

Network marketing, USE THIS ACTION TIP with your team members and yourself to improve recruitment and sales.

Personal/ leadership development, USE THIS ACTION TIP with all communication to improve your end results.

REFERENCE RESOURCE: Chapter 10, Pages 93-95,  In Pursuit of Profit, by Christine Harvey - an international best seller, published in 8 languages and used by corporations and Institutes of Management around the world.

Hurry - June Prosperity Teams™ are starting - register now Don’t be left out - join our Prosperity Team™ for high achievers and see how your goals can be transformed overnight. Go to this link: http://www.womenforwealth.com/htm/EShop/prosperityteams.html

Love or Fear=?ISO-8859-1?B?rSA=?=Manifest Moments=?ISO-8859-1?B?gQ==?=, Issue 12

From Christine Harvey, WomenForWealth.com

I had a call from a member this week...

She told me that she’s had some rough times over the past few months and that these member emails have pulled her through. It’s vital to feel connected.

It’s also important to remember that all human beings have ups and downs. How we deal with the down moments in life probably has more to do with our quality of life than how we deal with the up moments!

Here are some essential manifest points about life....

1. Life is... a series of choices. Choices come from only two sources – love or fear.

2. Freedom comes... when we take 100% responsibility for our choices.

3. Insight comes... when we acknowledge that what shows up in our life is exactly what we wanted – it was a choice. Was it from love or fear?

4. Feelings in the body come... like a pit in your stomach, or any place in your body, as a sign that things are not right.

Stop what you are doing and figure it out. We all have underlying issues which cause us to react in certain ways to certain things. If you can stop a pattern to your reactions, probably it came from fear. Examples might be ‘fear of being taken advantage of,’ or ‘fear of being unlovable’ or ‘fear of failure.’ The list is endless, but each person has their ‘favorites!’

Spotting what they are can help you chose love in dealing with it next time – AND get a different result. As Tony Robbins says, “doing things the same way will get the same result. If we want different results, we have to do things differently.”

5. The mind was made... to do problem solving. The next time you have a problem, use gratitude. Say “Fantastic – go at it mind – see what you discover!” Or, “Great, let’s see what God and the universe has to deliver.” The minute you change to gratitude, options flow in – amazing and true. Gratitude is a subset of love.

6. The ‘Six Essential Experiences’... that most humans need, are:

... Feeling Seen and Acknowledged
... Feeling That You are Okay
... Feeling Able to Create Effects
... Feeling Safe
... Feeling Loved
... Feeling That You Belong     

3 MINUTE FOCUS TIP: The next time you have that uneasy feeling in your stomach, stop. Look at the Six Essential Experiences. See if you are letting fear stand between you and your ability to manifest the 6 essential experiences! If so, CHANGE IT. It’s that easy. Come from love with your choices, minute by minute.

From ChristineHarvey@WomenForWealth.com
Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide, including international best seller ‘In Pursuit of Profit.’
Sign up quick to join a Prosperity Team™... The June Co-Ed group is already filling up! Don’t be left out - join our Prosperity Team™ for high achievers and see how your goals can be transformed overnight. Go to this link for info: http://www.womenforwealth.com/htm/EShop/prosperityteams.html

Profit From Objections - - Profit Pointers=?ISO-8859-1?B?gSA=?= Curriculum, Issue 13

       Profit From Objections- - Profit Pointers™ Curriculum, Issue 13

From Christine Harvey (For application of these principles to:  business, real estate, network marketing, personal development, see APPLICATION TIPS below.)

Hello all,

Most people in the business world, in fact in life, want others to do something from time to time.

Perhaps it’s to buy something, to do something, or to decide something. But they come up against protest.

How they handle the protest – the very words they use next - will determine their results. This is what we call, ‘The Cushioning Segment of handling the objection.’

It’s the psychological piece that comes between the objection and your explanation.

Let’s look at what NOT to do.

Most folks dive in and start defending their case. And, because of that, most folks fail to win the other person over.

Why? Because if we are to convince anyone of anything, be it a customer or in a personal relationship, we must first convince them that we hear their objection.

But it goes farther then ‘hearing.’ We must convince them that we feel and understand their objection. Without this, our explanation falls of deaf ears. It’s as if the other person has a suit of armor on. Our words don’t penetrate their armor – they just bounce off.

Let’s say they express their objection. The person who says, ‘I hear you John but ... And then goes on to present the counter, will NOT win. Why? Because the customer does not feel heard or understood.

Let’s look at what DOES WORK: If you are selling the product or idea and say, “John, I know what you mean. That’s a serious concern. After all if that’s not handled, there can be serious repercussions. XYZ could go wrong. Then you would be in a really mess. I totally understand.”

Then you take a deep breath while the customer (or personal relationship) gets the message that you understand. It’s what we call the Cushion or Empathy Segment of countering an objection.

Now, and only now, are you ready to explain your side of the case. And so you counter their objection as you normally would, with a rock solid explanation of your idea or service and all the benefits to them that you can muster.

And finally you close it off by asking if their objection is satisfied. If not, you repeat the 3 part cycle – here it is in a nutshell:

The 3 Step Formula for Turning Objections into Approvals:

1. The Cushioning/Empathetic Segment
2. The Explanatory Segment
3. The Close-Off Segment
   

Remember, profit comes from overcoming objections. Results come NOT from your explanation or counter argument. Rather, success lies in your ability to convince the other person that you hear and understand their objection, BEFORE you present your explanation.  

3 MINUTE ACTION TIP: Today as you present your ideas in your business and life - STOP when you hear objections from your listener. Don’t leap into your counter argument! Instead pause and empathize – even repeat their concern. In this way, you’ll prove that you’ve heard and understand their objection. Only then will your explanation be heard, and only then will you win the business or win your case.       

APPLICATION TIPS:

Business and sales, USE THIS ACTION TIP with customers to close more sales – ie increase profit.

Real estate, USE THIS ACTION TIP with your assistant, team members and yourself to improve closing ratios in buying and selling.

Network marketing, USE THIS ACTION TIP with your team members and yourself to improve recruitment and sales.

Personal/ leadership development, USE THIS ACTION TIP with all communication to improve your end results.

REFERENCE RESOURCE: Chapter 9, Pages 85-89,  In Pursuit of Profit, by Christine Harvey - an international best seller, published in 8 languages and used by corporations and Institutes of Management around the world.

Have you heard how Prosperity Partners™ achieve together? Don’t be left out - join our Prosperity Team™ for high achievers and see how your goals can be transformed overnight. The new team will be starting next month! Go to this link for info: http://www.womenforwealth.com/htm/EShop/prosperityteams.html

Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide,
            including international best seller ‘In Pursuit of Profit.’

Why not forward this to another person who can benefit – you’ll be helping them AND the economy at the same time.

From ChristineHarvey@ChristineHarvey.com

Why We Should LOVE OBJECTIONS - in life and business- - Profit Pointers=?ISO-8859-1?B?gSA=?=Curriculum, Issue 12

      Why We Should Love Objections - in life and business- - Profit Pointers™ Curriculum, Issue 12

From Christine Harvey (For application of these principles to:  business, real estate, network marketing, personal development, see APPLICATION TIPS below.)

Hello all,

Most people dread objections rather than welcoming them. If you learn to love them, your results will skyrocket.

Here are some typical situations in which objections surface...

Your client or employee or colleague is too busy to act now.
Your customer has no money to buy.
Your spouse disagrees with you idea.
Your members won’t participate.
Your boss won’t give you a raise.

It’s easy to become masterful at overcoming objections, but first you need to recognize them for what they are.

Just put your detective hat on, and realize that objections can take 3 forms:
    Questions,
    Statements, or
    Non-verbal actions of uneasiness.

Step one is to watch for the objection... As you speak about your idea, watch for these three to come up. Then say to yourself, “Oh, here’s an objection – now I’ll go to step two.”

Step two is to uncover the reason for the objection. Often the objection arises in the mind of your listener, at no fault of yours. It may be a misconception, or a previous misinterpretation, or a preconceived idea. If you fail to uncover the objection, your listener will leave without taking the desired action, no matter what he or she says when you are together. You’ll know this is true when your customer cancels the order, or your member doesn’t show up or your spouse does something other than agreed!

A good way to uncover the objection is as follows...

If they ask a question, ask them “Why do you ask?” This will help them to go deeper and reveal their true fear or misconception. They might say, “Well I can’t afford downtime of the machine,” or “Well, my daughter goes to lessons at the time of the meeting.”

If they make a statement, it might sound like this: “I suppose you don’t work weekends.” Just interpret that as a question, and say, “Why do you ask?” Let’s assume you are in the service industry. Perhaps they are trying to say that they would like your mobile phone number, and perhaps your sale hinges on that. Wouldn’t you like to know that!

if they make signs of non-verbal objections - wiggling in their chair, or making an uncertain face, or pausing to look at something you are showing. Now you need to ask a question that opens up a conversation, and reveals hidden fear, doubt or misconception, such as. “What issues are you thinking about?” You’ll be amazed at what you discover that can lead you to profit or loss.

Remember that an objection lingers like smoke - if not cleared.
Our goal is to clear objections so that we can explain our benefits and get a favorable decision. And profit!

3 MINUTE ACTION TIP: Today as you present an idea in your business, job or life, look for the 3 signs of objections in your listener. When you see or hear one say, “Why do you ask?” After you uncover the hidden fear or concern, move on to explain your benefits, and a favorable commitment. Try it and then bask in your results!!!

APPLICATION TIPS:

Business and sales, USE THIS ACTION TIP with customers to increase sales and bring profit to your organization.

Real estate, USE THIS ACTION TIP with your assistant, team members and yourself to improve sales and profit.

Network marketing, USE THIS ACTION TIP with your team members and yourself to improve recruitment and skills training.

Personal/ leadership development, USE THIS ACTION TIP with all communication to improve your results.

REFERENCE RESOURCE: Chapter 8, Pages 79-83,  In Pursuit of Profit, by Christine Harvey - an international best seller, published in 8 languages and used by corporations and Institutes of Management around the world.

Have you heard how Prosperity Partners™ achieve together? Don’t be left out - join our Prosperity Team™ for high achievers and see how your goals can be transformed overnight. The new team will be starting next month! Go to this link for info: http://www.womenforwealth.com/htm/EShop/prosperityteams.html

Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide,
            including international best seller ‘In Pursuit of Profit.’

Why not forward this to another person who can benefit – you’ll be helping them AND the economy at the same time.

From ChristineHarvey@ChristineHarvey.com

Applying the Ancient Hawaiian Ho=?ISO-8859-1?B?uQ==?=oponopono ­ Manifest Moments=?ISO-8859-1?B?gQ==?=, Issue 10

Applying the Ancient Hawaiian Ho’oponopono  – Manifest Moments™, Issue 10
From Christine Harvey, WomenForWealth.com

Hi Team -  

I ‘ve been dying to share this with you since I received it from Liz! How often have we all been in a similar situation – trying to sleep, but tossing and turning, wondering what to do about something that upsets us?

Hats off to you Liz – you say you had to use this principle four times to get results – I think that’s extraordinarily good. Most mortals would take much longer to get results! It’s a true tribute to what can be done, and I’m SO proud of you all for having the willingness and ‘out of the box’ approach to creating a better life and a better world around you.

As you read below, you’ll see that Liz had a situation that could have spilled debris around her. But she used the Ancient Hawaiian Principle of Ho’oponopono, to bring calm and clarity to herself. By doing that, she was able to deal effectively with the business dealings at hand. Notice that she did NOT just swallow it, or ignore it, or sweep it under the rug. That just comes back to bite you. No, in her words, “I said my piece with empathy and conviction...”

If you still have not tried this principle, please do. Try it in what seems like an impossible situation. It’s from the book ‘Zero Limits,’ if you want to read even more. I know it seems foolhardy to say “I love you… I am sorry… please forgive me…and  thank you” to someone or something that ‘seems blatantly wrong,’ and yet think about this. Every situation has so many more factors than we can see, or know. What we see is just the tip of the iceberg. Who are we to judge? And where does it get us. To ‘let go,’ is an ultimate spiritual manifestation!

Read below and see what you think. I think it will knock your socks off!

Prize winners for trying this principle so far are Theresa, Rose, Liz. I’ll leave the contest open a few more weeks.

Hi Christine,
I wanted to tell you I had applied this principle with great success recently. 
I had a business issue that got really hot, emotional and personal and came up suddenly. 
I wasn’t handling it well and knew we had a big meeting the next morning.  I was dreading it and had that terrible feeling in the pit of my stomach. 
As I climbed into bed that night, I thought about the issue and how wrong all the people involved were. 
I tossed and turned, and suddenly your piece on the Hawaiian Teaching came into my head. 
 
The words formed themselves.  I imagined each individual and the whole group that would be meeting the next day. 
I was so upset that it took 4-5 times of imagining each individual and saying “I love you… I am sorry… please forgive me… thank you” before the knot in my stomach started to loosen.  Then a feeling of total calm came over me and I went to sleep. 
The meeting the next day went beautifully and I said my piece with empathy and conviction without causing offense. 
 
Using that particular phrase helped me calm down and come up with real solutions.  It also helped me get enough sleep to actually be effective!
 
Thanks, Christine!  I will continue using this one!
 
Liz Uible

3 MINUTE FOCUS TIP: Want to manifest inner peace and tranquility? Think about these 4 short phrases as you go about your day. When something upsetting crosses your path, simply say to yourself: I love you... I’m sorry... Please forgive me... Thank you. See if your stress converts to peace and tranquility.

Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide, including international best seller ‘Success Motivation in a Week.’
Why not forward this to another person who can benefit – you’ll be inspiring them AND they in turn will inspire the world!
Want to join the next Prosperity Team and skyrocket to your highest goal ever? Email me for details at ChristineHarvey@WomenForWealth.com
_____________________________________________________________________________________________________________

Here it is again...
Ancient Hawaiian Perspective – Manifest Moments™, Issue 4
From Christine Harvey, WomenForWealth.com

Perhaps the name Joe Vitale rings a bell from the movie ‘The Secret.’

In his 2007 book written with Ihaleakala Hew Len, PhD, called ‘Zero Limits,’ he talks about the ancient Hawaiian teachings of Ho’oponopono. These ancient teachings ask us to take responsibility for everything around us... everything in the universe... everything in our awareness.

When we see something that upsets us – for example perhaps you see a child being chastised by their parent unnecessarily, and your heart goes out to them – or whatever the situation, here’s what they prescribe... an easy 4 part process. We simply need to say to ourselves:
I love you... I’m sorry... Please forgive me... Thank you.

When I first read it, I felt it was too simplistic. As coincidence would have it, I discovered that other people I knew were reading it too, and trying it with success. So I tried it and discovered it works well – it brings instant stress relieve and more importantly – a new perspective. Try it, and see what you think!

3 MINUTE FOCUS TIP: Want to manifest inner peace and tranquility? Think about these 4 short phrases as you go about your day. When something upsetting crosses your path, try uttering these 4 phrases to yourself. See if your stress converts to peace and tranquility.

Free Prizes for trying this principle: I’m so curious about how this works in different areas of life, that I’ve decided to offer a free (surprise) prize to each of you who writes back to say how you have applied this principle and the result you achieved. I’ll share the results with all of you. Simply email me at ChristineHarvey@WomenForWealth.com, and say “Here’s the situation I applied it to...” and “Here’s the result I got...”

Christine Harvey is the Author of 6 Business and Leadership Books published in 25 languages by 48 publishers worldwide, including international best seller ‘Success Motivation in a Week.’
Why not forward this to another person who can benefit – you’ll be inspiring them AND they in turn will inspire the world!
Want to join the next Prosperity Team and skyrocket to your highest goal ever? Email me for details at ChristineHarvey@WomenForWealth.com

Impressions from Warren Buffett

Impressions from Warren Buffett- - Profit Pointers™ ,
From Christine Harvey, WomenForWealth.com

See quotes from Warren Buffett and partner Charlie Munger below...

Hello all,

I want to share with you the highlights of the Berkshire Hathaway shareholder meeting where we had the opportunity of hearing Warren Buffett answer questions from shareholders from 9:30 am until 3:15 with only a couple of breaks. Bill Gates was present too as a board member, and we saw them both again the following evening at Warren’s favorite restaurant.

The morning started with a 7am entry, where people rushed into the 30,000 seat arena and saved seats for everyone and their brother – a culture that has developed over the years. I would term it ‘sophisticated chaos.’ There were deaths and no pushing and shoving – just fast moving people in track shoes. We secured a second and third row position for our group of 11, about half way down from the podium and had excellent seats under our own ingenuity. The people in row four directly behind us, paid a runner $25 each to secure their seats – so what can I say – that was the start of our day. Within minutes, the whole arena was full, and the overflow watched remotely from the adjoining exhibition hall, crammed with Berkshire Hathaway owned company stalls.

Between 7 am and 8:30 am, we chatted with new friends and old, and the time flew by. At 8:30 am a movie started – now an expected event at these share holder meetings. For those who expected a staid epic, the tables were turned. We were glued for an hour to a most humorous film, as fast moving as MTV, with clips ranging from a BBC type spoof of the sub-prime crisis to Warren’s episode on ‘All My Children.’ The film’s quality was first class, staff of thousands, and Warren’s daughter listed as producer. A very funny and useful clip on the sub-prime fiasco exists on YouTube – a must see http://www.youtube.com/watch?v=SJ_qK4g6ntM

With that kind of introduction, I suppose it should have been no surprise that the opening included a female TV star pretending to take over Warren’s role in Berkshire Hathaway, followed by Warren and his partner Charlie Munger, coming on stage equipped with candy and cokes to consume while answering shareholders questions – of course all the products were under the Berkshire Hathaway umbrella – and those they couldn’t consume on stage, such as Dairy Queen, were touted unabashedly!

But hey, it was wonderful to see these two fellows, age 77 and 84, who have come so far in their own lifetimes, have so much fun with 31,000 people – and to hold their own against questions from shareholders all over the world for 6 hours straight – never wavering from their points of integrity, always answering with facts rolling out like wildfire.

Typically Warren would answer each question first, then throw it to Charlie, who most often answered, ‘I have nothing to add.’ We soon learned that Charlie had a way of cutting to the chase with one sentence of fully loaded words, when another human might choose three sentences, leaving room for interpretation! Neither of them cut any slack for the government regulatory bodies that failed to oversee the Freddy and Fanny Mae issues, or for the Enron executives of the world, or for the outrageous pay scales of some CEO’s.

Here are some golden nuggets covered in the Q&A by Warren Buffett, from my notes followed by points from Tom Harvey of EconomyGuy.com.

When asked about their joy in giving, they said to give things you have personal interest it.

When asked about Tungsten, they said there will be no substitute from Tungsten for cutting tools.

When asked about how they view life, they said “There is no reason to look at nuisances in life.” They commented on how they could have both stayed in their jobs at Warren’s grandfather’s store, and it would have been ‘hell.’

When asked about why they pay themselves so little, Charlie said it’s a good role model.

When a high school boy from German asked about what to do with the rest of his life, they said try to meet interesting people, read books, go to work for a business or person you admire, get the right spouse, and have the right attitude.

When asked about advice for the quiet types who want the recognition they deserve, they said to join with others who want to learn public speaking and learn to express yourself, as Warren had to do. “Force yourself into a situation where you have to do what you are afraid to do.”

When asked about the sub-prime situation, they said “When markets are dislocated, there are always opportunities.” Opportunities may be very brief and very extreme.

When asked “What if you could only see a financial statement and not talk with the management before buying a company, what would you look for?”, they said “Compare it to buying a farm again – Look at the asset – the income and expense. Only buy if you understand the company and the product.”

When asked about economics, inflation and the election, Charlie answered, “We’ll have turmoil that looks like a tea party – will have changes in regulations that will NOT work for everyone. Turmoil as far ahead as you can see!”

When asked about risk, Warren said he considers himself the Chief Risk Officer in the company, and he doesn’t want 1 out of a hundred possible risk, he wants 0.

When asked why he bought a company in China based on the annual report only, he said “When you see that a company has a value of 100 Billion, but you can buy it at 35 B, you don’t need to do further valuations to find out if it’s worth 97 Billion or 103 Billion. If there is a significance between price and value, we buy it.”

When asked about what they look for in their replacements for themselves, they said track record, human qualities and integrity.

When asked about how they handle meetings with outside company directors, Charlie said they keep it short. “We might say for example, ‘We don’t buy start ups’ and the meeting is over.”

When asked about nuclear knowledge, they said “The genie is out of the bottle.” Choke point is the nuclear materials - in the hands of too many of the wrong people – think we need to reduce that. They suggest seeing the Nuclear Threat Initiative website on the internet.

When asked about what we should teach children in school, they said your mind and body are your best assets, i.e. yourself. Too few people invest in themselves. “You can be the person you want to be.” Pick up good habits. Charlie thinks that schools should teach people how not to be manipulated by vendors and suppliers. They recommended 2 books – Influence and Yes.

When asked about economics today and if they remind them of any time in the past, they said “Troubles that begin in one area, usually spread to others.” “I can’t remember in my lifetime, shockwaves being sent out like these.” “Some stupid things won’t be repeated quite the same way, but the primal urges will pop up  like desire for leverage, and belief in the tooth fairy!”

When asked about other good books, they referred us to Larry Cunningham who rewrites a lot of Warren’s principles.

When asked what their the biggest influencers had been, they said father, wife and books. Warren added about Charlie – Ben Franklin. They advised, “Teach your kids by what you do not what you say.” Warren said he visited he father’s office often when not in school and read all his business books. “Look at effective human beings, see what their qualities are, and copy them – don’t take the bad qualities from anyone.”

When asked about any last words, Charlie said he would like Berkshire Hathaway to have influence on other companies.

REFERENCES SUPPLIED BY: Christine Harvey – author of  In Pursuit of Profit, an international best seller, published in 8 languages and used by corporations and Institutes of Management around the world.

Have you heard how Prosperity Partners™ achieve together? Don’t be left out - join Prosperity Team™ for high achievers and see how your goals can be transformed overnight. The new team will be starting next month! Go to this link for info: http://www.womenforwealth.com/htm/EShop/prosperityteams.html

Why not forward this to another person who can benefit – you’ll be helping them AND the economy at the same time.

More Buffett points below from EconomyGuy.com
_____________________________________________________________
(To Subscribe Free and receive critical information about the economy that affect your investments daily in your inbox,
        go to EconomyGuy.com and enter your email address)
By Tom Harvey

Hi EconomyGuy readers,

Special Re: Berkshire Hathaway Shareholder Meeting, Saturday May 3 in Omaha

Here are the highlights as I saw them at the Berkshire Hathaway shareholder meeting.  There were 31,000 attendees with about 5 hours of questions and answers from any shareholder to Warren Buffett and Charlie Munger.  This was highly informative and entertaining, as not only were their answers refreshingly straightforward and honest, they were also amusing.

1. About the liquidity crisis - Warren states that while it is probably over, disruptions will continue. The FED action with Bear Stearns was the high water market in the crisis.  Warren Buffett was asked to take over Bear Stearns before JP Morgan was asked to.  Warren’s reasons for not doing it was stated to be that he didn’t have enough cash (he only had $35B of the $65B required) on hand.
2. If Bear Stearns had failed on the Sunday it was taken over by JP Morgan, it would have had to declare bankruptcy. It held $14.5 Trillion in derivatives that would have been unwound in a very short period – think 2 weeks.  That would have resulted in 1 or 2 major other failures.  This is why the FED acted so decisively, and changed their rules that day.
3. A great book to read on investment is “The Intelligent Investor”, chapters 8 and 20. (I have personally purchased this book, and intend to study it – perhaps with you.) He mentioned it several times during the meeting and said it was the book that opened his eyes to investing.
4. What is the stock market future?  Warren states emphatically that he has no idea.  He and Charlie are not in that business, and never discuss it.  He is only interested in buying low priced businesses, and considers his buys a long term hold.  One exception was a Chinese power company that he bought low, and sold at a fair market value a few months later.
5. When he buys a company, he retains the current management.  He has no contract with the CEO of the business, but gives lots of appreciation.  He looks for managers with lots of passion for their business.  His cookie cutter business is a privately owned business where the owners want their cash out, but want their company legacy to continue.  Berkshire Hathaway is the perfect solution for them. In fact, he is traveling to Europe in two weeks to speak to business groups and thereby solicit interest mainly from large, multi generational, family owned businesses. He wants to get on their radar screen, so that when they get ready to sell even years in the future, they will think of Berkshire Hathaway first. He stated his interest in German companies, because of their quality machinery, much of which works it’s way into the US, such as printing machinery.
6. Does Warren Buffet use stock options?  Basically, no, he just doesn’t use them.  He used one once as a Put on Coca Cola.
7. MBA schools should concentrate on teaching just 2 things.  First, how to value a company, and second, how to value stock market indices.  He also thinks MBA schools don’t provide enough communication skills like public speaking. He was so frightened of public speaking that he signed up for a Dale Carnegie Course and then canceled his deposit, later went back and paid cash so as to not back out. He advocates fighting fears and progressing in areas of fear by getting a support group around you, such as the Carnegie Course did for him.
8. Berkshire Hathaway won’t produce the same results it has produced in the past. It is just too large to grow at the same rate as it did in the past.  It will continue to buy companies, and these will be great investments, but you can only invest that one company’s worth at a time, and now Berkshire has much more money to invest than that.  The inability to invest all its income in great companies is the major slowing process in Berkshire Hathaway’s growth.
9. High CEO salaries are ridiculous in US industries.  His recommendation on how to stop this practice is to have the top 5 shareholder groups unite in communicating to the board of the top companies to stop this practice. He likes to lead by example. He takes little in salary, thus the CEO’s of companies he’s invested if see the example. Most are independently wealthy anyway.
10. Warren does not do “pairs” trading where he buys one stock long, and shorts a related stock.  The odds are you will get 4 pairs right, and one wrong.  The wrong one will wipe out the profit of the 4 good trades.  So, why do it, he says.
11. There have been huge market dislocations in the Tax Exempt Muni Bond market. There is $330B of these bonds out there.  Currently, Berkshire has $4B of these bonds.  The dislocations show up as major swings in the interest rates offered for specific municipal bonds.  He cited examples of the same bond selling at a 4% interest one week, then 8%, 10% and 11% the next week.
12. Berkshire Hathaway did re-insurance in the Municipal Bond market during the first quarter 2008, and received $400M premiums.  This insurance insures the primary insurer of the bond, so both the underlying bond issuer and primary bond insurer would have to default before the Berkshire Hathaway insurance paid out.  This business started out of the blue, as people came to Berkshire asking for their help.  With the Berkshire insurance attached, those bonds now trade at a lower premium than those without their insurance.
13. Here is what Warren looks at when he buys a business.  He looks at the asset first.  He must understand the business, so he can value its future.  He tries to buy at 40% of value.  He wants lots of free cash flow from the business.
14. Regarding the current US exchange rates.  The Euro and Pound won’t depreciate against the US Dollar in the long run.  The US Dollar will continue to weaken over the next 10 years.  There is no need to Hedge against a falling Dollar, if you are in a Dollar economy.  Warren doesn’t like to purchase a company that has all its income in US Dollars – he would like to see some of the income coming from non-Dollar sources.
15. Investment Banks can’t assess or appreciate the riskiness of their own business.  This is a major risk to those industries as proven by the Bear Stearns debacle.
16. Fannie Mae and Freddie Mac are overseen by a government organization called Otheo.  The only job of this organization is to oversee these two companies.  It failed 2 for 2 in its job, as clear misrepresentations in both companies occurred.  This was a clear failure in a government oversight organization.  Warren was basically disgusted by this.
17. The US Government needs to “reign in Investment Banks.” Also, “US accounting standards are all wrong.”  Companies can choose how they value their assets.  For example, they can choose to estimate their current market, or they can choose to report what they paid for the asset.  Think about the sub-prime mortgage security instruments in this context.  This accounting problem is still happening today.
18. Charlie Munger defined some securities out there as “good until reached for”.  This refers to paper assets, meaning they had value until someone tried to actually cash them in, then their value disappeared.
19. The Credit Default Swaps (CDS) market on Wall Street is a “crazy market”.  It absolutely need to be regulated by the government.
    

In short, I would highly recommend attending this shareholder meeting next year. I enjoyed recording the key thoughts on your behalf, but a personal visit would be good. Perhaps we can even organize an EconomyGuy.com members cocktail party for next year! We had 6 friends here to brainstorm after the meeting and it was extremely useful. My wife Christine and I thought of several business ideas to pursue, based on Warren’s comments. Tonight we are off to a special restaurant that Warren frequents and expect to glean more ideas here from Warren and the attendees.

More later,
Tom
EconomyGuy.com