7 Comes 11 in Business and Investing

by | Jan 5, 2015 | Archives

Seven facts and 11 actions can help you overcome one of the greatest risks to your wealth.

Census Chart

A sign of death in the US economy.

A Wall Street Journal article “Endangered Species: Young U.S. Entrepreneurs – New Data Underscores Financial Challenges and Low Tolerance for Risk Among Young Americans” shows one of the greatest risks to the American future.

The article says: The share of people under age 30 who own private businesses has reached a 24-year-low, according to new data, underscoring financial challenges and a low tolerance for risk among young Americans.

This trend reflects the rise of fear and cynicism in the Western world.

Start-ups create employment. More important they generate the ideas that create the Western vitality and evolution of the global economy.

Start-ups of new businesses and trying new things are essential to growth.

This is not just a concern for the youth.  The drop in young start-ups is is part of a broader drop in private business ownership over the past 25 years.

One study in the U.S. shows that the start-up rate  (start-ups as a percentage of all firms) fell almost in half between 1978 and 2011.

In the past decade there has especially been a slowing of start-ups in the vital areas of  technology.

The decline in start ups has many causes but the bottom line is a falling tolerance  for risk.  In an annual survey at Babson College a survey of 25-to-34-year-old Americans more than 41% saw an opportunity to start a business said fear of failure would stop them.  The percentage in 2001 was only 23.9% in 2001.

The fear of failure is the measure we should be most concerned about.

Without starts ups, the economy suffers stagnation from business consolidation.  This creates a stiffened old boys network of the super rich who resist  growth in the economy.

The costs of operating many types of small businesses have come down in the past decade, with the greater use of technologies that reduce labor costs. But young entrepreneurs face formidable financial hurdles.

You can help solve this problem and profit in the process using the 7-11 rules of business and investing.   The 7-11 rules apply to the process of investing and starting a business.  After all. your business is simply an investment that is multiplied by your own personal experience and energy.

Seven Facts to Know

#1: Markets are ruled by supply and demand and in the long term are predictable.
#2: Markets in short term are ruled by emotion and cannot be predicted.
#3: Periods of high performance are followed by periods of low performance and vice versa.
#4: Cheap (good value) investments outperform expensive (poor value) investments.
#5: Investments in established up trends offer greater immediate opportunity.
#6: Investments with high and rising earnings outperform investments with low and falling earnings.
#7: Good value, high quality stocks with rising earnings that have gained attention from the market are the most likely to appreciate.

Eleven Steps to Take

#1: Know that we know less than we think we do and that’s OK.
#2: Listen to those who disagree.  Expand horizons.
#3: Be wary of the thundering herd.  Truth is not created by repetition of an error.
#4: Avoid what is traditionally safe. Fashion reduces value. If  you opt for certainty, you could die anonymously.
#5: Don’t care too much about daily volatility.
#6: Don’t care too little about strategy that suits your own abilities, wants, needs and desires.
#7: Don’t count on extraordinary returns.
#8: Do not underexpose (don’t make too many short term decisions and not enough long term decisions) yourself for the long term.
#9: Invest in what you know.
#10: Look for contrasts and trends that create value.
#11: Accept that risk is your partner, embrace it, adapt and bet on growth.

Let’s Hook Up the Young & the Old.

Here are two steps to take.  If you are an investor, find a young entrepreneur and invest in him or her.  If you are creating your own micro business, find a young person and involve them in the business.  If you are young and want to get started, look for someone with a few miles under their belt to assist.

Fearing risk in times of accelerating change is a mistake.  Statistics show that increasing numbers are making this error.  The thundering herd’s shift away from risk, creates value for you, me and others who are willing to “Go Try Things”.


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(1)  A Wall Street Journal article “Endangered Species: Young U.S. Entrepreneurs