Frank Talk
Monday, February 16th, 2004
By Michael Lombardi, MBA for Profit Confidential
My friend Frank has been a hardworking sheetrock contractor for over thirty years. We recently had an interesting talk inside a new home he had just about finished working on.
I started the conversation by admiring his new one-ton van. This set him off right away. He told me that in 1970 it took one month’s wages of $1,100 to buy the best pickup truck out there. Now it took ten months wages. And who could do that? Who can afford a ten-month gap in income?
“Nobody” was his answer so as most of us do, he financed it. He then went on to what could only be described as a rant regarding how everything was financed.
“Twenty, thirty years ago” he began a family with a couple of kids and lived in a 1,000 to 1,500 square foot home. “Now every family wants 3,000 to 4,000 square feet.” He suggested that wages hadn’t tripled like these space requirements, but the ease of which financing can be acquired had greatly changed.
That was not all, he went on… “more than half” the quotes he gave out for renovations and basement finishing all depended on weather the owner could get financing. He asked me “Michael, don’t people save money any more?”
He calmed down for a second or two, but there was no stopping him now. He told me he quoted a clothing company to put some walls up and board and tape them. The total was around $12,000.
Now, the owners of this business cut and prepared various clothing articles and shipped them to China for sewing and stitching. Then it re-imported the finished articles for sale here in the U.S. Apparently a successful business model.
When Frank presented his quote, they tried to get him to chop $2,000 or so off the price. They found the labor charges too high. If you want to make Frank mad, do what they did. He gives a competitive quote all the time. His price is his price.
I guess one of the business owners suggested that the price of labor in China was much more reasonable than here. Now, from what I can imagine, Frank lost it. He told them to send their such-and-such wall to China and get it built there! He told them that he didn’t live in China, couldn’t go there for lunch, or buy materials there. He then went on to what they could do to China, and I’ll refrain from elaborating.
Needless to say, he didn’t get the job! He didn’t want it. He does excellent work and is always fair, so, he stays away from those that try to chisel him out making a decent living.
But here is the crux of the issue. Prices have gone up tenfold for two- or threefold increases in wages. People have to finance to acquire homes or vehicles. Not only do we save less, but the prices of big ticket purchases have out stripped wages! You have no choice but to finance.
When a hard working contractor can see that people are not saving money, that inflation has impacted the cost of goods and not our wages, and that China may provide some price relief, we here at PROFIT CONFIDENTIAL become almost certain about the following few things:
Save your money! Resist the urge to finance, be it a credit card or bank loan, and don’t think that cheap goods imported from China or elsewhere are making life better for anyone on this side of the ocean.
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Tags: china, stock market, stock prices
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on TwitterTweet
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