Today, I’ve been having some back and forth with a friend who is struggling to make his online business work.

I asked him some pointed questions to focus him on the things that matter and directed him to another friend who knows his industry very well and might be able to give him some pointers.

Then I recommended he have a laugh. Something we can all use more of.

The future of social media… (Click anywhere on the bottom the image to start the video – pardon the goofy ad)

Note: Why discussion on this blog is closed

But numbers can cripple too, or at the very least they can distract you and rob you of your enjoyment of your business.

‘Enjoyment’ is a crucial aspect of busi­ness-building because if, at the end of the day, the process is not satisfying, you’ll never put in the work required to make it really work.

Make-believe numbers

Enron…

For years, people in the legitimate energy industry were scratching their heads over Enron’s numbers.  “How are they doing that? Why can’t we do that?” I’m sure Enron’s ‘success’ agitated many inferiority com­plexes and inspired a lot of boardroom screaming matches.

Then Enron’s chief executives were taken away in handcuffs. They were lying about their numbers.

We’ve got a bit of that in the Internet marketing guru world too.

It can range from things as simple as inflating the number of people on a tele-seminar to claiming sales figures and visitor numbers that bear no relation to reality.

Why do they do it? It’s easy. They want sales now and they don’t care how they get them.  Rather than earn a reputation by making real contributions and real accomplishments, they choose to steal one instead.

Silly numbers hurt too

You’ve seen the formula: “I made X dollars in just one (day, week, month!!!)”

I stay away from this myself. I report success stories in terms of repeating monthly or annual revenue, not one-time, ‘special circumstance’ sales spikes.

Person­ally, I am far more impressed by someone who is regularly bringing in $5,000 a month than someone who once made $50,000 in a day.  The $5,000 a month person has a solid base to build on.  The ‘$50,000 in a day’ windfall guy may or may not be able to repeat it.

Sure, windfalls and huge sales spikes are ‘cool.’ We should all work towards them and enjoy them fully when they take place, but real business is not a fireworks display.

Big pay ‘days’ are invariably the result of lots of behind-the-scenes work, taking care of business day in and day out, for months and years on end, not “magic” or “genius.”

I’ve said before that there is no Great Bean Counter in the sky who decides who can and who cannot make money and how much everyone is ‘allowed’ to make.

Money comes from ‘wiring.’  It’s a matter of put­ting attractive offers in front of receptive buyers and then delivering on your promises.

How to make that happen is really the only thing we should think about.  While we can learn much from the success of others, it’s NOT their reported numbers that is instructive, it’s the reality of what it took to generate those numbers.

Look behind the curtain. Don’t get dazzled by the stage show.

Take pride and satisfaction in your consistent daily efforts and ignore silly numbers.  The real numbers you’ll generate by building a real business will be far more interesting and satisfying – and maybe even bigger too.

**This article was originally published in 2005 and is now available along with fifty-six other articles in the book “The System Club Letters”

For more information:
http://www.RealMarketingBooks.com

I used to think the oldest examples could be found in US publications from the late 1800s.

Now I’m not so sure.

Here is a form-perfect sales presentation embedded in the opera L’Elisir d’Amore (”The Elixir of Love”) by Gaetano Donizetti which premiered in Milan, Italy way back in 1832.

Dr. Dulcamara arrives in town as an unknown, catches the villagers attention, establishes his credentials, lays out the problem, shows how his product solves the problem, and then shows what a great deal his solution is.

He creates a sense of scarcity and a time limit to buy; uses testimonials to back up his claims; and then, only after he establishes his product’s value, reveals its price in classic infomericial style which, following his well-crafted build up, appears like a great bargain.

The villagers clamor for the product and the buying frenzy begins.

Yeah, he’s a ham and the whole thing is way over the top. This is a comic opera after all, but his sales sequence is impeccable.

The music isn’t bad either!

Here’s a rough translation:

DULCAMARA: Signore! Signori! Good day dear friends! Come closer…can you all hear me?
Now then, I reckon you’ve heard of me. That’s why you’ve turned out to cheer me.
I’m doctor of posology and modern pharmacology,
of medical essentials I’ve heaps of top credentials.
I’ve cured so many terminal cases
that I’m famous all over the world, and…and…in other places.
As one who loves the human race, my philanthropic feeling
requires my travelling place to place to share my gift of healing.
I empty out the hospitals wherever I arrive

It’s Dulcamara’s magic cure that makes the patients thrive, and eases the diseases so that dying men survive. Without my skill the deathly ill would not still be alive!

For flatulence, anaemia, lock-jaw or septicaemia, this potion here will clear it up… (concocted in Bohemia)
This tonic’s a salvation for chronic constipation,

I have here testimonials in praise of what I’ve done.
Here’s one from a Bavarian, a male octogenarian, who bought my primal water… then sired a baby daughter by Charlotte, who’s a starlet, and has just turned twenty-one!
And since then he has sired another daughter and a son!
The water that he’s taken is certain to awaken the slumbering libido of old men in search of fun!

For ladies of a certain age with bottoms growing bigger…this potion, made from thyme and sage, restores your girlish figure. Two spoonfuls of the liquor, you take each night with dinner.
In just a week, or quicker, you’ll look five kilos thinner.

There’s nothing like it anywhere. My friends, take my advice… because you’re all so nice, Ill give a special price!

As I’m the sole supplier, and stocks may soon expire, the limit’s ONE per buyer…
…unless you want it twice.

I’ve pills for disabilities, from dropsy to asthmatic wheeze, for every sniffle, cough and sneeze, I’ve remedies to stem disease.

And if your veins are varicose, the symptoms I can diagnose. I’d recommend a double dose of potions I suggest.

For gentlemen whose pates are bare, I’ve something here for loss of hair…applied for just a month, I swear, your thatch will match a grizzly bear. There’s nothing like it anywhere – you really have to try it. There’s nowhere else to buy it, from Paris to Trieste. I guarantee you won’t resent the paltry, piddling sum you’ve spent on hair restoring liniment – discovering you are blessed with shocks of locks that manifest – yes, more than you before possessed! The doctor always knows what’s best!

You’re convinced my potions cure you, but you’re looking apprehensive…you’re mistaken, I assure you, if you think that they’re expensive. Fifty lire? No. Thirty? No. Twenty? Some shops would charge you plenty! But for you, a proposition – I’ll discount my own commission and I’ll give away each bottle for ten lire – as a gift.

VILLAGERS: Just ten lire – what a bargain! What a sympathetic man…and honest too!

DULCAMARA: Here’s one more…this one’s stupendous! As a cure-all, it’s tremendous. Throughout Europe I have sold this to crowned heads and big-time spenders…but because my tour has ended, and you folks have been so splendid, it is yours for fifteen lire…twenty less than I intended.
(to assistant) Gelsomina, sound the trumpet! So then nothing could be clearer..each one bought saves twenty lire…so the more you buy, then the more you are saving… buy two, and put one away.
It’s the panacea so many are craving for syndromes unknown to most doctors today.
Time has shown I know better than they!

VILLAGERS: If we profit when we buy it, then we’re fools if we don’t try it. What a wonderful preparation, this all-purpose medication. Doctor, we shall never forget you. We’re so lucky you came to town. We’re so honoured we met you…such a man of great renown.

DULCAMARA: Now, some say doctors may be greedy, but you’ll find I’m kind and fair.
If I treat a patient who’s needy, I only charge what the poor beggar can bear.

VILLAGERS: A more kind, benevolent man you won’t find anywhere.

DULCAMARA: Ah! What I sacrifice, to relieve human suffering…my chief concern is in serving mankind.

VILLAGERS: A fairer man you’ll never find!

On the one hand, I see people failing to make money, which is kind of understandable given how bad much of the moneymaking advice out there is. Also given how some people seem to insist on doing things that don’t make money.

Then you have people who’ve cracked the code and figured out how to make money, sometimes a lot of it, but when you catch them a few years later, they’re dead broke.

How does that happen? (It happens a lot.)

People talk a lot about money, but they spend hardly any time THINKING about it.

To help the members of my System Club, I wrote a short guide book that covers not only the most reliable way to make money, but also the most reliable way to hold onto the money you make in all kinds of economies good and bad.

Given the challenges we’re all facing today, this information is too important not to share with everybody. If you’d been a System Club member, you would have had it years ago, but better late than never.

Another item from the System Archive.  I guarantee you will never look at money and money making the same way again after reading it. It could even change your life.

 The Financial Independence Blueprint

- Ken McCarthy

About Liquidity (2005) – Ken McCarthy 

“There are few things more unbalancing to the mind than the act of suddenly winning or losing large sums of money.” – Henry Howard Harper, The Psychol­ogy of Speculation

One of the best educations I ever got was the time I spent working on Wall Street. It was the roaring 80s and the market seemed invulnerable. It wasn’t and I was right there when the whole thing melted down. It made an impression on me.

Punch bowls, bubbles, and musical chairs

Most of the time, I focus on the particulars of run­ning an Internet business and using the Internet to boost existing businesses.  Today, I’d like to talk a little bit about money in the broader sense.

First my biases. I am extremely conservative finan­cially. I am very positive about my ability to make money, but I am also very realistic about the vagaries of life.

The reality – as I see it – is that we are living in a period of extraordinary opportunity, especially for folks who know how to use the Internet to find and serve customers. One of the reasons I’ve poured so much ef­fort into teaching in the last few years is, quite literally: “Now’s the time.”  Now is the time to rack up cash – but keep in mind, it won’t always be this way.

We are currently experiencing a period of financial liquidity unlike anything ever seen before in the history of this country. Liquidity in this context simply means:  There is a ton of money around right now.  A TON.

Yes, we are good marketers and yes, we are good business people and yes, we work hard and yes, we have been clever, but we’re also profiting from the fact that the Central Banks of the world, especially our own, have been printing money like there is no tomorrow.

Well, there will be a tomorrow.  There always is. At some point, the punch bowl will be taken away and the party will be over (at least until the next time.)  If you’re old enough to have seen such a time, or you’ve read some history, you already know it’s not fun for the un­prepared.  So what do you do to prepare?

Suggestions for a happy landing

1. By all means, enjoy the party – especially the part that involves you aggressively making and salting away cash.

2.  But don’t assume the entire reason you’re doing well is because you are: a) a financial genius or b) graced by God.  The liquidity explosion has helped us all a lot by putting easy money in large quantities into our customers’ pockets.

3.  Don’t be in a mad race to jack up your lifestyle to keep pace with your rising income. I’m not saying live in a hut and wear a burlap sack, but be ruthless about living like a normal person, not a player on a roll. The best things in life really are free, something frighteningly easy to forget when you’re on a spending spree.

4. Don’t make big long term bets on things that de­pend on: 1) cheap oil and 2) consumers having easy money coming out of their ears.  I don’t have a crystal ball, but history says neither of these conditions are permanent.

5. Think musical chairs. In short, don’t be the guy who has so overextended himself on lifestyle enhance­ments and bubble investments that when the music stops, you’re one of the ones left without a chair.

You know the story of the Grasshopper and the Ant. And the Seven Years of Plenty and the Seven Years of Famine.  There’s a reason those stories have been around for a long, long time. Let’s prosper together throughout the ups and downs of the business cycle, not just on one sunny turn of the wheel. History shows that people with perspective end up being the biggest win­ners in the money game.

Ken McCarthy

P.S. This advice was originally sent by fax as a bulletin to every System Club member way back in 2005 when most advisors were telling their clients that the party would never end.

In contrast, graduates of the System Seminar and members of the System Club has received consistently realistic advice about what it takes to succeed in business, online and offline, in all kinds of economic climates.

P.P.S. Because of the demands of our other businesses (and our desire to have a little more time to enjoy life!), we’re no longer putting on the annual conference which ran from 1994 until 2011.  The best way to keep up with the System is to get and read the books we publish and join the System Club.

Further reading:

* How to Join the System Club

* The last live System Seminar

There is a lot to learn from watching this short video.

First, there’s the all-important lesson that everybody who “gets there” gets there the same way: by putting on their pants, or in this case gym shorts, one leg at a time.

Obviously, the scale and scope of Facebook has changed dramatically since the time of this interview.

New money, new expertise, and new ambition has poured in.

But look at where Mark Zuckerberg started.

He didn’t start out with the ambition to make billions of dollars. He also was not thinking about creating a service that would be so huge it would challenge even Google in traffic.

The answer is very simple and it’s the answer to everything: he focused on getting what was in front of his face at the moment right.

I detect no wild ambition, no intoxication with the fantasy of limitless riches, no rush to bring something to market ready or not.

Instead, I see a guy who just picked up his tools everyday, worked on his blueprint, and took pains to get it right.

I know this flies in the face of typical “get rich quick” seminar bullshit, especially the famous “shoot, ready, aim” method that students of a certain type of “guru” are encouraged to follow.

The truth is that nothing goes right the first time, but the idea that you can build a lasting success with a “sell first and get the quality right later” approach is a great way to fail.

That being said, it certainly is possible to package and sell things, even at high prices, that are not ready for market. You can even make money launching products, selling a lot of them, and then abandoning support for the product, which is another way of saying screwing your customers.

Yes you can do it, but it’s…

Unfortunately, this approach has become the new normal in the Internet marketing education world, so much so that I find that some among the new generation of would-be educators don’t even realize there’s another way to do things.

This is bad for the marketplace, it’s very bad for people who are trying to learn Internet marketing, and it’s a stupid and shortsighted way of doing things.

Big spikes of income from episodic hyped up promotions of products that have no basis in reality does not make a business.

Businesses are built on selling products and services. Products and services that do what they say they are going to do and are supported and improved when they don’t.

“We wanted to make sure it was going to work before going any further with it.” – Mark Zuckerberg.

After getting a good results from a test at one school, he didn’t roll it out to the world. He tested it at just three schools.

After those three schools continued to prove the concept, then he rolled it out to 29 schools.

Then, he geared up to launch the service to schools around the world. Not the world. Just the world’s schools.

I could not disagree more.

To paraphrase a line from the movie FOREST GUMP: “Genius is as genius does.”

I do believe in inborn talent. I also believe in the near magical powers of enthusiasm and passion, but I also believe that there is no such thing as genius. It’s a myth, a fairy tale, make believe. As a piece of ‘showmanship’ it’s a good strategy for selling, but as a way of describing the way the world really works, it’s a total flop.

The awesome power behind a four letter word

I’ve had the opportunity to meet and spend extended time with several people that the world at large considers geniuses (in the fields of music and business.)  I’ve also read in depth about the lives of geniuses and talked with people who’ve worked with them. (Just the other night I had dinner with a neighbor who worked for ten years with the painter Robert Rauschenberg who at the time was possibly the world’s most respected living artist.)

I can tell you from these experiences, and my friend will back it up, that ‘geniuses’, no matter how far out they seem, really do put their pants on one leg at a time. In fact, unless you actually see a genius at his or her work, you could very easily overlook them.

And that, of course, is the four letter word that makes all the difference: work.

But work alone obviously isn’t enough. Lots of people work and many people work very hard without producing genius results. So what’s the missing ingredient? Some people say it’s talent, but I say they’re wrong. Talent is nothing more than a raw material and an inert one at that.

The real work

I’m opening up a topic here that can’t be adequately covered in one page or even one hundred pages, but I can give you something to chew on: Every ‘genius’ I’ve ever met or worked with is profoundly involved in a never-ending program of creative self-education. Yes, they work hard. That’s a given, but they also consistently work on expanding themselves…on stretching.

Jim Rohn, one of the great practical philosophers of our time, puts it this way:  “If you work hard at your job, you’ll make a living. If you work hard on yourself, you’ll make a fortune.”

How do you ‘work on yourself?’ If you don’t know how, you’re in good company because this is certainly not a subject taught in school or on the job or in most families – and yet, it is the single most important topic for people who are pursuing achievement.

A highly regarded artist and dancer – a woman with the intriguing name of Twyla Tharp – came out with a book two years ago called “The Creative Habit: Learn It and Use It for Life.” A smart marketer could easily package the gold in her book into a $5,000 seminar.

You can get it now at Amazon for all of $16.50. It’s packed with immediately practical ideas on how to ‘stretch’ your potential into places you may never have dreamed possible. Good reading for these long, cold winter nights.

Excerpt from The System Club Letters

What are they? And why are they so dangerous to your financial health –  and sanity.

I first heard the term “LSD deal” in a book by Robert Ringer. I don’t remember which one though I have a feeling it might have been “Looking Out for #1.” You can look it up.

The reason I’m writing this particular blog post is I wanted to point a friend to what Ringer had to say on the subject and much to my surprise when I googled the term nothing useful came up.

First of all, what is an LSD deal?

No, I don’t mean trade in illegal drugs.

I’m talking about deals that not only make no sense, but also waste incalculably large amounts of time, money, and energy. The folks pursuing them seem caught in the thrall of deep delusion.

It happens to everyone at least once at some point in their lives: young and old, male and female, rich and poor, intelligent and not so intelligent. As Ringer’s ingenious terminology implies, there’s something about these deals that cause folks to lose their connection with reality.

Let’s start out by looking at some obvious LSD deals.

How about paying $400 a share for an Internet startup that’s not only never made a profit, but also barely made a sale? That kind of insanity was very popular not all that long ago.

How about packaging real estate loans that were never signed, never recorded, and were made under terms that the borrowers could not possibly dream of meeting?

That’s the financial disaster the world economic system is currently trying to dig itself out from. Keep in mind less than five years ago these kind of transactions were considered absolutely “normal.”

Of course, neither the $400 per share Internet IPO or the $10 million package of loans made to people under highly dodgy circumstances made any sense at all, but the people flogging the stuff “believed” and the people buying it “believed” too.

Functionally, there is no practical difference between the people who got involved in these businesses and people tripping their brains out on a powerful hallucinogen, thus Ringer’s apt term the LSD deal.

I’m not picking on you

I mention these two examples first so that no one will think that I’m picking on them individually.

After all, both these MEGA LSD deals were endorsed by institutions like Harvard University, Columbia University, the Federal Reserve Bank, the White House, “leading economists”, and various captains of industry.

So if you find yourself caught up in an LSD deal, don’t beat yourself up, but do disengage and move on. LSD deals are quite possibly the most dangerous thing on earth when it comes to your wealth, health, and sanity.

How to know when you’re involved in an LSD deal:

1. You love talking about it, thinking about it, dreaming about it –  but not a whole lot of practical activity (i.e. money making) is going on.

2. You’re waiting for: a) the right partner, b) the right investor, and/or c) the right break before the “magic” can start happening.

3. You’ve done absolutely no market research, or your market research is months and sometimes years old, or your market research involves talking to yourself about how great your product, project or idea are.

The antidote to LSD deals

Remind yourself of how business works:

You take things off your shelf, pass them across the counter, and somebody gives you enough money in exchange so there is a clear profit in the transaction for you. You have a repeatable system in place for this to happen day in and day out.

That’s a business. Most everything else is a hallucination, an LSD deal.

It’s true that some deals and ventures take longer to bring together than others and there can be an extended waiting and ramp up period. Okay, that’s fine as long as what you’re working towards is going to look like the description of business in the paragraph above.

Another sure sign of an LSD deal is vagueness on the details.

Instead the process is: a) run around, b) talk a lot about what you’re doing, c) experience huge emotional highs (and lows), and d) at the end of the day avoid looking at your empty ledger book.

Here are the tell tale signs of being in a REAL business

Business happens when money changes hands.

Business happens when your total sales are more than your cost of goods, marketing, and operations costs.

Business happens when you can put your hands on your customer list and say “these are the people who buy from me.”

Business happens when there is a clear, definable, reachable market for what it is you have to sell.

I might be leaving a criteria or two out in this definition, but you get the idea.

It’s perfectly fine to pursue dreams and passions. The fact is a lot of what we consider humanity’s greatest achievements have come from people who pursued dreams and passions.

But in the meantime…

Keep your eye on the ball

If people aren’t giving you money you can bring to the bank –  not promises of money, or hopes of money –  in exchange for your goods and services, then you need to get that part right and get it right right now.

Not only will this “boring” approach to business make life more comfortable and pleasant for you, it will also increase the odds that you’ll reach some of your most ambitious goals and biggest visions.

Thoreau said it’s okay to build castles in the sky, just remember you also have to build them on the ground too. Good advice.

Now, at last, there is an article on the web which explaines one of the most important concepts in business: the LSD deal – What it is, why it’s so dangerous, how to recognize when you’re in one, and what to do to get out of one and onto a more productive track.

I hope you found it useful.

Optimism and positive thinking are essential tools for success. So is having your feet firmly on the ground and learning to avoid the quicksand.

Learning to analyze business ideas before you invest time, money and effort in them is one of the most useful skills you can learn as an entrepreneur and training in this skill has run through all our System programs over the last sixteen years.

It may be why so many of our students have been so successful over the years and why we have new success stories year in and year out.

Good luck!

Ken McCarthy

The System Seminar

P.S. The last public System Seminar will be held April 15 – 17th, 2011 in the New York City area.

Full details: The System Seminar

One school of economic thought, the Keynesian School, think that’s a great idea.

(Before you attribute Keynesian manipulation to the “right” or the “left,” understand that they ALL do it. It was Ronald Reagan who kicked off the bubble that’s dominated the US economy since 1980.)

The other school of economic thought thought, the Austrian School, says the government should stay the heck out of manipulating the money supply.

Why?

Because it doesn’t work in the long run. The piper always has to be paid and in the meantime, the waste and excess that is spawned during bubble times is not good for society or real wealth building.

I’m in the Austrian school, all the way.

Who cares?

Does the broader economy matter to the individual entrepreneur?

Does a bear s*** in the woods?

True, during a bubble time, the state of the economy might not matter that much. In fact, a lot of loony ventures that wouldn’t work in normal times, thrive during bubbles. Ignorance can be bliss – and profitable.

But when the bubble goes the other way and things tighten up, intelligence (i.e. being interested in the wider world around you) pays obvious dividends again.

First, the little question

Let’s take care of the little question first…Is the recovery real?

To quote a sage friend of mine: “This recovery has everything going for it – except customers.”

Sorry to be the bearer of bad news, but there is no recovery. Bogus pyrotechnics on the stock market does not mean that the marketplace – the place where real people buy and sell – is in good shape.

Sure some businesses are flourishing. Well run, well positioned business, in “fortunate” niches are doing great, but the vast majority of of business activity – and buying – is down across the board.

…And the problem is structural: heavy debt overhang taken on when blue skies looked like they were going on for ever and ever.

If you get your business news from CNBC, you’re going to argue with me on this point. OK, I give up. Larry Kudrow and Jim Kramer are financial geniuses. You win.

The real question

The real question is will the insane excesses of recent years lead us to inflation (or hyperinflation) or deflation (price crashes.)

The average thinking person assumes that the bailouts are inflationary. It’s a reasonable position to take – unless you include one variable: scale.

Here’s what I mean…

If someone turns on a garden hose and just sprays water in the air all day and night, that would seem pretty wasteful, wouldn’t it?

But step back and look at the bigger picture.

What if that same person is spraying his garden hose in an attempt to fill up Lake Mead after Hoover Dam has collapsed? (Thanks Robert Prechter for this analogy.)

Now a completely different picture emerges.

It won’t work

Yes, it’s a shame to waste all that good water AND it’s nowhere near enough water to work.

Yes, it’s obscene that first Bush and then Obama have been shoveling untold trillions of dollars down a black hole trying to “shore up” the banking system AND as big as these bailout numbers are, they are absolutely dwarfed by the size of the problem.

The problem: Money is disappearing from the economy faster than it can be replaced. Where is it going?

Well, a $1 million house in Miami is now worth say $395,000. $695,000 in value just went up in smoke. No one else made it. It’s just gone. Poof!

The bank that made a loan based on the $1 million valuation counted on getting its money back some day and with a profit no less. The owner counted on being able to sell the property and capture the profit or borrow against it.

No more.

Multiply that by tens of thousands of properties in Florida, mix with fifty states, throw in commercial real estate, and a countless number of enterprises that are selling less, earning less and therefore worth less and you’ve got a massive exit of dollars from the economy that even reckless bailouts can’t fill.

It’s all supply and demand.

A dollar shortage means cash is more valuable, NOT less. When cash gains in value, prices go down. Inflation is the opposite. Dollars become less valuable so the prices people demand go up.

The 1980′s, 1990′s, and 2000′s were a massively inflationary period – in real estate, in stock prices, in commodities, in business valuations – now we’re coming down the other side.

Why you’ll never hear this on TV

This is not simple stuff which is why most people get it wrong.

You’ll rarely hear this scenario being discussed intelligently or in depth.

Why?

It’s not profitable for TV channels to talk about it.

Take CNBC as an example (please). It sells its airtime to one-million-and-one financial services companies, all of whom want you to turn your cash into their financial products.

Even if the smartest thing in the world right now (and for the time being it is), is to keep your cash in US dollars and in safe places, CNBC will NEVER tell you that because its advertisers would have a fit.

They’re pitching, not reporting or teaching

Speaking of “fits,” notice that CNBC’s stock picking rock star Jim Kramer tells people to BUY-BUY-BUY and SELL-SELL-SELL, but he never tells us about the third option which is to go to and stay in cash until things blow over. And you know what, he never will.

To translate this into practical advice: Don’t borrow to buy things at TODAY’S prices and only make big purchases (like real estate) if you absolutely have to – and you don’t, you can always rent.

If you continue to “play” the market – and anybody who owns stock is “playing the market” even if it’s in a conservative mutual fund – it’s best to realize you’re playing with a grenade whose pin has been pulled. Play if you must, but be ready to move fast or face an unpleasant outcome.

If you own a business, tighten up. If you can expand without taking on obligations, go for it, but the theme of the day is batten down the hatches. Get smart. If you’re going to invest, invest in improving your game.

The good news is that flexible, well run, marketing-savvy enterprises are going to be the best place to be.

Guiding lights

I’ve mentioned before that my guide to these times is Robert Prechter. (Not-so-coincidentally, you will see my name on the cover of the latest edition of his prophetic book “Conquering the Crash.”)

I’m also a big fan of Hugh Hendry, a hedge fund manager from the UK who was not fooled by the bubble and not only survived the 2008-2009 crash, but made money during it.

This is not simple stuff, but when you wrap your mind around it – and you can if you want to – you’ll be living in totally different (and better) world than people who are getting their info from CNBC and other totally unreliable sources.

It’s worth taking the time to get it right because fortunes will be made by people who get this right.

This video which I found on YouTube explains it as well as I’ve seen it explained anywhere (and after you watch the video, take advantage of the free report link at the bottom of this article.)

- Ken McCarthy

P.S. If you’re still following this, you’re probably interested in turning all this into some practical advice. Last summer I wrote and gave away something called the Independence Day Blueprint.

I was motivated to write it because I noticed that a lot of my successful students were spending like there was no tomorrow. Others were doing “smart” things with their money like piling it up in mutual funds. Ouch!

So long before the crash starting in 2005, I started beating the drum and warning about the coming inevitable credit contraction.

Some listened, some didn’t. Those that did were happy, I know at least three families that saved multiple six figures because they considered what I was saying seriously, told their broker to stuff it, and put all their money in cash (cash money market funds, treasury bills, savings accounts in highly rated banks.)

This summer I put all my ideas into the Independence Day Blueprint and planned to give it away on the 4th of July to anyone who asked for it. I did – for that one day. Then I took it down and planned to come back later and market it.

Then the reality of my schedule hit me. I’m never going to find the time to market this report for what it’s worth.

So rather than have it sit in my digital filing cabinet where it won’t do anybody any good, I’m making it available to anyone who wants it for free.

But this is it. Get it, read it, use it.

To get your free copy:

Click here for Independence Day Blueprint

This entertaining – and informative – video explains the two major theories of modern economics.

One, Keynesian, says when you run into trouble, print more money. The other position, Austrian, championed by Friedrich Hayek, says “not so fast.”

I live as if the Austrians are right and, if you ask me, I recommend that you do too.

No answers, but it’s good to know the questions.

- Ken McCarthy

P.S. Today (January 31, 2009) is the last day for the early bird tuition special for System Seminar 2010.

I’m the only person – in the world – who’s taught practical online marketing before the boom…during the dotcom boom…during the dotcom crash…during the Bubble of the 2000s…and during the present crisis. Sixteen years in all.

I always bake economic reality and sobriety into every course.

Could be why our enrollment is way up this year over last while the rest of the so-called competition is fading.

Details: The System Seminar 2010 – Chicago, IL