Bubbles & Global Trends

An economic bubble is trade in high volumes at prices that are considerably at variance with intrinsic values. It could also be described as a trade in products or assets with inflated values. The cause of bubbles is unknown, however many explanations have been suggested, it has been recently shown that bubbles appear even randomly at time, without any rationality. I was very intrigued by the idea of bubbles, how a good can become the leading product in the market that everybody wants with such high demand then suddenly it falls because everybody starts selling. This type of activity in the market can easily cause a collapse in the economy especially if it is dominating the public (everybody is trading in it). The Tulip bubble also known as Tulip-mania was the most interesting to me, because of the price it got to. At the peak of tulip mania, in March 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman this equates to the price of mansions and fine art in modern times. I was never clear to me why this would happen, if you think about it now, if I saw that this was going on then I would grow my own tulips because it was worth so much money. Eventually that's what everyone did until the most expensive tulip in the world failed to sell. this caused everyone to lower their prices because their was over production which then lead to the collapse of the tulip industry and ultimately the collapse of the Dutch economy. The wealthiest of the wealthy became the poorest of the poor, people that were lucky were the ones that managed to sell before the crash. A modern example of a bubble I believe would be the real estate market. It is believed that the main cause of the 2007 crash is the Real Estate market and that is why people borrowed so much money that they couldn't pay back. The Real Estate market, despite a slight decline in 2007-2009, is still growing to astronomical prices.

How To Have A Successful Business

I have learnt that there are many ways to create and maintain a successful business. The two most important in starting a business is to have a good market opportunity and to have a passionate team that is not only motivated by money. Although the money and success is a part of the motivation behind creating the business there should also be a vision and a belief in what you are doing. You must be passionate in order to achieve your maximum potential. To Make a business successful you must be organized at all times. Make sure you are on top of all the records and finances to make sure there is no leakage in the cash flow. Also have an efficient filing system that will allow you to pull out any document you need, whenever you need it. Although organization is a very important part of having a successful business that is not all, you also need to monitor the market and keep an eye out for competition, if they are doing something better than you are find out what it is and use it to your advantage, be creative in your tactics and marketing, if they are charging less money than you and stealing away your customers then find a way to make the consumer pay that extra dollar at your establishment. it is very important to know the market and know the consumer. In order to be successful you can't own the business part time, you need to be fully committed if you really care about its success. You must stay focused and prepare to make sacrifices such as not going out on the weekend because you need to do more research on the market or staying late to keep on top of the booking. Be prepared to spend less time with family and friends but also have a goal to when you can take it easy and you must have an exit strategy since the start. Make sure you can leave when you want to with as minimum hassle as you can. Basically the key to having a successful business is; commitment, passion and sacrifice, just being in for the money is not enough you aim should be to provide a great service that you would use yourself show your customers that you care and build that brand.

How To Handle A VC The most important part I believe is to assure the investors that you are personally capable and credible. You need to give off the answer yes to the following questions without having to say anything; Are you the kind of person able to build a company? In an existing company, it's more: Are you the kind of person who can manage a complex project competently? How personally committed are you to the idea that you are proposing? You must reveal yourself, become transparent, but don't give out too much. Tell them who you are, give off confidence and control and you and the investor need to like each other because you are about to start a five to ten year relationship and if you two don't like each other then that is just a recipe for disaster. An investor will always be hard on you especially if the investor is not an angel investor, at the end of the day they want to ensure their money back and their return as well. You need to be honest with the potential investor to show them if you can give them their homerun that they are all looking for or not, most of the time the investor would have made up his mind about you as soon as he meets you. first impressions are everything.

Interesting Lessons From This Course

One of the most interesting things must be the traditional economics vs. behavioral economics. There is a joke that stuck to my head; Two men walking in wall street, there is a dollar on the floor, the first man bends down to pick it up, the second man stops him and says "Don't bother it's not real.". This joke was very interesting to me because its true. In traditional economics based on the invisible hand theory you would never find money on the floor because there is no waste. The fact that consumers are supposed to be rational beings did not make sense to be because I don't think humans are rational, I think we are very adaptive but not rational for example; they did an experiment on the streets asked random pedestrians if they would take $100 now or $101 tomorrow, the rational thing to do would be to take the $01, however everyone chose to take the $100 now. This shows that we are not rational as the traditional economics suggests. I was also very interested in the behavior experiments the most one that interested me was the candle and matches experiment. It was a shock to me that the team that was not motivated by money was the one that got the answer fastest. This was interesting to be because then we watched a video about the Golden Circle by Simon Sinek and he used the example of the Wright Brothers and Samuel Langley, the Wright brothers were only motivated by their passion, Langley was promised fortune and fame and he was given so much news coverage and capital from the government not to mention the most brilliant engineers of the time working alongside him. Eventually the undercapitalized and ignored Wright brothers made it happen before him. This was interesting to me because of the idea that passion and believing in what you do gives you better results and helps you achieve more. However my favorite in class activity was investing in the stock market. I learned how to interpret patterns in the history of the stock by looking at Google finance, Yahoo finance, and morning star. My stock choice was Disney (DIS), by the end of the class my stock was fourth on the class and I based my choice on news about the company and looking at the history of the stock, I managed to predicts that the stock will have a slight dip and then it will rise by double or more than the amount it dipped, to my surprise that is exactly what happened. I also now know the significance of the market cap. and the value vs. growth investing.