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How and Why Buy-and-Hold Investment Strategy Works

DJIA variability is 75% secular growth (red line) and 25% chaotic excess variability (blue line).

29 May 2024 – This essay attempts to answer a question I ran across on social media recently: “Is now a good time to invest in the stock market?” My knee-jerk reaction to this question, based on over half a century of armchair investment-strategy study plus a couple of decades’ experience investing my personal funds, is always: “Yes. Any time is a good time to invest in the stock market.” More specifically, the time to invest in equities is whenever you have cash available to invest in equities—regardless of transitory economic or market conditions. Being a management-science professional, however, I’m going to try to provide a little more backup for this answer.

Folks who dabble in equities markets fall into two broad categories: Traders and Investors. Traders use a market-timing strategy to achieve better-than-average gains. They hold equities for short periods of time—a few months or less (often much less)—making frequent trades in the hope of using superior investing acumen to achieve outsized gains. Their underlying assumption is, of course, that they actually possess superior investing acumen! Otherwise their results will, in the long run, confirm John Bridges’ 1587 observation that “a foole and his money is[sic] soone parted.”

Investors, on the other hand, display more humility (or a better appreciation of reality). They recognize that they do not possess superior investing acumen! Assuming they aren’t trading on inside information, don’t know something about investing that the majority of professional investors are ignorant of, and don’t have more than the typical human being’s allotment of good luck, they don’t expect to magically achieve greater than market-average gains. Their goal is to put together a portfolio of equities (stocks and bonds) that will, over time, achieve no less than market returns. This is called the buy-and-hold strategy.

The Research Project

If your goal is to meet or exceed market-average gains, you probably should know what constitutes average market gains. That’s where I can make a contribution because I’ve spent a lot of time over recent decades building skills for data analysis. I should, therefore, be capable of analyzing the vast treasure trove of economic data that folks have been amassing for…a very long time!

A couple of years ago, I started a research project to figure out how and why markets behave as they do. First, I decided to concentrate on the U.S. economy because not only is it the one I happen to be immersed in, but it has historically been pretty stable. Especially, the period between the Great Depression and the economic shock of the COVID-19 pandemic was one of relatively mild economic and social disruption. At least, there was little in the way of Shakespeare’s “slings and arrows” directed at the U.S. economy by “outrageous fortune” (AKA the outside environment).

The how is easy. Just seek out economy-related data collections and graph the data. The data is out there in freely available public databases. Professionals have been obsessively monitoring and recording everything of economic interest for well over a century. Specifically, overall economic performance, measured as gross domestic product (GDP) per person, is tracked by the Bureau of Economic Analysis (BEA), an agency of the U.S. Department of Commerce. The BEA publishes annual GDP data nominally (without correction for inflation) and as real data (corrected for the effects of inflation). You just go to their website and download it for free.

Market-performance data is tracked on various timescales and published in real time by the companies that run the markets. Market indices (e.g., Dow-Jones Industrial Average, or DJIA) are compiled from stock prices and published in near real time by various organizations (e.g., S&P Dow Jones Indices LLC produces the DJIA). I decided to use DJIA because it is marginally the longest-running market-data index extant.

The why takes a little more cogitating.

To begin with, it’s important to understand how markets work. That is, the mechanisms that determine prices of goods and services that make civilized society possible. Folks have tried to understand how this works for as long as people have used specialized labor to fulfill their needs and wants. The earliest attempt (that we know about) to explain such economic ideas was written by the ancient Greek poet Hesiod. His Works and Days (Hesiod, ca. 700 B.C.E.) vaguely hinted at the idea that prices for goods and services depended on a balance between their supplies and demands. In the 17th century, John Locke accurately described the workings of the Law of Supply and Demand, but it was not until the late 18th century that Adam Smith provided a coherent explanation, and not until the mid-20th century that Friedrich Hayek used the law to explain how markets determine prices of securities through negotiations between buyers and sellers.

Finally, in 2022 Glendon Williams and I showed that Hayek’s mechanism for setting equities-market prices involved a trend based on long-term GDP growth plus a chaotic “excess volatility” that defied accurate prediction but averaged out to nothing (Masi & Williams, 2022). The graph at the top of this posting shows the results for the “quiet” period between the economic shock of the Great Depression and that of the COVID-19 pandemic. The smooth red line is an increasing-exponential model that tracks the growth of the U.S. GDP per person quite accurately, while the jagged blue line shows the DJIA market index. The excess volatility is the difference between the two. Our 2022 analysis showed it to display signs of chaos.

Comparing the Strategies

The buy-and-hold investment strategy relies on maintaining a portfolio of equities whose prices, on average, mimic the underlying GDP trend line while using portfolio diversification to smooth out the excess volatility. It turns out that this long-term trend has a growth rate of just under five percent (5%) per year. This is approximately three times the size of the excess volatility that traders attempt to take advantage of by timing the market.

If (and only if) an individual trader is able to predict the rapid swings of the excess volatility, and make trades that track those variations accurately enough, they can achieve additional gains. Any mistakes in timing their trades can, of course, be disastrous.

The fact that this excess volatility is chaotic means it follows Zipf’s Law. This law applies to many natural systems that behave chaotically. In general, it says that in any finite system, there is more room for little things than for big things. That is, if you graph the number of things in any population against the size of those things, you find a decreasing power law: There are more little things than big things. In this case, the frequency of variations in the excess volatility is inversely proportional to their size. This means that the shorter your trading time scale (i.e., the more often you trade) the smaller the difference between your selling and buying prices can be, so the smaller your profits can be for any given trade.

What I haven’t yet pointed out here is the fact that everyone—all traders at least—is trying to time the same market. If you think you’ve found a pattern in the excess volatility of some equity or group of equities, you may be able to exploit it to achieve spectacular gains for a while. In time, however, everyone else finds the same pattern and tries to exploit it. That changes the pattern! Suddenly it shifts so that instead of buying low and selling high, you find yourself buying high and selling low! That erases your once-spectacular gains with spectacular losses. That is how chaos works: Short-term predictability more-or-less quickly turns into long-term unpredictability.

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Key Insights to Help You Craft a Stronger Brand for Your Business

Branding targets what makes your business unique. Photo by Freepik.

22 MAY 2024 – The following is a guest post by Julia Mitchell, lifestyle consultant with Outspiration Network.

In today’s saturated marketplace, standing out from the crowd is more crucial than ever, and a strong brand can be the beacon that guides consumers to your door. Boosting your branding efforts isn’t just about slapping a memorable logo on your products or services; it involves crafting an unique identity, a compelling narrative, and an emotional connection that resonates with your target audience. Whether you’re a startup looking to make your mark, or an established company aiming to rejuvenate your image, this article will explore effective strategies and innovative approaches to elevate your brand above the competition and turn casual observers into loyal advocates.

Developing a comprehensive understanding of the core essence of your brand is absolutely imperative. It is crucial to thoroughly grasp the underlying values, mission, and unique attributes that distinguish your brand from competitors. Consistency in tone, messaging, and aesthetic presentation across all platforms are essential for enhancing your brand’s recognition and establishing a strong, resonant identity.

By maintaining a cohesive and uniform appearance and interaction style, you foster a deeper connection with your audience. Ensuring this consistency in all forms of communication and throughout the customer experience helps cultivate trust and enhances the memorability of your brand. This strategic consistency not only strengthens your brand’s image but also forges more robust and meaningful relationships with your audience, ultimately contributing to long-term loyalty and engagement.

Identifying the specific characteristics and preferences of your target audience is a critical initial step towards effective market segmentation and targeting. By gaining a deep understanding of where your potential customers congregate, whether it’s on particular social media platforms, forums, or other online communities, you can strategically tailor your marketing messages. This approach ensures that your promotional efforts align seamlessly with their daily online interactions and activities.

Moreover, it is essential to clearly communicate your unique value proposition. This involves demonstrating why your product or service is superior to that of your competitors and explicitly outlining how it addresses the specific needs, challenges, or desires of your audience, thereby enhancing their overall life quality or solving their problems. This strategy not only attracts attention but also fosters a connection that can lead to increased customer loyalty.

Perfect Your Business Knowledge

Earning a degree online offers the flexibility and convenience necessary for business professionals to enhance their skills without pausing their careers. When you choose to get a business administration degree online, you position yourself to acquire advanced business acumen and leadership capabilities. This degree equips you with the strategic insights needed to excel in the corporate world and drive transformative business decisions.

Additionally, the online format allows you to integrate your learning directly into your daily business activities, applying new knowledge and theories in real-time to your business challenges. This approach not only enriches your educational experience but also immediately benefits your business operations.

Understanding your competitors’ branding strategies can illuminate the strengths and weaknesses within your industry. Analyze their approaches to uncover opportunities to differentiate your brand uniquely for your target audience. While imitation is not the goal, leveraging insights from their tactics can refine and elevate your own. Regular competitor analysis ensures you remain competitive and your branding strategy stays relevant and forward-thinking.

Leveraging targeted advertising is key to enhancing your brand’s visibility and reaching your desired audience effectively. Invest in a diverse mix of channels, including social media, pay-per-click (PPC), and traditional advertising spaces, to maximize exposure. Analyzing the performance of your campaigns post-launch is crucial. This data-driven approach enables you to discern which strategies succeed and which falter, allowing for optimized future advertisements that resonate more profoundly with your audience.

In today’s digital landscape, online discoverability is vital. Implementing robust search-engine optimization (SEO) strategies significantly enhances your brand’s online visibility. This entails optimizing your website and content with strategic keywords to improve search engine rankings. Continuously monitoring your SEO performance and adapting your approach based on analytics and industry trends is essential. With SEO’s ever-evolving nature, staying informed and flexible in your strategies is crucial for maintaining and enhancing your online presence.

Update Your Marketing Strategy

Evolve your branding and marketing strategies in tandem with your business’s growth. Regularly review and refine them to keep them aligned with current market trends and industry dynamics. Engaging with your audience and soliciting their feedback provides valuable insights into their perception of your brand and areas for improvement. Adopting a flexible approach and being receptive to feedback ensures your branding remains effective and congruent with your business objectives.

Visuals are key to effective storytelling and branding. High-quality images, graphics, and videos not only boost your brand’s attractiveness but also sharpen message delivery. Uniform visual elements across platforms strengthen brand identity, fostering a consistent brand image.

Allocating resources to professional-quality visuals enhances your brand’s perceived value and communicative power. Collaborating with marketing professionals, such as graphic or web designers, often involves sharing complex design ideas, sometimes encapsulated within large PDFs filled with images. These hefty files can pose challenges when attempting to send them through email or online platforms. To facilitate smoother exchanges, you can compress these PDF files to reduce the size of your files quickly, ensuring they’re more manageable to transmit. Selecting an adept PDF compression tool is critical, as it guarantees the minimized file retains its original structure, quality of images, fonts, and overall content integrity.

Online reviews and feedback are incredibly influential in shaping perceptions of your brand. Actively monitoring customer feedback across platforms and responding in a timely and professional manner can mitigate negative impacts and amplify positive sentiments. Reputation management tools can help track and manage online sentiment, ensuring your brand maintains a positive image.

In summary, effective branding is at the heart of business success. By implementing the strategies outlined above, you can significantly enhance your business-branding efforts. Continuous monitoring, adaptation, and improvement are essential to keeping your brand relevant and resonant with your audience. Investing in your brand is investing in the future of your business.

About the Author

Julia Mitchell knew from a young age she wanted to have a career that made her excited to wake up every day. Now in a top-level position with Outspiration, a financial services firm, she’s got her dream job alongside multiple side-income entrepreneurial ventures. She is incredibly passionate about the activities that fill her days, she wants to share her adoration for her favorite lifestyle topics with the world and encourage others to turn their INspiration into OUTspiration.

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The Nine Senses!

Twenty-four centuries ago, Aristotle insisted there were only five senses. Boy, was he wrong! Image by Chubykin Arkady/Shutterstock

18 October 2023 – We owe the original list of five senses to Aristotle, who said “… There is no sixth sense in addition to the five enumerated — sight, hearing, smell, taste, touch …” (Aristotle, 1931). For nearly two millennia, folks labored under this delusion, but by the 16th century natural philosophers (the elite scientists of the day) had started to doubt the completeness of Aristotle’s list. In 1557 physician Julius Caesar Scaliger described a sixth sense kinesthesia, or proprioception, as the internal perception of body position. More recently, scientists have described other senses, extending the list until it has grown to eight:

  1. Vision (sight);
  2. Audition (hearing);
  3. Olfaction (smell);
  4. Gustation (taste);
  5. Haptics (touch);
  6. Kinesthesia (body position, muscle effort);
  7. Vestibular (sense of gravity and acceleration);
  8. Interoception (physiological state of the body).

This is currently the list as quoted by most scientists and practitioners interested in the science of sentience and cognition. I got serious about sense enumeration while reading Andy Clark’s new book The experience machine: How our minds predict and shape reality (Clark, 2023). The book is important reading for anyone interested in the science of cognition, but a complete description in this blog will have to wait until I get around to writing a full critique of it. This present column is about the sense of time, which is a relatively recent addition to the growing list of human senses, bringing it up to nine.

The roughly 1,900-year lag between Aristotle’s original work and the addition of time sense to the list of human perceptions is a tribute to both that ancient Greek’s domination of early scientific thought and his habitual sloppy interpretation of observations. Notwithstanding, we talk about time sense constantly. Time is embedded in our language and is fundamental to our understanding of the Universe. Indeed, Newton began his The mathematical principles of natural philosophy, which is generally acknowledged to be the first complete description of Classical (Newtonian) Physics, by postulating an absolute time that is the same for everyone everywhere (Newton, 2002).

It turns out that my former ignorance of any scholarly literature exploring the temporal sense as a feature of the human sensory system is another example of the truth of the aphorism (often apocryphally attributed to Carl Sagan): “Absence of evidence is not evidence of absence.” A more careful literature search turned up scholarly articles on the subject reaching back to the late 1980s (Czeisler et al., 1999). That, of course, ignores the even older recognition of longer physiological cycles, such as the circadian rhythm common in animals and plants, which has been carefully studied since the middle of the 20th century (Aschoff, 1965).

One possible reason that the temporal sense has been largely ignored by many researchers is that there seems to be no single, dedicated internal temporal organ serving up time sensation for the entire body. Vision has the eyes. Audition has the ears. Where is the clock for a temporal sense? Instead, many organs, such as the heart, seem to have independent pacemakers for their own activities (Schulz & Steimer, 2009).

Another potential reason scholars have ignored the time sense is the recognition that sentient beings receive abundant clues about the passage of time from their surroundings. This could, the thinking goes, obviate the need for an internal temporal sense organ. Who needs an internal clock to know whether it is day or night when Nature makes it obvious through other senses? The difference between having a time sense and just relying on so-called zeitgebers—external cues to the passage of time (Schulz & Steimer, 2009) is whether one can sense time passage when cut off from other sensory input from outside. There is now abundant research showing that humans (at least) sense time accurately even under conditions of intense sensory deprivation (Aschoff, 1965).

Temporal Cycles

The most important aspect of time for a mobile sentient creature (i.e., an animal) is the notion of cycles. The three cycles that are most significant to terrestrial creatures are the annual, lunar and solar (diurnal), which repeat on a yearly, monthly and daily period respectively. Animals (and plants, but we’re here just considering animals, and specifically Homo sapiens sapiens) need to key their activities to these three cycles because they so dramatically affect environmental conditions, which, in turn, affect opportunities for activities.

Chronobiologists (scientists who study the temporal aspects of biological systems) recognize three types of temporal cycles: ultradian, circadian, and infradian based on their frequency, or the number of beats per unit time. For biologic systems, the most salient seem to be circadian rhythms, which have a frequency of approximately one cycle per day. Infradian rhythms are slower (lower frequency), such as the menstrual cycle. Ultradian rhythms, such as the heartbeat, are faster. The whole range of frequencies important to biologic systems extends from microseconds to multiple decades (Czeisler, et al., 1999; Honma, et al., 2023). Two especially important brain structures for time sensing are the suprachiasmatic nucleus (SCN), which provides a pacemaker for circadian clocks in mammals (Schulz & Steimer, 2009), and the subthalamic nucleus (STN), which provides a pacemaker for judging time intervals shorter than a few minutes (Honma, et al., 2023). These are both structures centrally located in the human brain.

Ready, SET, Go!

SET is an acronym for scalar expectancy theory, which is a framework that describes how the brain might use the time sense to compare a presently experienced time interval to a previously experienced time interval, such as, say, the time between breakfast and lunch (Honma, et al., 2023). SET postulates a clock made up of a pacemaker, a switch, and an accumulator. The pacemaker provides a free-running oscillatory signal at a frequency appropriate for physiological functions using the time sense (a few tens of Hertz). The switch gates clock pulses from the pacemaker into the accumulator, which keeps a running count of pulses in the brain’s short-term working memory. The brain then compares the accumulator’s current contents to the expected number recalled from the brain’s reference memory of previous occurences of the event. An individual experiences a current time interval of interest as a fraction of the expected time interval recalled from reference memory. As the ratio approaches unity, the individual experiences a growing sense of anticipation that it’s time for the waiting interval to end. If the ratio exceeds unity without the waited-for event happening, the individual begins to wonder why it is taking so long.

Similar or equivalent mechanisms likely provide mechanisms for the brain to develop a feeling that it knows what time it is in the real world and can feel the passage of time. This is the temporal equivalent of the conscious experience of being able to see how far it is to that oncoming car, or that the ambient temperature is uncomfortably hot this afternoon.

References

Aristotle. (1931). De Anima (J. A. Smith, trans.) Classics in the History of Psychology. https://psychclassics.yorku.ca/Aristotle/De-anima/de-anima3.htm (Original work published ca. 350 BCE)

Aschoff, J. (1965). Circadian rhythms in man. Science. 148(3676) 1427–32.

Clark, A. (2023). The experience machine: How our minds predict and shape reality. Pantheon Books.

Czeisler, Charles & Duffy, Jeanne & Shanahan, Theresa & Brown, Emery & Mitchell, Jude & Rimmer, David & Ronda, Joseph & Silva, Edward & Allan, James & Emens, Jonathan & Dijk, Derk-Jan & Kronauer, Richard. (1999). Stability, Precision, and Near-24-Hour Period of the Human Circadian Pacemaker. Science. 284. 2177-2181.

Schulz, P., & Steimer, T. (2009). Neurobiology of Circadian Systems. CNS Drugs, Suppl.Supplement 2, 23, 3-13.

Honma, M., Sasaki, F., Kamo, H., Nuermaimaiti, M., Kujirai, H., Atsumi, T., Umemura, A., Iwamuro, H., Shimo, Y., Oyama, G., Hattori, N., & Terao, Y. (2023). Role of the subthalamic nucleus in perceiving and estimating the passage of time. Frontiers in Aging Neuroscience. 15 DOI: 10.3389/fnagi.2023.1090052

Newton, I. (2002). The mathematical principles of natural philosophy (D. R.Wilkins, Ed., A. Motte, Trans.). Daniel Adee Publisher. (Original work published 1729).

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Eight Growth Strategies for Small Business Owners

Figuring out how to grow your company sustainably can be tricky. Christina Morillo/Pexels

1 April 2023 – The following is a guest post by Julia Mitchell, lifestyle consultant with Outspiration Network.

As a small business owner, figuring out how to grow your company sustainably can be tricky. You already wear so many hats that experimenting with new initiatives might leave you feeling overwhelmed, but at the same time you’re eager to see what you can achieve. Start by brainstorming workable ideas for growth. To get started, here are some growth tactics that you may be able to implement at your company, from engaging in business process management to focusing on content marketing.

Utilize Business Process Management

If you’re running your business based on inefficient processes, your company will not be able to grow to its full potential. With business process management (BPM), you can leverage automation to free your time from burdensome processes, and you can also gain a clear perspective of the ways in which systems, people, and data interact within your company. BPM will help you work out the kinks in your processes to make your business operate more easily.

After you create a BPM framework, you’ll need to assess its effectiveness from time to time to ensure that you’re getting the results you want. If you notice any issues, you’ll be able to adjust your framework accordingly to get the best results.

Invest in Content Marketing

Today, lots of companies invest in content marketing to promote their products and services. The term “content marketing” can encompass any written marketing materials across digital platforms. This could mean blog posts on your company’s websites, promotional e-books, social media captions, and more! Through content marketing, you can deepen your relationship with your audience and establish your digital platforms as credible sources of information. By creating evergreen content, you’ll have digital marketing assets that you can utilize over and over again for years to come. This will save time as you create new campaigns in the future!

Perhaps you haven’t thought much about content marketing before, and you’re not sure how to build up a robust content marketing strategy. Utilize online marketing resources to get your strategy off the ground. In time, you’ll likely notice a boost in sales as a result of content marketing!

Network Online and in Person

Perhaps you became an entrepreneur because you preferred working solo to working with other people. But, even if you’re an introvert, there’s simply no escaping the importance of networking when you run a business! To get comfortable with networking as an introvert, Creo Incubator recommends opting for one-on-one meetings with your industry contacts, setting goals for the number of people you want to talk to at events, and letting go of the idea that you have to become an extrovert to succeed in business. If you get comfortable with being yourself, other people in your industry will naturally gravitate towards you.

Launch New Products and Services

As you connect with a broader customer base, you’ll need to tune into their consumer demands so that you can match your offerings with their needs. If you’re thinking about developing and launching new products and services, you’ll have to make a plan! Marcus Lemonis recommends conducting extensive market research before building your new product, surveying your competition for ideas, estimating how much revenue you could earn from specific offerings, pitching the idea to any necessary stakeholders, and building buzz before the official launch date.

Expand Your Team

If you’re planning to grow your business, you can’t do it all by yourself! This is the time to start expanding your team so that you’ll have enough staff to handle all of your new projects. Create job listings for several online platforms, let your friends, relatives, and professional network know that you’re hiring, and prepare your interview questions ahead of time so that you can determine if a candidate will be a good fit.

Cultivate Partnerships

It’s easy to view other businesses solely as competition, but by partnering up with other companies that are not your direct competitors, you can reap lots of benefits! If you’re curious about partnering with another business for a marketing initiative, you’ll want to look to businesses that provide offerings your customers would also be interested in. However, you don’t want to pitch a partnership to a business that sells the same products! For example, if you run a company selling baking tools or kitchenware, you could launch a partnership with a business that sells artisan ingredients. Make sure that your offerings complement each other.

Seek Additional Funding

What if you have an idea in mind for a new product, service, or other initiative, but you simply don’t have the funds to make it a reality? You don’t necessarily have to wait until your revenue is higher. Instead, you can seek outside funding. If taking out a loan feels too risky, it’s time to start looking into small business grants.

Lots of organizations offer small business grants – you can find grants funded by both public and private institutions. It also helps to look up grants that are specifically targeted towards your industry. As you prepare your applications, go over the eligibility criteria closely! While pulling your pitch together, be very clear about what you plan to use the money for.

Host Events and Workshops

Facilitating events and workshops either online or at your company’s physical location is a fantastic way to “give back” to your audience. You can also film events and workshops and put the footage up on your website—this will allow people who missed the event to go back and watch it! You’ll be able to bring your audience together and foster valuable connections.

Growing your business takes time – and you’ll need to get comfortable with testing out strategies that don’t necessarily work. But, as you experiment, you’ll figure out how to draw in more customers, increase your sales, and deliver new offerings that your audience really wants. With these tips, you’ll be ready to explore the potential of business process management, content marketing, networking, and other growth tools.

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Building Wealth: How to Cultivate a Mindset That Attracts Financial Stability

Reshaping your financial mindset is the key to building wealth. Photo by Lukas/Pexels

The following is a guest post by Julia Mitchell, lifestyle consultant with Outspiration Network.

29 January 2025 – Achieving financial stability isn’t just about saving money; it also calls for a transformative approach to how you view and manage your finances. By reshaping your money mindset, you can unlock a future filled with financial success and security. This article guides you through practical steps to revolutionize your financial perspective, ensuring you not only meet but exceed your monetary goals.

Wealth: The Foundation, Not the Destination

Building wealth is a crucial first step toward creating a fulfilling life, but it’s just that—a foundation. According to Maslow’s Hierarchy of Needs, our physiological and safety needs sit at the base of human motivation. These include basic necessities like food, shelter, and personal security. Without meeting these fundamental needs, it’s nearly impossible to focus on anything beyond survival. Wealth enables individuals to satisfy these foundational requirements, providing the stability and security necessary to pursue higher aspirations. For example, a person struggling to pay rent or afford meals cannot realistically focus on building meaningful relationships, developing self-esteem, or achieving their full potential.

However, simply accumulating wealth does not guarantee happiness or fulfillment. Herzberg’s research shows that unmet basic needs—termed hygiene factors—cause dissatisfaction and misery, but meeting them only removes dissatisfaction; it doesn’t create long-term motivation. This distinction explains why addressing physiological and safety needs through wealth is essential but not enough on its own for achieving a truly satisfying life. True fulfillment lies in progressing toward Maslow’s higher levels, such as love and belonging, esteem, and ultimately, self-actualization. At this top level, Csikszentmihalyi’s concept of Flow—a state of deep engagement and purpose—becomes possible. Wealth clears the way for these pursuits, but happiness emerges only when individuals move beyond material needs to cultivate deeper connections, personal growth, and meaningful experiences.

Set Flexible Goals

To commence your journey towards financial resilience, start by setting flexible goals. Flexible goals allow you to adapt to life’s inevitable changes without losing momentum. Whether it’s adjusting savings targets or reevaluating investment plans, staying adaptable ensures you can respond effectively to financial surprises and opportunities alike. This agility will empower you to maintain progress towards your financial aspirations, regardless of the twists and turns life may throw your way.

Cultivate an Abundance Mindset

Adopting an abundance mindset is pivotal in transforming your financial life. View the world as a playground of endless possibilities, where resources are plentiful and opportunities for growth are abundant. This outlook propels you to take smart risks and strive for expansion, secure in the knowledge that there is always more to achieve. By shedding the fear of failure, you open doors to more creative and successful financial strategies. This proactive stance on wealth creation not only enriches your financial portfolio but also broadens your horizons, inspiring continual personal and professional development.

Enhance Your Career with Online Education

Consider the transformative impact of certifications on careers when exploring online education to shift or advance your professional trajectory. Pursuing an online degree, especially in fields like information technology, equips you with a blend of academic knowledge and practical certifications that dramatically boost your marketability. This educational pathway not only provides the flexibility to learn at your own pace but also opens up a wider array of job opportunities with potentially higher income, making it a strategic choice for career advancement.

Prioritize Retirement Savings

Prioritizing your retirement savings is essential for a stable financial future. By starting early, you harness the power of compounding interest, allowing your investments to grow more significantly over time. This strategy not only fortifies your financial security for later years but also promotes a disciplined approach to managing your finances. Consistently setting aside money for retirement ensures that you are well-prepared for the future, no matter what it may bring.

Focus on Long-Term Goals

Maintaining a focus on long-term goals is key to shaping a successful financial future. Whether your aspirations include buying a house, financing your children’s education, or ensuring a secure retirement, these objectives serve as your financial compass. Crafting a clear vision around these aims provides motivation and directs your daily financial choices, ensuring every decision supports your overarching ambitions. This disciplined approach not only brings your dreams within reach but also aligns your immediate financial actions with your long-term aspirations.

Build Savings Habits

Developing robust savings habits is foundational in transforming your money mindset. Start by setting a budget that includes setting aside a fixed percentage of your income into a savings account each month. Treat this action like a non-negotiable expense. Over time, these regular contributions build a financial cushion, reducing stress and increasing your options in the face of financial emergencies or opportunities.

Negotiate for a Higher Salary

Your income is a powerful asset in your financial arsenal. When you engage in successful salary negotiations, you align your earnings with your true worth and expertise. This boost not only strengthens your financial standing but also solidifies your self-esteem and professional value. Approach these discussions prepared and confident to advocate for what you deserve, enhancing both your career trajectory and financial future.

Transforming your money mindset is a continuous process that enhances every facet of your life, contributing to both personal and professional fulfillment. As you apply these strategies, each step not only betters your financial situation but also sets the stage for a prosperous and secure future. Consider revisiting your educational goals as well, perhaps by going back to school, to further boost your career and income prospects. Embrace these changes wholeheartedly and witness your financial landscape evolve into one of success and abundance.

About the Author

Julia Mitchell is driven by a deep love for the vibrant tapestry of life and seeks to share her enthusiasm for her favorite lifestyle topics with the world. From the art of mindful living to the thrill of culinary adventures, travel, and personal growth, Julia believes in the transformative potential of a well-lived life. She recognizes that powerful inspiration should be translated into action to flourish truly. This is where the concept of “OUTspiration” [ https://outspiration.net/ ] comes into play.

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Empowering Your Team: Smart Strategies for Investing in Employee Training


25 December 2024 – The following is a guest post by Julia Mitchell, lifestyle consultant with Outspiration Network.


In a competitive business landscape, the ability to adapt and grow is paramount. Companies that prioritize strategic training investments not only enhance their workforce’s capabilities but also secure a competitive advantage. By focusing on tailored educational opportunities, organizations can foster a culture of continuous improvement and innovation.


Return on Training Investment


Calculating the return on investment (ROI) for employee training programs involves evaluating the costs of training against the measurable benefits gained. Start by identifying the direct costs, such as program fees, materials, and trainer expenses, as well as indirect costs like employee time spent in training. Then, estimate the impact of expected outcomes, such as increased productivity, improved customer satisfaction, or reduced turnover rates, and assign monetary values to these benefits. Comparing the financial gains to the initial investment provides a clear ROI figure.


Prioritizing Employee Retention


Investing in employee training is a strategic move that can significantly enhance career development and retention efforts. Offering diverse learning opportunities such as workshops, online courses, and mentorship programs creates an environment where employees feel valued and motivated. This not only aligns with their career goals but also leads to higher job satisfaction and lower turnover. Integrating career pathing into your recruitment process can attract candidates eager for long-term growth, further strengthening workforce stability.


Enhancing Staff Skills with Online Degree Programs


Encouraging your employees to earn an online degree can be a game-changer for your organization. Online degree programs in fields like information technology and cybersecurity offer the flexibility needed for employees to balance work and study. This approach allows them to apply new knowledge directly in their current roles as well as helping them prepare for larger roles in the future, fostering a culture of continuous learning and innovation. Explore various online IT programs to support employees and position your company for long-term success.


Planning Training for Restructuring


Planning employee training during periods of organizational change or restructuring is essential to ensure a smooth transition and maintain productivity. Training programs should focus on equipping employees with the skills and knowledge they need to adapt to new roles, technologies, or processes introduced during the change. Clear communication about the purpose of the training and its alignment with organizational goals fosters engagement and reduces uncertainty among staff. Prioritize hands-on or scenario-based training to help employees apply what they learn in real-world contexts.


Training When Launching New Products


Investing in employee training is critical when expanding into new markets or launching new products, as it prepares your team to handle the unique challenges and opportunities these ventures bring. Training can focus on market-specific skills, such as understanding cultural nuances, regulatory requirements, or regional customer preferences, ensuring your team is equipped to meet local demands effectively. For new product launches, comprehensive education on product features, sales techniques, and support processes empowers employees to represent the product confidently and deliver excellent customer experiences.


Addressing Skills Gaps


Developing a structured plan to address skill gaps ensures that employee training is targeted and effective. Start by conducting a skills assessment to identify areas where employees need development to meet current and future job requirements. Prioritize these gaps based on their impact on organizational goals and create a step-by-step training roadmap that outlines specific objectives, timelines, and resources. Incorporate a mix of learning methods, such as workshops, online courses, or mentorship programs, to accommodate different learning styles.



Maximizing Training Impact Through Strategic KPIs

Effectively measuring training success requires focusing on key performance indicators (KPIs) [ https://www.lingio.com/blog/training-metrics ] aligned with business objectives. Tracking metrics like attendance and completion rates provides insights into engagement and effectiveness. Assessing post-training results reveals how well employees apply new skills. For instance, an increase in customer satisfaction scores following a customer service training program indicates successful skill application. Selecting the right KPIs informs future investments, ensuring resources are directed towards the most beneficial programs.

Strategic training investments are a cornerstone of organizational growth and employee satisfaction. By aligning training initiatives with business goals and continuously evaluating their impact, companies can cultivate a workforce that is both skilled and motivated. This commitment to development not only enhances current performance but also lays the groundwork for future achievements, ensuring a resilient and dynamic organization.


About the Author


Julia Mitchell is driven by a deep love for the vibrant tapestry of life and seeks to share her enthusiasm for her favorite lifestyle topics with the world. From the art of mindful living to the thrill of culinary adventures, travel, and personal growth, Julia believes in the transformative potential of a well-lived life. She recognizes that powerful inspiration should be translated into action to flourish truly. This is where the concept of “OUTspiration” comes into play.

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How to create a thriving business from your home base

Building a thriving business from home is a dream of many. Huseyn Kamaladdin/ Pexels.

2 November 2022 – The following is a guest post by Julia Mitchell, lifestyle consultant with Outspiration Network.

Building a thriving business from home is a dream of many. After all, what could be more satisfying, not to mention rewarding, than working from home and doing what you love? So if that’s you, and you always envisioned being an entrepreneur from your home base, here are some helpful tips on how to accomplish this.

Think of a unique business idea

Certainly, thinking of a unique business idea is the first step in creating a successful business, provided that there is a demand for your offering and you can make a profit at the end of the day. Establishing whether your business idea is feasible or not is going to be a task in itself because you’ll have to do extensive market research to figure this out. A simple solution to this dilemma would be to ask yourself if there is a problem that people are seeking a solution to and then find out how you could provide an answer for it. Then it’s about thinking creatively about how you could go about this; creative brainstorming sessions are usually a necessary part of this process.

Formulating a business plan

Suppose you’ve decided on a niche business idea that you believe would take your target market by storm, then the next thing to do is to develop a business plan to set the wheels in motion, so to speak. A business plan will be invaluable in helping you establish your next steps while keeping your focus on your end goals simultaneously.

Getting funding

In order to access the capital you need, one of the first things that you will need to do is to check your credit report. This will give you an overview of your financial situation and allow you to identify any potential issues that might affect your chances of getting funding. This is particularly important if you’re attempting to take out a loan. Other ways you could obtain funding include finding investors or applying for grants.

Upskilling yourself in the meantime

Before launching your business, you will need to have all your ducks in a row as well as the confidence to launch your business without hesitation. But, suppose you do have some reservations about going ahead with your business plan because you feel like your skill set could use some improvement. Then you could opt to study online even in the beginning stages of building your business to boost your skill set in the requisite areas of business management, leadership, and marketing.

Registering your business

The next step in setting up your business is registering it so that it has a legal identity. This will also help boost your business’s credibility when approaching vendors, suppliers, and potential customers when you are ready to create a pitch to win them over. Registering as an LLC is a good idea if you desire a business structure that is easy to manage in the beginning stages.

Moreover, an LLC is often the preferred option for novice entrepreneurs as a result of its many benefits that include greater flexibility in regard to the structure of your business. It has less paperwork to complete, limited liability, and tax advantages. Learn more about how to form an LLC—the process typically requires five distinct steps, depending on which state you reside in. For more information, contact your local corporations commission.

Setting up your home office

This is perhaps the most exciting part of getting going because you can pretty much design your home office space to be a true reflection not only of your brand but your authentic self, too. Just remember to keep it professional. But again, don’t be afraid to have fun with your vision by taking a chance with your decor, as this should be one of the less risky business decisions you can make.

Applying for an Employer Identification Number

Applying for an Employer Identification Number (EIN) is a necessary next step if you plan to hire employees. Furthermore, an EIN can help you to obtain a loan if necessary, open a separate business bank account, and it’s also often required by the IRS for tax purposes. Keeping financial records for your business separated from your personal accounts not only saves headaches, it is also the best way to avoid tax audits later on!

Getting ready for the first sale

Once you’ve established all of the above, then all you need to do is get ready for your first sale. Furthermore, you will probably have to start off small in the beginning to see what sales and marketing strategy works best for you, then scale up from where your sales start to skyrocket.

These steps should help you with creating a business that’ll help you realize your dreams in an environment where you feel the most comfortable.

About the Author

Julia Mitchell knew from a young age she wanted to have a career that made her excited to wake up every day. Now in a top-level position with Outspiration, a financial services firm, she’s got her dream job alongside multiple side-income entrepreneurial ventures. She is incredibly passionate about the activities that fill her days, she wants to share her adoration for her favorite lifestyle topics with the world and encourage others to turn their INspiration into OUTspiration.

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The Immigrant

There was a creature standing lonely in the corner of the room. Image by Kanyanat Wimonkanjana/Shutterstock

24 March 2121 – I had a dream the other night. We had just moved into our new house in a deep, dark forest. It wasn’t a new house, but it was new to us, and we felt warm and safe because we had power to control what went on inside our house, even though outside was a deep, dark forest full of dangers. They could not get to us in our warm, safe house.

Something woke us up, however, in the middle of the night. Looking around, I realized that there was a creature a little less than three feet tall standing lonely in the corner of the room. It was most definitely not like us.

It was not frightening or aggressive. It did not seem dangerous or powerful. It was shyly quiet and passive. I reached out to touch it, patting its head between large, round ears. It was warm and fuzzy like large a grey teddy bear, but alive with large, expressive eyes.

It was not threatening. It made no demands, not even a request. It just was just hoping for a place in which to stand quietly, safe from the dangers lurking in the deep, dark forest outside. We thought, what kind of monsters we would be to chase it back out into the deep, dark forest among dangers it would almost certainly not survive. So, we decided to leave it alone for now.

The next morning, we talked about the creature that came to us in the night with no demands, just hoping to find a safe place to stand. We’d encountered similar creatures in the past. Most of the time, we’d accepted them into our family when we could. Most had brought some troubles, and took a while to fit into our home, but in the end they did. The life they added was worth the small troubles they brought. Some proved spectacularly successful. Others less so. All just wanted a safe place to stand.

The next night, we found the creature standing timidly in the corner again, just hoping for a safe place to stand. It eyed us carefully, not knowing if we were the kind of monsters who would drive it out into the deep, dark forest full of dangers that it surely would not survive. We called it over and patted it on its head between its large round ears to show that we would not drive it away. It lay its warm, fuzzy head on the edge of the bed with a grateful smile. It was grateful just to have a safe place to stand.

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Systems Organization of Modern Enterprises

Wild dog pack walking in the forest, Okavango delta, Botswana, Africa. Note that while the pack leader (center) is fixated on the pack’s prey, the followers fixate on the leader, watching for clues as to what he wants them to do. Photo by Ondrej Prosicky/Shutterstock.

20 January 2021 – The following text is a lightly edited version of a posting I made on 13 January 2021 to the discussion forum for a class in my Doctor of Business Administration program at Keiser University.

Systems Theory as Emergent Organizational Design

At the turn of the 20th century, management theorists, Frederick Taylor in particular, proposed a horrid theory known as “scientific management,” which was based on the then nearly universal assumption of hierarchical business organization (Kiechel, 2012). Whenever someone promotes some idea as “scientific,” it sends up a red flag that the promoter has no understanding of either science or whatever reality the promoted idea is intended to explain. So-called “scientific” management was the poster child for sending up such a red flag.

Taylor’s assumption of hierarchical organization, however, was not surprising. Human beings, after all, evolved as pack hunters, and the hunting-pack model has clear evolutionary advantages for pack-hunting animals (Bailey, et al, 2013). Ethologists understand the impulse to form hierarchical organizations as a step up from the dominance system of pack hunters, which has one dominant individual leading an otherwise egalitarian team to accomplish some common goal (Wilson, 1975). One can visualize the hierarchical organization as consisting of packs within packs. Thus, natural selection has imprinted the tendency to favor this kind of dominance system into our DNA.

By the mid-20th century, management theorists, such as Peter Drucker, began to question the hierarchical organization model (Kiechel, 2012). James Miller (1955) provided a new model by applying systems theory to topics in the life sciences. Eventually, Henry Mintzberg introduced the idea that systems organizations – teams of teams, or adhocracy – arise naturally within modern complex organizations (Mintzberg & McHugh, 1985). Following this line of reasoning, and observing how large organizations have actually operated as far back as when ancient Egyptians were building pyramids, indicates that the hierarchical model was never valid (Procter & Kozak-Holland, 2019). Large organizations have always had a de facto systems, or adhocracy, organization, just as Mintzberg discovered arising naturally within modern organizations (Mintzberg & McHugh, 1985).

Mintzberg’s systems model is the natural way that pack animals collaborate to reach a common goal (Bailey, et al, 2013). Moving another step up the organization-model ladder, moves from the pack to the team. The difference between a pack and a team is that in a hunting pack subordinate individuals work together by playing similar roles in the hunting activity. More evolved groups go further by collaborating. Individuals in collaborating teams play different roles in the process, each according to their particular skills and talents.

As Adam Smith (1776) famously pointed out, it is more efficient for individual team members to specialize in performing different tasks than for them to all divelop and use similar skill sets. In the context of productivity of collections of nation states, David Ricardo showed how doing what one does best, and leaving it to others to do the rest, maximizes group productivity (Costinot & Donaldson, 2012; Felipe & Vernengo, 2002). Ricardo’s comparative advantage theory, when translated to team collaboration, indicates that the most effective teams are those made up of members with the appropriate complementary set of diverse skills needed to complete the task (Bailey, et al, 2013).

In the end, humans seem to have finally found the most effective organizational model for reaching any common goal (Project Management Institute, 2004). It consists of ad hoc collaborating teams working together toward a common goal. Each team has their own task to help reach the goal. Each individual team member has the skills needed to complete their particular part of the team’s task.

The following text is a lightly edited version of a comment I made on 15 January 2021 to another student’s posting to the same forum. It illustrates how the systems theory organizational model is supposed to work. The included figure projects the planned structure of the organization.

Response to BE post

Yes, BE, the system model for business organization lends itself to strategic development, human resources development, and most other activities organizations engage in (Aubry & Lavoie-Tremblay, 2018). I’d like to use a film project I’m executive producer on to illustrate how systems concepts lead to superior organization performance. The project goal is to develop, produce, and distribute a motion picture (provisionally entitled False Gods) from concept to screening.

Figure 1 shows the enterprise’s corporate structure (Hoover, 2013). It forms a star network centered on the False Gods LLC holding company, which retains the intellectual property and other assets (e.g., investor funds). There are four subsystems within the network: business, production, marketing, and legal. Each subsystem consists of at least two components, each of which has its own corporate identity. For example, the business subsystem includes C.G. Masi LLC, which provides project management services, and Mercury Bank, which provides financial services (e.g., checking and savings). One of the subunits of the Production subsystem is Sound (Hoover, 2013). This subunit includes a number of subcontractors, such as a recording studio, a number of voice actors, and a Foley artist (to provide sound effects). The Music subunit is located in Spain, and is contracted to provide an original musical score, musicians to play the score, and recording facilities. These form another layer of subsystems within the Music subsystem.

Illustration of systems-theory model for organizational structure using False Gods project team design.

The systems model views each of these components as a separate system with its own inputs, process, and outputs (Miller, 1955). For example, the Animation subunit is a complete studio, with its own artists, equipment, and management. It has as inputs the existing script and instructions from the Director. The process consists of breaking the script down into individual shots and creating video clips for each shot. The output is a large number of digital-video files (estimated to number approximately 1,500 for False Gods), one for each clip, which the animation studio transmits electronically to the Film Editor.

Finally, the film editor combines those digital files with digital files from the Music, Foley and Sound subunits to fashion the complete film as one large digital-video file (Hoover, 2013). Each of these systems and subsystems has its own expertise, which it lends to the overall project. A voice actor, for example, in the Sound subunit has expertise in expressing emotion in spoken utterances that fit the requirements of the script and the timing of the animated images. All of these components combine like a giant multi-dimensional jigsaw puzzle to tell the story of the motion picture.

References

Aubry, M., & Lavoie-Tremblay, M. (2018). Rethinking organizational design for managing multiple projects. International Journal of Project Management, 36(1), 12-26.

Bailey, I., Myatt, J. P., & Wilson, A. M. (2013). Group hunting within the carnivora: Physiological, cognitive and environmental influences on strategy and cooperation. Behavioral Ecology and Sociobiology, 67(1), 1-17.

Costinot, A., & Donaldson, D. (2012). Ricardo’s theory of comparative advantage: Old idea, new evidence. American Economic Review, 102(3), 453–458.

Felipe, J., & Vernengo, M. (2002). Demystifying the principles of comparative advantage. International Journal of Political Economy, 32(4), 49–75.

Hoover, S. (2013). Film production: Theory and practice. Stephen Hoover.

Kiechel, W. (2012) The Management Century. Harvard Business Review., 90(11), 62-75.

Miller, J. G. (1955). Toward a General Theory for the Behavioral Sciences. American Psychologist, 10(9), 513-531.

Mintzberg, H., & McHugh, A. (1985). Strategy formation in an adhocracy. Administrative Science Quarterly, 30(2), 160–197.

Procter, C., & Kozak-Holland, M. (2019). The Giza pyramid: Learning from this megaproject. Journal of Management History, 25(3), 364-383.

Project Management Institute. (2004). A Guide to the Project Management Body of Knowledge (PMBOK Guide). Newtown Square, PA: Project Management Institute.

Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations. Edinborough: W. Strahan.

Wilson, E. O. (2012). Sociobiology: The new synthesis. Harvard University Press.

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Independent and Dependent Variables

Figure 1: Causation leads to correlation.

11 December 2020 — The following essay is taken verbatim from a posting I made to the discussion forum for a class in my Doctor of Business Administration program at Keiser University.

Sometimes, but not always, variables of interest in survey studies depend on each other (Alreck, 2019). As Figure 1a shows, this sets up two kinds of relationship: causality and correlation. Causality is the stronger of the two. It means that variable A, called the independent variable, has whatever value it happens to have because of extraneous factors, but variable B gets its value because of variable A’s value. Mathematically, we symbolize this relationship as A → B, which means “A implies B.” If extraneous things change A’s value, variable B’s value will change as a result.

Correlation, however, is weaker. It just means that both A and B generally change similarly. Figure 1b shows one possible way this can happen. In this instance, not only there is a causal relationship between A and B, there is also a causal relationship between A and C. In such a case, there will also be a correlation between B and C, but no causal relationship between them. If researchers include questions about only B and C, but fail to ask about A, they will miss the most important part of the relationship.

Figure 1b: Variations in multiple dependent variables may be caused by the same independent variable.

Simple statistical analysis can thus show correlation, but cannot show causation (Alreck, 2019). For example simple scatter plots can show cross-correlations between variables, and even show degrees of correlation (Weiss, 2012). They cannot, however, prove that there is a causal relationship between them (Alreck, 2019). That requires some outside information (Bekiros & Sweeney, 2018). Essentially, an understanding of the system under study must be available to ensure that all relavant variables have been observed (Coetzee & Erasmus, 2017).

Figure 2: A more complicated web of dependencies.

Figure 2 shows a more complicated web of interrelationships between variables. A second independent variable D appears that also affects the value of variable C, but not that of B. In this case, B is still closely correlated with A, but A’s correlation with C is less close because D variations also affect C. To find causation in such situations, use factorial ANOVA (Steinberg, 2008).

References

Alreck, P. L. (2019). Survey research handbook (3rd ed.). McGraw-Hill Education.

Bekiros, S., Sjö, B., & Sweeney, R. J. (2018). Pitfalls in cross‐section studies with integrated regressors: A survey and new developments. Journal of Economic Surveys, 32(4), 1045–1073.

Coetzee, P., & Erasmus, L. J. (2017). What drives and measures public sector internal audit effectiveness? Dependent and independent variables. International Journal of Auditing, 21(3), 237–248.

Steinberg, W. J. (2008). Statistics Alive! Sage Publications.

Weiss, N.A. (2012). Elementary Statistics (8th ed.) Addison Wesley.