The James Dicks Blog

What game you ask? How about life. This is definitely a game, and right now things are tough all over, both personally and professionally in our businesses. I decided to write specifically about this today as I heard my number one mentor, my Uncle Jack, say it yet again today.

“Don’t take yourself out of the game” Let me guess, some of you out there have fallen on tough financial times; some of you may be facing foreclosure and some may have lost your job…maybe all the above. I have the great fortune to speak with people just like you facing all sorts of financial issues every day. I was just told by an amazing man the other day that I was an amazing man. What a compliment, because I never looked at myself that way. All I was doing was sharing some of my insight as to how to keep moving forward and never take yourself out of the game. In fact, I learn from every person I meet. It doesn’t matter how successful they are or how much they are struggling; I am always blessed to be able to learn from others.

The biggest thing I seem to hear these days is that things are tough. “I can’t do it anymore, I don’t know what to do, I will never recover, what do I do now? How will I ever get back to where I was? There is just not enough time for me to fix this.”

I have heard it all, and some of these things may hit home with you. Not to worry. There is still plenty of time for all of us. We just have to get motivated; find someone that can do that for you.

Next, you have to get up and make something happen every day…and I mean every day. When things get bad you can’t take the easy way out. Trust me I have been there too. I tried the “get depressed, go to bed and wake up a week later” strategy! That one didn’t work. I got out of bed a week later tired but with the same problems – only worse.

One of the sayings you will hear from me is to keep the ball moving forward. It doesn’t matter what you do, just do something. Everything you do will have a cause and effect; for every action there is a reaction. It doesn’t have to be instantaneous, it just has to happen. When you do something every day to keep the ball moving forward you will be reaping those actions down the road. Next thing you know, you are reaping all the positive reactions from your past actions. By the way, this is also why you don’t do things you shouldn’t. I am a firm believer in karma and everything you do comes back full circle. You reap what you sow. Always keep that in mind.

Let me give you a few examples to help drive this home:

3 scenarios –

- Facing foreclosure

- Lost job

- Vaporized financial portfolio

Scenario number 1- Facing Foreclosure

This one is probably one of the most prevalent today. Okay, so let’s get over the shock we are facing foreclosure and may or may not loose our home. Well, you have to wake up and get out of bed first. Then develop and write a plan of action. Do it on paper so it is embedded in our subconscious which promotes good habits. Now start making phone calls, writing letters, just do something every day because it will start changing things and opening doors to new opportunities. I have written many specific ideas on this in some of my other stories. But when you start making calls you are keeping yourself in the game. If you give up, I can assure you, the end result will be foreclosure. When you start making calls remember that you may have to call the same number 20 times to get the right answer you are looking for. The call center you are calling at the bank probably has hundreds of people working there. Some of them are newbie’s and some are long time associates that know it all. There is always a program to help you but not everyone working at the bank will know about it. Just keep yourself in the game.

Scenario number 2- Lost Job

Again many of you may currently be in this place. What do you do? Get up; that’s first thing to do to keep the ball moving forward. You must create a plan of action; once you do that you can carry out the plan of the day. Start making those phone calls and tap into your network. NETWORK! You must have a network to be successful in life, both personally and professionally. Some of you may have been in a fraternity; some of you may have joined the military. If you think you don’t have a network think again. Try your church, your family, your friends, former co-workers; all of these can be networks that can help you stay in the game. Do not be so proud that you can’t or won’t ask for help. The first time may be the hardest but as you ask more and more people in your network for help you will find that it is not a bother. They are more than willing to help, and the more you ask the more momentum you will gain. The more phone calls you make, the more job interviews you go to, the more that will change. After all, you are where the good Lord wants you to be right now, and you will be where he wants you tomorrow. Just don’t take yourself out of the game…keep your faith and it will all work out. It always gets better.

Scenario number 3 – Vaporized Financial Portfolio

This one may be tough to handle. After all, you may have spent a lifetime building it. In the blink of an eye, so to speak, it’s gone. What do you do? First thing, you wake up, develop a plan and carry out the plan of the day. Start by making small changes, see what isn’t working and look for ways to diversify and start practicing good money management. Find someone that can motivate you; someone that you want to learn from. Even these small steps will start to make a difference. You see, you don’t have to get all your money back right way, or overnight. You will have to make some changes in your longer term plan and you may still have to make some sacrifices over the short term, but here is what will happen. These small steps will start to change your situation as you know it. Next week, next month, when you are working your plan you will start to see some significant steps forward. You don’t need to change it all today, just change a few things that will provide all the changes you need in the future. If you don’t get up and move the ball along or if you decide to take yourself out of the game, then there will be absolutely no hope.

To finish, you should be able to grasp a few constant variables -

- Have a plan

- Carry out the plan of the day

- Move the ball along

- And don’t take yourself out of the game

As always Happy Investing,

James Dicks

Buy and Hold – bet you have heard about that financial strategy at one point or another.  The older you are the more likely you have heard it and probably the worse off you are today.  When the markets go down, like we have seen over the last few years (forget about the rebound of late) your portfolio seems to go down harder.  Why does it seem that your portfolio can fall 50 percent or more over night but you can’t seem to get it to move higher at the same rate? Great question!

If you are plugged into the financial news of the day, you know that we just had the best July in the markets since 1997. I say “whatever.” I know one too many investors that don’t agree with that.  Buy and hold as a strategy has been around a long time, I mean since the beginning of trading. Gone are the days when you could buy a good blue chip like the IBM of late, sit on it year after year and receive a safe double digit return without ever having to look at your stock. 

The problem with “buy and hold” as a trading strategy is that it is like any other great way to make money; the first one in makes all the money.  If you get in at the bottom and you start your buy and hold plan, odds are you will make money in the long run.  However, at some point the market will retrace its moves and then give back your gains, some or all of them. Then if you get into a reversal for a prolonged period of time, which is what we saw when the markets went down significantly to the levels it is currently holding, you may not have enough time to recover.

For those of you that get in at higher points, you then get caught up in great so called strategies like cost average down.  You start allowing your emotions to take over as you ride the stock all the way down.  You feel like it’s a great company and are sure it can’t go any lower…it will come back…I have a feeling about this! Any of these sound familiar?  You bet! How did that feeling work out for you? Probably not too well.  All you did was build a portfolio that has a lot of a stock that you cost averaged down and that is still a long way from break even.

Don’t email me and say it’s not a loss until you book it on paper. Are you kidding me!?  I have heard this one time too many. It’s a loss, oh believe me it’s a loss.  Try paying a bill or retiring on a stock that is down 80% or more in your portfolio.  You can’t because it’s a loss. Let’s try this concept on for a moment- Time Value of money.

Time Value of money is something we must take into account, especially those of us that are already in retirement or nearing that very important point in our financial lives.  If you are sitting in a stock that has done well with your “buy and hold” mentality then great! Now do something to protect your profits.  Try using a stop loss order, which will allow you to set a price that if (or when) the stock drops to will get you out of the market.  If you love the stock so much, buy it back when it bottoms out in order to protect the profit.  You can’t book the profits until you sell the stock.  Why be up 40 percent on your favorite stock, and then watch it retrace its profits to break even or worse, wind up with a loss.  You can sell at the 40 percent profit and buy it back if you love it so much when it gets back to your original price.  While it is going down you can put your money in something that is doing well. Thus, the Time Value of money.

If you aren’t making at least 3 to 5 percent on your money, you are losing out to inflation.  You better be planning on bumping that return on investment higher as inflation is surely on the rise.  So you sit in your favorite stock and if you are lucky enough to make 5 percent a year and you feel happy.  But inflation is running higher than 5 percent.  Guess what? You are losing money more than you think, and your retirement will not be what you had hoped for, if at all.

It is okay to let someone manage your money for you, but you had better know a little about what they are doing for you so you don’t wake up one day and wonder how your portfolio is doing and where all the money went.  All I am saying is take a little time to learn about the markets and learn how to use some of the tools out there to help you do that. You can always go to my web site James Dicks.com to learn about some of the best tools out there to help you trade or learn about the markets.

No reason anymore to sit in a stock that is about to go down or that is going down when you can be in one that is moving forward.  With a little education and support, you can take control of your financial future.  Add a little diversification and money management and there is no stopping you

Happy Investing,

James Dicks

Whenever I speak to customers and investors at my conferences or while traveling I always seem to get the same sort of objections.  I am always telling people how I am no different than anyone else; I made money and I lost money, more than once.  The difference is….I learn from my mistakes and the next time I don’t make the same mistake. 

One of the most profitable times in my life was during my dedicated real estate career; I say that because, at the time, that is all I did.  That period also taught me about diversification and the importance of good money management, but that is another story.  Anyway, during this time (the late 90′s) I began to invest in real estate.  The market was a good buyers market so there were lots of opportunities, however interest rates were a little higher and I had pretty bad credit.  As I was growing up through high school and after my graduation, I didn’t maintain my credit as I should have.  Contrary to what people believe, think or say, you can fix your credit. I did but it took many years.  I was able to eliminate all the bad and replace it with all good. Yet again, that’s another story but you can do that to.

As far as this story goes, I identified a great place to make money in the real estate market place, most specifically rentals, and investor rehabs.  The problem was I didn’t have any extra cash and poor credit. So, I set out to accomplish my goal. I had to use private money; in fact I was paying interest as high as 18%, one year notes and five points.  Yikes, you say.  Me too!

The difference was this; if you aren’t putting any money down or little money down then your return is infinite regardless of what you are paying for the use of the money.  I always get the terms of the money first then I look for a deal that fits within those parameters.  That way I can still make money paying whatever the terms are.  That’s what I did.

I bought literally hundreds of properties and then started buying multi-family properties.  As I have written before, you need to move the ball along.  I was able to eventually find better pricing that was still high but not as high.  The point of all this is to show you that credit and using private money is a possibility that you can consider and today’s financial landscape offers a great opportunity to go out and find deals.

Let’s talk about no money down deals and better yet getting money back. First, there are lots of them out there. Maybe not as many no money down deals as in the past but certainly little to no money down deals are still available.  When I first started out I was able to do a lot of deals that actually paid me when I closed.  The key is to find someone that will deal with you.  Do your homework and keep moving the ball forward. 

Enough is enough.  Credit is killing us…literally.  Now credit has been around forever and we should remember that the number one reason for credit is to make the lender rich.  I know I have written about some of this before but I can’t say it enough.  Credit is probably as much an addiction as anything.  People get so addicted to it they can’t control themselves.

I am not a doctor but I would imagine that the simple reason some people get so over extended is that they run their credit cards up and then the interest literally chokes them.  What happens is that people get depressed.  When that happens, some people will go out to the mall or wherever and buy something, anything that doesn’t matter.  That immediately makes these individuals feel better, at least until they get buyer’s remorse.  Shopping for clothes, electronics, cars or whatever, is normally associated with a good feeling, so the next time you feel down you end up going shopping to buy something to make yourself feel better.  There are two problems with this; I doubt that many of you pull out cash to purchase these items, and you no doubt use a credit card.  If you don’t pay it off at the end of the month, you start to get hit with interest which is usually so high that it is hard to ever get ahead.

Second, the purchases get bigger; you will ultimately have to spend more and more to feel better.  This is a losing proposition all the way around.  What we need to do is eliminate credit all together.  We need to start paying for our purchases outright.  Yes, credit cards are okay, but you must use them wisely and pay them off at the end of each month.  So what else do you need credit for?  Maybe for a car or a home.  You can always a buy a used car and save money.  You can develop a strategy concerning your home loan by paying off extra principal every month. My point is, if you use credit, you have to have a plan to pay it off and get it paid off as soon as possible.

Credit only exists for one reason and that is to make you a slave to it and make the lender rich.  Everyone in America should start taking conscious control of their outstanding debt and begin to eliminate it.  Let’s make the lending institutions suffer a little, let’s make them squirm when they wake up one morning and realize that we have all decide to take back control of our finances.  Remember that if you are saving money you are making money.

Start calling all your creditors and ask them for an interest rate reduction, don’t take no for an answer.  You may have to talk to several people but you will find one that can help you lower your interest rate.  Not everyone at the bank will even know that they can lower your interest rate but they can and they will, if you are persistent enough.

If you are skeptical just know this, in one of our worst financial times I can remember the banks are doing everything they can to make more money at our expenses, so much in fact that the president has to get Congress to put restrictions on what they can and can’t charge for.  The banks are adding new expenses and fees to our accounts, they are raising interest rates faster then we can pay our bills.  Why? Because they are greedy and want to make sure we don’t get off their credit “drug,” so to speak. our society has become credit junkies.  It’s time to quit and start living debt free.  As a nation, we are spenders…not savers.  This paradigm has shifted over the last 40 years.  And we are bigger spenders than our brothers in the East. Asia, for instance, saves much more than we do and that has a global affect on our economies.  With financial times as tough as they are now, people are realizing that saving is something we all have to get back to. 

Let’s do it debt free.

Let’s look at a very simple strategy to understand. It’s quite difficult for most of us to accomplish; it’s called compartmentalization. I think that it’s safe to say that we all face tough times in today’s financial market place.  Personally and professionally, we are all faced with certain decisions that we simply just don’t want to deal with each and every day. 

So what do you do?  I got nothing, right? Wrong!  We have to act.  We have to make something happen or the problem will never go away.  So how do you do that?  How do you deal with something that you can’t do anything about? I bet that some of you out there right now reading this have faced certain depression, feeling that things just can’t get any worse, that the world is closing in on you; especially when it comes to your financial lives.  You probably have wondered how you got to this place while feeling hopeless.  DON’T!  It always gets better! Yes, it may get a little worse, but it can always be worse.  Something I know for a fact is that it always gets better.  You just have to move the ball along and make something happen. 

So how do you do that?  Well it’s no secret you have to look at life as a series of events.  Each event has to be dealt with to the best of your ability.  What you do is create a space in your mind filled with tiny compartments, boxes so to speak.  Each thing that you have to deal with goes in one of those boxes.  You simply open the box and put the problem in it.  You have to do this subconsciously but if you write it down you will help commit it to your subconscious.  Once there it stays there in that tiny compartment until opened so you can deal with it. 

So let’s say you owe a bunch of money to your creditors.  Well, that one is easy.  You don’t deal with any of them until you need to.  So as I always say, you have to have a plan and then work the plan of the day. That helps with your compartmentalization of the problem.  Each Monday you open the tiny box in your mind that deals with these creditors and give them all a call.  Pay the ones you can work out payment arrangements with and tell the ones you can’t pay you are still thinking about them.  Then CLOSE the tiny box in your mind and move on!  Seriously, close it and don’t look back until next Monday.  You don’t need to deal with it anymore this week.  You don’t need to stress about it, get anxiety, or have another sleepless night. 

You see if you can’t do anything about it then you don’t need to deal with it, at all.  This doesn’t mean go to sleep depressed wake up a week later only to find that you still have the problem but bigger.  What this means is that when you go to bed, close all the tiny little boxes in your mind because there is nothing you can do about it until morning. 

When all else fails, go to my number one rule – Communication.   Communicate with whoever can to help solve your problem.  That way you don’t have to have anxiety build up to a boiling point only to lead you back to the mere fact that you still have to communicate.  Open the compartment in your mind that “stores” the problem, communicate and deal with it, then close it and move on.  Don’t reopen it or think about the problem until you can do something about it.  

This is very hard to do, but if you practice you can master it and once you have done that your life will be so much easier that you simply can’t believe it.  You see we all try to solve problems that aren’t ready to be solved, meaning that with faith that the good Lord will provide you simply have to be ready and act when the time is right.  So, if today is not right and you can’t do anything to fix the problem yet and you have already communicated as best you can simply move on to the next compartment and deal with that situation.  You will find that you will have the best sleep you have had in years. 

So open up your mind and accept the fact that you can’t solve all your problems at one time, create a space in your mind that will compartmentalize all your problems and then leave them there until you are ready to solve them.