There is no “new normal”. Why is the stock market disconnected from the economy? The “Spoke-and-Wheel” entrepreneur technique. Your first “30 Day Book Challenge”. Basics of storytelling / copywriting.
There’s not going to be a “new normal”. And what was so great about “normal” anyway? This newsletter is for people who don’t really want to go back to “normal”.
The Great Reset is happening. A different world is being created.
Trillions of dollars have been airlifted onto this economy and is going to change everything you do, every opportunity you think you have, every news event that has cast its light onto society.
The goal of this newsletter is to find the signal in the noise: provide important new information about The Great Reset. What is going on in the economy? What skills you need and step-by-step tutorials on getting those skills. Business opportunities and step-by-step how to execute on them. And fun.
I’m not an expert. Nobody is. I’ve been crushed by waves before. When I sold my first company in 1998, for a brief second I thought I was immortal. I thought nothing could touch me. But then everything touched me, everything shoved me down, I got crushed by all the waves.
It happened to me again and again and again. And maybe two more “agains” after that. I got tired. I got depressed. I wondered, “when is this going to be over?”. When will the pain stop because it keeps getting worse?
The only way I was able to do this was to think outside the box. To reduce the importance of what everyone else was arguing about.
There is unrest. One out of three people in the US were laid off from their jobs. Trillions of dollars, Trillions(!), has been air-dropped onto the economy but where is it? What happened to it? There are protests. There are people dying on ventilators. There are kids who have no idea what will happen to their schools, to their futures. Everyone is arguing.
The wise person doesn’t hide away and theorize. This is just another way of hiding.
The wise person engages fully in the world, Ignores the masses arguing. Ignores the hypocrisy in the headlines. And rises above and sees the challenges, the real problems, and the solutions to solve those problems.
In The Great Reset, I will discuss each week (sometimes more):
- -Trends I’m seeing
- -Business Opportunities where I outline step-by-step how to create the business idea of that week.
- -Persuasion techniques — because persuasion is the same as storytelling and it is with stories that one can travel the bridge from creativity to action to change.
- -Book Challenges — each one will be to write a book in 30 days or less.
- -BS Headline of the Day — not to feel tense about the stupidity of the mainstream but to analyze why society might be so clueless.
- -Alternatives to stock market investing — the stock market is mostly a result of fears and headlines. But there are many alternatives.
- -Idea List of the Day — We must all endeavor to exercise our idea muscles. Translating the dreams into reality.
- - Puzzles worth solving to test our brains.
- -Pop! — What to look for in popular culture that can be more than just a seed, but a plant, a tree, that might go forever.
SHOULD WE CARE ABOUT THE ECONOMY?
The US economy normally spends $4 trillion a quarter, give or take.
Because everyone was ordered to stay home for 3–5 months (and many still being forced to stay home), the number being discussed privately by Federal Reserve governors is that maybe $2 trillion that normally would’ve been spent, has not been spent.
Hence the size of the CARES stimulus package was $2.2 trillion. Replace the money!
Unfortunately, they did not replace it so well. Some notes on the stimulus package:
- money that goes to large companies (sometimes called “bailouts”) does not get spent. That money is used to pay down debt, or is just put in the bank.
- money that goes to wealthy people does not get spent. Sending $10,000 to someone worth $10,0000,000 just goes into the bank and never gets spent.
So probably 2/3 of the stimulus package was put in the bank and will not hit the economy for a long time. It will hit the economy eventually, due to the way banks operate (will explain at some other point), but is not being spent TODAY.
The money that does get spent is the money that was a direct stimulus. The $1200 checks. And only the $1200 checks that were sent to people with less than a few thousand in savings in the bank, which is most people (the average American had $400 in savings BEFORE the pandemic).
Combine this money with some of the unemployment insurance that was given out and we see that about $500 billion, give or take, is actually being spent during this time.
This is much less than needed to restore the economy quickly, despite what pundits are saying.
The rest will be spent, but over the next 12–18 months as banks get more comfortable using the extra money in corporate bank accounts to lend that out to mortgages, small business loans, and so on. But that is a slow process and has not begun yet.
In a few editions of this newsletter I’ll have a basic Economics class so one can see what is really going on behind the scenes.
But today, the important thing is: the money has not yet been spent. And with one out of three people laid off during this period (although many coming back to work now), people are filled with uncertainty.
People ask me: “Why is the stock market disconnected from the economy?” In other words, the economy feels like a wreck right now. Why are the markets over or near all time highs again?
REASONS THE STOCK MARKET IS DISCONNECTED FROM THE ECONOMY:
A) BIG vs SMALL. Example: Starbucks is two blocks away from my apartment in NYC. In between my apartment and Starbucks there are three or four mom-and-pop small cafes.
These cafes did a vibrant business for years. Now…they are gone. Out of business. When the dust clears, it will be seen that Starbucks has gained market share and increased profits for the long run.
(the above image was as of June 25. The final numbers could be worse but they won’t be better).
Across the United States, bigger well-financed companies (i.e. the companies that are on the stock market) are crushing smaller “Main Street” companies.
At first glance, this is horrible. Millions effected. We all agree with this. But we must start interpreting every piece of data with, “where is the opportunity?”
One opportunity is to buy stocks that will gain in market share as result. But this has been happening.
And bit by bit we will explore other opportunities (restaurants vs commisary kitchens, for instance. Other opportunities in ecommerce, in fitness, in fashion, etc).
Walmart, for instance, remained open this entire time because it was deemed “essential”. But a small clothing store was closed down and about 30–50% of them will remain closed and out of business forever.
So the big companies have won, crushing the small. The stock market indices are weighted by the biggest companies, the ones that have done the best during this period, so the indices are not quite a measure of the economy during this period, but a measure of how well the big companies have crushed the small.
Hence, the market goes up. For our purposes, this is neither good or bad but something to note. Eyes must be open to the truth and not to the mindless banter in the headlines or on social media.
The market is often correlated to how much money supply is in the economy. With an extra two trillion coming from the stimulus package, that money will eventually find itself in the markets.
Also, there is anticipation of inflation. Inflation drives up the price of everything that is bought with dollars, including stocks.
There currently IS ZERO inflation. Below is the current inflation index. Since the beginning of 2020 it has gone negative. We are experiencing massive deflation.
Many people ask: won’t there be massive INFLATION?
Again, I will save the reasons why for a future “Economics for the Great Reset” edition of this newsletter. But at the moment, people are more worried about inflation then actually exists.
We often see that often the smartest and the “wisest” are busy with their computers and their theories and ignore actual reality. But people who are taking action quickly realize the truth.
When you get an email that says 40% off clothes at XYZ.com for this weekend only! — this is not really a special sale. These are the ACTUAL PRICES of those clothes.
Rents in New York City right now are 30% down, the largest decrease in maybe forever.
Warren Buffet has called deflation the worst thing that can happen to an economy. Because when people realize prices are going down, they stop buying. Why should I rent in NYC today when it will be cheaper next month? And this creates a deflationary spiral down.
The Federal Reserve would LOVE for there to be inflation again but there are many reasons why there isn’t. In fact, we were probably in a deflationary period even before this pandemic hit.
The only two times in the past century where there was deflation in the US was in 1930–1933, the beginning of the Great Depression, and in 2008, during the Great Recession.
And, of course, we are there now, during The Great Reset.
The market is not a measurement of the economy but a measurement of uncertainty.
During the pandemic the market hit a low on March 23, because Congress rejected the first version of the stimulus bill.
The S&P chart for the past six months.
(S&P for past six months)
The economy wasn’t the worst on March 23. It was even worse in April and May. But the world had the most uncertainty that day.
The economy was shut down for who knows how long. No money was coming. How deadly was this virus? And so on.
The next day, the market shot up because the stimulus bill was passed. So that created a bit more certainty about the finances of the country.
And after that, by mid-April, it looked like virus cases and deaths had peaked (which is still the case that around April 15, the US had hit a peak) and that created a lot more certainty.
Then earnings reports started coming in, the first since the pandemic had started, and whether the news was good or bad at least it had certainty in it. And, also for the reasons above, the markets started to go up and have yet to come down.
D) UNCERTAINTY, part TWO.
I’m normally very bullish and optimistic on the stock market. But I do think the market will take a pause and perhaps (it’s impossible to predict) have another dip down.
There’s a lot of uncertainty:
- how long will things be closed. Originally the US wanted to “flatten the curve”. This meant that the same number of people would be infected by the virus but over a long period of time so as not to overwhelm the healthcare system.
But now the definitions are moving around. Again, there is no point in determining if this is hypocritical or not. Often in society goals, objectives, data, opinions change for many reasons. We cannot fight them (believe me, I’ve tried — and that will be another story for sure).
Much of America wants to lock down until the virus is essentially gone.
There are many things we don’t know:
- what effects does the virus have on people, even children, who are asymptomatic. Do they get other issues in life? We don’t know but there are many rumors being reported.
- will there be a vaccine? Some say “yes”. Others say, “Covid-19 is a variation of the common cold, which is also a coronavirus, and we’ve been working for 50 years on a vaccine for the common cold and we aren’t even close. What makes people think we will have a vaccine for this coronavirus?”
- will the world eventually hit herd immunity?
- are people immune after they get antibodies? We actually have no clue. Again, look to the example of the common cold. There does seem to be some immunity but it lasts about 2–3 months.
- are there any good prophylactic medicines? The answer is that there certainly is although the search for a vaccine has taken precedence, perhaps for poltiical reasons. We just don’t know.
- how many businesses are truly gone? Since much of the economy is still closed, we don’t really know. Yelp has suggested that about 50% of restaurants are permanently gone. I believe this.
The average restaurant had only two weeks of cash on hand when the pandemic began. The PPP loan helped somewhat but now we are over four months later so there has been much uncertainty. We do know that many chains have announced either bankruptcies or store closures. Here are a few:
1. Victoria’s Secret filed for bankruptcy.
2. Zara has closed 1,200 stores.
3. La Chapelle has closed 4391 stores.
4. Chanel stopped production.
5. Patek Philippe stops production.
6. Rolex too.
7. Nike has a total of $ 23 billion in debt preparing for the second phase of layoffs.
8. Gold’s gym filed for bankruptcy
9. The founder of AirBnb said that because of the pandemic, 12 years of effort were destroyed in 6 weeks.
10. Even Starbucks also announced that they will close 400 stores forever.
11. Nissan Motor Co. may close in the USA.
12. The largest car rental company (Hertz) filed for bankruptcy — it also owns Thrifty and Dollar
13. The largest shipping company (Comcar) declared bankruptcy — they have 4,000 trucks.
14. The oldest retail company (JC Penny) filed for bankruptcy — will be acquired by Amazon for a penny
15. The largest investor in the world (Warren Buffett) has lost $ 50B in the last 2 months.
16. The largest investment company in the world (BlackRock) signals a disaster in the global economy — it is managed by more than $ 7 trillion.
17. The largest shopping center in America (Mall of America) has ceased to pay mortgages
The following are major retailers that announced the closure:
- Victoria’s Secret
- Bath & Body Works
- Forever 21
- Pier 1 Imports
- Destination Maternity
- Art Van Furniture
- Olympia Sports
(h/t Hanson So)
Additionally, isolation and anxiety has bred more uncertainty:
- the “Black Lives Matter” protests. These are often peaceful protests and demand well-needed reform but the ensuing violence and corruption of some of these protests for other agendas has created uncertainty. In NYC alone there has been the greatest increase in shootings and murders in decades.
And there is great uncertainty about these protests. What will happen if there is more police brutality? What will happen if one of the officers in Minnesota doesn’t get convicted?
- China / India tensions, including shots fired between opposing armies and people killed
- The elections. The headlines on both sides of the fence are disturbing. Again, ignore the headlines but study the reasons for those headlines.
Some newspapers say Joe Biden in serious cognitive decline. Others say Trump will refuse the results of the election and try to stay in office.
Neither of these headlines are probably true but this is how polarized The Great Reset has pushed world events.
- Cancel culture has spiked. Again, not interpreting, just noting. But it has created a culture of fear in corporations, media, academia. Solutions and reforms are needed. But there also needs to be discussion when people are not afraid.
The people who are ready for The Great Reset are not arguing about these points. They are noting them, they are staying creative, they are staying healthy, and they are looking for opportunities.
How far will cancel culture go? We don’t know. It won’t go forever. Because once you cancel everybody you will have succeeded in cancelling nobody.
There are reforms needed (and I will discuss in a future edition) but my point is that great uncertainty still exists and will eventually pause the markets.
The election will relieve us of some of this uncertainty, but we’ll see. In every poll and in the prediction markets, it’s’ looking like Biden will win.
— — — -
What we do know: every industry will change.
- - content creation
- - fashion
- - food / restaurants
- - consulting
- - video conferencing / events
- - manufacturing / supply chains / logistics
- - education
- - healthcare
- - online commerce: ecommerce / automated commerce / live commerce
- - social media
- - sports
- - travel
- - big data
- - telemedicine, tele-mental health
And so on.
THE SPOKE AND WHEEL MODEL
In each newsletter I will offer some ideas and step-by-step suggestions for how to create a new business or a new side “hustle”.
I don’t like the word “hustle” because it’s not like driving an Uber Eats car is going to make a serious living for someone. “Side Hustles”, I’ve come to realize, are BS unless they can be scaled into businesses. Walking dogs as a side hustle will not make you wealthy. Or even make you a living.
Instead, I will only propose ideas that have the potential to change lives.
Each idea should have the potential for what I call “spoke-and-wheel”.
The wheel might be the core idea, but many spokes can come out of it.
Let’s say you have a philosophy of how fitness should be done and you feel strongly about this idea. That’s “the wheel”.
Spokes for this idea might include:
- - an online course
- - a newsletter
- - Zoom events
- - speaking at real or virtual conferences
- - doing a podcast about fitness
- - writing a book
- - selling activewear that is related to your fitness idea
- - selling equipment
- - integrating your ideas on fitness with diets, supplements, medicine.
- - consulting with other fitness businesses that need to pivot (a “meta” idea)
- - and so on.
You need a strong idea to create a strong wheel. But it’s the spokes that make you money. And not every spoke makes equal amounts of money but will contribute to the other spokes.
For instance, writing a book might not make money. But will brand you as an expert and will perhaps lead to more people taking your online course or buying the activewear you put out.
“But how do I create an activewear fashion line? I know nothing about fashion or manufacturing!”
Don’t worry, we’ll cover all of that.
— — -
First: a 30 day Book Challenge.
Occasionally I will give one of these challenges. It’s a way to make money. Or it might trigger ideas. Or feel free to share with someone.
CAN YOU MAKE A LIVING WRITING BOOKS? ANSWER: YES
The definition of a book has changed. If you go into a bookstore, most books are about 60,000 words and 250–300 pages and fit neatly into one of the topics organized around the different shelves in a bookstore.
This is a relic of the past. A book can be any number of words, any number of pages, and about any topic you want.
A friend of mine, Kamal Ravikant, once wrote a book, “Love Yourself As If Your Life Depends On It”. He wrote it in 2012. It was 8000 words. Maybe he sold over a million copies. I know he did very well with it. He sold it as an ebook and a paperback on Amazon. He self-published it.
People say: “But isn’t it better to publish with a big publisher?”
Maybe sometimes. Maybe not.
When you self-publish you control the timing of book publication, the content, the marketing, the size of the book, the pricing, etc. And you make a greater percentage of revenues per book sold.
Additionally, as my friend, Hugh Howey (author of the best-selling book, “Wool”) has pointed out: self-published books tend to have higher starred reviews on Amazon (i.e. they are better on average) and have higher sales rankings on average (i.e. they sell more on average).
They might not be in the top ten of books, but they are more likely to sell a solid consistent amount.
One friend of mine writes one or more books a month. I don’t know exactly what he is making today but the last time I spoke with him, about two years ago, he was making $60,000 a month.
If every book you write averages $500 a month (some will do more, some will do less), and you write a book a month, then by the end of the year you will be selling $6,000 a month ($72,000 a a year) and that’s BEFORE you add some of the other “spokes” we will talk about.
Should you do this? I don’t know. I will be describing MANY business model and ideas in this newsletter. If you don’t like this one, wait for the next issue. But again, this can get you thinking.
30 DAY BOOK CHALLENGE: 10 SCIENTIFICALLY PROVEN WAYS TO [….]
A) Pick a category that you are interested in and that if you learned more about it, your life will be better.
Maybe “how to have better habits”. Maybe, “persuasion”. Maybe “negotaition”. Maybe, “Parenting”. “Entrepreneurship”. “Memory”. “Antiaging”. And so on.
B). Go to SSRN.com or JSTOR.com. Both of these are databases of academic papers.
C) Let’s say the category you are interested in was “Entrepreneurship”.
I just went to SSRN.com and searched on Entrepreneurship. 9,964 academic papers came up.
D) Pick ten of them. The ten that most interest you.
Here’s one that intrigued me: “Foundations of Entrepreneurship” by a professor from MIT and another professor from Toronton.
Looks like the idea of the paper is that, at any given point, an entrepreneur has many choices, TOO MANY choices, about which direction to go when building a business.
And they give some scientifically significant ways of identifying what the choices are, and whether to optimize what one should do or take action for each choice.
They give a historical example of Walt Disney early on in the paper.
E) Write a chapter:
- - summarize the problem the paper points out
- - summarize their solutions and any studies they did to prove their solutions
- - give 1–3 historical examples, either from the paper or from other entrepreneurs you are interested in.
- - if possible, give an example from your own life.
BOOM! You have a chapter.
- you explain a problem entrepreneurs face. Maybe a historical story of someone who almost went out of business because of this problem.
- you show one or more scientific solutions to this problem
- you tell another historical story or maybe a story from your own life.
There were many other papers I found on this particular search that looked fascinating.
The entire point is:
- scientists don’t write for regular people. So all of these papers need to be “translated” for the layman.
- all of the papers are about real problems that entrepreneurs have faced. Including people starting businesses right now. These papers are written by scientists from respected institutions (which demonstrates “authority”).
- telling stories of historical examples will allow people to relate and will also demonstrate “authority”.
- telling stories from your own life will allow people to relate even more. (and shows “social proof”).
F) Repeat ten times. Now you have ten chapters.
G) Title: TEN SCIENTIFICALLY PROVEN WAYS TO BE A BETTER ENTREPRENEUR
- people like numbered lists: “The ten commandments”, “The four noble truths”, etc
- “scientifically” gives this an important concept in influence (See “Influence” by Robert Ciladini) called “Authority”. People like to read things that have the stamp of authority on them.
- “social proof” — another influence technique. By giving historical examples (which can also be “authority”) and by giving your examples, you will establish social proof.
H) Go to 99Designs.com. For less than $100 you can get a nice cover designed.
I) Now you have a 10 chapter book that is about 20–40 pages. Maybe even more pages. But if you do one chapter every three days, you will have a book in 30 days.
J) Make an audiobook. Go to audible.com and look for their suggestions on making an audiobook. Audiobook sales might be greater than regular book sales.
K) Upload to Amazon as a kindle ebook AND a paperback AND an audiobook.
Many people think self-publishing is just an ebook.
Don’t fall into that trap. Just doing an ebook looks very unprofessional. For free, you can also make it a paperback on Amazon. And you can also upload it to Audible, which is owned by Amazon.
For “Choose Yourself”, a book I self-published on Amazon in 2013, I still make more money per month on the audiobook than on the other versions of the book.
L) Price the kindle, at first, at 99 cents, and make deals with companies like BookBub to market your book at launch.
M) You get to pick up to ten categories to put your book in. Make them as niche as possible because, for at least a few of the categories, you would like to be #1.
For instance, the #1 book in “Textbooks/ Business Entrepreneurship” (so it’s a “bestseller”) is ranked #2859 in the overall Amazon store. That means it probably sells about 50–80 books a day.
That’s not a lot. On the day of launch if you also have some marketing efforts going and you have all your friends buying then suddenly you will have a bestselling Amazon book. For other categories, you want to be in categories where there is a lot of demand so people see your book, see that it is a “bestseller” and will take a closer look.
N) How do you do more marketing for your book?
I will cover this more extensively later on. Marketing a book deserves an entire edition of this newsletter.
But the first rule of marketing a book: write your second book. You can try the technique I’ve outlined above but in other categories. Or, in future issues of this newsletter I will outline more 30 day book challenges.
Also, don’t forget the spoke-and-wheel approach. Now that you have a book, you can do consulting around it, speeches (either virtual or, as events start to happen again, at real events), make a podcast around the ideas of the book, etc. Spokes!
HOW DOES ONE WRITE A STORY? THE BASICS OF COPYWRITING.
After I sold my first company I went dead broke within two years. I remember looking at my bank account by accident at an ATM machine: $143.
I was going to lose my house for sure. I had no way to save it. And I assumed people would hate me since I hated myself.
I had two baby girls and I thought about killing myself because I was so worthless it would be good if they forgot me and I thought that my life insurance policy was worth much more than them having a father.
I couldn’t wake up every day. I couldn’t think. I went to a psychiatrist and he asked, “how can I help you?” and I said, “the only thing that can help me is if you write me a check for a million dollars.”
He laughed and said, “I don’t think that will help you” and at the time I thought he was wrong.
One day I wandered into a restaurant supply store.
I bought 100 waiter’s pads for $10. I thought they were beautiful. The size. The color. The “working” feeling they gave me. I started writing on them. Not articles because they were too small.
Just lists. 10 ideas a day. 10 ideas every single day. Ideas for businesses. For books. For ideas for other people to use.
Soon I had ideas for a business I wanted to create. And ideas for how to value investments. And ideas for other people to use and I would share my ideas and the people I sent them to opened up opportunities for me.
Sometimes I would make ideas for chapter titles.
Some keys to writing idea lists:
- most ideas will be bad. The point is exercising the idea muscle
- Consistency. 10 ideas every day.
- Write ideas for other people and share them (on occasion)
- Idea Sex: take two ideas and combine them. For example: Star Wars = Science Fiction + Westerns.
One time I was thinking of writing an idea list for a book idea, “The 24 Rules of Money”.
I never wrote the book (again, most ideas I will do nothing with, it’s the exercise that counts). But here is a list of some of the chapter titles:
More on idea lists and “idea math” later.
The point is: PAS
Problem, Agitation, Solution.
I had a problem. I went from rich for the first time in my life. I had never had money before. And I spent like an idiot. And then I was broke.
Agitation: I was doing worse at each job. And I had a solution. Start being creative again. Start taking action. Writing ideas and sharing them. Exercising my idea muscle. And ultimately this led to new ideas. New careers. New businesses.
And then I went broke again. And again. But that’s another story.
This is the essence of copywriting — how to use words and stories to persuade people. It’s a bit more complicated than PAS but critical for all business. PAS is lesson #1 in copywriting. I will describe more techniques in the next issue.
IMPORTANT: In The Great Reset all the degrees and credentials in the world will no longer help you.
There are two types of skills but you only need to master one or the other.
A) Technical skills: This can range from programming, to setting up a wordpress blog or shopify store, to…uploading a book onto Amazon.
B) Story telling skills: Writing, podcasting, speaking, copywriting, persuasion, marketing, creativitfy, etc.
Remember, in The Great Reset: SKILLS > CREDENTIALS
PAS — Problem, Agitation, Solution, is the basic basic way of looking at storytelling.
But let’s take a look at Star Wars:
- P: Problem: Luke’s parents are killed, right when he gets a message to save a princess.
- A: Getting off the planet, getting help, finding the princess, rescuing her is all “agitation”
- S: But nothing will save them unless they destroy the Death Star, which is the “solution”.
And every part of that can have smaller PASs embedded in it. A fractal of stories.
- P: Han Solo owes money in the first scene we see him in in Star Wars.
- A: Greedo, the bounty hunter, finds him in the Cantina and might kill him.
- S: Han Solo shoots Greedo.
Puzzle of the Week:
When I was broke, when I needed a personal Great Reset, I started off every day by reading some non-fiction (to learn things), some fiction (to get better at writing and storytelling), and a book about games or puzzles. And then I would write down my ten ideas of the day.
18 years later I still follow the same routine.
But why puzzles?
- - Puzzles exercise the brain. Builds new connections.
- - Puzzles improve your memory.
- - Puzzles increase your problem-solving ability
- - Puzzles release dopamine, which improve your mood.
- - Puzzles reduce stress, raise IQ, prevent cognitive decline.
The brain needs exercise. Puzzles are a safe way to force the brain to solve a problem and exercise.
Each issue of this newsletter I’ll provide a puzzle or two that I was trying to solve that day.
Here is one. Enjoy! (Answer next issue, plus another problem). Will publish at least once a week.
[Any questions, topics, feedback you have: text me at 203–590–8607]