The Future is Your Decision

From our July 2011 Creating Confidence Newsletter.

Last Tuesday the 12^th, I spent the morning at the Vistage All City meeting. Our speaker was Brian Beaulieu, a respected economist from the Institute for Trend Research. Brian’s talk, The Future is Your Decision, offered perspectives for CEOs and individual investors based on his trend research.

I found his information useful and have summarized his thoughts below.

Overview

There are 3 mega-trends to be considered when making decisions about your businesses or when investing:

1. Demographics, the World and the US have increasing population. More people = economic growth
2. Inflation, not hyperinflation, but easily 4.5% to 6%
3. Taxes are going up

2011 and 2012 will be periods of modest growth, with continued high unemployment. At the same time, it will be increasingly difficult to fill certain knowledge based positions because our workforce is a) immobile due to being unable to sell their existing homes and b) inadequately trained for the type of jobs available.

2013 and 2014 will likely be a modest recessionary period like the early 1990’s but not as deep as 2008.

Commodity prices are on a temporary rest. 2012 will see increasing commodity prices on items such gold, copper, oil and agricultural products.

The US represents 26% of the world economy. While we are the largest economy in the world, our share of the pie is growing smaller and opportunities exist in emerging economies for investment and doing business. Think Brazil, Australia, and India.

There will be ongoing weakness of the US dollar.

Housing will no longer be in recession but will not be in recovery. Over the next 5 years people will rent and not buy.

Interest rates will remain low and may creep up in 2012 and 2013. A 2014 recession may provide a temporary restraint on rates. Currently we have the lowest rates we will see in our lifetime. Borrow long term, taking advantage of fixed rates now and repay with cheaper inflated dollars.

Remember that normal today is tomorrow’s abnormal.

For Businesses

Look for customers in these growth segments:

• Exporters
• Alternative Energy
• Health care
• Professional services such as law and accounting
• Higher education
• Overseas in India, Brazil, Canada and Australia

Inflation will hit the labor market in 2012. You will need a strategy to employ a mobile workforce. Training programs are more critical than ever, given that you may not be able to find the skill you want in the workforce.

This is a good time to buy other businesses. If you have not positioned your business for sale, you likely do not have time to do so before the next recession. The next good selling season will be 2017 and 2018. Position now to be ready.

Do not let the pain of the past color your vision for the future. Find a sector of your business that is entrepreneurial and expand that segment.

In periods of inflation, metrics and monitoring are critical.

If you cannot raise prices, sell that business unit. Raise prices more frequently and in smaller increments. Think 1% to 1.5% per quarter instead of 4% a year.

For Individuals

The stock market will continue to be volatile thru 2011. Brian is bullish on 2012 and then expects a lackluster market. Position portfolios to take advantage of the 3 megatrends noted earlier.

Invest globally and position your portfolio to include commodities and other investments that do well in periods of rising interest rates and inflation.

Refinance your home if you have not already done so. If you are young and have equity in your home, consider borrowing the equity and investing it outside your home.

Summary

Brian closed with a quote from Dr. W Edwards Deming. “It isn’t necessary to change, survival is optional.”

That sort of says it all. If you can’t love change, at least accept it and position yourself for it. As with any of these ideas, it is best to a) run the numbers for your personal situation and b) consider the impact based on your personal goals.

As your Wealth Advocate, we are here to guide you and your business thru the coming changes. If you have questions or need our assistance, please contact me at Mackey@MackeyAdvisors.com or our team at 859-331-7755.

May prosperity be yours,

Mackey

Never Lose Hope

by: Harvey Mackay

In Greek mythology, Pandora opened her fabled box and let out all evils except for hope, which the Greeks considered to be as dangerous as the world's other evils. Soon they discovered that without hope to offset their troubles, humanity was filled with despair. So Pandora let out hope as well. In the myth, hope was more potent than any of the other major evils.



In modern times, we consider hope to be anything but evil. It's what gets many of us through our worst days. Lingering unemployment, foreclosures, dwindling retirement funds, businesses folding -- any of these could make a person lose hope.



Fortunately, Pandora recognized the relevance of hope -- an element that is critical to our very existence. In the current business climate, hope is what keeps us from throwing in the towel. I'm a realist, but I'm also an optimist. And while hope and optimism are not exactly the same, they are intrinsically linked.



For example, I am optimistic that the economy will eventually improve, and I am hopeful that we can learn lasting lessons from events that led to our business challenges. But I can't just wait and hope. I have to help things happen.



Hope looks at what is possible and builds on that. As former television executive and author SQuire Rushnell (yes, that's the way he spells his name) puts it, "Take the 'imp' out of impossible!" Instead, he says, read it as "I'm possible."



In one of my favorite inspirational books, Tough Times Never Last, but Tough People Do, my friend Robert Schuller offers up this observation: "Understand the power of this word: impossibility. When uttered aloud, this word is devastating in its effect. Thinking stops. Progress is halted. Doors slam shut. Research comes to a screeching halt. Further experimentation is torpedoed. Projects are abandoned. Dreams are discarded. The brightest and the best of creative brain cells turn off. In this defensive maneuver, the brain shelters itself against the painful sting of insulting disappointments, brutal rejections, and dashed hopes.



"But let someone utter the magic words, it's possible. Buried dreams are resurrected. Sparks of fresh enthusiasm flicker. Tabled motions are brought back to the floor. Dusty files are reopened. Lights go on again in the darkened laboratories. Telephones start ringing. Typewriters make clattering music. Budgets are revised and adopted. 'Help wanted' signs are hung out. Factories are retooled and reopened. New products appear. New markets open. The recession has ended. A great new era of adventure, experimentation, expansion and prosperity is born."



This advice, penned more than 25 years ago, is just as pertinent today. In fact, when you consider the advances of the past quarter century, look at how we have changed the face of businesses: Did anyone have a website in 1985? What was your cell phone number? Were you video-conferencing with your South American office with the touch of a button?



What will the next 25 years hold? I suspect that coming generations will use their technologies in ways we are just beginning to imagine are possible. I am certain that products will be developed that will make life easier, safer, and better. I have every hope that we have the brainpower and the will to do just that.



But we cannot accomplish much at all if we don't have hope. Hope is believing that every cloud has a silver lining, and when that cloud rains, it makes things grow. And then the sun comes out again.



British anthropologist Jane Goodall has spent more than 50 years conducting landmark research on wild chimpanzees and great apes and observing the tremendous power of nature to restore itself. She shares these thoughts:



"I carry a few symbols with me … to remind me of the hope that there is in the world: the human brain, with the technology that we are now working to try and live in greater harmony with the environment; the resilience of nature; the tremendous energy, commitment, excitement, and dedication of young people once they know what the problems are and we empower them to act to do something about it. And finally, the indomitable human spirit, those people who tackle impossible tasks and won't give in … that are shining inspiration to those around them."



Mackay's Moral: Hope for the best and then find a way to make it happen.



[This article appears courtesy of Early to Rise ]

COBRA Premium Subsidy Program Extended

On December 19, 2009, President Obama signed into law the Department of Defense Appropriations Act, 2010 (DOD) which extends the 65% COBRA premium subsidy to February 28, 2010.

The American Recovery and Reinvestment Act of 2009 provided a government subsidy of 65% of the cost of COBRA coverage for employees (and their eligible family members) who lost their health insurance coverage due to involuntary termination of employment in 2009. The subsidy was to last for up to 9 months. The DOD extends the subsidy to 15 months and includes eligible employees (and their eligible family members) who lose their jobs in January or February of 2010.

Growing through the Recession

At Mackey Advisors we have two main lines of business. Our personal financial planning division and our business services arena offering financial advisory services to small businesses in the area of tax, accounting, Controllership and CFO consulting.

As President of the company, the bottom line is my responsibility, which has been no walk in the park this year. I have updated our revenue forecast and reprojected our budget more times this year than in all the 27 years of my business career combined. As business clients cut back their budgets, some cut their service level with Mackey Advisors. We took that time and repurposed our efforts to marketing.

Having more time to tell our story has paid off. We are now experiencing a higher level of growth than at any time in our 27 year history. Recession? Maybe it is just another word for opportunity.

Mackey McNeill, CPA/PFS
President and CEO
Mackey Advisors
www.CultivatingProsperity.com

Finally! CEO Compensation moves toward accountability!

If you are like me, you just want the recession to go away. Enough already! Yet as I rail against this downturn, when I pause, I see it as a “reset.” We are long overdue for some of the changes we are now seeing in the marketplace.

For example, exorbitant CEO compensation has continued its upward spiral since the 1970s. Only in this economic downturn has some semblance of sanity returned. Check out this New York Times piece click here for full story that discusses a recent study documenting a decline in CEO pay and benefits. And imagine this: there is now a trend toward tying CEO compensation with company performance. Hmmm. Nothing new here to most of us. This is how small businesses have always run. Your company does well, you do well. Run your company into the ground, you suffer. This is a back to basics idea.

Let’s use the recession as a time to reset, back to the basics!

May prosperity be yours,

Mackey McNeill, CPA, Personal Financial Specialist, IAR

President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

The Scream of the Lizard

I recieved this e mail from Bob Veres (more on Bob below) and felt it was on target .. and puts yesterday's market in perspective.

I hope you enjoy it.

I don't know about you, but I'm feeling just a little beat-up at the moment, and not totally because of the stock market.

Today's returns, trickling in all day, reminded me of a time years ago when I foolishly allowed my children to talk me into accompanying them on a roller coaster ride at a theme park called Sea World. For most of the day, we had been staring at sharks that were safely housed behind thick glass, and polar bears behind even thicker glass, chilled in the penguin area and splashed while watching the killer whales throw their trainers 20 feet or more in the air.

It was a good day, and I still felt good about it as the roller coaster ominously rose into the air, but the people who built it were really clever, and after we crested and fell, nobody noticed that the dip was only about half of the distance we had climbed up, and I was breathing a sigh of relief while my children were pouting in disappointment.

Then the rollercoaster climbed again, and as we crested this secondtime, I looked down and saw that the rest of the park was inhabited by tiny creatures who were either ants or fellow humans who were dangerously far below, and I had just enough time to consider the implications of this and work up a good anticipatory fear when our car crested the top, and fell straight down and--this is the truly scary,fiendishly clever part--WE COULDN'T SEE ANY BOTTOM. The designers had created a fall where the bottom was invisible to us until we actually splashed into the water.

The park had an automatic camera which took pictures of the people in the cars on the way down, and the expression on my face closely resembled that of a heart attack victim, except for the greenish skintone. My kids looked overjoyed.

After the concerned woman from in a park uniform had helped me into a seat and asked me if I thought I needed medical attention, I remember thinking that, in retrospect, it was obvious that there WAS a bottom,and that I would survive, and that nobody had reported a large pile of blood and bones that was the remnant of others who had experienced this particular ride. So why was I so scared? Couldn't I have told myself that I would survive, that everybody else who had ever gone into this particular fee-fall had survived, and simply enjoyed the trip?

No, I couldn't--and I think that's what I'm remembering now. As soon as the roller coaster car crested the top of the tracks and I looked down,the lizard-like part of the back of my brain took over total control of my thought processes, and it screamed, against all logic and against many things I knew to be true, that I and my children were about to die,and it sent a surge of adrenalin and signals of dread into my system so strongly and thoroughly that it was a few minutes before I could standup, shakily, and go pet the sting rays.

This, of course, is what virtually all investors are feeling right now as we ride the roller coaster that is the investment markets, and whoever designed this particular free-fall was even better than the designers of that Sea World ride. I know that there is a bottom somewhere in front of me, and I know that the relentless tide of bad news will end and I know that at some point in the not-too-distant future, I will look at a graph of the markets and see a blip that started last Fall and ends somewhere, hopefully soon, and it will look as inconsequential and trivial as the October 1987 crash looks today, or the little jiggles that represent the 1930s, and I will wonder why we were all so damn worried.

And I will have forgotten--because we always forget this--that the lizard-like base of our brains sometimes decide to take control, and all our knowledge and all our intelligence is neutralized by a little lump of tissue that has no understanding at all of what's going on, no perspective, nothing except an "on" switch which, when triggered,activates a complex, instantly powerful native algorithm which screamsinto our brains and throughout our bodies that there is a saber-toothed tiger right behind us and we should be running for our lives.

This, of course, is the voice in the ears of investors all over the world today and, to some extent, for the last several months. All of us know, in the cortical part of our minds, that we signed on for a rollercoaster ride and that we will not die as a result of taking this ride down. But for most of your clients, for many investors, the game has suddenly gotten too tough, and their lizard's shout is winning the contest against your calm, reasonable, measured tones, your facts and figures, your perspective and experience.

The hell of it is that we, ourselves, design these roller coasters; they are a product of mass psychology. When the lizard's shout finally drowns out the last bit of reasonable perspective, the markets hit bottom because that is precisely when there is the maximum fear--by definition.
Then, again by definition, the markets begin to rally into what may be the next bull market or may be a sucker's rally opportunity to sell a little bit at a little less of a loss in hopes of recognizing the nextbull. The lizard's shout becomes less loud, people become hopeful, they buy back in at a higher price than they sold, the market moves upward until either the lizard screams again in panic or--the sure sign of a bull market--it starts tickling peoples' minds with a kind of panic that MAYBE THEY'LL GET IN TOO LATE as the roller coaster climbs again.

This, too, is our own creation, more tracks created by more mass psychology, aided and doubtless magnified by the echo chamber of the financial media and a thousand pundits who know no more than the lizard about where the markets will go tomorrow or next week.
I'm one of those financial media types, and also a pundit on occasion,and I can tell you that I can hear the lizard's scream echoing across the financial landscape, so loudly that it's hard to remember that stocks are on a fire sale now and they are certainly a hell of a lotless risky than the were last August, and that these rides are seldom fatal to those who stay in their seats, and they are usually at least harmful to those who panic, unhook their seatbelts and jump over the side toward the distant ant hill below.

I can hardly wait to look back on those charts and wonder what the hell we were thinking getting so panicky about a blip, and I know at that time that the lizard will be giving me a different message: that if only I'd had the sense to buy when everybody else was selling...

This too shall pass, and 99% of your brain knows it. The market belongs to the lizard now, and I am ashamed to admit that I, the pundit, the media guru, still feel that sense of panic on the way down, irrational as I know it is. I feel it so much that sometimes I can barely hear the rational part of my mind over the screaming that echoes that are calling up from a deeper part of my consciousness. I would curse the designer of this roller coaster, as I did the fiend who put that damn thing up at Sea World, but I'm afraid this time it is us, collectively, who designed our own fear machine.

And this is the moment, here and now, when the picture is taken.

Best,
Bob VeresInside Information HYPERLINK "http://www.bobveres.com" http://www.bobveres.com

Bob Veres is a nationally recognized leader in the independent advisory community. He is the author, creator and founder of, Inside Information is a master study group whose members are the leading practitioners in the financial planning profession.

The world is different

Things have been changing and until this recession few were noticing. The recession is a wake up call. Especially for those of us in business. We must begin to think differently.

I recently received an e mail with a Tom Peters post that said it well.

click here to read the post

May prosperity be yours,
Mackey McNeill, CPA/PFS

President and CEO

Mackey Advisors

525 W 5th Street Suite 318

Covington KY 41011

859-331-7755

Mackey@CultivatingProsperity.com