Following on from my last blog post "The Greatest Investment You Can Ever Make", and because this is a subject I am so passionate about I decided to actually speak to David Wolfe personally…

…Together with my business partner Tim we organised a "teleseminar" in which I asked David the following question:

     "David, I know from my own experience that there are lots of raw foods, good eating habits, and lifestyle modifications which can truly optimize health, energy levels and longevity, I also know that most people are very busy, and feel like they don't have time for a lot of new changes, and don't do anything…

     …so, can you please give me that "right to the point" main habits and food suggestions that can make the biggest difference to improving people's health with the least amount of time and effort…

     …in other words the 80/20 rule… what are the 20% of foods and lifestyle habits that give 80% of the results? … the ones that are simple and easy to apply, that anyone can put into practice today?" 

To listen to the free call with David in which he answers the above question click on the link below:

Right click here to download the mp3 version of the call

And don't forget, if you haven't already watched the video from David I referred to in my previous blog post then just click on the image below to watch that:

Click here to watch the free video

Speak soon,

Andy.

In this short video talk about a topic that has become a passion of mine over the last few years. It's something I have invested a lot of time in, and like all good investments, it's a subject that is paying me back "with interest", and will do so for MANY years to come.

Just click on the play button in the video control bar, and don't forget to click on the link under my short video when you have watched it:

Click here and watch this truly transformational video from one of the most knowledgeable people in this area… 

I noticed a few things among the barrage of noise in the papers recently that were actually important. The RPI (Retail Price Index), which measures inflation and the relevant pressures, fell to its lowest level in 60 years. This is an important figure because it is a more accurate ‘waypoint’ than is found in the majority of the info that comes out. However, the government does not like this figure as it includes too many things that make them look bad, so they don’t use it.

This figure revealed that the significant risk is currently far more weighted towards deflation than rapid inflation. This is pointing towards the unemployment tsunami that I have written about recently and wage price freezing, as well as reductions, all of which go against what should be happening if a government was printing money (which it is). This is a real paradox and is the sort of trend to be expected when a system is in turmoil.

These are quite depressing figures and confirm to me at least what I have been saying about the economy and how the worst is yet to come. It may not feel like it is the worst as they may be able to polish it and spin it, but it will be bad like a long, drawn out torture. This is going to present opportunities to the prepared minds!

A Little Bit On Attitude And The Virtue Of Selfishness

Here's an example of the last paragraph:

The current situation has forced me to think differently about business and by doing so it has presented an opportunity to me to create a new business that will thrive in this economy. I would never have considered it before because my mind was not thinking that way, but it has to do with the simple concept of finding a lot of people that have a need and filling that need. Now I don’t know whether we are going to pursue it or not as we are evaluating it now, but because my mind was open to opportunity then it presented itself.

The point is that I am surrounded by negative information that I am having to look at so that I can protect my investment. My attitude to that information is indifferent other than seeing it as a useful guide to the future. My attitude to all of the negative media and blatantly wrong conclusions that are being drawn once again by the majority is to remain purely interested in what serves me. As Ayn Rand explained it, 'The Virtue of Selfishness'.

By being selfish you will always prevail and strive to grow. If you let this noise wear you down then you will start to believe it. All you have to do is find ways to turn the situation to your advantage. The business I am looking to go into by the way has nothing to do with property investment or the sale of property trainings. It is a mix betweeen industrial age and information age business which looks very lucrative indeed and meets a real need. I thought that I would never consider another industrial age business again! Sometimes the opportunity lies where you don’t think it’ll ever be.

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Following on from my last article, I thought I’d cover the unemployment issue in a little more detail. Now I’ve been banging on about how unemployment will take off around the end of this year for some time now, and even though the media and nearly all financial pundits seem to be saying it is looking like we are coming through it, I struggle to find ANY positive data that shows signs that the recession is nearing an end. The bear market rally that is happening now will prove to be just that within the next six months and this time next year the talk will be about the winter of discontent we will have just had and how everybody hopes the new conservative government can turn around the disasterous policies of Gordon Brown.

Well I was reading one of the many newsletters I receive and there was a good bit on unemployment in the US and how it has taken over from employment. They presented a site with an animated chart that shows through several years of monthly figures how these figures have changed. It starts with 2006 when there was great employment, then it rolls on to March this year and the representative change in colour is dramatic. I suggest you view the chart, it takes just over a minute:
http://www.slate.com/id/2216238/

Its been 50 years in the US since they have seen so fast a drop and given that there is now a much smaller percentage of manufacturing jobs there then the volatility is breathtaking.

What happens in the the US is a fairly good indicator of what is likely to happen in the UK and even though we may not experience unemployment here as severely as they have, it will definitely follow a similar pattern. The US went into recession in Dec '07. In May '08 we followed suit - i.e., we are a minimum of six months behind them. Signs of the problem for them started to show in Jun to Aug (as you can see from the chart) and then things got really dangerous in Sep to Nov.

So 6 - 9 months after the recession started they were getting some bad signs and after 10 – 12 months the figures were dire. I think we will experience dire figures a little further delayed than they because of the yearly pattern and things will really start to look bad for us from September onwards. Just look how bad it got between Nov and March in the US. I expect to see some serious protest marches this year and there is a possibility that we could even see rioting in some areas.

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The quarterly work of fiction has just come out from the Bank of England and as usual they have got some pretty big assumptions wrong. However, in this report as well as in the press conference, I saw a more reserved approach from Mervyn King.

I think he had been riding on a decade of success where whatever he said was pretty much ok and then after his TOTAL failure to recognise the recession/depression coming (the D word has not left my vocabulary, despite other commentators now believing we are actually through the storm and starting to recover) he now is less confident (wisely) of the accuracy of his predictions. As with anyone who has had life give them a smack in the mouth, he is treading much more cautiously now.

Well, here are the notes I made whilst reading and listening to the report:

    King says it is worse in other countries than in the UK, and some of what he says is right. However, other countries are nowhere near as exposed as we are and that could and probably will prove very bad for us when the new money in the world actually figures out that the UK is one of the most over exposed of all the financial nations. Even though we will not end up like Iceland or Ireland, we are in a similar predicament only on a much bigger scale, but with big friends and big bargaining chips.

    I think their GDP fan chart is wrong, as it shows on page 9 we in a 'V' shaped recession. We are not, we are in an 'L' shaped recession, so the assumptions for the remainder of this report will be wrong once again.

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Introduction
The following article has been written to explain the thought and purpose behind groups and how they can be used to increase communication and networking between members. The guide is split into sections for ease of reference and contains information about the benefits and features available to you.

Recent Changes
When groups were first introduced last year, they were still in the early stages of development. Since then they have become an integral part of the site and it is encouraging to see many of you putting them to good use. In response to this and in keeping with the progress of the website as a whole, it was felt that a review was needed and some adjustments have been made that will hopefully increase both their effectiveness and appeal.
 
Aims
The aim then of this post is to familiarise you with recent changes and explain the key features, so that you can continue to get the most out of them. Some of the points raised here are new, while others have been the case since groups were first set up and these are broken down into stages for you to read in sequence. The other intention of this post is to encourage those of you who haven’t yet ventured into groups to take a new look at them and perhaps get involved.
 
All about Groups and When to Use Them
Groups were designed to be self moderated and are therefore essentially the property of the members who are members of them. They stand apart from the open forums on the site as more private or personal discussion boards, the subject of which can be a specific common interest or viewpoint, or serve a networking purpose, such as a property investing network in your area. There are no actually parameters set on what you would like the subject of the group to be, provided of course that it conforms to the guidelines and regulations as detailed on this site.

However, when choosing a group you may want to consider what it can offer to the community as a whole and choose subjects that are likely to encourage participation. It may also preferable to have some involvement or experience with the subject of the group yourself or choose something which you are passionate about. Form a new group if the topic you want to discuss has not been mentioned elsewhere and you feel that it could benefit from a dedicated discussion board.
 
Getting Started
If you want to browse groups the simplest way is to click on the You tab under the header banner at the top of any page. To the right of the You page there is the My Groups box which can be found under the My Friends box. From here you have the option to search groups, view all, create or read this guide. You will also be presented with a list of the groups, if any, to which you currently belong. To access those groups, simply click on the appropriate icon or text below it.

Searching groups will take you to the group directory page. Each entry has an icon, a name a member count and a description. Results are displayed in order of most recent first or you can use the search box to the left of the page if you are looking for a group of a specific name. There is as tab below this to search by category, so for example if you know the group is about business, or you are looking for groups in this category then you can find it by searching for all groups that have the business tag. You can then select the one that you are interested in by clicking on the icon or the group name above the description. If results appear on more than one page browse these by using the next and previous links found above and below the results.

When you select a group the home page for that entry is displayed. It will show the description, category, owner, type and member count and the date it was created. Forum topics are below this followed by polls and then events. The left column of the page shows the group icon and name and below that you will find useable links for that entry.

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In our constant chatting with estate agents, we have noticed that without exception they are all saying that they are not getting any new instructions coming on. Obviously this is an exaggeration as they will be getting some, but they are not coming on at the rate they need to in order that they survive.

Now this is being caused by agents telling the vendors what price the property will sell for and the vendors not wanting to sell at that price. This was an entirely predictable response to what has been going on and is an emotional problem that will be worked around as the agents must keep new properties coming on…or they will go bust.

So I expect to see a bit of a long game being played by estate agents over the next three to six months. What I mean by this is that the way they will work around the problem of not having any new instructions is to let the vendors assimilate the bad news themselves over a period of time.

Let It Dawn On Them Gradually

The agent's ploy will be this:

They will view a property that the vendor wants to put on the market for £95K and wants £90K for minimum. They know the vendor will be ok to receive £85K and probably £80K at a push. But they know the market will only pay £65 - £75K. In an ideal world (for them that is) they would put the property on at £82.5K and open it up to offers. This would mean a possible first time buyer at £81K and several BTL investors at £65 - £80K, depending on experience.

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I was chatting with Greg yesterday about how it is going finding properties for clients right now and he was explaining the problems that we are facing currently. The biggest problem we are having is the one that I mentioned would happen a few months ago.

That is, the first time buyers are swamping the market trying to pick up bargains and they are willing to pay more for them than we are. So what is happening is that the vendors are selling to them and of course we all know that the inevitable will happen and most FTB purchases will fall out of bed - especially in today's market.

So what we are doing is sowing the seed of doubt with the agent and saying, ‘We understand that the vendor wants to go with them. But when that falls out of bed as they can't get a mortgage in 3 - 6 months time, then let us know if the vendor would then be interested in our price, or if he would rather wait and go through another long winter without a sale.’ We also add that we may not be willing to offer so much if the market comes down.

Now at this time of year the market looks like rising a little anyway, so they will probably dismiss our opinion out of hand, which is why persistence is the answer here. Weekly or bi/monthly telephone calls to the agent to let them know you are still interested in the prop should it fail to complete will hopefully mean that the agent will call you first when it does. Or he risks going to a new unknown buyer. Remember he does not get paid without a sale going through, so it is in his interest mainly for that to happen and if you position yourself as a certain sale, he will correctly advise the vendor that a sale to you for £5 or £10k less is actually a better deal. A sale to a FTB is no better than a 1 in 3 chance of success, so use that as well.

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What If We Were A Great Bank?

So let’s say we were a bank and we started out with say £2,000,000 of capital. So we started trading and we took in deposits and decided to loan out our deposits at a higher rate than the interest we were paying for the them. I’m not going to make this more complicated and discuss how as a bank we can create money against those deposits, so let’s just keep it simple and say that we loan out just the deposits that we take in. In which case we make our margin on the spread.

Let’s then say we take in £30,000,000 of deposits and we loan that money out. Our loan ratio is 15 (loans) to 1 (capital), which is apparently healthy. Now let's say we go very conservative and we decide that we will only loan out at 70% ltv. We also decide that we want very low ratios of income and so we state that just 10% of someone’s income must cover the mortgage (ie very affordable) and we require a minimum credit score of 900 (max 999) - we are looking for only the best borrowers!

So now let’s look at us. We are in good shape, our loans are great and with no defaults we are making a good profit and our share price is going up. Life is easy! And, deservedly so, we are paying bonuses to the people who have generated this growth in our business (without the media spin it now looks different).

But then comes along mark to market - the property market is in decline and we have to re-evaluate our portfolio. Even though our loans are performing beautifully we have to re-evaluate them at today’s price. The property price has gone down in value by say 20%, so instead of us having loans on our balance sheet at 70% ltv, they are now at 90% ltv. So our company is now not as attractive as on paper our loans are higher risk. In reality they are not but on paper they look much more risky. So let's say we have to mark the value down from £30,000,000 to £29,000,000. It’s bad but not too bad at first glance and it was the conservative thing to do, to avoid going to prison for not knowing something.

But where do we take this paper loss? Well against our £2,000,000 of capital, of course. So this transforms our 15 - 1 ratio (loans – capital) to 30 – 1, making us appear over-geared. This triggers off various alarms, the regulators are now very worried that we are way, way over exposed and are close to failure, so we are on the watch list.

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It has been said at the moment that if you are not confused then you are not thinking clearly.

The credit markets are frozen and despite the recent surge in the stock market, they remain so. So any recovery in stocks will turn out to be a false dawn until these are thawed out.

There is no shortage of information at the moment to confuse anyone, most of it mis-information which is of course from people in the know who do not understand what is going on or the people in the media who just want to report a story. The reasons for both these two producers of excessive mis-information is that these people still falsely believe this is a normal recession and the credit market bubble has burst and led to the house price bubble bursting, whereas the truth at the moment is quite different from the reporting of the mass media.

I wrote in the summer of 2007 that we should be able to escape a major downturn in prices as the British and American property markets were not the same and that the British one was inherently stronger. However, I then had to write how the American market could end up affecting the British market, yet there was nothing really wrong with it (despite what the media will have you believe).

However, the real issue that brought about this crisis was not the lax lending policies in the US, it was not the ‘new wave’ structured investment vehicles and it was not the house price bubble deflating. The real reason for this crisis was the reason I wrote about a long time ago, when I said that I did not know about a particular law that meant that the banks could be forced to sell that assets at today’s price (mark to market).

This single law has brought about the whole crisis and an accounting reason is all it is. The mortgage market in the US, however, was the catalyst that brought about the crisis.

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