Daily Intent

Santa Barbara, CA – Jeff Bochsler – Follow me on Twitter or tell the world on Facebook through the Share Link above.

POWER OF 72:
If you have ever taken a finance class, you’ve learned of the power of 72.  For those that evaded numbers at all cost in efforts to enjoy the splashing of beautiful colors across a canvas, the power of 72 is a mathematical model used to determine how long it takes for something to double.

Art by Luke from the Ukraine

For example, if you want to know how long it will take your $2000 investment to grow into $4000, divide your rate of return into 72.  Let’s assume, in this example, that you have a good financial planner and the rate of return earned is 8% each year.  Each year your money will grow by 8%.  We then divide 8 into 72, pull out our multiplication tables from third grade, and get the answer of 9.

72 / 8 (PERCENT) = 9 YEARS

Thus, in 9 years your money will grow from $2000 to $4000 without any extra effort.  In the following 9 years your money will compound into $8000.  Then $16,000.  Then $32,000.  Within 36 years you will have doubled your money four times.  You’re now two to the fourth times wealthier!

POWER OF 72 WORKS BEYOND MONEY:
In marathon training, it’s recommended a runner doesn’t increase their mileage by more than 10% each week.  This steady increase prevents injury while at the same time encouraging progress.  Going from 10 miles per week to 11 miles doesn’t seem like much, but if you use the power of 72, maintaining a 10 percent increase, within a matter of 7.2 weeks you will have doubled your mileage.   Within 14 weeks, just over 3 months, you will have amped up your mileage to 40 miles per week.  That works out to 8 miles per day, assuming 5 workouts per week.  8 miles is more than a 10k race.

This is powerful information.

For one that is concerned about arriving to the finish line of a marathon, it is much easier mentally to break the training up into smaller, more manageable parts.  “All I have to do is increase my training by 10 percent this week.”  Within less than 20 weeks they’ll be ready for a marathon.

Translate this into anything you want to accomplish.  Read more books?  Read 10 percent more each week.  Instead of 50 pages this week, read 55 pages.  In less than two months you will be reading 100 pages per week.  Within 3 months you will be reading 200 pages, nearly an entire book each week.

Want to get stronger?  Go from 10 pound to 11 pound weights within two weeks.  Within 14 weeks you’ll be lifting 20 pound weights and impressing a few fellow gym goers.

POWER OF 72 WORKS FOR INTELLIGENCE: 
How about intelligence?  All you have to gain is 10% more knowledge each year and you’ll double your intelligence in less than a decade.  In 2017, watch out, I’m going to be twice as smart.  …and more than likely, twice as obnoxious.  That’s beside the point.

Of course there is a limit as this doubling compounds rather quickly.  Double two thousand ten times and you arrive at over two million.  But the reality of this limit is unknown until your reach it.  It is said, we only use 10 to 20 percent of our brain capacity.  Might we all have plenty of space to grow in this category?

So go on.  Plan out your progress using the power of 72.  Soon you will be Compounding Your Knowledge.  Compounding You.

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PLAN
Catalyst for Thought – MINDS Lunches.  Within the coming weeks 10 person lunches will be shared with Paul Orfalea, founder of Kinkos (SOLD OUT), and Jim Eiting, past CEO and now Chairman of Midmark, a $300m medical device company and author of the recently released book, Focus for Success.  Klaus Schauser, one of the founders of Expert City which later became Citrix Online, will also be joining us.  Register at www.CatalystSB.org to ensure you receive the registration emails.
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LEARN
Buzzword: Boomernomics
“An investing strategy that involves buying equities directly related to the spending behavior of baby boomers (people born between 1946 and 1964).

Areas such as biotech, healthcare, and luxury cars are the kinds of companies that stand to benefit from this age group.  People using the bommernomics investing strategy also invest in companies that offer products such as motor homes or dentures, which are geared toward aging or retiring consumers.”  -Investopedia.com

Six Points to Ponder:

   1. Corporate Earnings Continue.  The Markets did not appreciate the corporate earnings this week.  Though corporate earnings have tended to beat the Street’s expectations, there’s concern they’ll have trouble matching in the coming quarters.     – The Dow scaled down to 10,577, S&P 500 migrated South to 1139 and the Nasdaq meander to 2307.  Oil is down to $77/bbl.
2. Health Care Bill Stunted By Senate. The replacement of Ted Kennedy by a Republican in Massachusetts has President Obama back-pedaling on his health reform.
3. FHA Flounders.  As the FHA budget drowns, on the brink of bankruptcy, they have decided to tighten their underwriting standards and increase their upfront fees.
4. Kraft Cradles Cadbury.   Have you ever considered how a Velveta Cheese filled Cadbury egg would taste?  Kraft purchased Cadbury for over $19Bn this week setting us up for such possibilities.
   5. Rent Videos On YouTube.  YouTube, owned by Google, looks to attract more professional content by delivering paid video options rather than the current, watch an ad first option.
6. High Flying Hopefuls.   Favre vs. Brees.  Manning vs. Sanchez.  This weekend’s NFL playoff games will be filled with aerial stunts and a bit of trickery.  Australian Open.  Tennis season is kicking off with some exciting tennis Down Under.  The big hitters are still in.  Round 3 of 7 begins today.

Positives:

* The Senate Democrats, before this week’s election, had a fillibuster-proof majority.  In short, they had enough seats to vote through whichever bill served their parties interest.  With the election of a Republican to fill the deceased Ted Kennedy’s seat, no longer is this the case.  I believe this is a positive, less because of my stance on any particular issue, but more because this new reality encourages people to vote with their intellect rather than along party lines.
* YouTube’s offering of paid videos offers business owners a new avenue of revenue.  The video creators will be able to set the price for their video rentals.  If you are a fitness trainer and want to offer a training video, create a video and upload it to YouTube.  Charge for views.  Health, education, business seminars?
* Aside from Mark Sanchez, the other three remaining NFL QBs could easily throw for over 300 yards this weekend.  400 yards isn’t even out of the question.  The biggest question mark, thus, is who will let their excitement overwhelm them.  Will the old, as in the past, Brett Favre show up throwing off his back foot and blowing key drives with terrible decision interceptions?  Or is he more emotionally sound at the young age of 40?  This is Drew Brees debut on the main stage.  All know who he is, but a big win this weekend will catapult him into the category of great quarterbacks of the past decade.  Peyton Manning is already there.  He just needs to spot the Jets trickery and dissect as he loves to do.  Interceptions could be his fall.
* Verizon Wireless has just lowered their monthly service fees.  Unlimited minutes and texts are only $69.99 / month.  I called yesterday and was able to update my plan, saving $25 / month.  AT&T, its major competitor, has been forced to follow suit.  Call your carrier today and save yourself dollars.

Negatives:

* China’s economy a “bubble”?  The Chinese government looks to be taking measures in efforts of slowing down growth.  Much of growth has come from the real estate sector and excessive lending.  Might our recent experience be able to aid them in their abilities to stave off a meltdown?  Pull back too quickly and you have problems.  Let it go on and you have issues.  Either way, it has American investors nervous.  Couple these concerns with our own domestic headwinds, and you have a 100 plus point drop in the Dow yesterday.  Other notables include Goldman Saks profiting $4.9Bn last quarter, BofA coming just short of profiting in their quarter, Wells Fargo profiting slightly, IBM having a strong quarter (but seeing their stock fall 2.9 percent), JP Morgan Chase showing stronger earnings, and Intel, too, having a better than expected quarter.  Positive reports are good news.  However, they are coming as a result of lowering cost structures, rather than by overall economic and revenue growth.  Investors want to see Americans start spending again before they become too optimistic about reports.
* FHA has put itself in a pickle as a result of its terrible financing.  When subprime mortgages fell off the lending map two years ago, FHA happily stepped in to filled the void.  Low credit scores?  Not a problem?  Minimum down payment?  Sure.  Gift money from a relative?  Why not.   These underwriting standards have them facing high delinquencies and, thus, low reserves to cover future losses.  They are left with no other choice but to increase their fees.  The Upfront Mortgage Insurance Premium, a fee that is charged at the funding of the loan and used as a “pay-to-play”, will be increased from 1.75% to 2.25%.  On a $400K loan, this results in a $2000 cost increase.  Along with these fees comes stricter guidelines, many of which aren’t fully describable, but will surely have an effect on thousands/millions trying to qualify.
* Haiti’s struggles continue.  It is estimated that 20,000 Haitians are dying each day because of insufficient medical supplies.  Should you still wish to donate, visit this link and find your favorite group to support.                                        http://www.msnbc.msn.com/id/34835478/ns/world_news-americas/
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GET INVOLVED
Local:

Australia Day Festival
Where: Santa Barbara Maritime Museum
When: Saturday, January 23rd.  4pm – 11pm
Cost: $50.
Why:  Holy Kraike!  Who doesn’t enjoy the Australians?
Go online to www.australiadayfestival.com
For other fun ideas, go to www.lovemikana.com

** Tell your friends to join hundreds of other AWESOME people who are intentionally working to better their lives through receiving this weekly MSR!  Email me their information or have them sign up online here at www.DailyIntent.com

Live and Be Well,

Jeff Bochsler

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