#5 OPPORTUNITY IS EVERYWHERE – WILL YOU FIND IT?

 

I read in Time Magazine that Almond growers in California pay bonuses to bee keepers to bring their hives to California to pollinate the almond blossoms in springtime. The beekeepers throw out the almond blossom honey because it is not a popular flavor. What could you do? Buy up honey-combs. Find uses for this bitter honey. Suggestions? It is popular in Italy. “Mead” or liquor brewed from the stuff is not only tasty, but it is highly regarded as health food. It is just a matter of marketing the stuff.

OPPORTUNITY IS EVERYWHERE IN GOOD TIMES OR BAD!

I have often warned about Get Rich Quick schemes. You don’t need to buy endless books, manuals, and courses. That is for procrastinators. You need to get out there and do stuff! No excuses!

The big problem is that any business plan [if it was ever any good at all], once widely distributed it crowds the field: When any popular course or book teaches many people in any location how to exploit an opportunity, in the same way, competition for the same customers and resources makes it impossible for latecomers to use the plan.

Become a Travel Writer? Start a Hedge Fund? The competition generated by hundreds or even thousands of new entrants in any newly popularized field makes it difficult for newcomers to do well. An early entrant –or the ones who wrote the book may have made money on a particular strategy, but once “everyone” starts using [for instance] the same arbitrage or charting techniques in the stock market, the market no longer behaves in the same way.

Thus, in this series, I will be throwing out many ideas. It is up to you to avoid arriving after the crowd has already been there.

With any business, one secret is to personalize your product or service. Use your own skills and expertise. Carve out your niche market. Above all, keep your product new, alive, relevant and your business open to change. Study the Marketing tricks of others! Keep on top of the political situation. Local laws change. Consumer needs change.

You must move with them or go under. The best products or services are those recommended or required by governments! Consider the newest “green” products and services: If you are marketing insulation and weather-proofing [for instance], when your improvements are required or financed by the government, it becomes an easy sale. More about this specific and obvious opportunity later.

Right now we see even more opportunities than at the bottom of the Great Depression — 1932. When most people are panicking or on the sidelines to “wait and see” that is always the best time for opportunists to seize the moment. Alternatively, if you want to go back in history 800 years—Consider the years around the end of the Black Plague. Then, amidst desolation and despair — after the death of 40% of the population — a new renaissance of enlightenment, prosperity & expansionist Europe began. Life was back to normal in a few years.

It was a time of wealth transfer on a grand scale. Great fortunes and a new Aristocracy came into being. Political power & fortunes were not expanded by laying low and hoarding coins…

During the Plague, half of all homes, farms, and businesses were abandoned. Simple reason? The owners were all dead. There was no law and order. Only panic. A few opportunists armed themselves & occupied the abandoned lands. They re-established productive farms — and were able to protect them. Others put together small bands of thugs to rob, murder the weak, conquer & grab property from their neighbors. Like all crooks, they also prospered, but usually only briefly.

A few “Robber Barons” who were [or hired] good administrators joined a new European aristocracy. Descendants of some of these Entrepreneurs are still prospering among us –in the USA, Latin America, Asia and Europe. Old wealth always dies off and they are constantly being replaced by new entrepreneurs.

Another business Opportunity:

Surveys in places like the USA and Spain show that anywhere from 30-75% of homes and condo apartments in the foreclosure process are actually already vacant. With abandoned property, the foreclosing banks have no one to negotiate with.

Typically a foreclosed home sells within a few weeks. Banks in normal times take the first “reasonable” offer. In “normal times” it takes about three months from foreclosure to when the home is put on the market — it takes a few more months to get a home ready. But is taking a lot longer now, and many homes have not made it onto the market, even as more homes are being foreclosed each month. This is the “two pigs-in-the-python” problem. There are just so many abandoned homes that it is hard to digest them all and get them onto the market and sold.

We are now seeing foreclosures of six times normal levels, and as of summer 2009, this number is still rising.

Where’s the opportunity? You offer the banks a service to rehab the homes then cover the doors and windows with security shutters. Probably with a staff you’ve trained, you can get abandoned property ready for sale in say 4 weeks. The pay you a few thousand dollars up-front for the service, and the balance upon completion of the work. To get the co-operation of the cash-strapped bank, your payment can be made in the form of say 1 out of every 10 homes you rehab. Another possibility is to arrange for government payment for your services — under any one of a dozen different programs to assist in making the housing market back to normal. As mentioned before, all the newly homeless and unemployed may have difficulty renting from conventional landlords who are not enterprising enough to cash in on the government subsidized rental assistance programs mentioned earlier.

But if you can get paid cash to take control and rent out five thousand homes in (say) Las Vegas, without putting up a dime, obviously it’s a sweet deal. If there is never a recovery, you are sitting pretty with a few million dollars of golden government crumbs coming in every year. In the more likely event, in a few years –when things are back to normal —inflation will have pushed up prices back to at least 80% of what they were, you take 5000 times $200,000@ net gain per home, and your net worth is, well, you figure it out. Think small and you do the same in your spare time with 10 homes.

Passive Investors

In my opinion, the opportunities available to passive investors in securities or commodities is infinitely small compared to those who [as in the above example] are producing or actively dealing in products and services. A passive investor never gets a sure thing. He is happy with a high degree of risk and 1% a month. He might lose everything in a Ponzi scheme like Madoff’s –or more likely due to bad managers like the guys who ran Citibank or General Electric. A good active businessman can make an infinite out of nothing more than his brain and the talent to get into the game and make things happen. It is easy to operate on other people’s money when you are creating and running a potentially profitable business. Everybody and their dog wants to get in on your act and invest with you.

As I write, I just exited a franchised shop dealing in precious metals –bullion and coins. They will “graciously” buy my one-ounce gold Kruger Rand coins for a 15% discount from the “ current $1000 melt or spot gold price” of $850 or sell me the same coins for a 15% mark up at $1250.

Plus if I want to deal with them, I’ll need to pay another 5% government tax on any purchases through them as a licensed dealer.

Do you really think that an investment in gold is “no risk” when you have to sell at 30% more than you paid, just to break even? [And note: While writing this, the spot gold price just fell to $850. Thus, if I sell to this local dealer, my $1250 investment has dropped by 45% in a few days!]

Is it a good idea to “invest” at $1250, with a 100% probability that the gold will fluctuate wildly and totally beyond your control? If you buy gold, you will have to go back to a dealer or banker to sell at a discount. Sure, if you are a regular customer and experienced, you can probably get the discount or premium reduced. But there will always be substantial transaction costs. Obviously, it seems better to be a dealer making a markup on many daily trades, than a passive investor. There are always going to be transaction costs, and the consultant or broker/dealer collecting these.

Another advantage of being a dealer yourself [in ANY product or service] is that then you will be regularly offered the best deals.

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