February 28, 2013 – Big Day in History?

Seems like this turned into a very prominent day in history …

• Today was Pope Benedict XVI last day as Pope after resigning and giving his farewell speech and then leaving the Vatican in his white helicopter for ride over the city and to his new residence. The first opening of the Pope position due to resignation since the 16^th Century. Now the Cardinals get down to the business of picking the next Pope.
• Today the U.S. Senate failed to pass both Republican and Democratic alternatives to head off across-the-board spending cuts, further ensuring Washington will blow past a Friday deadline to avoid or replace $85 billion in cuts that threaten economic growth, military readiness and jobs. Now we wait to see what the lack of leadership from Congress and the President will do to the economy … and what the “reaction” will be the next 90 days. (Lack of leadership always results in “reacting” rather than managed responses and commonsense)
• After a strong January, for the month of February the Dow rose 1.4 percent, the S&P 500 gained 1.1 percent and the Nasdaq advanced 0.6 percent. Not robust, but positive even though the Dow did not match or exceed highs as the media seemed to imply as they attempted to prime the pump for the economy. This economy is stagnant at best and most likely will continue the saw-toothed up-and-down trend for most of the year. How the lack of leadership in Washington D C will play out won’t take long.

How do you feel about your investments?

How do you feel about your job security?

How do you feel your company/employer will manage in today’s volatile times?

Do you feel the governments (National, State, and Local) are helping businesses and individuals succeed for this year and the future? Are you concerned or confident?

© Phil Hoffman 2013. All rights reserved

Now What?

The past week and the past month have been something of a roller coaster ride on many fronts. I don’t blog about politics but there are certain world issues that affect us all that I believe we need to be cognizant of and just think about.

1. The Election is over … now we know who the leadership is and an idea of what is going to happen
2. The Fiscal Cliff has now moved into focus and will be a major subject the next several weeks … these issues affect all our lives …
3. The leader of the CIA has resigned
4. The Secretary of State and other cabinet leaders are expected to start resigning so we get to see some new tweaks and adjustments taking place that will affect us
5. The “personalities” of Congress will now reclaim attention since the Presidential Election is over
6. The Federal Reserve shot its last bullet with the last interest rate reduction so they will not be able to do much to impact the economy other than share their ideas, perspectives, and suggestions
7. Revising of the healthcare system to implement Obamacare will pick up steam
8. Business leaders have a sense of what is going to help or hinder their business and will start making decisions according to their knowledge and perspectives … their job is to look out for their business
9. We should see a better defining of the “new normal”
10. With the Election over we will start hearing more about foreign affair issues … with both our friends and enemies … both good and bad

These issues and others will have a significant effect on all of us. It may be wise to simply think through the ramifications of these issues and how they will affect you, your career, your future, your investments, your lifestyle, and your family.

What are your thoughts on the foreseeable future?

© Phil Hoffman 2012. All rights reserved

It’s the 2nd Half of the Fiscal Year (an election year) … what should we be watching

I try to avoid blogging about the stock market and politics, but these are interesting times that require that responsible people take notice of what affects us. Or as Adam Hamilton recently noted, “Our democracy rises or falls based upon the willingness of thoughtful people of moral courage and conviction to participate in the political process.”

Not Normal Times

These are not normal times. I tell my friends that we are in a “historical global economic crisis” that is going to be impactful on the rest of our lives … and our children’s lives. Even in normal times, the stock market forecast lacks precision. And I believe we have all learned we can’t trust the projections of politicians. Right now, we have the Euro-economy at risk of breaking apart, the U S economy is wobbling on the edge of the fiscal cliff, and the Republicans and Democrats are locked in an election year feud about how to address or stimulate the U S economy.

 Six Things to Watch

We are in the last half of this fiscal year … an election year … and while it is impossible to predict the markets, there are certain things we can watch to see how they play out and how they may affect us. Here are six factors I think are noteworthy:

1.  Fed… will the Federal Reserve provide more stimulus (or stimuli)?

Will Chairman Bernanke decide to ride in on his white horse and attempt to rescue the markets again by injecting money into the market to stimulate the financial system? I notice where Sam Stovall said, “The Fed has one bullet left, and they want to wait as long as possible.” Is the Fed becoming our real life Barney Fife? The Fed’s next meeting is Sept 12 – 13 … if it doesn’t announce new stimulus will the markets be disappointed?

2.  It’s an Election Year: Romney or Obama?

Just before a presidential election is always a time of uncertainty … and investment advisors are stymied as to which policies might be put into effect until the winner is determined. It is obvious that the economy is affected by fiscal, monetary, and regulatory policies … and these are normally determined by who wins the election. For example, which trade policies and banking regulations are manipulated or influenced by who wins the election. Since World War II, stocks have suffered losses only three times in election years (according to LPL Financial). Rallies tend to get stronger as Election Day nears and policy clarity improves.

This year’s election is very important … lawmakers need to come up with a solution for the huge debt load … at risk is another credit downgrading … plus Congress must act to avoid the U S falling over the “fiscal cliff” … battling growth-stopping higher taxes and spending cuts. A real dilemma that must eventually be addressed.

3.  The Fiscal  Cliff… will we go over the edge or a close call?

The budget for Jan 1, 2013 has many problems … the Bush tax cut issues … temporary payroll tax cuts will expire … and least we forget that the Congress voted in nearly $100-billion in automatic government spending cuts that are also scheduled to kick-in. As Bill Stone with PNC put it, “The approaching fiscal cliff is big, scary, and yet avoidable.” And we know that it must be avoided if the economy and markets are to avoid falling into a recession the first half of 2013. Bets are a deal will be struck … but most likely not until after the election.

4.  Europe … after the Olympics will they break up or make up?

Who really knows how their debt crisis will end? Will the PIGS* fall like dominos? Do you really think a bad outcome in Europe is priced into the market? This has a bigger impact on the U S economy than most people realize. (*PIGS = Portugal, Ireland, Greece, and Spain)

5. Policy has to be made … “right” decisions are a must!

To quote Ewen Cameron Watt, chief investment strategist for BlackRock Investments, “The fate of markets for the remainder of the year will be dominated by three factors: policy, policy, and policy.”

The USA faces key decisions on taxes and ways to boost growth while trimming the ballooning budget deficit … any of which are a negative impact on the market. The European situation has to be addressed eventually, and China’s challenge of dealing with an economy that is not booming like it once was. All these factors impact each other and all of us.

The U S needs to come up with a tax policy that promotes economic growth and reduces uncertainty for businesses … a long-term solution that will give businesses the confidence to invest and hire workers. Simply put, a business can’t operate within a government that operates quarter-to-quarter when businesses require confidence to go forward with a new plant that will take three years to build and startup.

6.  China … can’t be ignored

China is the world’s second largest economy. And it has tried reinvigorating its economy with two interest rate cuts that appear to be working. They are currently projecting to grow at 8.5% in 2013,  up from 8% for 2012. They clearly state that they will do what is necessary to keep its economy strong. We are in a situation where if Europe goes flat line we can possibly survive, but if China falls into recession our hopes for a recovery are most likely over. Hard to believe we are at this juncture in history.

Thoughtful … moral courage and conviction

It will be interesting to see where things evolve over the next several months. As one analyst put it, “the odds are that not every worst-case scenario will come to fruition.” But we must keep up with what is going on that is affecting us during these difficult times. Or as Adam Hamilton recently noted, “Our democracy rises or falls based upon the willingness of thoughtful people of moral courage and conviction to participate in the political process.”  My suggestion … go vote with courage and conviction in your rights.

What’s your take on the markets … the economy?

© Phil Hoffman 2012. All rights reserved

How Do I Increase Sales?

There is a recent poll listing the issues that showed sales concerns have grown from less than 10% in 2000 to nearly 22% in 2011 for small and mid-sized company owners and executives.

It is usually a given that to increase sales revenue you have to increase market share. So how do you increase market share and increase sales during a down economy? First, you have to understand the Big Picture.

It is generally understood that there is a limited amount of revenue to be garnered in any market. When the economy is down the amount of money available shrinks making it more competitive and in an extended down economy the “tightening” of the market can almost be felt. Furthermore, increased sales in one company, and sometimes just maintaining sales in a poor economy … usually means loss of revenue somewhere else.

Differentiate

So how then do you increase sales in this difficult time? Is it even possible in a down economy? The right answer is to give your customer a clear and compelling reason to buy … differentiate yourself … your company. Simply ask, “with all of the goods and services available to your customers in your market why should I buy from you?”

The answer is you have to offer a Value Proposition. If you’re the same as everyone else you’re a commodity, and that means you eventually get forced to compete on price. Basically, there are four ways to increase sales in any economy, and they all center around giving your customers a reason to buy. These reasons are:

1. Lowest price
2. In-Stock Availability of Best Selection / Inventory
3. Fast Delivery or Quick Ship
4. Best Perceived Value – Value Proposition

Let’s look at these options:

No. 1. Of these lowest price is usually the go-to short-term answer. Unless you are a major player in a market with high volumes, volume based buying power and high efficiency, this isn’t usually a good business model. (It’s hard to out Wal-Mart Wal-Mart.)

No. 2. High in-stock inventory and premium selection are tied to volume, and causes you to tie up cash that could be used for something else. This demands high and quick inventory turns to compete. (Same for fast delivery / quick ship)

No. 3. This leaves us with Best Perceived Value … or Value Proposition. Most businesses don’t sell on perceived value because they haven’t taken the time to define it, they don’t understand it, and their sales people don’t understand it, so how can their customers understand it? If this is your situation, you need to address it professionally as soon as you can. Without a good Value Proposition Plan you will most likely be forced to go back to price … and it’s hard to win at that game especially in a down economy and make any profit.

When demand is high, companies can get by with a poor value proposition. However, when market demand falls off, companies without a Value Proposition Program generally lose market share. And the companies perceived to offer the best value by their customers get a larger piece of a smaller pie. Realize, even if you get the same number of pieces of the smaller pie, it is still less volume.

Do you have a Value Proposition Plan / Program?

Do you know how to implement one?

© Phil Hoffman 2012. All rights reserved