Multi Level Marketing Opportunities and Pyramid Schemes.

My mother maintains a vendor booth at an indoor swap meet and farmers market in her city. She is keeping it mainly to promote her cheesecake business by handing out samples and business cards. She also likes to go to meet new people and has made friends there.

She called the other day and was a little vexed about a man that befriended her there. She said he was really charming and before long had pulled up a chair inside of her booth and had just kind of moved in-- talking about how he was recently widowed, etc, etc. Then all of a sudden he started pressuring her into some business deal where she would invest $1,500 dollars and she could make loads of money in return. He handed her some glossy pamphlets that looked professional. My mom responded to his gesture with, "aren't you just running a pyramid scam?"

"Oh no--that would be illegal. Just invest $1,000."

"I'm not giving you a $1,000!"

"Just five hundred then...you can write me a check."

So then, to get rid of the guy, my mom says,"My daughter Penny handles all of my business and finances." So she gives him my name, phone number and address! So, I have that to look foreword to--a call or visit from Ralph--you would think that being a con-man and all he would change his name to Alfonse or Jonathon or something wholly more attractive and affluent sounding. I am looking foreword to it...almost salivating at the thought...oh yeah...it's on Ralph!, it's on like Donkey Kong!

Multi level marketing is in many business opportunities a legitimate form of selling products. The difference between a legitimate multi level marketing business and that of a pyramid scam is easy to spot. The legitimate multi level marketing company places an emphasis on selling a product where the pyramid scam places an emphasis on recruiting people or asking for investments and in some cases like gifting clubs they will ask for donations where you in turn will recruit people below you to ask for donations or investments. The gifting clubs will sometimes use religious "feel good" terms or names like Renewal Celebrations or Jacobs ladder and might come as a special invitation from a church member.

A pyramid scheme is set up so that there is a hierarchy where people are recruited below those who have been previously recruited. Those who have been recruited make payments to the people above them in the hope of making their money back by recruiting others and gaining payment from them. In pyramids, most of the sales are made to the recruits and not the general public. The nutritional supplements or what ever they have going only serves as way to make the scheme look legitimate.

1. Never feel pressured into joining a multi level marketing group.
2. Never feel pressured into signing or investing in something that you aren't sure of.
3. Take the time to investigate any business opportunity.
4. Check the business out on the Better Business Bureau website at http://welcome.bbb.org/
5. Never make investments at the swap meet!

Always keep in mind, that it's a felony in the United States to participate in a pyramid scheme and is punishable by fines and time in jail. People participating in the scam are viewed as engaging in illegal activities rather than being a victim.

Satellite Radio as an Investment

Long ago and oh so far away

I fell in love with you before the second show

your guitar, it sounds so sweet and clear

but your not really here

it's just the radio.......

I heard a remake of this classic beat Superstar by The Carpenters not too long ago on my favorite XM satellite channel Ethel. It had a new edgy techno feel that was both hauntingly beautiful and familiar. I started to blink away tears when I heard it. On Ethel I know that I can find the edgy and the alternative that my heart craves. It's music like this that keeps me tuned into my XM channels, that, the superior sound and the lack of commercials (on 69 0f the 170 channels). Really, It was love at first sound! To me it's worth the annual subscription price of $143.00.

"If you love it so much, why don't you marry it?"

"O.K., I will."

I decided to look into Satellite Radio as a stock pick and was slightly shocked at what I found. The analysts opinions on XM Satellite Radio Holdings, symbol XMSR, were all over the place with most of them being in a neutral position not really recommending it but, not actually dissing it either. Today, they are leaning toward a buy position.

There is a friendly merger between Sirius Satellite and XM satellite that has been going on for over a year and it has been held up by the Department of Justice and the Federal Communications Commission. They need to approve the merger. The Federal agencies have a fear that combining the two companies will create a monopoly in the medium and hurt competition for consumers. I don't believe so. You can easily switch over to FM/AM, your CD player, your Ipod, your DVD player etc,etc...... I am optimistic that it will go through eventually. In my opinion, they need to merge for both to survive and thrive at all.

In the event of a merger you want to look at the company that is being bought, this is the stock that will rise--if it's a good fit and can benefit the company acquiring it. In this case XM is the one being bought.

I took a look at the financial statements and ratios of both companies and understand why the analyst opinions are so varied. Presently XMSR stock is at $11.35 a share with a beta of 1.2 which makes the stock slightly riskier than most. It has increasing annual Revenue which is good but, their Expenses are so high that it entirely wipes their Net Income. It might just be the nature of the satellite radio medium though--Sirius had similar results. XM has no P/E ratio or dividend, which isn't uncommon for a fairly young company. I would classify it as a highly speculative stock investment.

I ended up picking up fifteen shares of XM but, they say that love is blind.

O.K. so, I did marry it but, there was a shotgun involved and I might get an annulment by the end of the year--but, at least I was wearing underwear!

http://xmradio.com/

Hostile Takeover Attempts "I'm Going to Disneyland!"

I think it's a good idea to own stock in the Walt Disney Company if you have children in your household. It teaches them how a corporation is run, how to read the financial statements, how to invest their money, and learn about new movies and rides that are coming out before the general public does. Kids can easily identify with the movies, T.V. and theme parks that are run by Disney.

I remember sitting in the theater when the first Pirates of The Carribean movie came out. When it was over, my oldest son who was eight or nine at the time turned to me and goes, "we are going to make so much money off of this!" Here, I was just thinking about where I could put a tattoo of Captain Jack's name on my body! Anyone who can take a drunk, slightly effeminate pirate with bad teeth and make him that appealing deserves an Acadamy Award!

Growing up my parents kept stock in Disney and we would go to the annual stockholders meeting at the Anaheim Convention Center. This is how I became interested in Corporate Finance and Investments. Children were welcome to stand up and ask questions of the Board of Directors or make suggestions. At the time they would always show a movie that was "in the works" and give shareholders free passes to Disneyland across the road there. They don't do this anymore, I think the shareholder's meeting is in New Mexico this year--I'm sure Alburquerque will be just as much fun as going to Disneyland.

One year at the annual shareholders meeting for the Disney Company, A group of Corporate Raiders had been buying up shares of the company and tried to take it over. The word was that they were going to buy up Disney and then dismantle it, selling off it's various attributes. At that time The Walt Disney Company lacked vision and innovation in it's leadership, especially in it's movie making capacity. It became a target for a hostile takeover attempt.

When a company wants to grow either in a new direction or expand in the same capacity it will look to a another company that has the attributes that are desirable for it's expansion and try to buy it. The buyer can go directly to the management and make an offer or it can bypass the management and make a tender offer to it's shareholders. This becomes a hostile takeover attempt. They will make a statement offering to buy each share of stock for a certain amount of money--usually a great deal more than it's worth. The aquisition company will attempt to buy up as much of the target company's stock as to have a controlling share of the company and take it over.

Can the target company prevent a hostile takeover from occuring? If a company is the target of an aquisition there are measures that they can take to prevent the action.

• Pac-Man: This is where the targeted company turns around and attacks the company by buying up it's shares in an attempt to take control of the attacking company.


• The White knight: At the request of the company being targeted for takeover another company can come in and buy up shares at a higher value than the aquisition company coming to the rescue of the target company.


• Poison Pill: The target can issue stock to it's investors (except the aquiring firm) at a discount so that there are more shares that are out there for the aquiring firm to have to purchase making the buyout more expensive.


• Golden Parachute: This is a provision where the aquiring firm will have to pay the management of the target company large sums of money if a takeover happens.


• Suicide Pill: The target company will ruin the company rather than let it be bought out.
  

At the end of the day The Bass Brother from Texas came in to Disney and bought a controling interest saving Disney from a hostile takeover. The new management team of Micheal Eisner, Jeffery Katzenberg, and Frank Wells was introduced. Over the following years the company was revitalized with the new leadership and vision.

Should You Invest In a Franchise?

My brother-in-law came to the United States from Damascus, Syria. There, as a young man in his early twenties he was trained and worked as a Chef in the Sheraton Hotel in Damascus . It was his American dream to come to the United States and open a restaurant of his own. After many years of saving, he and my sister had the money to invest. They chose to go with a franchise instead of creating a resturaunt of their own. With a franchise they would be able to have a turnkey business that has been established in the area and receive support and training. Most importantly, with a franchise they would have brand recognition and customers that were familiar with the restaurant. They chose an upscale hamburger franchise in Southern Californa. They met and liked the owners and talked with other franchisees in the franchise network so they would know what to expect. They were able to watch the restaurant being built from raw land and into a brand new establishment with a fabulous kitchen! They have been very successful and happy with their decision.

A franchise will typically offer the prospective franchisee:

• An established business name, trademark, customer recognition


• Business support (business plans, help with location, training)


• Help with financing


• Proven track record


• Product

The downside of opening a franchise over an independent small business:

• Monthly franchise fees of around 6% to 10% of gross sales


• Loss of freedom in product or services


• Reliance on the performance of other franchisees in the system.


• The franchise can terminate your agreement at the end of your contract term.


• You are leasing the trademark name you do not own it.

If you are considering investing in a franchise:

• Evaluate the amount of money you have to invest in the venture.


• Go to Franchise trade shows and talk to the various franchisors and determine what kind of work you would like to do.


• Have the franchisor back up any financial claims with tangible written documentation. The Federal Trade Commision requires all franchisors to provide prospective franchisees with a complete disclosure statement so that the franchisee can make an informed decision.


• Look at franchises that have been in existence for a long period of time--they have a higher rate of success and profitability.


• Talk to other franchisees in the franchise system to find out what you can expect in terms of operation and profit.


• Look at the annual sales and make sure they are increasing and not declining. Do the same with net profit.


• Don't rush into anything. If you feel pressured --walk away.

Check any prospective franchise opportunity for complaints with the Better Business Bureau at

http://welcome.bbb.org/

If you would like any further information to evaluate if a franchise is right for you, The Small Business Administration is an excellent place to start. They have great resources and people trained in helping you to start up a small business including financing options and research materials.

http://www.sba.gov/

Roaming Wolves

The snow is up to my thighs now and it's getting hard to go out and feed my horse. A herd of deer have been coming into the yard at night and eating my pine trees and sharing with my mare from her manger. It is unbelievably cold here! It was -16f when I took my son to school this morning. He has been home from school for over a week now because of the bitter cold and snow. I am waiting for the school to call and cancel again today and have me go pick him up. I home school my youngest son so, he never gets snow days. I pulled him out of his elementary school about a year ago and I will probably home school him for another year. Yesterday most of the roads were closed around Idaho because of unsafe driving conditions and we just hung out and played Rock Band and watched DVDs. I am good at drums and singing but, I get kicked off stage if I try to play guitar.

Our friend Zane called. I have known him since he was five and we have seen each other through some hard times. He has a good heart. My son has two friends that I love and adore. One has moved away to go and live with his dad. I don't get to see him too much any more and I miss him terribly. It broke my heart completely when he moved. It's hard to feel that he has moved on and has another life without me being a big part of it. I don't know, I think that you love and become attached to people but, I always seem to lose those that I love the most in life.

Zane comes from a ranching family in the area and even though he is young, he works at his ranch and has many of the responsibilities of an adult. He does this and juggles basketball and school as well. He has the most beautiful mare named Peyton--after his favorite quarterback. She's a brown and white Paint with blue eyes. He bought her as a yearling and he and his dad broke her( I don't think that's the right term anymore, it would be more like "gentled" her to ride.) He loves working out there on the ranch with his dad and always mentions it. I think it would be a great life if you didn't have to go out in sub-zero weather to work. He said that he has a new calf he is nursing. The mother abandoned it and he is taking care of it.

We talked about a report of wolves in the area and debated about whether they were actually out there. There is supposedly two wolves running together behind my house. His ranch runs behind our property through the woods and along the river. The ranchers are calving right now so they don't want wolves roaming in the area. Neither of us have heard any wolves at night so, he thinks they are just coyotes.

Take Control of Your Financial Life! Create a Budget.

The single best way to take control of your financial life is to create a budget.

1. Creating a budget helps you to see exactly where your sources of income are coming from and where your money is being spent.


2. With a budget you will be able to see where expenses can be reduced to help you save money.


3. With a good budget you will be able to plan and make decisions about future expenditures and achieve financial goals.

To create a budget, gather data on your income and expenses. Three months of data is a good place to start. You can get the data from your checkbook register or online bank statements.

1. Start with a list of monthly income using the data collected for three months. You can then project your income for the rest of the year. Your income should be about the same for the upcoming months--adjust it if there are any changes.
2. list income from salary and wages, interest, dividends, self-empoyment income, and any other fixed income such as alimony.
3. Calculate a monthly total for all income.

After you have computed your total monthly income you can calculate your monthly expenses:

1. List your fixed expenses that must be paid every month first like house payment or rent, taxes, insurance, car payment, credit card and debt payments.


2. List your variable expenses like groceries, utilities, clothing, entertainment, any upcoming vacations, and savings.


3. Project your expenses by adding up the first three months of say--groceries and divide by the number of months (3) to get an average.


4. Use this average as your projected grocery amount for the upcoming months.


5. Do this with all of your variable expenses.


6. Include any upcoming major expenses that you know of like vacations and insurance payments.


7. Calculate a monthly total for all of your expenses.Subtract your total monthly expenses from your total monthly income to get your net income.


8. Try to keep your budget simple.


9. Round off dollar amounts to a whole number.


10. Look at your variable expenses to see if there are some expenses that you can cut back on and put into savings.

I have created an example budget for you to look at--just click on the link below.

http://spreadsheets.google.com/ccc?key=pw8uKsSvPJgdeEv3ebaTlLA&hl=en&pli=1

Where Should I Put My Money Now? Investing In A Rotting Stock Market.

1. 
   
   Even if the economy slips into a recession or slows to a crawl, there are certain industries that statistically have proven themselves to weather the storm. Don't think about the profits that were made yesterday or last year, look forward and long term. The economy for the year 2008 is expected to slow down considerably but, it will also will also come back in 2009. As the economy shifts you can expect the stock market to precede this slow down by one to three months. By the middle of Summer you should see the stock market rebounding as investors anticipate a better economy.
   
   Historically there are investment areas that do well in a bear market. If you are concerned about the economy and your portfolio, here are the best industries to invest in right now that are the least vulnerable to a slow economy. Think Basic needs like retail food, tobacco, soft drink manufacturers, cosmetics, utilities, pharmaceuticals.

Also Consider investing in companies that are doing business with China and India. China and India still have the hottest economies on the planet and their growth is expected to continue at a very lively pace. GE and IBM have both brought in decent profits with their collaborations with Chinese businesses. Also software should do well this year.