C4E Update 1.18.15

In class this week we finished up our storefront project, as well as the presentation associated with it, as well as we finished selling our sock inventory. I am a little bit worried that we made one or two mistakes in the outline that we sent in to the bank. Our group did a relatively poor job of working in tangent with each other, and while we edited and spent extensive time going over the outline, I'm hoping that our hard work was reflected in our end product. In retrospect I would have tried to take on more roles in the storefront project itself. I didn't particularly feel that the other members of the group were putting in the same effort that I was putting into the project. I think that I would feel a lot better about what we sent in had I had my hand in more of the project and knew exactly what went in and where. But live and learn. I don't think that the problem lies in others inability to do work well, but my tendency to want control. I never like group projects because in parts the work reflects work that isn't mine. Thus, if I don't know and trust my group member(s) well enough to trust in their work, I feel uncomfortable accepting that as part of our project. While I think that that can be hurtful to the cohesiveness of the group, I do believe that this is a component of my competitive edge, an advantage that I have. I want to win more than anyone else. I think that is why I feel so drawn to competing in athletics. In school, and this business world, this manifests itself through the effort that I put into my work, especially the work that I feel particularly inspired by. Thus, I'm really hoping that we did well here. We also spent time this week creating our presentation for Ms. Stevens and Mr. Fischer Tuesday which I am excited about.

The Millionaire Next Door p. 140-175

In this portion of the book the author discussed the notion and dangerous of the concept known as "economic outpatient care" or EOC. EOC is when wealthy parents financially support their adult children through annual payments, gifts, etc. While this concept sounds beneficial to the adult children of wealthy parents, in many ways it can be harmful. According to the author there are numerous well known studies that show that the overwhelming majority of those who receive EOC from their rich parents are relatively low income earners. The majority of successful millionaires are people who were taught independence and frugality at a young age. They are people who's ability to survive was based on the success of their business. Had they not strove to create the best possible business that they could, then they wouldn't be able to pay their bills. Oppositely, people who continuously receive cash gifts from their parents are typically underachievers. They don't have the same stresses as the people mentioned above because they are confident that whether or not their business does well, they will have a source of income either way. Extensive studies show that these people are the least likely to be successfully economically in life. The one exception to the EOC rule is education. In a study on millionaires, 80% of those questioned believed that their education was one of the most fundamental and important resources in their financial success. The overwhelming majority of millionaires had parents who took the brunt of the cost of their children's college educations, leaving them without debt or with minimal debt. My parents have always told me that my inheritance is my education, and that I don't have to worry about the cost of college, but that is all I'm getting. Thus, I hope that my frugality and my work ethic allow me succeed in business. And I'm confident that I won't be left with boatloads of student debt, as many recent graduates become.

C4E Update 1.9.15

In class our group focused on finishing up the documents that we are sending in to Mr. Gladstone and the bank this week, as well as selling the rest of our sock inventory. A lot of energy was put into changing our predicted first year numbers to make them more plausible, as well as making our final product look presentable. We had a slight issue putting the document into one file since there were issues translating the format from a word document to a google drive, but I think our work is thorough enough were that shouldn't cause a huge problem.
Additionally, we were able to sell the rest of our sock inventory. Our initial strategy to sell the socks to the basketball team was a success. We sold pairs to all the varsity players, as well as a few junior varsity players. Our other buyers were close friends who wanted the socks. The socks were well liked by everyone who bought them, and I'm convinced that we could continue to make money off this project if we continue to try to sell socks in bulk to teams. It may be worth trying to find a cheaper supplier of the socks though since our margin of profit is only around $2.50 per sock.

The Millionaire Next Door p. 100-140

This portion of the reading discussed frugality, and both some common consumption tendencies of millionaires, as well as common investment strategies of millionaires. While the term frugality has been commonly used throughout the book, the author gave specific examples of how the majority of millionaires in America are frugal. The author described the consumption of automobiles by the wealthy. In his studies the author witnessed that the overall majority of millionaires in the United States had never spent more than $30K on a car. My favorite part of this section was when the author described the most common cars that millionaires have, the Chevy Suburban, the Jeep Grand Cherokee, and the Ford F-150. This was my favorite section because these are three of my favorite cars, so it's promising to know that they would suit me as a millionaire. The author includes in this portion the ways in which most millionaires purchase cars. The overwhelming majority were frugal buyers, spending monthly speaking to different dealerships in search of the best deal. These are life lessons which my parents have taught me since I was young. My mom recently bought a new car, which she had been in the hunt for spanning out over a full year! Another interesting topic evaluated by the author in this portion of the book are the ways in which the most successful millionaires in the country invest. The author found through his studies that the majority of successful millionaires in the country are independent investors who are independent. They study specific sectors within the stock market where they may have some sort of expertise. They are not overly active in their investments; the overwhelming majority won't touch their investments until they've been in the possession of the investor for over two years. Oppositely, those who don't succeed as well in the stock market are those who shop around for investing expertise. Rather than being independent, they are reliant on cold callers, and other people trying to make a quick buck. In addition, these people are typically overactive in their investments. Rather than allowing their investments to appreciate, they are constantly making changes to their investments, sometimes even weekly. Rather than having any special knowledge in one area, they spread out their investments, even into fields where they have zero expertise.
What I took from this portion was that in terms of investments, it's best to be independent and focus on a couple of sectors to invest in, or stay away from depending on the trends in that sector. In addition, buy the cars that you like (for me) rather than ones that attempt to display status.

C4E Update 12.19.14

This week in class we've finalized parts 4-6 of our storefront project, which consist of the budget and other expenses, as well as ordering and receiving our first shipment of the BHS socks. While I feel confident that we are going to be able to go forth with our storefront project based on the work that we have put into revising and finalizing it, I am very excited about our sock idea. We sold the majority of the first batch to the basketball team, and a few lucky mortals. We've already been approached by many people asking where we got the socks and where they could find a pair. Jack and I are excited to continue this project and see that it grows and that we have some extra money to spend. Once through with this project we hope to continue to market the socks and sell them for our own personal financial gain. We were very pleased with the quality and design on the first batch, and feel that with all the hype surrounding the new mascot, as well as a partial rejuvenation of school spirit within BHS, that we could really benefit from our sock business. I honestly think it's really stupid that it took a couple kids in a business class to come up with this idea. Kids love being able to throw their school mascot on some apparel, whether that be a t-shirt, socks, sweatpants, etc. At any other school in the country the school itself would recognize this and would be able to benefit from the profits from the merchandise that it sells itself. But the truth is that I am glad that the high school has not caught on yet since it allows us to monopolize the ever growing sock industry.

The Millionaire Next Door p. 80-100

I came across some very interesting findings in this portion of the reading that I wanted to share, because I found them to be obvious, yet important to reiterate. The author throughout the book has established the differences between what he calls a PAW and  UAW, a Prodigious Accumulator of Wealth vs an Under Accumulator of Wealth. In his comparisons he makes through the book, he uses PAWs and UAWs who make similar incomes, and differentiates why one's net worth is significantly higher than the others. He discusses a study where he asked a group of combined PAWs and UAWs what their overall life goals were, and more than three fourths responded: to become wealthy by the time they retire, to increase their wealth, to become wealthy through capital appreciation, and to build capital while conserving assets. Interestingly though, while both PAWs and UAWs answered similarly for the first question, the second question was almost split perfectly between PAWs and UAWs in their responses. The second question asked about time allocation and financial planning. It was an agree or disagree question. The overwhelming majority of PAWs agreed with these statements: I spend a lot of time planning my financial future, I have time to handle my investments properly, I place the management of my own assets above other activities in my down time. As one would imagine, the overwhelming majority of UAWs did not agree with the above statements. This fact clearly states a theme throughout this book which has been clear and constant; that accumulating wealth is not hard, it just takes planning, hard work, and brain power. Everyone wants to succeed in life. I'd imagine that the majority of Brookline High School would agree with all of the statements above from the initial question asked that all PAWs and UAWs responded similarly to. The only difference is the way that those who succeed and the way that those who don't go about accomplishing those goals. It's reassuring to know that I don't have to be some high accomplished surgeon or politician when I grow up to accumulate wealth, but rather simply have a financial plan and stick to my set goals.

C4E Update: 12.12.14

Last week in class we continued to work on our storefront project. After finishing parts 1-3, we had to begin parts 4-6. Parts 4-6 is the less idealistic business stuff, but the more practical. I had to draft and write up a tentative budget for our doggy day care service. While a budget is such a straightforward and seemingly basic document, it is incredible difficult and tedious to have to write up. There is so much unknown when starting a business regarding how much money needs to be spent and where those funds should be allocated. I found that whatever I imagined the price of something to be, if I doubled that value I would find my estimation to be much closer to the actual value of the goods. One of the more tricky aspects of this is that the storefront of Boylston St. is so run down and disgusting, that there is so much necessary money to be spent on simply repairing and sprucing up the appearance. This paired with the normal costs of starting a business i.e. permits, insurance, utilities, etc. means that we are spending a lot of money in places that we didn't originally anticipate.
In our $200 project we are in the process of ordering our BHS themed logo socks. The reason that it took us so long to do this is because we wanted to ensure that we are ordering the right product. Many of the sewed on designs that we found on line seemed shabby and poorly done. We really liked the idea of socks where we could print on an image because through that process we could ensure that the product design would come out a lot nicer and cleaner. We've been working hand in hand with the assistant athletic director Mr. Williams on this project, and he ordered a couple pairs from the same distributer with our design on it that we could use as models. We're happy we did because we ended up liking a design that changed a bit from our initial one, now reading "Brookline Warriors" under the spartan logo. The socks came out likely and different sports teams have expressed interest in purchasing them. Our next step it to order them and then to push them off, which we anticipate will happen completely within a couple of days.