Charlie Munger is Warren Buffet’s long time partner in running Berkshire-Hathaway. He is also a multibillionaire and a successful CEO in his own right. The Motley Fool (http://www.fool.com/) discusses Charlie Munger’s “Investing Principles Checklist” in the February 8th, 2010 article, "Charlie Munger on How to Become Rich", by Morgan Housel.
The Investing Principles Checklist is a high level summary of recommended investor traits and behaviors. It’s not specifically about intrinsic value. However, four of Charlie Munger’s ten investing principles struck me as pertinent to my developing definition intrinsic value. First, the ten principles:
(1) Measure Risk
(2) Be Independent
(3) Prepare Ahead
(4) Have Intellectual Humility
(5) Analyze Rigorously
(6) Allocate Assets Wisely
(7) Have Patience
(8) Be Decisive
(9) Be ready for Change
(10) Stay Focused
Of the ten, these four struck a chord with me; (1) Measure Risk, (5) Analyze Rigorously, (6) Allocate Assets Wisely, and (7) Have Patience.
Under (1) Measure Risk, the objective is to assess how risky the proposed investment is. Does the business have a “moat” – an important competitive advantage? Is the investment overvalued?
For (5) Analyze Rigorously, the objective is to understand the potential investment – do your homework – and apply your research to whatever rules you’ve developed.
(6) Allocate Assets Wisely is about having and using an asset allocation plan. It also made me think that in order to take advantage of an opportunity you must have some cash available - or you’ll have to sell something. Having available cash – “keeping your powder dry” - seems like the better path. That means having a cash reserve for the purpose of taking advantage of investing opportunities.
(7) Have Patience means waiting for the right opportunity. It means waiting until others are fearful to become greedy; waiting until the price is right to provide the “margin of safety” that you want.
I’ve learned the following about intrinsic value from Charlie Munger’s “Investing Principles Checklist”:
(a) Intrinsic value includes the risk associated with the investment. I need to have a reasonable estimate of the reward and a reasonable estimate of the risk. And, knowing myself, I’ll need to analyze each separately.
(b) Intrinsic value may have nothing to do with maintaining a cash reserve for investment opportunities or with being patient until the price is right; but both behaviors enable an investment with the right intrinsic value - when I find it.
Link to Other Topics in the Special Report: What Is Intrinsic Value?
Friday, February 19, 2010
Friday, February 12, 2010
What Is Intrinsic Value?
Other Topics in the Special Report: What Is Intrinsic Value?
What Is Intrinsic Value? - Low Price?
What Is Intrinsic Value? - Buffet's Filter
What Is Intrinsic Value? - Charlie Munger's Checklist
What Is Intrinsic Value? - Benjamin Graham's View
What Is Intrinsic Value? - Dividend Growth
What Is Intrinsic Value? - Dividends
What Is Intrinsic Value? - A Consolidated List
What Is Intrinsic Value? - Low Price?
What Is Intrinsic Value? - Buffet's Filter
What Is Intrinsic Value? - Charlie Munger's Checklist
What Is Intrinsic Value? - Benjamin Graham's View
What Is Intrinsic Value? - Dividend Growth
What Is Intrinsic Value? - Dividends
What Is Intrinsic Value? - A Consolidated List
What Is Intrinsic Value? - Buffet’s Filter
In my quest to determine what “intrinsic value” means to me in my own investment decisions it would be strange if I failed to consult the greatest living investor, Warren Buffet. His writings and quoted sayings are ubiquitous; but here are a few that resonate with me.
“… buy stock in businesses that are so wonderful that an idiot can run them; Because sooner or later, one will.”
From a panel discussion in 2008
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Berkshire-Hathaway 1989 Letter to Shareholders
“Here’s what we’re looking for:
“(1) Large purchases (at least $10 million of after-tax earnings),
“(2) demonstrated consistent earning power (future projections are of little interest to us, nor are “turnaround” situations),
“(3) businesses earning good returns on equity while employing little or no debt,
“(4) management in place (we can’t supply it),
“(5) simple businesses (if there’s lots of technology, we won’t understand it),
“(6) an offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when the price is unknown).”
Berkshire-Hathaway 1989 Letter to Shareholders
“The key to investing is … determining the competitive advantage of any given company and, above all, the durability of that advantage.”
July 1999 at Herb Allen’s Sun Valley, Idaho Retreat
So, what exactly resonates in these Warren Buffet quotes?
First, I want to own only wonderful businesses. I’ve seen first hand how an idiot at the top can destroy an average business. I’ve also witnessed a good, but not wonderful, business muddle through with an idiot at the top.
Second, don’t pay too much, but its okay to pay a fairly valued price for a wonderful business. Microsoft, Cisco, Amazon, and eBay may be wonderful businesses and fairly priced today, but for the folks who bought them in 2000 it’s been a very long decade
Third, a wonderful business has (a) consistent earning power; (b) good returns on equity; (c) little or no debt; (d) good current management; (e) a business model I understand; and (f) a durable competitive advantage.
That’s a great list. However, every item needs a detailed definition before it becomes actionable. For example; what does “fairly valued” mean? What is consistent earning power? What is a good return on equity? How do you know the current management is good versus just lucky? What is a company’s competitive advantage and what would make it durable?
I’m making progress here. But I’ve still some way to go before I’ll know exactly what intrinsic value means to me
Link to Other Topics in the Special Report: What Is Intrinsic Value?
“… buy stock in businesses that are so wonderful that an idiot can run them; Because sooner or later, one will.”
From a panel discussion in 2008
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Berkshire-Hathaway 1989 Letter to Shareholders
“Here’s what we’re looking for:
“(1) Large purchases (at least $10 million of after-tax earnings),
“(2) demonstrated consistent earning power (future projections are of little interest to us, nor are “turnaround” situations),
“(3) businesses earning good returns on equity while employing little or no debt,
“(4) management in place (we can’t supply it),
“(5) simple businesses (if there’s lots of technology, we won’t understand it),
“(6) an offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when the price is unknown).”
Berkshire-Hathaway 1989 Letter to Shareholders
“The key to investing is … determining the competitive advantage of any given company and, above all, the durability of that advantage.”
July 1999 at Herb Allen’s Sun Valley, Idaho Retreat
So, what exactly resonates in these Warren Buffet quotes?
First, I want to own only wonderful businesses. I’ve seen first hand how an idiot at the top can destroy an average business. I’ve also witnessed a good, but not wonderful, business muddle through with an idiot at the top.
Second, don’t pay too much, but its okay to pay a fairly valued price for a wonderful business. Microsoft, Cisco, Amazon, and eBay may be wonderful businesses and fairly priced today, but for the folks who bought them in 2000 it’s been a very long decade
Third, a wonderful business has (a) consistent earning power; (b) good returns on equity; (c) little or no debt; (d) good current management; (e) a business model I understand; and (f) a durable competitive advantage.
That’s a great list. However, every item needs a detailed definition before it becomes actionable. For example; what does “fairly valued” mean? What is consistent earning power? What is a good return on equity? How do you know the current management is good versus just lucky? What is a company’s competitive advantage and what would make it durable?
I’m making progress here. But I’ve still some way to go before I’ll know exactly what intrinsic value means to me
Link to Other Topics in the Special Report: What Is Intrinsic Value?
Friday, February 5, 2010
What Is Intrinsic Value? - Low Price?
“Price is what you pay; value is what you get.”
Benjamin Graham
As with most things, the momentary price of a stock is easy to determine. Today, delayed stock quotes are available from many on-line services and real time quotes can be had through most on-line brokerage houses including mine, USAA Investment Management Company.
As with most things, the value, or “intrinsic value”, of what you are about to buy is much harder to discern. John Templeton, one of history’s greatest investors seems to have equated value with low price. Or rather, he was certain that a basket of low priced stocks purchased during periods of market pessimism would perform well; with the good performers dominating the poor performers. He bet his life on this strategy at the beginning of his career as illustrated by the following quote from the web site http://www.sirjohntempleton.org/.
“While standard stock-buying advice is “buy low, sell high,” Templeton took the strategy to an extreme, picking nations, industries, and companies hitting rock-bottom, what he called “points of maximum pessimism.” When war began in Europe in 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less, including 34 companies that were in bankruptcy. Only four turned out to be worthless, and he turned large profits on the others after holding each for an average of four years.”
At least in this case, John Templeton didn’t try to determine the intrinsic value of the 104 companies in his 1939 portfolio. He assumed that most of them were worth more than the price he paid. If 52 of the companies failed and the other 52 doubled he would have broken even.
In hindsight, his risk seems small and apparently it seemed so to him at the time. However, because he borrowed the money used to buy the 104 companies, at lot depends on the terms and conditions of his loan and the speed in which his portfolio would grow. We don’t know the terms of his loan, but obviously the deal seemed favorable.
Recently, this was a viable strategy again. Last spring one could have bought a basket of seriously depressed financial companies for under $10 per share. Those who pulled the trigger have done very well to date. I wasn’t one of them. And, despite the current much higher prices of financials, I have no desire to own any. My perception of their value is much lower than their current price.
The question is why do I think that? What does intrinsic value mean to me? I’m going to think this through over the next few posts.
I think more clearly when I write. And there is nothing like a posting deadline to force me to write.
Link to Other Topics in the Special Report: What Is Intrinsic Value?
Benjamin Graham
As with most things, the momentary price of a stock is easy to determine. Today, delayed stock quotes are available from many on-line services and real time quotes can be had through most on-line brokerage houses including mine, USAA Investment Management Company.
As with most things, the value, or “intrinsic value”, of what you are about to buy is much harder to discern. John Templeton, one of history’s greatest investors seems to have equated value with low price. Or rather, he was certain that a basket of low priced stocks purchased during periods of market pessimism would perform well; with the good performers dominating the poor performers. He bet his life on this strategy at the beginning of his career as illustrated by the following quote from the web site http://www.sirjohntempleton.org/.
“While standard stock-buying advice is “buy low, sell high,” Templeton took the strategy to an extreme, picking nations, industries, and companies hitting rock-bottom, what he called “points of maximum pessimism.” When war began in Europe in 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less, including 34 companies that were in bankruptcy. Only four turned out to be worthless, and he turned large profits on the others after holding each for an average of four years.”
At least in this case, John Templeton didn’t try to determine the intrinsic value of the 104 companies in his 1939 portfolio. He assumed that most of them were worth more than the price he paid. If 52 of the companies failed and the other 52 doubled he would have broken even.
In hindsight, his risk seems small and apparently it seemed so to him at the time. However, because he borrowed the money used to buy the 104 companies, at lot depends on the terms and conditions of his loan and the speed in which his portfolio would grow. We don’t know the terms of his loan, but obviously the deal seemed favorable.
Recently, this was a viable strategy again. Last spring one could have bought a basket of seriously depressed financial companies for under $10 per share. Those who pulled the trigger have done very well to date. I wasn’t one of them. And, despite the current much higher prices of financials, I have no desire to own any. My perception of their value is much lower than their current price.
The question is why do I think that? What does intrinsic value mean to me? I’m going to think this through over the next few posts.
I think more clearly when I write. And there is nothing like a posting deadline to force me to write.
Link to Other Topics in the Special Report: What Is Intrinsic Value?
Friday, January 29, 2010
Special Report: Converting to a Roth IRA
Links to Topics in the Special Report: Converting to a Roth IRA:
Converting From a Traditional IRA to a Roth: How Much?
Converting From a Traditional IRA to a Roth: Timing
Converting From a Traditional IRA to a Roth: How to Convert
Converting From a Traditional IRA to a Roth: How Much?
Converting From a Traditional IRA to a Roth: Timing
Converting From a Traditional IRA to a Roth: How to Convert
Converting From a Traditional IRA to a Roth: How to Convert
You’ve decided converting or moving a portion of your Traditional IRA into your Roth IRA is the right thing to do. You’ve calculated how much to move and you know you want to do it now. So just do it.
What? You say you don’t know how? No problem. Just call your broker, mutual fund company or your discount broker’s customer service department and ask for their instructions.
My discount broker is USAA Investment Management Company. The first time I moved money from my IRA to my Roth I called USAA Customer Service; they guided me to the right place on their web site to download the proper form.
Next, I filled out the form specifying the precise securities I wanted to move and signed it.
Then I faxed the form to the phone number shown on the form. Daily for the next two days, I checked both accounts on-line – the transaction concluded on the second day.
The really good part came next. After establishing and documenting the process that first time, USAA has allowed me to give verbal instructions by telephone to their customer service representative. It’s really a snap.
When I move my wife’s money from her Traditional IRA to her Roth it’s a bit more complicated but not too much more. The first Roth conversion I did for Linda was identical to my own first conversion. I downloaded the form, filled it out and had Linda sign it. Then I faxed it to USAA. That was last year.
This year, after I instructed the customer service representative on making my Roth conversion I told her that I also wanted to make a conversion for my wife’s account. She told me she could do it over the phone if we could conference in Linda for a three-way call. I called Linda while the rep waited on the line and when Linda joined the called she told the representative that I was authorized to do the Roth conversion transaction for her.
Linda then dropped off the call and I instructed the USAA Customer Service Representative on which of Linda’s IRA securities we wanted to move to her Roth.
The next day it was done. Your broker or mutual fund company will have a different process and nobody beats USAA customer service. Nevertheless, your broker’s process will probably be similar.
Once you’ve decided to make the move and determined how much to move and then selected the specific securities to move – the mechanics of actually making the move are really pretty easy.
Link to Other topics in the Special Report: Converting to a Roth IRA
What? You say you don’t know how? No problem. Just call your broker, mutual fund company or your discount broker’s customer service department and ask for their instructions.
My discount broker is USAA Investment Management Company. The first time I moved money from my IRA to my Roth I called USAA Customer Service; they guided me to the right place on their web site to download the proper form.
Next, I filled out the form specifying the precise securities I wanted to move and signed it.
Then I faxed the form to the phone number shown on the form. Daily for the next two days, I checked both accounts on-line – the transaction concluded on the second day.
The really good part came next. After establishing and documenting the process that first time, USAA has allowed me to give verbal instructions by telephone to their customer service representative. It’s really a snap.
When I move my wife’s money from her Traditional IRA to her Roth it’s a bit more complicated but not too much more. The first Roth conversion I did for Linda was identical to my own first conversion. I downloaded the form, filled it out and had Linda sign it. Then I faxed it to USAA. That was last year.
This year, after I instructed the customer service representative on making my Roth conversion I told her that I also wanted to make a conversion for my wife’s account. She told me she could do it over the phone if we could conference in Linda for a three-way call. I called Linda while the rep waited on the line and when Linda joined the called she told the representative that I was authorized to do the Roth conversion transaction for her.
Linda then dropped off the call and I instructed the USAA Customer Service Representative on which of Linda’s IRA securities we wanted to move to her Roth.
The next day it was done. Your broker or mutual fund company will have a different process and nobody beats USAA customer service. Nevertheless, your broker’s process will probably be similar.
Once you’ve decided to make the move and determined how much to move and then selected the specific securities to move – the mechanics of actually making the move are really pretty easy.
Link to Other topics in the Special Report: Converting to a Roth IRA
Friday, January 22, 2010
Converting From a Traditional IRA to a Roth: Timing
If you think, as I do, that your income tax rate may be higher after you retire, then you’re a candidate for converting a portion of your Traditional IRA into a Roth IRA.
In the previous post I discussed why you might want to move money from your Traditional IRA to your Roth and some considerations for determining the amount to move (convert).
When you move cash from your IRA to your Roth, timing is not a consideration. However, if you move securities you should know that your tax liability is determined by the value of the securities at the time of the move. Your cost basis (what you paid) is irrelevant; so is the price at which you eventually sell the stock.
Because of this feature, when I moved securities from my IRA to my Roth last year, I did it in the early Spring because the entire market was significantly down. This allowed me to move more shares for the same tax liability than if I’d made the move later in the year.
For example, suppose you held 100 shares of XYZ company in your IRA that you’d originally purchased for $10 per share. Your cost basis for this stock is 100 shares times $10 per share or $1,000. If today, the price of XYZ stock is $5 per share and you convert all 100 shares into your Roth, your tax liability is your tax rate on $500.
If later, the price of XYZ increases to $12 and the value of your holding in your Roth account becomes $1200, it doesn’t matter because your tax liability remains the tax on the $500 value at the time of conversion.
Last year, the situation was pretty clear. The market had crashed and everything was down. I had confidence that my stock would rise again although I didn’t know when. Today, in 2010, it’s a bit less certain. The market is up substantially from last March. Some people think we’re in a new bull market. Others expect another leg of recession. Still others think the market is simply overvalued right now and expect a correction.
I expect another leg down to match a “W” recession and an extended “L” shaped recovery after the second downturn. If I were certain in this opinion I’d wait to move shares to my Roth until after the next crash.
However, I’m not certain. So today I moved a portion of my planned 2010 conversion and I’ll wait and see what the next six months brings before I move the rest.
The next post will address the mechanics of Roth IRA conversion.
Link to Other topics in the Special Report: Converting to a Roth IRA
Friday, January 15, 2010
Converting From a Traditional IRA to a Roth: How Much?
I believe income taxes across the board will probably be higher by the time I retire. If I’m right (I hope I’m wrong!) Linda and I will be better off with more retirement assets in tax-free Roth IRA’s instead of in tax-deferred Traditional IRA’s.
Recently, I’ve read articles describing the new for 2010 rules on who can contribute to a Roth IRA and articles describing the special (2010 only) rules for converting a traditional IRA into a Roth. The new and special rules don’t apply to me – I don’t make that much money. Still, converting (moving) some assets from a traditional IRA to a Roth is something I do every year.
All new IRA contributions go into a Roth. However, I’ve changed jobs a few times in my life and each job change ended up increasing my Traditional IRA account balance when my 401k account with my former employer was rolled into my Traditional IRA.
Since allowable 401k contributions are significantly higher than IRA contributions the amounts rolled over into my Traditional IRA drove it higher than my Roth; Even though I contribute the maximum allowed to my Roth each year.
Because I believe my income taxes will be higher after I retire – an arguable belief I know – I want to move as much money as I can afford from the Traditional IRA to the Roth. Now then, how much can I afford?
The problem is the value of the assets moved becomes taxable income for the year in which the move occurs. If you move $1,000 to your Roth and your income tax rate is 25% then your income tax for the year increases by $250. This can be a very expensive proposition if you convert tens of thousands of dollars. It can also be very expensive if you have no money budgeted to pay taxes other than your withheld wages.
I fall into the second category. I don’t want to write a check on income tax day. On the other hand, I don’t mind reducing my refund from Uncle Sam in exchange for moving retirement money to my Roth. So, I estimate what my refund might be and then conservatively calculate the amount I might safely move to a Roth.
Then, I split the difference and move the same amount from Linda’s Traditional IRA to her Roth as I move between my own accounts.
Timing considerations and the actual mechanics of the conversion (move) will be the topics of future posts.
Link to Other topics in the Special Report: Converting to a Roth IRA
Recently, I’ve read articles describing the new for 2010 rules on who can contribute to a Roth IRA and articles describing the special (2010 only) rules for converting a traditional IRA into a Roth. The new and special rules don’t apply to me – I don’t make that much money. Still, converting (moving) some assets from a traditional IRA to a Roth is something I do every year.
All new IRA contributions go into a Roth. However, I’ve changed jobs a few times in my life and each job change ended up increasing my Traditional IRA account balance when my 401k account with my former employer was rolled into my Traditional IRA.
Since allowable 401k contributions are significantly higher than IRA contributions the amounts rolled over into my Traditional IRA drove it higher than my Roth; Even though I contribute the maximum allowed to my Roth each year.
Because I believe my income taxes will be higher after I retire – an arguable belief I know – I want to move as much money as I can afford from the Traditional IRA to the Roth. Now then, how much can I afford?
The problem is the value of the assets moved becomes taxable income for the year in which the move occurs. If you move $1,000 to your Roth and your income tax rate is 25% then your income tax for the year increases by $250. This can be a very expensive proposition if you convert tens of thousands of dollars. It can also be very expensive if you have no money budgeted to pay taxes other than your withheld wages.
I fall into the second category. I don’t want to write a check on income tax day. On the other hand, I don’t mind reducing my refund from Uncle Sam in exchange for moving retirement money to my Roth. So, I estimate what my refund might be and then conservatively calculate the amount I might safely move to a Roth.
Then, I split the difference and move the same amount from Linda’s Traditional IRA to her Roth as I move between my own accounts.
Timing considerations and the actual mechanics of the conversion (move) will be the topics of future posts.
Link to Other topics in the Special Report: Converting to a Roth IRA
Friday, January 8, 2010
Diversification & Warren Buffet
Warren Buffet famously said, "Diversification is a protection against ignorance. It makes very little sense for those who know what they are doing." And, “Wide diversification is only required when investors do not understand what they are doing.”
Although Warren Buffet speaks in favor of learning everything you can about prospective investments and only putting your money on your best ideas. Mr Buffet reads annual reports for pleasure. He walks his talk and he is the most successful investor in history.
However, his current stock portfolio consists of the following stock investments – not counting Berkshire-Hathaway’s wholly-owned subsidiaries:
Thirty companies from fifteen industries are represented in this list. It looks pretty diversified to me.
Mr Buffet has a problem that I don’t have though. He has too much money. He must find a place to put billions of dollars; A place that will earn a good return and also not drive the price out of sight by the shear size of his buy order.
I could, if I chose, put every last cent I own into one stock – and no one would notice. Poor Warren just can’t do that. He often buys companies outright – taking them private – because he can’t make a significant (to Berkshire) investment in their stock without taking them over. Right now he is in the process of swallowing Burlington Northern (BNI) whole.
So, it may be that Mr Buffet has inadvertently ended up with a diversified portfolio. But, I doubt it. Warren Buffet is an excellent stock picker. He picks for the Berkshire
If you pick the best company in every industry – you inevitably create a nearly perfectly diversified portfolio. Not a bad approach, if I do say so myself.
Would that I could emulate his results.
Although Warren Buffet speaks in favor of learning everything you can about prospective investments and only putting your money on your best ideas. Mr Buffet reads annual reports for pleasure. He walks his talk and he is the most successful investor in history.
However, his current stock portfolio consists of the following stock investments – not counting Berkshire-Hathaway’s wholly-owned subsidiaries:
Thirty companies from fifteen industries are represented in this list. It looks pretty diversified to me.
Mr Buffet has a problem that I don’t have though. He has too much money. He must find a place to put billions of dollars; A place that will earn a good return and also not drive the price out of sight by the shear size of his buy order.
I could, if I chose, put every last cent I own into one stock – and no one would notice. Poor Warren just can’t do that. He often buys companies outright – taking them private – because he can’t make a significant (to Berkshire) investment in their stock without taking them over. Right now he is in the process of swallowing Burlington Northern (BNI) whole.
So, it may be that Mr Buffet has inadvertently ended up with a diversified portfolio. But, I doubt it. Warren Buffet is an excellent stock picker. He picks for the Berkshire
If you pick the best company in every industry – you inevitably create a nearly perfectly diversified portfolio. Not a bad approach, if I do say so myself.
Would that I could emulate his results.
Friday, January 1, 2010
Timeshare Sales Pitch Weekends
Linda and I have taken a couple of weekend get-a-ways where the bulk of the cost was borne by one of several timeshare marketing companies.
Generally, timeshare companies cover lodging and some meals but not transportation. But, TNSTAAFL, there’s no such thing as a free lunch – the cost of a timeshare subsidized weekend includes sitting through a high pressure tag team sales event. These are usually advertised as 90 minutes long, but in my experience you rarely escape before three hours have passed.
The multiple and continuous sales pitches can be frustrating and irritating, especially when they delay giving you the premiums you were promised until seemingly every sales person and manager in the place has had an opportunity to work on you.
The stakes are high for the sales team. Their commissions are high but their marketing expenses are high as well. They need to sell some minimum number of time shares per session to recoup their marketing expenses and pay their sales commissions. So, they push hard.
If you can’t take the hard sell for an extended period of time without caving; stay out of the situation. Pass on the timeshare weekend. Actually buying a timeshare could make this weekend the most expensive vacation of your life.
Linda and I have stood up to the test, but the fact that timeshare companies continue to offer weekend vacations in their marketing mix is testimony that someone’s been buying under the pressure. Don’t let it be you.
Link to Other Topics in the Special Report: Cutting Expenses
Generally, timeshare companies cover lodging and some meals but not transportation. But, TNSTAAFL, there’s no such thing as a free lunch – the cost of a timeshare subsidized weekend includes sitting through a high pressure tag team sales event. These are usually advertised as 90 minutes long, but in my experience you rarely escape before three hours have passed.
The multiple and continuous sales pitches can be frustrating and irritating, especially when they delay giving you the premiums you were promised until seemingly every sales person and manager in the place has had an opportunity to work on you.
The stakes are high for the sales team. Their commissions are high but their marketing expenses are high as well. They need to sell some minimum number of time shares per session to recoup their marketing expenses and pay their sales commissions. So, they push hard.
If you can’t take the hard sell for an extended period of time without caving; stay out of the situation. Pass on the timeshare weekend. Actually buying a timeshare could make this weekend the most expensive vacation of your life.
Linda and I have stood up to the test, but the fact that timeshare companies continue to offer weekend vacations in their marketing mix is testimony that someone’s been buying under the pressure. Don’t let it be you.
Link to Other Topics in the Special Report: Cutting Expenses
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