Toyota’s behavior in recent years reminds me of how USA car companies (Ford, GM, Chrysler) behaved toward their customers in the 1960s and 1970s (based on news reports, shipping steel to them and personal and family experiences) that opened the door for Toyota and Honda to earn USA motor vehicle market share. For readers new to the Millionaire’s Coach®, my focus is on “behaviors that create, maintain and grow wealth, as well as behaviors that blow wealth”SM. Whether a new or a lifetime reader, you can all tell me what behaviors Toyota has been performing in recent years.

This is a good example of why it is so important to first determine your personal values and those of your enterprise, order those values in terms of importance and them check decisions and actions against them for compliance with your values. If there arises an issue where a decision and or potential action might appear to be acceptable according to one value but not with another, that is when the highest priority value rules. Be careful of deceiving yourself such as via one of the psychological defense mechanisms. It is a good idea have some neutral third party who can absolutely keep your confidences check decisions of high impact against your values to protect against deceiving yourself. If you think that can not happen in corporations, let me say two words: Enron, Toyota.

For more information on how to select values, a simple way to determine their priority to one another and more, see the Millionaire’s Coach® Billion Dollar Success Secrets.

For more information on how situations can influence individual and group decisions for growing or blowing wealth and how to become the situation that others respond to, see the Millionaire’s Coach® Billion Dollar Persuasion Power.

With regard to public safety on the streets and highways, I think it is also important to know that Toyota is not recalling all models with floor mats that trap the gas pedal. I have had the all weather floor mat jam the gas pedal to full acceleration in downtown rush hour traffic after an Octopus car wash attendant pulled the retaining clip out to vacuum and never replaced it (in fact they have done it at multiple locations and Octopus employees seemed not at all concerned when I told workers at the car wash exits of the consequences of doing that).

When I contacted the local Toyota service department the service manager told me to throw away the all-weather floor mats specifically sold to me for my Toyota by Toyota. I was told that because they are not standard equipment, Toyota was not liable for my having purchased them from Toyota for the model of Toyota for which they were specifically designed. In addition to not being excited of the prospect of stepping into my new Sienna carpeting from the muddy parking lot on a sunny winter day at Taos Ski Valley, I was flabbergasted to hear there was no refund available for the floor mats.

It appears to me Toyota is still minimizing and back-pedaling to save corporate pennies at the risk of property, personal injuries and lives of its customers. Hearing their response, I was feeling like I did owning Fords and Chevys in the 1970s. I disliked that experience so much then that I have never owned another Ford or Chevy for more than three decades now. (Subsequently my two brothers and two children who all grew up with me in a USA steel town have all bought foreign vehicles.) Walking to my car looking disgustedly at the Toyota No-Service printout, I saw something that made me feel that at least I got something for my time, trouble and $30,000+ dollars, a “Free complimentary car wash.” That is, until I got to my Sienna to find it looking just as dirty as it did returning to Albuquerque on salted highways from a snow storm and that muddy Taos Ski Valley parking lot.

Walking back inside to the service manager, I told him I never got my free car wash. He responded the car wash was broken, there was nothing he could do. Well, for one thing, he could not put on my Toyota No-Service receipt that Toyota gave me one when I didn’t get it. But I guess to Toyota, as long as they say something happened as it was supposed to happen, then it is alright regardless of what really happened.

So based on my experience, in spite of the billions Toyota is spending on advertisements touting their emphasis on owner safety, they still haven’t put their values where their mouth is. it all sounds and smells like profiteering BS to me.

Toyota has been increasingly behaving in ways that blow wealth. Everyone should learn these lessons. Determine your values, order your values and live and die by them. And remember- in a free market society you are never so big that you can force your customers to smell something rotten (literally and or figuratively) and make it all better by telling them it says right there on page 320 of the Owner’s Manual that is how it was made to work.

My issue with the stock and mutual fund investment situation today is fundamentally a human-behavioral one, not an analyzed, advised, articulated investment strategy one. And that also goes to the heart of how investors, and world finances, got into this current situation.

There was a time before U.S.A. corporations began eliminating employee pension plans, when most of the investment money flowing into stocks was through trained investment consultants, brokers and managers. These individuals had varying degrees of intellectual acumen, expertise and focus, making investment decisions based on financial ratios, mixed with a bit of educated expectation regarding how evolving events might financially impact the business climate in an industry and for specific companies in those industries. While subject to human imperfection, they were people who committed their lives to knowing all they could learn about investing for profit and wealth. While consumers were still free to react to events based on the 70/30 Situational Rule, in the “good-old-days” investors in stocks typically had investment knowledge and experience to, for profit or loss, provide a basis for intellectual discipline in making investment decisions.

But once 401ks were created, individuals with more limited to no real understanding of the workings of business and the financial markets were increasingly, collectively, pouring billions of additional capital into stocks, and making decisions based on an incorrect emotional sense of risk-reward, and more subject to the 70/30 Situational Rule than intellectually disciplined professional investors.

Bullsh&$? No, fact, as Adam Shell got so very right. Adam gives anecdotal examples that match my information and experience in this market, of people pulling out at or near the bottom of the market, after their stock funds had lost most if not all of the value they were going to lose. As Adam noted, “. . . stock funds have suffered outflows totaling $232 billion, Investment Company Institute statistics show. In contrast, fixed-income bond mutual funds have enjoyed inflows of $431 billion.” A lot of people got out of the market near the bottom and have stayed out missing out on the rebounding values.

There is research with insightful information about how people on average tend to misperceive their chances of good and or bad things happening to them. A popular example of this is the confident cry, “No Deal,” as contestant after contestant go again odds of probability, passing up a sure payday for that elusive big payoff on the game-show. Educated, experienced investors know that lay-investors are likely to do just as lay-investors did as reported in Adam’s article. When stocks are going up, there is pressure on lay-investors to pour their money into riskier investments.

That speculative inflow of cash into the markets drives up stock prices more, based on supply and demand, which can trap professional investors into the feeding frenzy on overvalued (according to more traditional solely financial indicators of a company and its stock’s worth). In the late 1980s and or early 1990s, Fidelity sent a mailing to its mutual fund investors cautioning them of how, to paraphrase, stocks were overpriced according to traditional financial tools for valuing stocks, and the market was not risk free, possibly heading for an adjustment (noticeable drop in value). Years later Alan Greenspan was castigated for his very on-target “irrational exuberance” remark about the markets. The signs were there before the derivatives market threatened to take the world beyond financial damnation all the way to the depths of hellfire.

All very erudite on my part, but since money talks and bullsh%# walks, let me tell you what I did based on what I am sharing with you, and how that worked for me. I am not an investment expert, there are multitudes of them in the world. My niche is in how “Human Behaviors Maintain and Grow or Totally Blow Wealth.”SM Since the 1980s, in my observation, the markets have overall been as much if not more driven by an abundance of cash to invest and emotion than by financial analysis and skill. I have used that to make some money and keep from losing my slim, firm little butt in this recent market.

About 20 months before the steep decline in recent stock prices, I knew an adjustment was coming sooner than later. I had no detailed knowledge about how extremely fragile the economy was behind the scenes because of subprime mortgages. I did know there were a lot of people buying nice houses who 10 and more years earlier would never have gotten loans for them. I knew the U.S.A. economy was overheated more now than when Fidelity pointed out some investment facts to clients and even when Greenspan said the market behavior was a result of “irrational exuberance.” That irrational exuberance, human behavior driven by the 70/30 situational rule and the average person’s misperceptions in evaluating risk-reward, was still going on and fueling itself to escalate further out of control.

I also knew there was so much negative media about then President Bush and so much public sentiment was against him, Democrats would have to perform a miracle to lose the 2008 USA presidential election, with no disrespect meant to Mr. Obama, that it didn’t matter who was the Democratic candidate or Republican candidates (although McCain-Palin in my estimation did a lot to prevent the Democratic miracle of a loss in 2008). Let’s not get off track with politics- my focus is on behavior. And on average, Democrats have a reputation, probably deservedly earned, for tending to be less fiscally conservative than Republicans (Clinton vs. Bush-Chaney arguably disputes that being an absolute).

The result of my observations, feelings and perceptions of behaviors occurring those about 20 months before the market decline led me to cut my financial investments in the market half. Before that, interest rates in credit were less than my rate of earnings in investments so I used credit a lot. But when I cut investments, I began to eliminate debt. Because what happens when credit is too easy and too cheap for too long? Remember, it was obvious for example that loans were being made across the country to finance real estate that in previous years would have been considered too risky. I saw that with my eyes, including people I was meeting, and read for months the stunning growth in the housing market. In that sense, without knowing the behind-the-scenes details of the parsing out of subprime loans, I saw the behavioral results of it.

Which again is my point, it is no longer enough to invest based on established financial tools for determining the value of a stock. To get, grow and maintain wealth, you need to also analyze behavior. One fund manager I know had become increasingly interested in what I teach pulled back his fund about 6 months before the market slide, bet against the market and made money instead of losing it. Billions. Behavior.

No, I don’t have a crystal ball. If I did, I would have moved all my stock investments to cash equivalents the day before the slide began the stock market losing about 57% of its value. My investment mix lost at its lowest point, 38% of its pre-slide value. I left it there and began increasing investments on the market’s way back up as did many professional investors. At this point, I have fewer than 60 days of debt and maintained a favorable interest rate by doing that. Many people are loaded with debt from the cheap credit days, now when interest rates are going up and credit and cash are harder to get for individuals and businesses (unless you’re too big to fail).

I did however predict within six days when the market would rebound to 9600. A CFO I know was bragging right after the crash that he had moved all his stock investments into money market funds about 12 months before the slide. He said someone had made an offer to him that he began to research before investing money in it. That led him on an odyssey into the subprime loan market and night terrors about what he feared would happen to the financial markets as a result when people began defaulting on those billions of dollars in loans that had been divided up and parceled out around the world to god and countries.

At the time he was bragging about that in a financial management meeting, the markets were still in limbo wondering like Chubby Checker said in the song, “How low can you go?” Someone asked him what he thought would happen next. The CFO said he was no financial genius, that anyone looking into those loans being sold off as they were would have seen the same thing, it was blatantly obvious the fall was coming, just a matter of when. He added, “Don’t ask me where the market will be in 6 months, I have no idea.”

At that moment, I had one of those intuitive flashes I get, this one feeling about with better than 82% certainty, and I blurted out “9600. It will be around 9600.” Talk about someone being derided! Being Rejectionproof®, their response did not stop me from making a note of that date in my calendar; I was already putting my money where my mouth was before my mouth got there. Money talks, bullsh&* walks, right? The market went over 9600 six days before six months had passed. I got that intuitive sense because of decades of learning about, studying and predicting behavior. What I haven’t told non-paying clients until now, my off-the-cuff guess is that for the intermediate future, 9600 is a slightly conservative moderate valuation based model of what the market will support.

Remember, Adam’s article said a lot of non-professional investors have pulled out and stayed out of stocks. At present, as of this month, with a bit of slight speculation and profit taking having gone on so far in 2010, professional investors in the market have not been willing to take the market value very far above 10,000. My opinion is that until some few months of success in reduction in unemployment worldwide, and some factual information about what is happening in trends in a certain country’s economy (that I won’t say by name so my blog is not blocked there although this might be enough to make that happen now), any driving up of the market valuation before that is based on speculation that the market is heading toward favorable news such as employment. But I suspect egocentric hubris of U.S.A. investors’ ignoring what is going on financially with that unnamed country, will take the markets to heights analytical realities based on open information would know they should not go.

So what should you invest in? Do not ask me what to invest in, I won’t tell you. My wife has a professional adviser she hooked up with in Houston through UTMDACC. Her rate (not absolute dollars) of loss at its point lowest was 8% more than mine. It is not that I don’t want you to prosper from what I know, it is that I do not want you to lose because of what I do. There are two experiences with “the markets” that have shaped my reluctance to share specifics about my investment strategies.

The first dates back to a class in junior high school. We were introduced in class to the markets, I really don’t remember the details of what was said, only what happened to me! We were then told as an exercise, to presume we each had some sum, maybe $500 or $1,000, to invest in a stock. Our choices were posted in the classroom and tracked for some period of time. In my selection, I did then what many if not most lay people did in recent years. I found a stock that had a track record of increases and which was as I recall, one of the most expensive per share stocks, so I picked the winner.

That was possibly the highest price at which GM’s stock has ever sold since that day. Older and wiser, because the stock price fell so much during that class, I now wonder if there was not a stock split I knew nothing about and which was also beyond the kin of that middle school instructor to know and point out to me. All I know is that I ended up with a stock as I recall had lost more than half its value by the time the lesson ended.

The second experience that has left me feeling I should never give financial advice to others was in 1979. A man who’s wife I was counseling, said to me I was a smart man whose opinion he valued. He asked me about gold which in hindsight was roughly half-way to its peak price but already at a level it would fall below and stay at for about a decade. In 1979 gold reached about $459 an ounce, up from about $134 per ounce in 1976. He saw how the price of gold was going up and up and was feeling he should make some large investments in it. That was a time before I worked in commercial real estate asset management. It was before I got an MBA graduating at the 96th percentile in subject knowledge compared with national U.S.A. MBA graduates. But at that time already as those who follow me know, I was fairly fluent in human behavior.

I told him that I did not know when it would happen, but it was obvious to me gold was already selling at speculative prices with people maybe believing it was a great investment but really actually gambling that the price would go up after whatever price they paid for it, so they could later make a great profit from the purchase. Unless there is knowledge in the market that something of value, that something which has a utility has become or is likely to become scarce beyond the value of its utility, then there is no prudent financial reason for the price to be rising. I told him investing in gold at that time would be a gamble. He could double his money or lose half of it, depending on what happened after he bought it, and how soon he sold it. I did reassure him that eventually, like a pyramid scheme, the price of gold would drop dramatically and those buying in late, as he wanted to more or less do, would lose a significant percentage of its purchase price.

He thanked me and said he would leave his money where it was. Then I watched for days, weeks, months more as the price of gold continued its climb into 1980 to about $595. After I had told him that, in coming weeks when he brought his wife for counseling, every time I saw him I felt guilty about the money he had lost by listening to me. Still intellectually I knew I was correct, it was just a matter of how soon the price of gold would fall instead of continuing to rise to amounts clearly unsustainable by its availability and utility. Still, that weighed on my conscience as I have an aversion to doing others harm.

The counseling sessions ended while he price of gold was rising. But eventually after peaking the next year at about $595, gold dropped in price to $400 an ounce in 1981, gained some to $447 in ’82, dropping through in 1984 to $308, from $459 in ’79 to $308 in ’84. It took a bit more than four years but it did happen as I knew it would. It could have happened in one day, but from hindsight we know it took four years. The price of gold dropped a lot and stayed down for years. Some gambled, bought as it was rising, sold before it fell and made a profit. Others lost, a lot, to pay for those profits of others on a metal for which its utility had changed little during the rise and fall of its investment price.

Behavior. Without knowing financial formulae for valuing assets, just knowing behavior can provide valuable insights to help you maintain and grow wealth. Together, expertise with financial valuation, and understanding how influences on human behavior influences markets, will help you maintain and maximize wealth. If you are a professional investor, acquiring this expertise as part of your full time profession will help you make more profitable investment decisions more often than without it. If you are a private investor seeking financial guidance to grow and sustain wealth, do some homework first to determine how much your advisor really knows and uses each skill in making advisory decisions.

Forbes reported Tiger as the first sports star to earn $1 billion, much of that from endorsements and licensing that depend on his professional accomplishments, and the celebrity that has brought, intertwined with his choirboy public image. Now having behaved in ways that blew his choirboy public persona, Tiger might soon hold the record for the sports star to most quickly lose $1 billion dollars. While some of his sponsors have made no public comments on Woods continued endorsement role, Nielsen ratings company data reportedly show beginning two days after Tiger’s SUV mishap on November 27 until today, Woods has been at least placed in a quiet wait-and-see period while no company is showing Woods ads on TV.

This is not because Woods lost his golfing ability. Not because he is no longer a celebrity (he is now more reported on by media and talked about on the street than ever before). Instead, this is because Woods reportedly drove dangerously and had non-monogamous sex while legally married. Than the one reported public driving mishap and Tiger’s purported behind-closed-doors non-monogamous sexual behavior has already negatively threatened his wealth.

Since he was a boy Tiger worked at being a great golfer. He did that, rightly or wrongly, while being presented publicly as the kind of man straight women dream of finding. Those behaviors led to a clean-life, straight edge public persona and a golf-tournament-winning machine. They also led to Forbes reporting him as the first sports star with earnings of one billion dollars, mostly from endorsements and licensing. So why has revelations over the prior month about Tiger’s other behaviors been so damaging to his wealth, and let’s add personal relationships into this question?

That’s because Tiger’s recent experience also relates to another famous principle of mine, “In politics image is everything. In business image is important. But in love, intimacy is everything.” Tiger now has two strikes against him. With regard to intimacy, from what we see publicly, it appears as if Woods deceived his wife about his sexual encounters with other women. Deceit is not intimacy.

With regard to business, Tiger has behaved contrary to the public persona upon which he is marketed that earned him the billion-dollar paycheck. Tiger’s sponsors are rightly concerned that Tiger’s behaviors might affect their wealth. To sustain and grow their wealth, they have appeared to have acted, behaved to isolate the value of their wealth from Tiger Woods’ behaviors. Woods has performed behaviors often associated with the consequence of decreasing wealth. At this time, it appears to me that his sponsors have responded with a behavior to sustain and grow their wealth.

Note that I am not saying Tiger could not have made that money with other behaviors. He could theoretically gone with a Happy Gilmore public persona and other sponsors, possibly say a beer company, condom maker and Penthouse magazine, for example. Hell, he could even do a dramatization of his escapades to promote the TV show Cheaters.But he didn’t build wealth with scoundrel, a-man’s-man public behaviors. He built his wealth on the choirboy, kinda-guy-every-father-wants-his-daughter-to-marry, genuine American hero image. As for the third strike, I’m no expert at politics but would guess Woods should probably forget about Obama calling him to be his next vice presidential running mate.

What can Woods do from here to retain and grow wealth? Immediately he needs to know whether he wants to go on being the public persona “Tiger Woods” was until about a month ago. Or whether he wants to move on from here with the Happy Gilmore pubic [sic] persona. Tiger’s a big enough celebrity right now that either way he can grow wealth from it. But he does have to be more sensitive to maintaining whatever image he presents going forward as long as it is working for him. Note that is perfectly all right to change a public persona that never worked or is not working now. Professional wrestlers are a good example of that. Even the Rock went through various personas until hitting upon the Rock. So also the comedian Rodney Dangerfield. A struggling comedian, one day he spit out the words, “I don’t get no respect,” and the rest is legend.

The obvious thing anyone can do in Woods situation is to hire an expert to rebuild his image, and one to help ensure he never screws it up publicly again like recently happened. Listen to them and act, behave accordingly. And by comparison, saying this with admiration for his talent and respect for the dead, Tiger, don’t do what Michael Jackson did. Michael had a chance years ago for a comeback after child molestation accusations, and what did he do? He blew his second chance by performing surrounding himself with children refocusing media attention to that issue and setting his career back years more again. The last thing any non-pedophile wants to see is an accused pedophile who gets a Law and Order reprieve, go out and take that as a license to surround himself with children. That was Michael’s mistake. If people and sponsors give the old Tiger Woods a second chance, he should avoid especially even the appearance of any non-old Tiger Woods behaviors.

Tiger definitely still has profitable options ahead. But one thing is certain. If Woods wants to continue to work the choir boy persona, he needs to forever more walk the talk, at least publicly. But then again, if he wants to go for the Happy Gilmore golfer image, then have at those hookers, trees and fire hydrants and build up a new following accordingly just like Happy did. If anyone can do it, Tiger can. With the right behaviors.

Marriage
What’s worse than underestimating your lover?

Business
What’s worse than underestimating your competition?

Answers
Underestimating your:
Troups
Wife
Staff

While the second answer is for levity, having been a former counselor (one of my various professional experiences) I assure you it is also true!

What do any of these have to do with wealth?

They are all behaviors that have dramatic and broad ranging consequences. Making the first mistake can cost you a war, the second, your marriage, and the third, your business. All three of them effect wealth.

“Wealth is not about money. It is about behavior.” SM

Stanton Royce, MBA
The Millionaire’s Coach(R)

The biggest threat to creating and keeping wealth is to think wealth is about money. Wealth is not and never has been about money. Wealth is about behavior.

Behavior creates wealth and only behavior can keep wealth. If you don’t believe that, then study what happens to multi-million dollar lottery winners. They happen upon wealth and many lose it almost as fast as they get it.

Why? Money doesn’t make or keep you wealthy.

Your behavior does.

Stanton Royce, MBA is the expert in making people do what makes them wealthy.

That’s why people call him the Millionaire’s Coach^®.

Help us spread the wealth by spreading the word. Tell others about us. And tell us what can we do for you. We’re here to make you do things you’re going to love!

Because a little (or a lot of) wealth never hurt anyone.