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Now’s The Best Time to Enroll in Opportunity 101

Opportunity 101 is coming. First, one has to believe, as I do, that everything that goes up must come down and that most will go back up sooner or later. Second, that seven is a magical economic number that relates to almost everything that has happened or will happen. For example, I started in the business world in 1960 during a weak economy, and noticed that every seven years the economy had a correction or in some economists’ words, “a recession almost as bad as the 1929 depression.” The seven-year increments were: 1967, 1974, 1981, 1988, 1995, 2002, and now 2009. So watch out and be prepared for 2016; it is only seven years away. Now on to “Opportunity 101”. The correction in the economy is exacerbated by the media and continues until reality finally sets in. Businesses and consumers look to the media to be a guide to make financial decisions. Then businesses start reevaluating all of their expenses, especially payrolls and advertising, because they are the easiest to reduce. A great example of this is the school system that made cuts in their most important investment, teachers. Businesses do the same thing; they begin laying off employees and cutting back on advertising. After businesses cut advertising, public relations, and other costs associated with helping them sell their products and services, they begin to believe the media was right all along that the economy is slowing down. This leads to them closing of stores, laying off more employees, further reducing advertising, deferring capital expenditures, and putting off day-to-day expenses as well as preventative maintenance to keep pace with the slowing economy. Because they’ve cut back on functions that bring in more business, their business falters, which leads them to conclude often incorrectly that business in general is bad. Consumers, like businesses, listen to the media, and also reduce their purchases to prepare for a slowing economy. They start to cut back on large purchases, family vacations, and only buy what they have to. Since consumers are spending less, the economy slows, as the media predicted, and prices start falling. House prices are dropping and home equity is drying up. Additionally prices on cars, furniture and even small items at your local mom-and-pop stores are going down. This is where opportunity comes into play. We can assume that prices will eventually go to new heights. If past history plays into this picture, and if my calculations are correct, we should start seeing this happen in the fourth quarter of 2009. By the first quarter of 2010 we should see the light at the end of the tunnel. Let’s just hope that light is not an oncoming Metrolink train. If one feels that America is not coming to an end or that the new Administration is not going to socialize everything, then now may be the time to become an opportunist. One needs to be extra careful before jumping into any investment unless you have holding power, reserves, and a good back-up plan. There are many good values available. Whether the opportunity is acquiring real estate, investing in the stock market, or purchasing a business, the first thing to do is your homework. Buying value with an upside and getting the lowest possible interest rate is key to turning your investment into a long-term reward. It is unlikely that timing your investment or purchase will be at the lowest possible price. There is always the risk things could go lower, so you need to plan on holding your investment awhile, not expecting a quick profit. That is what Opportunity 101 is all about buying cheap and holding until it’s high. We are now on the seven-year cusp and Opportunity is knocking at our doors. The Opportunists will look back and say “I knew I should have bought more” while the rest of the world will say “I should have ” Rickey M. Gelb is managing general partner of the Gelb Group A Family of Companies

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