While cash plays an important role in your portfolio, ignoring the need for growth as well as preservation can compromise your long-term goals.

After peaking in April at 11,205, the Dow Jones Industrial Average plunged below 9,800 in June — low enough to ignite talk of a bear-market signal. Even though past performance does not indicate future results, that recent retreat is serving to reignite the fears of investors who moved out of equities during the worst of the downturn — and who have shied away from investment risk ever since. Some view today's high unemployment and a skyrocketing U.S. budget deficit as threats to the strength of the American economy and wonder whether the recovery will have legs. Others point to the market's advances and retreats over the last year and question whether investing in stocks is worth the anxiety and effort involved. And so they remain on the sidelines — their portfolios heavily weighted in cash and fixed income.

While it's impossible to predict exactly what will happen to the economy or financial markets in the immediate future, for investors with a long-term outlook (particularly those who may be 15 or 20 years from retirement, with time to weather additional market storms), the current environment could bring opportunities. "History suggests¹ that the average 10- to 20-year period produces annual stock market returns of 6% to 12%," says Tom Latta, Managing Director of GWM Investment Management & Guidance at Merrill Lynch. "Because we believe in the growth of high-quality companies over long periods of time — and after seeing the S&P gain nothing during the past 10 years — you can make the case that better times could likely be ahead." Latta and his colleagues have been urging investors to sit down with their Financial Advisors and reassess their portfolios in light of their risk profiles. "You might not really be as risk averse as you think you are," he says. Perceived appetite for risk, after all, is just one part of a risk profile. Equally important are an investor's ultimate objectives and the time horizon for achieving them.

"You may even be doing yourself a disservice by being overly invested in cash, particularly if you're saving for retirement and have a long time horizon," explains Anil Suri, Managing Director and head of Investment Analytics at Bank of America Merrill Lynch. "Cash can help guard against losses, but taking too little risk can also give you a low rate of return for working toward your longer-term goals."

 The good news? There are ways to help keep your investment strategy on track and take advantage of opportunities while also guarding against the risks of investing during volatile times.

 1. Work your way back in. Rather than fret about trying to time the recovery, investors should consider positioning themselves for a long-term rising tide. "If you moved most of your assets to cash during the downturn, I believe it's crucial to consider getting back to a diversified portfolio of equities, fixed income and cash that reflects your strategic allocation plan," says Latta. If you're worried about near-term volatility, you could move back into the market gradually through a technique called dollar cost averaging,² which calls for purchasing equal dollar amounts of an asset at regular intervals. "If you're concerned about buying into equities at the worst possible point, this allows you to invest gradually over time across a potentially broad range of prices," Suri says.

2. Think globally. Investors looking to recoup bear-market losses might consider broadening their exposure to international markets, particularly emerging markets in Asia. "If you want to work your way back in and capture opportunities, those are the markets with great potential," says Latta. To tap that future growth, you might want to consider investing in both foreign companies and American businesses selling to consumers in international markets.

3. Consider defensive investments. While equity investments always carry a measure of risk, some sectors (including regulated entities such as utilities and consumer staples such as food and household items that people continue to buy regardless of the economic climate) may hold up better than others in an uncertain economy. "In a downturn or even in times of uncertainty, many consumer staples are still appealing," says Latta.

4. Explore downside protection. Qualified investors have long been able to take out options or access complex strategies to help limit the downside risk of equity positions. Another way to pursue many of the same ends: Consider allocating a portion of your portfolio that might otherwise go to equities to structured investments with principal protection at maturity. Debt securities generally issued by large financial institutions, these investments may be tied to the performance of a wide range of underlying assets, including a specific stock or stock index, like the S&P 500. They allow you to participate in any positive return generated by the underlying asset, up to a predetermined cap, while reducing the possibility that you will lose money in your investment, if held to maturity, and subject to the credit risk of the issuer. "They provide the ability to stay invested in the markets while reducing some of the risk," says Brian Partridge, Managing Director of Merrill Lynch's Structured Investments Group.

5. Tap the tangible. Inflation may not seem like much of a possibility now, but experience has shown that's not likely to remain the case indefinitely — which also means the current environment could offer an opportunity to buy inflation-indexed securities for the future at attractive valuations. Real assets — real estate, including real estate investment trusts (REITs), and industrial and agricultural commodities — are currently considered "cheap" and have historically benefited during inflationary periods, meaning they could increase in value as the economy recovers and inflation accelerates. Treasury inflation-protected securities (TIPS — government bonds whose principal adjusts upward if the consumer price index rises) could also be worth a look.

"Some find real assets and TIPS appealing for the very reason that they're not stocks," says Latta. "They can help diversify a portfolio, potentially reducing its overall volatility, and hedge against the impact a rise in inflation can have on investments in stocks and bonds." Of course, tangible assets like commodities and real estate come with their own risks, and may not show much in the way of gains until the global economy finds a more even footing. One way to help manage that risk is to consider a commodity- or REIT-linked structured investment as the vehicle for your real-asset exposure. Another way is simply to recognize that some bumps are part of a broad strategy for rejoining the markets, but that compelling opportunities exist for investors with the foresight and patience to realize them.

The year was 2004, Lindsay Lohan was Hollywood’s raising star.  “Confessions of a Teenage Drama Queen” and “Mean Girls” where on the silver screen, the housing market was hotter than a metal roof in the Florida sun, and like the raising career’s of Hollywood’s newest stars and starlets there was no end in sight.

Lifestyles were fast and furious; Hollywood’s jet set was enjoying their new found fame and fortune in excessive ways that were once unimaginable.  Not unlike the beautiful people of Hollywood, agents and brokerages were also enjoying the fruits of a market super charged by “the make believe” new reality of economics.  Brokerages quickly expanded, agents were quickly becoming brokers so they could open new companies, lenders lent money knowing that property values would quickly increase, developers were building McMansions, and appraisers were snapping pictures like the paparazzi waiting for Britney Spears to exit the car.

Time and circumstance certainly has a cruel way of reminding us that all good things come to an end.

The darlings of tinsel town started making the news not so much for their on screen success but for their off screen mess.  The once steamy housing market began to cool like a February wind blowing off Lake Michigan.  The invisible hand of the economy was doing what it always does, working to keep things in balance.  The preverbal tortoise and hare, fast and furious verses slow and steady.

As the cool winds of change continued to blow, we thought to ourselves these winds were only temporary, the express train to prosperity would quickly return.  The waiting game slowly began.  Next year become the expression most favored in real estate board rooms across the country.  Like Lindsay Lohan and her manicurist’s message to the judge, denial had become the mindset.  The autumn winds of another year are beginning to blow in, and like the sometimes harsh hammer of justice, reality isn’t always pretty.

It is often said the Super Bowl isn’t won in February, it’s won in August.  Meaning what you do to prepare for the coming year is the difference between success and failure.  The latest housing news isn’t good.  Some continue to wish NAR and the government would quit reporting the news.  Some continue to enjoy the bliss of ignorance, saying next year is the year.  Others, completely oblivious to the facts in front of them are continuing to do the same thing they have been doing.

Others are heeding the economic trends and entering the world of rehab.  Rehab can occur in many ways, but it must start with the mind.  If you aren’t ready for change or enjoy the clouds of denial you can expect more of the same.

Consider this your introduction to Real Estate brokerage rehab, the first in a series of articles on planning, benchmarking, and implementing change to deal with reality.  The road to success might be bumpy, however it is the road.  The pathway to success begins with small steps, not giant leaps.   

This past week I had a great opportunity to meet with, and listen to some of the big brains of internet lead generation. 

Let’s paint a profile of the internet consumer.  Joey Cyberspace uses the internet for most of his purchases.  Joey decides Monday night is going to be Pizza night at the Cyberspace family home.  How does he buy his pizza?  He goes to his lap top or smart phone and places his order on-line.  Thirty to forty five minutes later the door bell rings and the Cyberspace Family is enjoying a piping hot pizza with topping so fresh it seems like the peppers were picked while the pie was being delivered.

 That night while doing the laundry Joey notices the tighty whiteys aren’t aging very well, and figures it’s time to give boxers a shot.  So Joey logs on to the trusty lap top and starts looking for Boxers.  He thinks to himself Awesome good ole JC Penny is having a sale.  He promptly orders the familiar 3 pack, and before check out a pop up comes up and says, do you want to be notified of sales and other company news?  Joey says sure and files out the form.  Three days later Joey’s mother would be proud, if he gets in a wreck the EMT’s will know he is wearing brand new clean underwear.

 Now you are thinking, what the heck does Pizza & Underwear have to do with buying a home?  Pay attention to the two transactions.  Both simple in nature, both at some time during the transaction required some sort of registration, the Pizza Shop needed to know where to send the pizza, and JCP asked him to sign up to receive additional information.  Both transactions where accomplished with no intrusive phone calls.  No contact with the merchant.  Joey accomplished his goals, first having Pizza Night, and second making his mother proud that he is wearing clean undies.

 Can anything be learned about the internet consumer from the two examples mentioned above?  Maybe.  Internet consumers make a consciences decision not to call a real estate office or agent, that is an unarguable fact.  However most agents and a lot of office policies, would jump on the phone and give Joey a call.  Joey has indirectly said “Don’t Call Me Turbo!  I will let you know when I want to speak with you.”  Internet lead generation is no longer cutting edge.   Years of data now exists and we now better understand the internet consumer.  Internet consumers will give us clues as to how they want to communicate with you. 

 Observation is the key to understanding the internet buyer.  Drip campaigns, the let me show you homes call within 15 minutes of the registration, and emailing more properties unsolicited are turn offs and only add to the image problem associated with the industry.  As we prepare for opening day we need to take a hitters approach to the internet consumer.  Observe, get comfortable in the box, be patient, the right pitch will come, and when it does, that is when we swing. 

 Until then Relax Turbo!

Check out the full article at www.the99percent.com.  Click here.

The story book romance, climaxes in a fairy tale wedding.  The happy couple purchases their dream to begin their life together.  Slowly at first the realities of life begin to tarnish the blissful future Sally & Joey Newlywed envisioned.  What once looked like happily ever after has become the war of the Roses.

 A slowing economy, a job loss, and a toxic home life have led to the nuclear option…The Divorce.  Attorneys on both sides of the table begin the process.  Marital assets are total and values assigned.  The debate continues.  The biggest asset Sally & Joey’s dream house is the most fiercely debate assets.  Did I say asset?  Is it an asset?

 As a realtor what advice do you give your clients?  The American Bar Association, The California Association of Realtors, The Oregon Association of Realtors, and The Tennessee Association of Realtors have all recognized that “in Divorce too late comes way too early”.

 Divorce this House and the Real Estate Collaborative Specialist – Divorce designation are divorce problem prevention experts.  To learn more about the RCS-D designation and Divorce this House, join us tomorrow for a course preview via webinar.  Capacity is limited so register now at https://www2.gotomeeting.com/register/165201642.

 Kelly Lise Murray and Wendy Waselle of Divorce this House will join Tami Bonnell, President of Exit Realty and Carol Johnson, President of the Recruiting Networking on Monday April 12, 2010 at 3:00 PM Central Time to discuss how the RCS-D Designation can supplement your recruiting efforts.  To join us on Monday April 12, 2010 please click here.

What are ideas worth?

Some argue that ideas are the key ingredient to success, ideas change the world as we know it, ideas change the status quo, and ideas inspire success.  I would argue that ideas in and of them self inspire great conversation but the conversation is only theoretical.  Ideas without action are the “we could of”, “we should of” and “if only” conversations we have with our “Lizard Brain”.

The 99 Percent is the think tank of Behance. Behance is a company that organizes the creative world to make ideas happen.  Check it out; I think you will be glad you did.

In the first quarter of 2009, many investors thought the economy couldn’t get much worse. But then came the rest of the year—in which the economy saw marked improvement, including a dramatic stock market surge and Federal Reserve Chairman Ben Bernanke’s announcement in September that “the recession is very likely over.” Still, worries about jobs, housing, consumer confidence and spending linger as 2010 begins.

While acknowledging that there may be bumps and fitful progress as the economy moves forward, BofA Merrill Lynch Global Research’s top analysts and market observers foresee 2010 in largely positive terms, with an improving global outlook and growth opportunities for investors who are willing to re-enter the markets now, rather than waiting until the economy regains its footing.

A Strong Foundation for Recovery

The still-rising unemployment rate in particular has led to questions about the durability of the economic recovery that began during the second half of 2009. To Ethan Harris, head of North America Economics for BofA Merrill Lynch Global Research, such fears seem overstated. "This recovery has the earmarks of something sustainable," says Harris. "We believe the equities and credit markets are well positioned for the year ahead. The economy may be advancing somewhat weakly, but it is advancing." Meanwhile, inflation is low, and the Fed will be waiting to tighten interest policy until the economy is clearly on a path back to full health. The primary threat to a lasting recovery would be a revival of the credit crunch, which could lead to a second recession. But Harris doesn’t expect that to happen.

Nor should a return to growth be seriously stalled by a stock market correction that could develop in the coming months, says Mary Ann Bartels, head of U.S. Technical Analysis, BofA Merrill Lynch Global Research. "Stocks may well take a breather, but you have to put that into perspective," she says. "In 2009 we witnessed the greatest rally of our lifetime. From March 6 to October 21, the Standard & Poor's 500 rose 60% without experiencing even a 10% correction. The last time that happened was in 1933."

Bartels compares our current period with the 1970s, when a U.S. stock market plunge was followed by a long, steady recovery. "Once stocks bottomed out and started rising, they never looked back," she says. "We're in 1975 right now. If you want to buy near the bottom, now's the time.

Rebuilding Confidence

Many investors who intellectually know the importance of staying invested have been understandably reluctant to venture back into equities. Michael Hartnett, chief global equity strategist and chairman of the Research Investment Committee, BofA Merrill Lynch Global Research, thinks most investors will eventually return, but perhaps not during 2010. "Many investors reacted to the drop in the markets by shifting from an overly aggressive position to a very conservative one," Hartnett says. "A number of those people are not yet convinced that the economy is regaining its footing. It may take several years of growth before they feel comfortable returning to the stock market."

An Emerging World of Opportunities

That very caution, of course, creates opportunities for investors able to look past temporary concerns and begin rebuilding their portfolios for the long term. And although last year's economic crisis seemed to attack almost every sector and kind of investment equally, this recovery could reward those investors who put a premium on choosing the right individual stocks, Hartnett believes. "If volatility continues to decline through 2010, as we believe it will, the importance of assessing each company and stock according to its own merits becomes much clearer," he says. "Instead of every stock, good or bad, going up or down 30%, you'll get a lot more differentiation."

Emerging markets — the fastest-growing economies during much of the past decade — should likely continue their dominant role, and one way for American investors to participate could be through large U.S. companies deeply involved in the developing world. "Infrastructure and urbanization are still the big stories for China and India," Hartnett contends. Adds David Bianco, head of U.S. Investment Strategy, BofA Merrill Lynch Global Research, "That translates into potential for U.S. investors in large-cap, S&P 500 companies in technology, energy, industrials and materials. All those areas should benefit from continued strong construction in Asia."

Still Room for Bonds

Corporate bonds, too, will likely continue to play an important role in most portfolios during 2010, says Jeffrey Rosenberg, head of Global Credit Strategy Research, BofA Merrill Lynch Global Research. Yet investors shouldn't expect a repeat of last year, when fixed income investments outperformed equities. "Bond yields have returned to more traditional levels, and stock markets have bounced back," he says. "Bonds may still be an excellent way to reduce risk, but the fundamental rules of finance will again apply: If you take less risk, expect lower returns, as well as the reverse."

Assessing risk in a rapidly changing economic environment will continue to be a challenge as 2010 unfolds. But Harris expects one of the biggest economic woes — the high rate of joblessness — to ease as the year progresses. "The job market should start to come back during the first quarter of 2010 as businesses become convinced the recovery is real," says Harris, who thinks that by year's end unemployment should have dropped to 9.5% from a peak of 10.2% — still high, but an improvement. Indeed slow, steady progress is likely to be the prevailing theme in many areas during the coming year, as the global economy continues to distance itself from its recent stormy past.

The National Association of Realtors publishes an annual “Profile of Home Buyers and Sellers”.  The most recent publication profiles home buyers and seller for 2008.

Much of the survey data is much of what we would expect.  Home buyers use the internet to search for property.  Typically home buyers use a real estate agent.  Most home buyers finance their home purchase.  Over half of the homes purchased are bigger than the previous home.  Most sellers use a real estate agent.  Over half the homes sold reduced the asking price at least once.

What I have found most interesting in the report is how buyers find their real estate agent.  We are all told that we need to be on the internet.  I agree.  What isn’t discussed enough, however, is that the vast majority of buyers still find their real estate agent by referral.  A whopping 43% of all buyers used a real estate agent who is or was referred by a friend, neighbor, or relative.  Another 11% of buyers indicated they previously used the agent.  The vast majority of Buyers interviewed only one agent.  Nearly all buyers indicated they would use or recommend their agent to others. (All of this data is on page 57 of the report)

This is the disconnect, over half of all buyers indicated they found their agent by referral or used the agent before and 70% indicate that they would referral their agent.  Does it not make sense that this is where prospecting efforts should be focused?

Dr. Ivan Misner founder of BNI, the world’s largest networking organization offers some interesting insights into networking clubs and how this non-traditional marketing effort may pay big dividends.  Check out his video by clicking the following link:

http://brokerprosper.peopleandproperties.com/networking.htm

Networking clubs maybe an innovative and inexpensive way to market your brokerage to new people, increase your sphere of influence, and get more agents involved.  Is a networking club right for your brokerage?  Find out, sign up for the BrokerProsper Newsletter or contact us. 

Check out the video section of BrokerProsper to tap into the power of this great resource.

Take a look at these attributes and decide if you are building a business that will create generational wealth or are you creating a job?

One of the goals of any professional should be to achieve a state of unconscious competence, meaning that they no longer need to think about their actions to achieve the desired results.  Much as a professional quarterback can simply find the open receiver without thinking about it, or the professional basketball player can sink the jump shot with no thought.

That same level of competence can be reached in any profession.  The carpenter knows where to put the nail without thought, the keyboard player knows where the keys on the piano are without thought, and the great cop knows who to talk to get to the bottom of an investigation. 

A novice may be unconsciously incompetent.  They are unaware of what they don’t know maybe even to the point of not even knowing what questions to ask to find the knowledge.  Eventually they will begin to understand what they don’t know, or become conscious of their lack of ability.  If you follow the theory most professionals will become skilled enough in their given trade to become a Conscious Competent and the truly great will achieve the status of Unconscious Competence.

This leads me to my point, even the unconscious incompetent knows that the point of listing homes,, and in fact the business of Residential Real Estate Brokerage is to sell houses.  This morning I had the pleasure of meeting a new client with the purpose of showing her some condos in Chicago’s Streeterville Neighborhood.  On Monday of this week I called the listing agents or their designee and scheduled visits to 4 units, 3 in one building and 1 across the street.  My client informed me she would be taking the train to the city and would like to meet me at the building.  The first 2 appointments went off without a hitch.  Both units beautifully decorated with stunning views of the Chicago Skyline. 

Visit 3 was 10 floors down in the same building.  On Monday the listing agent told me to meet her at the unit.  Knock, Knock, no answer.  Knock, Knock no answer.  There must have been a mix up, maybe I was supposed to meet her in the lobby, no biggie, and a quick elevator ride and back to the lobby.  No agent.  Thanks to modern technology, I have mystery agent’s number in my calendar.  A quick call and no answer, again no biggie I leave a message and suggest to my client the agent should call back in a few minutes.  No call, no agent, and no more time to wait.  The disgust on my client’s face was hard to disguise.

A few words of apology and we head across the street.  The bright sunshine of the crisp Chicago morning helped ease the disappointment.  This agent indicated that I could gain access to this unit by way of a lock box.  Not my preferred method of trying to sell a client’s property but it is a well accepted industry practice.  The door man quickly gives me access to the “lock box room” and I go to my notes and enter the combination on the appropriate lock box.  Bingo the front door springs open, and much to my surprise, no key.  Must be a mistake, I ask the doorman if there are any additional notes or showing instructions for the unit.  In something that sounded similar to English he said no.  I do what seems reasonable and place a call to the agent.  This agent is also unavailable, however someone from his office indicates that they have been aware of the missing key since Monday.  SINCE Monday I ask?  Yes since Monday I am told.  I asked the lady if she knew what day it was today, she said it is Wednesday.  I then asked if she had me on the showing calendar and she said yes from 10:45 – 11:00.  I then asked if she had ever heard of Alexander Graham Bell, she responds no.  I explain his invention and how it has greatly increased communication.

What is it with Realtors?  Four appointments, effectively 2 no shows, for the Love of God and everything Holy this isn’t rocket science!  Like Woody Allen once said 90% of life is showing up.  You would think a slow market would lead people to gain some form of competence.  Like a wise man once told me” you just can’t fix stupid!

Two business days into the New Year, all the reflections of the past are now fading, all the opportunity of the future is glowing, and the Prima Donna is only warming up, now what?

The experience of history is the greatest education one can have.  Recent history has provided Real Estate Brokerages with enough education that many might have earned a Master’s Degree.  The lesson began with an understanding the numbers without understanding mean nothing.  As real estate markets across the country began to boom, Brokerages experienced GCI increases of in unheard of percentages.  These GCI increases continued even as the under lying fundamental driver of real estate began to slow.  The number of transactions was slowing even as gross commission dollars was increasing.  The smart owners saw this trend and began adjusting.  The average and below average companies only looked at the top line.  History lesson number 1 Transactions as well as price matter.  It is easier to control the number of transactions than it is to control the price per transaction.

Before the melt down, companies experienced record profit levels.  Brokerages spent money on the latest and greatest gadgets; the latest must have technology, and began paying sale associates commissions that made little sense for the long term health of the company.  Brokerages expanded beyond any reasonable measure.  Agents with little experience opened offices faster than a dragster racing down the track.  Sellers viewed their property as an ATM, with no respect to business cycles.  Lenders encouraged the practice with easy credit.  However the fundamentals were unchanged.  Business is a cycle with peaks and valleys.  History lesson number 2 Business is and always will be a cyclical environment with highs and lows.  A business needs to be managed in the present while preparing for the future.

When the market began to declining as fast or faster than the growth, many though it only a hiccup.  Certainly this would downturn would quickly turn around, transactions would pick up as there was pent up demand.  Simple laws of supply and demand tell us this isn’t the cause.  Decreasing demand and slowing a transaction number influences price.  The GCI increases evaporated, transactions in a number of markets disappeared and brokerages were left holding the bag of excess expenses, high labor costs, and empty offices as agent left the business in droves.  History lesson number 3, if it seems too good to be true it usually is too good to be true.

That leads us to the future.  The Prima Donna or fat lady has already sung for a lot of brokerage operations.  For a number of others she is certainly clearing her throat and warming up.  For the lucky that are still in business the future is yours.  What are you going to do about?  I have heard many say that 2010 is going to be the year.  This year is filled with a fragile optimism that is still shining bright.  Much has been said about the brokerage of the future and the agent of the future.  However 2010 is where the rubber meets the road.  Repeating the same behavior of the past and hoping this year is the year is not a strategy.  Real Estate Brokerage is at the breaking point it is hemorrhaging and under attack from multiple angles.  Traditional training methods are outdated, traditional marketing doesn’t work, traditional brokerage must be re-invented. 

The past has created a very bright future for those that are prepared and have learned.  A friend of mine once told me that the best way to look at the mistakes we have made in the past is to consider these mistakes tuition.  Just as a college charges its student tuition history and its lessons charge a steep price.  Most of the surviving brokerages have paid for and earned an Ivy League education, now the only question that remains it what are you going to do with it.  Don’t let the Prima Donna begin singing your Swan Song.

BrokerProsper is a membership site dedicated to providing real estate broker/owners and companies the tools need to succeed in today's market place.  We search the Internet, speak with software developers, and interview service providers to evaluate all the products and services we recommend.

Our forums provide insightful discussion regarding the most pressing issues facing real estate brokerages.

Through an extensive network of partners we can help you with all your brokerage's needs.  Some have referred to us as the unfranchised franchise, we just like to think of ourselves as a helping hand.

Basic membership is free,so take a few minutes to look around, shoot us an email is you have any questions, comments, or concerns, we'd love to hear from you.