How to Shatter the Glass Ceiling With Stocks

How to Shatter the Glass Ceiling With Stocks

The Me Too movement has swept across many countries and industries.

It has helped put an end to serial offenders, which is good, but there’s still a long road ahead to fight gender inequality in general.

We need a second movement to overcome gender inequality and break the glass ceiling.

The good news is that you can do this with stocks.

How, you might ask?

No worries. As usual, I’ve got you covered with specific steps you can follow.

1. Invest in Stocks 

Many studies show that women shy away from the stock market and invest far less frequently than men.

The sad consequence of this is that many women miss out on growth and profit, and this deepens the financial divide between men and women.

If your finances are not strong (if you’re dependent on a monthly salary), you’re less likely to stand up to unreasonable treatment at work.

If, on the other hand, you are financially independent and don’t really need the salary, you’ve got the opportunity to make some bold career moves. 

2. Only Invest in Companies with Women at the Top

If they don’t have any women on the board and in top management, don’t invest in the company. 

The same goes for companies with only a few women in upper management. Where’s the limit?

You have to use some common sense. If there are only two women at the top and if those two are in charge of “soft” areas like HR or communications, it’s a sign that the company doesn’t take gender equality seriously. Someone in charge of HR or communications doesn’t have a say in big decisions.

Vote with your money and tell the public companies that you, as a female investor, no longer accept a world where women are excluded from power.

3. Only Invest in Companies with a Fair Gender Policy 

If they don’t mention diversity in their annual report, then you can rest assured that they don’t have any strategy or policy or goals to fight inequality. 

Let’s take an example from politics. How can you expect a political party to prioritize the environment if they don’t have any environmental policy written down? It’s a sure sign that it’s not a priority. They’ll the environment deteriorate if they reach power.

The same goes for companies. If there is no written plan, they don’t have one.

4. Engage and Use Your Voting Rights 

When you own stocks, you own the company, and you have power.

You have voting rights at the annual meeting. You can suggest things to be changed. You can ask critical questions.

In today’s world, many stockholders have the feeling that the CEO is in charge. When you listen to reporting calls, you often get the feeling that the CEO is the strict teacher and the shareholders the unruly students with silly questions.

The truth is that the CEO and the rest of the management work for the shareholders. They are hired to do the work that the shareholders – the owners – ask them to do. So the real boss is actually the owners of the business. It’s you, the shareholder. 

Use your power actively to make sure that women are treated well. Make suggestions, ask critical questions, and vote. 

The link between management and the shareholders is the board. The board is there to ensure that the company is run in the interest of the shareholders.

You, dear reader and shareholder, can run for a place on the board.

Many boards lack women – about half of the boards in my country (Denmark) have no women on them.

All-men boards are true catastrophes.

The tone is set in the board and trickles down through the company. If it’s okay to exclude women on the board, it sends a signal that it’s okay to exclude women further down the chain of command.

It sends the signal that women are not equals. 

5. Put Your Foot Down at Work 

I’ve ignored a lot of injustices because I was afraid of looking like a troublemaker and afraid of losing my job and my income.

I’ve discovered that my male counterpart was paid much more than me (the two of us were doing the exact same job, and I had more experience).

I’ve accepted that there was a whole layer of managers above me that consisted entirely of men.

I’ve accepted being demoted as some sort of absurd carrot and stick punishment for applying for another job internally in another department – and I kept quiet. 

Did not speaking up protect me?

No – in the end, I was fired while on maternity leave. 

I wish I could do it all over again and act differently. I wish I had spoken up. I wish I had resigned and had resumed my career somewhere else where women were valued. Not speaking up gave my boss the impression that this behavior was okay and that he could get away with it.

We all – men and women – have a moral imperative to speak up and be willing to risk our job.

Not just for ourselves, but for all the other men and women next to us and for all the men and women after us. We do it for ourselves, but also for our sisters, brothers, daughters, and sons.

We have to create pressure from both within the company as employees and from outside as shareholders and owners of the companies if we want things to change. 

Don’t forget to read my free e-book that explains my whole investing process – including my favorite way to calculate what a company is worth. You can get it here.

 

Ten Thoughts to Make You Rich

Ten Thoughts to Make You Rich

Our lives are built on the voices of our childhood. 

What do your voices tell you? 

That rich people are greedy? That investing is risky? That money is the root of all evil?

I hope not, because you’ll stay stuck with those thoughts.

Notice what the voices inside you tell you. 

What they tell you becomes your truth. 

If you think negative things about money or investing – or even negative things about your own ability to handle money or stocks – then that will be exactly how it turns out. 

No worries though. We can change your thoughts. One by one. 

It really works wonders when you begin saying something else in your mind.

Let’s look at some alternative beliefs. 

1. Money is Energy

Money isn’t the root of anything. You can do whatever you want with it.

Money has no intentions. You can buy guns or you can donate to The Red Cross. 

Money is just a way of exchanging goods and services. It has no value in itself. It’s what you spend it on that’s important.

You can say that money enhances the qualities you already possess. If you are goodhearted, you’ll be even more so with more money. 

It’s like energy. If you have energy, you can do a lot of things, but having energy doesn’t make you bad or good. It depends on what you decide to do with it.

2. My Money Works For Me and Multiplies 

Rich people aren’t rich because they have money. They’re rich because they have assets that give them money. 

They are, in other words, rich because they know how to make money work for them so they can work less.

What are assets? Assets are little money machines. Something that earns you money. They can be stocks, bonds or rental property- or even your own company.

The opposite of that is liabilities. They cost you money. This can be credit card debt, a mortgage, overdraft, or any other loan. 

A billionaire recently said when interviewed on his luxurious yacht: “It’s difficult to have a money-devouring yacht if you are paid by the hour.”

That really hit home with me, because isn’t that what most of us do? We get a nice degree, a nice job, but we are essentially paid by the hour and are working hard to pay off student debt and the mortgage.

3. I Am Enough  

I really love this sentence.

It comes from a hypnotherapist called Marisa Peer. According to her, a lot of people overspend because they don’t feel good enough.

They might buy expensive clothes for a party because they feel insecure. They might always pick up the bill because they feel unworthy of the company.  

The sentence “I am enough” removes a lot of that insecurity that a lot of people are struggling with.  Self-doubt is a common plague, like stress. You can fight it by changing the narrative in your mind. Just tell yourself:

“I am enough.”

4. I Create Generational Wealth  

Financial freedom is really just the starting point. It’s where you get a feeling of security and freedom for life. But I want you to aim above that level.

It really gives me a sense of being on a mission when I remind myself that I’m creating generational wealth. This isn’t really about me. There’s a lot more going on. 

5. I’m Financially Free   

Even if you’re not yet, just say it to yourself, because it gives your mind a command. It shows your mind which direction you want.

In a car race, the driver is never supposed to look at the object he is afraid of crashing into. If he begins focusing on the tree, he will unconsciously steer towards that. The driver has to keep his eyes on the track and the target.

Look at where you want to go and remind yourself of that. Tell yourself that you are that.

Don’t ever look at what you fear will happen.

6. I Exploit the Fear of the Market 

I like this sentence because it reminds me that I’m a value investor, and that it’s possible to get a higher return by investing in an intelligent way.

It keeps me rational when the market goes crazy. It does go crazy from time to time, and when it does, we should be chanting our ten sentences like a Buddhist monk.

7. My Money Will Do Good in the World 

I invest according to my values and principles. That’s why I can say that my money does good in the world – because I carefully monitor what it’s doing.

What does it mean to invest according to your values?

It means investing in companies that look after the environment if the future of our planet is important to you.

It means investing in companies with a fair representation of women in management and on the board if gender equality is important to you. 

It also means avoiding anything that you cannot vouch for. 

8. I Make More Money than I Spend  

This is really the root of financial independence: Always spend less than you earn and invest the rest.

This little formula will make you rich in time.

9. Whatever I Give Comes Back to Me Manifold 

There will be costs, and there will be necessary investments. 

Maybe you have to pay someone to build a website for a business you want to launch.

Maybe you need an investing course to excel at investing.

Sometimes you need to let go of some money in order to make more in the future. If you stay stuck and clutch your money too tight, you’ll have a hard time progressing to the next level. 

Think about what you send out into the world and trust that it will return to you manifold. Because it will. 

10. I Attract Money from Unexpected Resources

I like this sentence because it makes me look for new ways to make money.

It’s like a command in the computer of my mind to find money.

When I had less money than I have now, I was pretty good at renting out my apartment through Airbnb when I went on vacation and selling used baby stuff or pitching myself for a paid talk. 

Today I use this mindset in my business and my investing practice. It no longer makes sense for me to spend time on getting an apartment ready for Airbnb or selling stuff on eBay because I can use the same time somewhere else where I make more money with that time. 

And what a relief that is.  

Don’t forget to read my e-book ‘Free Yourself’ that shows you how I became financially free and how I invest. You can download it here

Why You Might Be Richer Than Your Wealthy Neighbor

Why You Might Be Richer Than Your Wealthy Neighbor

You might be a lot richer than you think you are.

Even if you own nothing, you might be richer than the person down the road with the big house and the fancy car.

Why is that?

I’ll tell you why.

Let’s look at what wealth is by using the example of two people.

The first person is a surgeon. She owns a big house with an ocean view, a Lamborghini and whatever else impresses people.

The other person is a nurse. She rents an apartment, and she takes the metro to work. She doesn’t own a car or any property.

Who is richest?

Most people will say the surgeon right away, but you can’t be sure. Don’t let yourself be fooled by a fancy exterior and job titles.

We have to look at their assets and liabilities. In other words, how much debt do they have? Do they own anything that makes money for them? 

Let’s pretend that the surgeon recently began working, and that she has a lot of student debt. Let’s say that she bought the car using consumer debt and a credit card loan. Let’s also say that she has a lot of debt on the fancy house. What the bank didn’t lend her, she borrowed from her parents. 

Let’s say the nurse is new on the job too.

Neither of them have had any chance to save money or invest in anything.

Who is the richest of the two?

The nurse is. At least if you define net worth as assets minus liabilities. The surgeon has a negative net worth due to all the debt. The nurse is in a neutral position. It may be that the surgeon makes more money, but she is actually poorer. 

A Fancy Exterior Says Nothing About Wealth  

Remember this, because it’s really important.

You can’t judge a person’s financial situation by measuring exterior status symbols such as a house, car, or title.

How wealthy someone is really depends on how they manage their money.

This is really good news, if you think about it.

It means that if you don’t own anything, but if you don’t have any debt either, you are in a neutral place – and that’s a pretty good place to be in.

You are in a better position to build your wealth than the majority of people. A lot of people start out with a negative net worth. First they have to chip away at the mountains of debt, and only then can they begin to build their wealth. 

Debt moves you backwards because it sucks money out of your finances. You could say there’s a hole in the bucket, and your money is dripping out of it.

You want to let your money work for you, so you don’t have to work so hard for money.

Debt is the exact opposite of that. It’s letting your money work against you, so that you have to work harder for it.

People with a lot of debt are pushing a cart up the mountain, and it’s harder for them to reach the top and become financially independent.  

How to Calculate Your Net Worth

How do you actually calculate your net worth?

It’s pretty easy, and a bit of an eye-opener (if you haven’t tried it before).

Here’s how you do it.

You have to find the present value of everything you own, and figure out how much debt you have. In other words, you have to figure out what your assets and liabilities are.

Just a note before we begin: I normally don’t consider your house or your car to be assets, unless you rent them out and make money from them. But for the purpose of this exercise, we’ll count them as assets. 

How to find assets:

  • What’s the value of the house or apartment you own (if you have one)?
  • What’s the current value of any stocks or other securities that you own?
  • What about your retirement savings?
  • If you were to sell your car today, how much could you get for it?
  • How much do you have in cash?

Then you have to find all your liabilities, meaning all your debt.

How to find liabilities:

  • How much do you owe on your house?
  • How much in student debt?
  • What about credit card debt?
  • Or any consumer debt?
  • Do you owe anyone else anything?

Then you add up all your assets and deduct all your liabilities. What’s the result?

I encourage you to keep track of your net worth –  it’s very motivating. 

Top 10 percent 

When I did this calculation for the first time, I discovered that I was among the top 10 in my country (Denmark).

At the time, I was an unemployed single mother of two small children, and I was living in a small apartment in the capital. 

I didn’t feel very wealthy, but this exercise changed that perception.

I could easily calculate the result. I took my cash savings, added my stock portfolio, the value of my apartment, plus my retirement savings. There was nothing to subtract as I had no debt.

I discovered that I was richer than a friend who had recently bought a huge house in a fancy neighborhood. I knew that she had no retirement savings (we talk about money), no investments, and that the house and the car were bought with borrowed money.

This made me feel different about my own priorities, and instead of feeling like the poor friend, I began feeling like the smart friend.

The next time you hear about some friend who bought a huge house or drives a Tesla, remember the old saying:  Don’t judge the book by (the house or the car) on its cover.

It says nothing about how they’re really doing.  

Do you want to learn how to build assets? I teach you how to get a good return on stocks in my free e-book Free Yourself. You can download it here.  

 

Buffett’s Five Rules for Investing

Buffett’s Five Rules for Investing

Buffett became a billionaire by investing in stocks, and his method is simple. It’s about buying stocks that are cheap. 

Yes, thanks, that sounds easy… But stocks in which kinds of companies? What are the criteria for selecting them? What are the rules?

Here are the investing principles boiled down to five simple rules. 

Rule number 1: The Company Must Be Stable

Both revenue and profit should be steadily rising. 

This sounds obvious – but a lot of private investors already err here.

They buy stocks in the latest fad, maybe an IPO or a biotech company, without checking whether the company makes a profit. Or they might buy shares in something that they really like or even fall head-over-heels in love with, like Tesla (“what a nice car, and it’s good for the environment!”) without realizing that it’s running on a deficit (Yes, Tesla is losing money). 

If there’s no profit, there’s no stability. It’s hard to predict the future, and that makes it hard to assess the value of the company.

Rule Number 2: The Company Must Sell Something You Understand

Buffett says you must invest within your field of competence. This means you need to understand whatever service or product the firm sells. 

Lets use the biotech example again. Very few investors really understand what a biotech company is trying to develop. It’s too complicated even for the specialists; if you’re a scientist, you have no real knowledge of the trials within the company.

This means you have no idea what a future product would look like or whether it might be better than a competitors, because it doesn’t even exist yet.

Rule Number 3: The Company Must Have a Future 

You should be very sure that the company will be bigger in 10 years. How can you be sure of that? 

You can be fairly certain that the company will grow if it’s protected by competitive advantages like economies of scale, switching costs, toll bridge, patents or secrets. If you want to know more about competitive advantages, you can read  my free e-book here.

Is that the case in a biotech company? Can you be sure that they will be bigger in 10 years? If they haven’t developed any products yet, you have no idea whether they’ll even exist in 10 years.

Rule Number 4: The CEO Must Be Trustworthy and Competent

How do you know if the management is trustworthy and competent?

When it comes to trust, you have to use your social skills – just like you would use them when meeting people in real life. Watch videos, read interviews and, if you can, meet them in person. Trust your gut feeling.

When it comes to competence, look at the numbers. By numbers I don’t mean the stock price. I mean the company’s annual and quarterly reports and its track record. If the manager is new to the job, go back to his previous job and look at the numbers. What numbers, you might ask:

Apart from growing revenues and profits, here are some specific things you should notice:

  • Are they buying back shares when the stock is cheap or expensive?
  • What’s the level of compensation? Is it at a fair level?
  • How high is long-term debt? Can they pay it back within a few years with free cash flow?

Rule Number 5: The Company Must Be on Sale  

You must buy shares when the company is on sale. Even the most wonderful company can be a lousy investment if you buy the shares too expensive. 

Buffett says that it’s like buying 1 dollar for 50 cents and that only some people get it. If someone doesn’t get it right away, you’ll never be able to explain it to them. 

Do you get the concept that because the stock market is not efficient, you can buy stocks for less than they are worth?

It’s really worth exploring, because knowing how to spot cheap stocks can make you super rich.

Don’t forget the e-book Free Yourself.  It’ll teach you how to calculate how much a company is worth. You cane get it for free here

Charlie Munger’s Seven Rules for a Happy Life

Charlie Munger’s Seven Rules for a Happy Life

It’s easy to say you’ve lived a happy life if you’re a nearly 100-year-old billionaire.

But it wasn’t always like that.

When Charlie Munger was 31 years old, he lost his nine-year-old son Teddy to cancer. Munger had gotten divorced a year before his son was diagnosed.

Munger was alone, heartbroken, and financially broke. His ex-wife got the house, and he lived in a bachelor’s apartment and drove a wreck of a car. His friends say he walked the streets crying every night as he returned from the children’s ward at the hospital. 

What could have ruined his life made him determined to prosper. This is what happened in the years after the death of his son: 

  • He got remarried at age 32 (and had four more children)
  • He met Warren Buffett at age 35
  • He was financially independent at age 38

This is incredibly impressive and bears witness to a strong personality and a wise soul. Munger is like an old owl, and he’s worth listening to.

What does he say about living a great life?

Here are his top seven rules for achieving a happy life:

1. Avoid Envy

“Someone will always be getting richer faster than you. This is no great tragedy,” he says. 

His partner Warren Buffett adds that the world is not run by greed, but rather by envy.

In other words, envy will make you miserable, and it’ll also turn you into a lousy investor.

2. Avoid Resentment 

If you want a miserable life, you just need to wallow in resentment. Write a list of all the things you regret and resent, and blame it on people around you. Look at the list every day, and you’ll have a guaranteed miserable life.

What’s the antidote?

Just do the opposite. Think of all the things you are grateful for, and the wonderful memories of people you love, and think about them everyday.

3. Don’t Overspend   

Charlie Munger is no Scrooge.

Whereas Warren Buffett drives his old Cadillac to buy breakfast every day at McDonald’s in Omaha, Charlie Munger likes entertaining friends at his enormous Channel Cat catamaran somewhere on the Californian Coast (or in Florida). 

Charlie Munger isn’t telling you to be stingy. He’s just saying, don’t spend more than you make (and since Munger makes a lot of money, he gets to spend a lot of money). 

“There once was a man who became the most famous composer in the world but was utterly miserable most of the time, and one of the reasons was because he always overspent his income. That was Mozart. If Mozart can’t get by with this kind of asinine conduct, I don’t think you should try,” he said in a commencement speech in 2007. 

4. Stay Cheerful Despite Adversity  

Life is sometimes hard, and it’ll be hard for all of us at some point.

If you expect your life to follow a certain predetermined path, you’re in for a great disappointment.

But if you expect potholes, roadblocks and the occasional traffic accident, you are better equipped to deal with reality and to stay cheerful even when your life takes its own – surprising – turns. 

“Life will have terrible blows in it, horrible blows, unfair blows. It doesn’t matter. And some people recover and others don’t,” Munger said, adding that you should try to learn something from each blow.

5. Surround Yourself with Reliable People  

I’ve spent too much time trying to figure out why people do what they do. 

“Why doesn’t my boss say good morning? Why isn’t my barista smiling today? Why doesn’t a colleague cough up his share of some gift expenses? Have I done something wrong to offend people?” 

Well, the truth is you probably haven’t done anything. People just do what they always do. People react in patterns.

Be good at reading them and avoid any unhealthy patterns.

What’s a healthy pattern?

Reliability is key.

Reliability is about doing what you say you’ll do. It’s about being somewhat predictable and reasonable. Which brings us to the next point….

6. Do What Your Supposed to Do 

Do what you’ve said you’ll do and keep your word. 

Keep doing it. Do what you’re supposed to do every day.

Success is in the detail. It’s about consistency and keeping at it. 

Like Munger says:

“If you’re unreliable, it doesn’t matter what your virtues are. You’re going to crater immediately. Doing what you’ve faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.”

7. Read, Study, and Learn  

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up,” Munger says. 

You should both learn from your past mistakes and learn from books and studies. Munger says to become as educated as you possibly can.

Read, study, learn.

Munger is known for a book or more every single day (and so is Buffett). 

Like Munger says:

“You’re not going to get very far in life based on what you already know.”

 You can get a step further today by reading my free e-book Free Yourself that explains how to become financially free by investing like Warren Buffett and Charlie Munger. You can get it here.