Edited by Frederick Mann
Copyright © 1995 - 1997 TLH, ALL RIGHTS RESERVED
Copyright © 1995 - 1997 TLH, ALL RIGHTS RESERVED
THE WEALTH SECRETS OF J. PAUL GETTY
by Craig Green
Copyright © 1995 — ZENO Press
Copyright © 1995 — ZENO Press
Introduction
J. Paul Getty was one of the most successful businessmen in history. His business experience started in the Oklahoma oil fields in 1914. As an independent wildcatter, he learned early on that small, hungry start-up enterprises could compete effectively with established business giants. Eventually, Getty Oil Company became one of those giants, but Getty never lost his independent spirit.
J. Paul Getty was one of the most successful businessmen in history. His business experience started in the Oklahoma oil fields in 1914. As an independent wildcatter, he learned early on that small, hungry start-up enterprises could compete effectively with established business giants. Eventually, Getty Oil Company became one of those giants, but Getty never lost his independent spirit.
In the early years, he worked as his own geologist, legal advisor, drilling superintendent, explosives expert and roughneck. He learned that big companies were often sloppy in their operations, and their salaried employees did not apply the same effort as his independent associates. [Editor: Note that this phenomenon is even more pronounced among government bureaucrats.]
The wildcatters had to be flexible, adaptable and versatile in order to survive. The big companies hired armies of expensive consultants and administrative personnel, housing them in expensive offices. The wildcatters used mud splattered cars as their offices. They relied on their own judgments and experience gained from many years of hard-fought battles in the oil fields.
After a series of successful oil strikes in his early years, Getty became a millionaire at age 24. He tried to retire, but got restless. Getting back into the oil business again, he turned his million into a billion — and more. Ultimately, Getty became the world’s richest man.
Getty Writes About His Success Secrets
In 1960, Playboy magazine asked Getty to write a series of articles about his life and wealth. His whole approach to this series was not How To Get Rich, but How To Be Rich. He realized that being rich means discharging the responsibilities that come with wealth, including making the world a better place.
In 1960, Playboy magazine asked Getty to write a series of articles about his life and wealth. His whole approach to this series was not How To Get Rich, but How To Be Rich. He realized that being rich means discharging the responsibilities that come with wealth, including making the world a better place.
While Getty was deciding what to do with his first million, his father said, "You have to use your money to create, operate and build businesses. Your wealth represents potential jobs for countless others — and it can produce wealth and a better life for a great many people as well as yourself."
So Getty got back into the oil business. At the depths of the Great Depression after the 1929 stock market crash, he bought stock in the Tide Water Associated Oil Company — and thus began the second phase of his meteoric rise to becoming the wealthiest man in the world. His attitude about this historic stock purchase is revealed in the following quote:
"In business, as in politics, it is never easy to go against the beliefs and attitudes held by the majority. The businessman who moves counter to the tide of prevailing opinion must expect to be obstructed, derided and damned." With this simple statement, Getty outlined the courage and commitment of successful entrepreneurs.
This report presents the following rules, principles and characteristics for obtaining, keeping and using wealth according to J. Paul Getty:
- Ten rules for accumulating wealth;
- A discussion of the "Millionaire Mentality";
- Five characteristics of successful executives;
- A discussion of good and bad habits;
- Five kinds of reactions when things go wrong;
- Six rules for solving difficult problems;
- How to do the "impossible";
- Ten important questions to ask when evaluating a stock purchase;
- Ten rules for the real estate investor;
- Mr. Getty’s ideas, principles and conclusions about individual effort and responsibility.
The information in this article was obtained from the book, "How To Be Rich," by J. Paul Getty, originally published by Playboy Press in 1965. It was based on a compilation of articles which had previously appeared in Playboy magazine in the early 1960s.
Getty’s Wealth Secrets
As you might expect, people often asked Getty how to get rich, and he received as many as 3,000 letters each month for money, advice, secret tips, and even marriage proposals. About 70 percent of his mail included requests for money. While Getty said the main ingredient in wealth accumulation is hard work, he realized it must be smart — based on goals and well-thought out plans. In his book, "How To Be Rich," Getty outlined the success rules upon which his entire career was based:
As you might expect, people often asked Getty how to get rich, and he received as many as 3,000 letters each month for money, advice, secret tips, and even marriage proposals. About 70 percent of his mail included requests for money. While Getty said the main ingredient in wealth accumulation is hard work, he realized it must be smart — based on goals and well-thought out plans. In his book, "How To Be Rich," Getty outlined the success rules upon which his entire career was based:
1. "Almost without exception, there is only one way to make a great deal of money in the business world — and that is in one’s own business. The man who wants to go into business for himself should choose a field which he knows and understands. Obviously, he can’t know everything there is to know from the very beginning, but he should not start until he has acquired a good, solid working knowledge of the business."
2. "The businessman should never lose sight of the central aim of all business — to produce more and better goods or provide more and better services to more people at lower cost."
3. "A sense of thrift is essential for success in business. The businessman must discipline himself to practice economy wherever possible, in his personal life as well as his business affairs. [Editor: "produce more than you consume."] ‘Make your money first — then think about spending it,’ is the best of all possible credos for the man who wants to succeed.’ [Editor: This is the opposite of the fallacy Mr. Penn identified in Report #13B: The Millionaire's Secret (II): "you have to spend money to make money." Mr. Getty is saying that before you can spend money you have to make it.]
4. "Legitimate opportunities for expansion should never be ignored or overlooked. On the other hand, the businessman must always be on his guard against the temptation to over extend or launch expansion programs blindly, without sufficient justification and planning. Forced growth can be fatal to any business, new or old."
5. "A businessman must run his own business. He cannot expect his employees to think or do as well as he can. If they could, they would not be his employees. When ‘The Boss’ delegates authority or responsibility, he must maintain close and constant supervision over the subordinates entrusted with it."
6. "The businessman must be constantly alert for new ways to improve his products and services and increase his production and sales. He should also use prosperous periods to find the ways by which techniques may be improved and costs lowered. It is only human for people to give little thought to economies when business is booming. That, however, is just the time when the businessman has the mental elbow room to examine his operations calmly and objectively and thus effect important savings without sacrificing quality or efficiency. Many businessmen wait for lean periods to do these things and, as a result, often hit the panic button and slash costs in the wrong places."
7. "A businessman must be willing to take risks — to risk his own capital and to lose his credit and risk borrowed money as well when, in his considered opinion, the risks are justified. But borrowed money must always be promptly repaid. Nothing will write finis to a career faster than a bad credit rating."
8. "A businessman must constantly seek new horizons and untapped or under-exploited markets. As I’ve already said at some length, most of the world is eager to buy American products and know-how; today’s shrewd businessman looks to foreign markets."
9. "Nothing builds confidence and volume faster or better than a reputation for standing behind one’s work or products. Guarantees should always be honored — and in doubtful cases, the decision should always be in the customer’s favor. A generous service policy should also be maintained. The firm that is known to be completely reliable will have little difficulty filling its order books and keeping them filled."
10. "No matter how many millions an individual amasses, if he is in business he must always consider his wealth as a means for improving living conditions everywhere. He must remember that he has responsibilities toward his associates, employees, stockholders, and the public."
"Do you want to make a million? Believe me, you can — if you are able to recognize the limitless opportunities and potentials around you and will apply these rules and work hard. For today’s alert, ambitious and able young men, all that glitters truly can be gold."
[Editor: A key ingredient to becoming a successful entrepreneur involves not only sorting through the limitless opportunities and recognizing which ones are the most promising, it also involves the recognition and organization of patterns and relationships that others haven’t found, and that others might perceive as useful. Most of the VALUE CREATION that occurs in successful entrepreneurship arises from structuring (creating) new relationships between existing people, ideas, and things.
An example of this is music composition. When playing the piano there are only so many musical notes in the world that can be composed into a musical piece. Anyone can tap randomly on keys, but it takes a special ability to compose a musical piece that others perceive as valuable. The notes that Mozart used to create his greatest masterpiece are the same notes that can be hit by anyone tapping randomly on a piano. The magic in Mozart’s music was not from the creation of new notes, but from the way those notes were structured (organized). This same principle of creative organization applies to most people, ideas, and things.]
The Millionaire Mentality
Getty defined the "Millionaire Mentality" as "that vitally aware state of mind which harnesses all of an individual’s skills and intelligence to the tasks and goals of his business." He described four kinds of men:
Getty defined the "Millionaire Mentality" as "that vitally aware state of mind which harnesses all of an individual’s skills and intelligence to the tasks and goals of his business." He described four kinds of men:
1. Executives who work for themselves. That is, they own and operate their own businesses. They want to be independent, and they accept the responsibility of being their own boss.
2. Those who work for others, but want to achieve the very best success for their companies. They are the best corporate executives and top commissioned salesmen men working for others, but dedicated to superior achievement.
3. Those who work for others and avoid taking risks such as the first two categories. People in this category are good, loyal, conscientious workers, but prefer the security of a steady job to the risks of owning their own business or running a company.
4. The last category of workers consists of those who put in their time and hope to collect a pension. They have no interest whatsoever in their company’s profits, but only in their own paychecks. They don’t seem to realize the two are connected.
The risk-takers in categories #1 and #2 are the ones who are successful at business. They generally display initiative, dedication and conscientious cost control needed to make a business profitable and long lasting.
Most people think of work as a stressful thing, necessary to make money, but otherwise a negative, oppressive experience. True entrepreneurs are quite different, however. They have an excitement about their work, which probably comes from the fact that they love what they do first, and the money only comes later as a natural result. And when you like what you do, it’s not stress; it’s fun. And stimulating. Rather than run you down, it charges you up.
[Editor: The average person’s work mentality is typically very negative and is expressed in sayings such as "work sucks," "working for the weekend," and "blue Monday." Compare this type of mentality to the "millionaire mentality" of loving one’s work. How likely is the person with an "average worker" mentality likely to succeed? In Report #13F: The Millionaire's Secret (VI) we shall see that the "average worker" mentality is an example of "psychological reversal," while the "millionaire mentality" is an example of strong "psychological alignment."] Getty said, "The truly great giants and geniuses of American business habitually worked 16- and 18-hour days — often seven days a week, and seldom took vacations. As a result, most of them lived to a ripe old age."
As examples of this observation, Getty pointed out that Andrew Mellon lived to be 82, Andrew Carnegie and Henry Ford lived to be 84, George L. Hartford and Samuel K. Kress lived to be 92, and John D. Rockefeller lived to be 98. These outstanding examples of super-wealthy and super-accomplished entrepreneurs demonstrate the folly of the idea that the stress of work harms your good health. In reality, the difference is quality of work rather than quantity. If your work is rewarding and exciting, it enhances your health. On the other hand, if your work is dull and monotonous, it can be stressful and detrimental to your health.
If you really like what you are doing, and would do it even if you didn’t get paid, then working hard at such an activity is not a draining experience, but actually stimulating. Sitting on a beach can be stressful for some entrepreneurs, since they are not doing what they find exciting and enjoyable. On the contrary, those who hate their jobs certainly receive a lot of stress from them. It is very much an individual thing.
Five Characteristics of Successful Executives
Getty defined business management as: "directing human activities." This doesn’t mean bullying people into conforming to management’s directives, but rather motivating and exciting employees to take an active interest in their company’s future. After all, their company’s future is their future as long as they work there. Getty presented five characteristics of successful executives:
Getty defined business management as: "directing human activities." This doesn’t mean bullying people into conforming to management’s directives, but rather motivating and exciting employees to take an active interest in their company’s future. After all, their company’s future is their future as long as they work there. Getty presented five characteristics of successful executives:
1. "Example is the best means to instruct or inspire others. The man who shows them as well as tells them is the one who gets the most of his subordinates."
2. "A good executive accepts full responsibility for the actions of the people under him. If called before his superiors because something has gone wrong in his department or office, he accepts full personal blame, for the fault is his for having exercised poor supervision."
3 . "The best leader never asks anyone under him to do anything he is unable — or unwilling — to do himself."
4. "The man in charge must be fair but firm with his subordinates, showing concern for their needs and doing all he can to meet their reasonable requests. He treats his juniors with patience, understanding and respect and backs them to the hilt. On the other hand, he does not pamper them, and always bears in mind that familiarity breeds contempt."
5. "There is one seemingly small — but actually very important — point that all executives should remember. Praise should always be given in public, criticism should always be delivered in private. Employees who have done a good job should be told so in front of their fellows; this raises morale all around. Employees who have done something wrong should be told in private: otherwise, they will be humiliated and morale will drop."
Good and Bad Work Habits
Getty used the example of his own smoking to illustrate the destructive nature of following old patterns of behavior blindly. Once in a Paris hotel, Getty woke up in the middle of the night wanting a cigarette, but was out. He put on his clothes, and was going to walk ten blocks in a rainstorm to get a pack of cigarettes at 2:00 a.m., when he looked at himself in the mirror and realized how silly the whole thing was. He was struck by how his own freedom was being compromised by his blind obedience to a bad habit. [Editor: This is a perfect example of the destructiveness of blind obedience to a habit, otherwise known as unconscious decision-making, which is a key obstacle that prevents many people from becoming successful entrepreneurs.] Of course, his smoking was a bad habit, but Getty also discussed the four positive habits that he thought were indispensable: optimism, promptness, thrift and relaxation.
Getty used the example of his own smoking to illustrate the destructive nature of following old patterns of behavior blindly. Once in a Paris hotel, Getty woke up in the middle of the night wanting a cigarette, but was out. He put on his clothes, and was going to walk ten blocks in a rainstorm to get a pack of cigarettes at 2:00 a.m., when he looked at himself in the mirror and realized how silly the whole thing was. He was struck by how his own freedom was being compromised by his blind obedience to a bad habit. [Editor: This is a perfect example of the destructiveness of blind obedience to a habit, otherwise known as unconscious decision-making, which is a key obstacle that prevents many people from becoming successful entrepreneurs.] Of course, his smoking was a bad habit, but Getty also discussed the four positive habits that he thought were indispensable: optimism, promptness, thrift and relaxation.
Optimism provides the spark and enthusiasm executives need to achieve their goals. It gives them the courage to buy when prices are low, and to expand their businesses when others are cutting back. This should not be confused with wishful thinking, however. Getty realized that business decisions must be based on calm, reasoned analysis of facts; not wild speculative fantasies.
Promptness will help the executive achieve his goals by eliminating wasted time, satisfying customers, and otherwise keeping one’s promises. This habit is necessary to build constructive relationships and strong businesses.
Thrift is necessary to fully recognize opportunities that come from cutting costs. This allows businesses to increase profits and to be competitive in difficult market situations. In a recession, it is critical.
Relaxation to Getty meant keeping one’s mind receptive and responsive — always ready to see and take advantage of new opportunities. Also, this allows one to see and deal with problems. Remaining calm under stress is a characteristic that successful, seasoned executives develop through years of experience. Understanding the benefits of this can help one strive for it.''
Another tip of Getty’s involved a habit of taking a break just before making big decisions. By taking a few minutes to sit down at a restaurant and have a cup of coffee, go for a walk, or just silent meditation, you have an opportunity to weigh all the details of the decision without distractions and pressure. This can be a lifesaver when you would otherwise be pressured into making a bad or rushed decision.
When Things Go Wrong For The Businessman
How do businessmen react when they get into trouble? Getty thought this was one of the most revealing aspects of the successful businessman. Spectacularly successful businessmen usually develop the ability to turn adverse situations into profitable opportunities. Getty distinguished between several kinds of people, and how they deal with adverse situations:
How do businessmen react when they get into trouble? Getty thought this was one of the most revealing aspects of the successful businessman. Spectacularly successful businessmen usually develop the ability to turn adverse situations into profitable opportunities. Getty distinguished between several kinds of people, and how they deal with adverse situations:
1. There are those who just let things happen, and essentially do nothing. They are at the mercy of others and the circumstances they find themselves in. Getty compares this non response to the rabbit hypnotized by a car’s headlights. He just sits there, waiting to be run over. They don’t respond to events because they simply do not understand what is happening, and don’t know how to fight back.
2. A second response is those who surrender to events because they are afraid to act. Unlike the first kind, they know what is going on, but lack the courage to do anything about it.
3. A third response is an excited, hysterical approach. This comes from extreme fear, but instead of being passive, they strike back at anything, without any thought to what caused the situation. They almost always blame circumstances or others for their problems, without taking any personal responsibility for their own contribution. They complain about "impossible odds" and "rotten breaks," but refuse to look at the situation objectively.
4. There are those businessmen who work at solving problems. They fight good, tenacious fights when things go wrong, and usually work toward a solution rather than finding blame in others. However, they lack initiative and imagination, and usually do only the minimum amount of work to patch the immediate problem.
5. Finally, there are the real leaders. They are imaginative, aggressive individuals who attack problems with a vengeance. They are not satisfied until the problem is not only corrected, but the system is changed to prevent the problem from recurring. They don’t always win, but they fight each fight to their utmost abilities. They are able to accept actual losses and move on, but they don’t give up as easily as the others.
Turning major setbacks into victories is a hallmark of successful businessmen. They don’t just look for the easy way out, or immediately cut their losses. They counterattack when it can gain something, and become defensive when necessary to preserve a larger goal than the immediate one.
Essentially, what Getty was saying here is that failure, dealt with objectively and aggressively, can often lead to success. It contains opportunities that most people don’t see, not even seasoned veteran businessmen. It takes a special kind of insight, courage and commitment to turn negative situations into positive ones. This is what so many business giants have done.
[Editor: The ability to turn negative situations into positive situations is not only a key success principle which creates positive energy in a business organization, but it’s also a perfect example of how successful entrepreneurs form new relationships between particular people, ideas, and things. This is essentially creating a positive structure (relationship) where there was once a negative one. For example, New Paradigm Enterprises has turned the negative (to say the least!) situation between government bureaucrats and individuals into a positive one because we profit from, and show others how to profit from selling freedom from the government bureaucrats. So what was once a negative situation (bureaucratic harassment) is now a positive situation (selling freedom for profit).]
Six Rules For Solving Problems
Getty realized that the ability to solve difficult problems was often the difference between those who succeed and those who fail. Here are his six rules for solving problems:
Getty realized that the ability to solve difficult problems was often the difference between those who succeed and those who fail. Here are his six rules for solving problems:
1. No matter what happens, don’t panic. You can’t think or act effectively if you are in a state of hysteria.
2. When things go wrong, pull back for a while — to get your bearings, take a breather, or just to calmly analyze the situation.
3. Sacrifice unimportant things. When critical decisions must be made, concentrate on only those important things which will result in success. This often means giving up those things that are not as important.
4. Carefully review all important factors. All available resources and every possible course of action must be thoroughly considered.
5. Develop countermoves — effective responses to situations that might develop. Considering your available resources and realistic expectations, develop alternative plans to be implemented when other things go wrong. Try to anticipate all possible combinations of things that can go wrong, and prepare plans to deal with them.
How To Do The "Impossible"
Getty said: "All top businessmen I know have made their biggest strides up the success ladder because they were able to see the possible in what others rejected or ignored as impossible. And, ...they managed to avoid taking large steps backward because they generally were able to recognize the impossible and give it a wide berth."
Getty said: "All top businessmen I know have made their biggest strides up the success ladder because they were able to see the possible in what others rejected or ignored as impossible. And, ...they managed to avoid taking large steps backward because they generally were able to recognize the impossible and give it a wide berth."
By asking himself the following questions, the businessman can generally determine whether an undertaking is possible or impossible:
1. "What — precisely and in detail — is the situation, proposition or issue under consideration?"
2. "What is at stake — what are the costs, what are the minimum and maximum the company stands to gain or lose?"
3. "Are there any precedents and, if so; can they be considered valid and applicable in this instance?"
4. "What do other parties — buyers and sellers, brokers, competitors, customers, etc., stand to gain or lose either way?"
5. "What are the known obstacles and difficulties the company faces if it goes ahead and precisely how can they be overcome?"
6. "What other difficulties are likely to arise — and if they do, what resources are available and what steps may be taken to cope with them?"
7. "Are all the facts known — could there be any additional, hidden, pitfalls?"
8. "How long will it take to accomplish the objectives or goals in question if it is decided to proceed?"
9. "Would the company stand to gain more by devoting equal time and effort to something else?"
10. "Are the personnel who would be responsible for handling the matter fully qualified and dependable?"
After answering these questions thoroughly, the businessman is much better able to make a decision about whether to proceed. Attempting to answer each of these questions honestly and completely should allow the businessman to reach a more informed, intelligent decision in the matter.
[Editor: A fundamental principle seems to underlie Getty’s idea of how to do the impossible: To carefully, consciously, consider every aspect of the situation. That is, (A) Carefully means to use a good decision process, (B) Consciously means to make decisions that are not automatic, and (C) Consider means to question or examine.]
Ten Questions To Ask When Evaluating A Stock Purchase
Getty first bought Tide Water Associated Oil Company stock in 1932 at $2.12 per share. By 1937, Tide Water stock was worth $20.83 per share. Much of his rise from millionaire to billionaire status was the result of his shrewd stock market investments during the Great Depression.
Getty first bought Tide Water Associated Oil Company stock in 1932 at $2.12 per share. By 1937, Tide Water stock was worth $20.83 per share. Much of his rise from millionaire to billionaire status was the result of his shrewd stock market investments during the Great Depression.
Getty’s philosophy about investing in stocks can be summed up in a single quote: "Sound stocks, purchased for investment when their prices are low and held for the long pull, are very likely to produce high profits through dividends and increases in value." Getty believed no one should ever buy a stock without knowing as much as possible about the company issuing it.
Getty suggests asking yourself ten questions when evaluating a company in which you are considering buying stock:
1. "What is the company’s history: Is it a solid and reputable firm, and does it have able, efficient and seasoned management?"
2. "Is the company producing or dealing in goods or services for which there will be a continuing demand in the foreseeable future?"
3. "Is the company in a field that is not dangerously overcrowded, and is it in a good competitive position?"
4. "Are company policies and operations farsighted and aggressive without calling for unjustified and dangerous over expansion?"
5. "Will the corporate balance sheet stand up under the close scrutiny of a critical and impartial auditor?"
6. "Does the corporation have a satisfactory earnings record?"
7. "Have reasonable dividends been paid regularly to stockholders? If dividend payments were missed, were there good and sufficient reasons?"
8. "Is the company well within safe limits insofar as both long- and short-term borrowing are concerned?"
9. "Has the price of the stock moved up and down over the past few years without violently wide and apparently inexplicable fluctuations?"
10. "Does the per-share value of the company’s net realizable assets exceed the stock exchange value of a common-stock share at the time the investor contemplates buying?"
Real Estate Investment Secrets
Getty not only made a lot of money in oil and shrewd stock buying, he also made considerable money in real estate. For example, while vacationing in Mexico in 1940, Getty met a tourist who said he had seen "the world’s most beautiful beach." After hanging onto a truck through 15 miles of jungle to reach it, Getty realized the man was absolutely right. So, he bought several hundred acres of the undeveloped beach, without any access, utilities or other service, and built Hotel Pierre Marques on Revolcadero Beach. It was a success, and confirmed Getty’s judgment, even though those around him said it would be impossible.
Getty not only made a lot of money in oil and shrewd stock buying, he also made considerable money in real estate. For example, while vacationing in Mexico in 1940, Getty met a tourist who said he had seen "the world’s most beautiful beach." After hanging onto a truck through 15 miles of jungle to reach it, Getty realized the man was absolutely right. So, he bought several hundred acres of the undeveloped beach, without any access, utilities or other service, and built Hotel Pierre Marques on Revolcadero Beach. It was a success, and confirmed Getty’s judgment, even though those around him said it would be impossible.
Most real estate deals don’t involve wild jungle areas where there are no improvements. Here are Getty’s secrets for investing in real estate in more conventional areas:
1. "Make a thorough study of the real estate market and its prospects in your area before you buy. Naturally, you should seek to buy when prices are low, and the indications are that prices will rise. Always take into consideration such factors as the rate of population increase and the general prospects for business in the area. There is no quicker way to lose money in real estate than by investing it in property located in declining areas."
2. "Know or learn as much as possible about every aspect of the particular use to which you intend putting the property you wish to buy."
3. Deal only through licensed and reputable real estate brokers. Beware the fast-talking, high pressure salesman who promises everything verbally. He is probably a fly-by-night who doesn’t much care what he sells you or anyone else."
4. "If you buy a property with a view to improving it or building on it, be certain that you have adequate capital or are able to obtain adequate financing to complete the project."
5. "If at all possible, always obtain at least one impartial, third-party appraisal of any property before you buy it."
6. "If buying a building of any kind, . . .have it inspected carefully by qualified and disinterested architects or builders before entering into any building commitments. If buying an existing income property such as an apartment house, have the owners books checked by a disinterested accountant. If the owner of the building or the income property balks at such inspections, look out."
7. "Shop around wisely and cautiously. Unless you run across an irresistible bargain you must snap up immediately, take your time about making up your mind. Don’t allow yourself to be stampeded into paying any deposits or binders until you’re absolutely certain you’ve found the property you want."
8. "Make certain you have the best available legal advice before signing any agreements, contracts or other documents. To avoid misunderstanding, it’s always best to have an attorney translate "whereas-" studded fine print clauses into coherent everyday English. Even seasoned real estate investors sometimes fail to have this done — and the ensuing squabbles between buyers and sellers usually wind up in courtrooms."
9. "Always insure the title to any property you buy. Even the most meticulous title search may fail to turn up all the pertinent facts about the legal history of a property. The cost of title insurance is negligible. The expense of fighting a lawsuit over a clouded title can be staggering — as many real estate investors, I among them, have discovered to their regret."
10. "Once you’ve bought your property, treat it as a long term investment, not as a short-term speculation. You’ll find that — 99 times out of a hundred — you’ll make much greater profits that way. In fact, if you wish to make money in real estate, always think in terms of investing and never in terms of speculating."
Ideas, Principles and Conclusions of the World’s Richest Man
In my opinion, this is the most important part of this report, because it ties together everything you’ve read up until now. It is placed at the end, because many readers probably wouldn’t appreciate it until seeing the various wealth, management and investment secrets revealed thus far in this report. But if you really want to understand and feel Getty’s lofty and successful business mind, I think you must understand his ideas, principles and conclusions about mankind and the world in which he lived. They will be as timeless 100 years from now as they were when he formulated them.
In my opinion, this is the most important part of this report, because it ties together everything you’ve read up until now. It is placed at the end, because many readers probably wouldn’t appreciate it until seeing the various wealth, management and investment secrets revealed thus far in this report. But if you really want to understand and feel Getty’s lofty and successful business mind, I think you must understand his ideas, principles and conclusions about mankind and the world in which he lived. They will be as timeless 100 years from now as they were when he formulated them.
Rather than write ongoing commentary, I will simply offer several direct quotes from Mr. Getty, on a variety of subjects that reveal his inner thoughts and philosophy:
General
"I consider myself neither a prophet nor pundit, economist nor political scientist. I speak simply as a practical, working businessman."
"I consider myself neither a prophet nor pundit, economist nor political scientist. I speak simply as a practical, working businessman."
"Competition — foreign or otherwise — exists to be met and bested. Competition — the stiffer and more vigorous the better — is the stimulus, the very basis, of the free-enterprise system. Without competition, business would stagnate."
"...I gradually learned that when their personal interests were involved, these economic illiterates suddenly became as shrewd as the most successful financier."
[Editor: Getty was aware of the importance of both competition and cooperation in business as described in Report #13B: The Millionaire's Secret (II).]
"It’s more important for the man with The Millionaire Mentality to be able to think small than to think big — in the sense that he gives meticulous attention to even the smallest details and misses no opportunity to reduce costs in his own or his employer’s business."
"Yet another of the blunders of young businessmen and executives is their constantly increasing tendency to over specialize. The young man who understands all aspects and phases of business is a rare bird these days."
"If you have a business, make sure you’re the one who’s running it."
On Dissent
"I have observed a contemporary American phenomenon which is disturbing, deplorable and truly dangerous. I’m referring to the growing reluctance of Americans to criticize, and their increasing tendency to condemn those who, in ever dwindling numbers, will still voice dissent, dissatisfaction and criticism."
"I have observed a contemporary American phenomenon which is disturbing, deplorable and truly dangerous. I’m referring to the growing reluctance of Americans to criticize, and their increasing tendency to condemn those who, in ever dwindling numbers, will still voice dissent, dissatisfaction and criticism."
"Very often it remains for the dissenter to point out that which is wrong. He is a skeptic who doubts, questions and probes — and hence is more likely to recognize lacks, weaknesses and abuses than are his complacent neighbors. The dissenter is also more alert and sensitive to the winds of impending change. He is thus frequently a prophet of the inevitable, who cries for action or change while there is yet time to take action and make changes voluntarily."
"I am, at heart, an anarchist.... My evanescent anarchistic tendencies are purely classical. I use the word anarchist in the sense in which it was understood by the ancient Greeks. They, of course, accepted the anarchist as a fairly respectable — if somewhat vehement — opponent of government encroachment on the individual’s rights to think and act freely. It is in this sense that I glimpse myself as an anarchist — regretting the growth of government and the ever-increasing trend toward regulation and, worst of all, standardization of human activity."
[Editor: If Getty felt this way about government bureaucrats back in 1960, imagine what he would think of them now! Government bureaucrats love conformity because it dehumanizes individuals and relegates them to numbers, which are easier to control.]
"Today, the inherent nature of government in an increasingly complex civilization creates strong pressures toward systemization and standardization, which, in turn, serves to create vast bureaucratic complexes. In government (as in overgrown big-business corporations that have assumed government-style management practices) the attempt to establish rigid procedures for the most minute activities tends to guarantee imposition of a structured conformity."
"Originally 13 rather loosely federated states dedicated to the proposition that all government should be held to a minimum and individual liberty kept at a maximum, the United States has changed greatly since the Declaration of Independence was signed. Modern America is a country with national, state and local governments that are infinitely more powerful than was ever envisioned by our founding fathers. Today, the hand of government can be felt — regulating, prescribing, proscribing and standardizing — in almost every area of human activity."
"Many businessmen who complain most about government’s bureaucratic meddling are lost in bureaucratic labyrinths of their own making. Far too many wallow in organizational charts, administrative directives and quintuplicated memoranda, worrying more about doing their paperwork than about doing business."
On Individuality
"Individuals help accelerate the trend toward a programmed social and economic system by their complacent, almost bovine, acceptance of it all."
"Individuals help accelerate the trend toward a programmed social and economic system by their complacent, almost bovine, acceptance of it all."
"The man who wants to be an individualist, call his life his own and retain considerable freedom of will and action should be alert to those courses of action which might lead him unwittingly into the trap of standardization."
"There is, however, hope for any person who wants to remain an individual. He can assert himself and refuse to conform. He’ll be on his own, that’s true, but... there will be no limits to what he can achieve."
"In my opinion, no one can possibly achieve any real and lasting success or ‘get rich’ in business by being a conformist... He must be very much of an individualist who can think and act independently. He must be an original, imaginative, resourceful and entirely self-reliant entrepreneur. If I may be permitted the analogy, he must be the creative artist rather than merely an artisan of business."
"I find it disheartening that so many young businessmen today conform blindly and rigidly to patterns they believe some nebulous majority has decreed are prerequisites for approval by society and for success in business... The majority is by no means omniscient just because it is the majority. In fact, I’ve found that the line which divides majority opinion from mass hysteria is often so fine as to be virtually invisible. This holds true in business as it does in any other aspect of human activity."
"The truly successful businessman is essentially a dissenter, a rebel who is seldom if ever satisfied with the status quo. He creates his success and wealth by constantly seeking — and often finding — new and better ways to do and make things." [Editor: A key element to finding new and better ways of doing things is to develop the ability to look at things from many perspectives — an important key to business success, as well as for the advancement of humanity.]
"It isn’t a very long step from a conformist society to a regimented society."
"In business, the mystique of conformity is sapping the dynamic individualism that is the most precious quality an executive or businessman can possibly possess."
"The men who make their marks in commerce, industry and finance are the ones with freewheeling imaginations and strong, highly individualistic personalities."
"These economic freethinkers are the individuals who create new businesses and revitalize and expand old ones."
"The resourceful and aggressive man who wants to get rich will find the field wide open, provided he is willing to heed and act upon his imagination, relying on his own abilities and judgment rather than conforming to patterns and practices established by others."
On Values
"To be truly rich, regardless of his fortune or lack of it, a man must live by his own values."
"To be truly rich, regardless of his fortune or lack of it, a man must live by his own values."
"I have known entirely too many people who spend their lives trying to be what others want them to be and doing what others expect them to do... Seeking to conform to those patterns, they dissolve into grotesque, blurred mirror images as they obliterate their individuality to imitate others."
"I am a stubborn advocate of enlightened free-enterprise Capitalism and the last person in the world to question anyone’s fundamental right to achieve financial success. ...On the other hand, I firmly believe that an individual who seeks financial success should be motivated by much more than merely a desire to amass a personal fortune."
"I do not measure success in terms of dollars and cents. I measure it in terms of the jobs and the productivity of my labors and my wealth invested and reinvested as capital in my various business enterprises — have made possible."
"Each individual has to establish his own standards of values, and ...these are largely subjective. They are based on what the individual considers most important to him and what he is willing to give for a certain thing or in order to achieve a certain aim."
"It has always been my contention that an individual who can be relied upon to be himself and to be honest unto himself can be relied upon in every other way. He places value — not a price — on himself and his principles. And that, in the final analysis, is the measure of anyone’s sense of values — and of the true worth of any man."
Closure
Getty tells a story about acquiring a company and meeting the first time with its board of directors. He purposely proposed a disastrous, silly plan, which would almost certainly lead the company into bankruptcy. Only three of the company’s nine officers had the courage to tell him the truth — the others were essentially "yes" men, which is all too common in American business today. To make a long story short, he retained the three courageous officers and let the others go.
Getty tells a story about acquiring a company and meeting the first time with its board of directors. He purposely proposed a disastrous, silly plan, which would almost certainly lead the company into bankruptcy. Only three of the company’s nine officers had the courage to tell him the truth — the others were essentially "yes" men, which is all too common in American business today. To make a long story short, he retained the three courageous officers and let the others go.
This story reminds me of my own military experience. Many of the majors and colonels I knew were petty, conformist "yes" men. They knew the bureaucratic system well enough to know how to exploit it to get ahead without taking risks. This allowed them to reach comfortable heights such as the rank at which most officers retire. But General officers were another matter.
I only knew two or three Generals, and so perhaps my experience is not based on sufficient information to draw valid conclusions. But I was always struck with the superior intelligence and remarkably, tolerance of the Generals I knew. They wanted to know important things; not petty procedures. I remember one time when I was teaching an evening class for officers in which I was in civilian clothes. A General officer arrived at the airport, and immediately came to my class to see our operation. I answered all the General’s questions, and he never questioned my appearance (which was standard procedure for our evening classes). He was satisfied with my answers, and was only concerned with important things. The next day, I got word from my commanding officer that a major in my class had complained about my dress, "because it was disrespectful to the General." This is the kind of mentality with which entrepreneurs constantly have to deal.
Deep down inside, entrepreneurs enjoy a quiet confidence, a happiness, a feeling of satisfaction that those afraid of risk will never feel. And J. Paul Getty was one of the best.
This article was prepared by:
ZENO Press, PO Box 170, Sedalia, CO 80135
ZENO publishes informational products pertaining to business and freedom. Write for a free catalog to the above address.
ZENO Press, PO Box 170, Sedalia, CO 80135
ZENO publishes informational products pertaining to business and freedom. Write for a free catalog to the above address.
"Life is Commerce" — a truckdriver friend
THE POWER OF REAL FREE ENTERPRISE
by Frederick Mann
Consider that there may be a close relationship between degree of freedom and wealth or prosperity. The freer people are, the more wealth and prosperity they generate. The opposite is also true: the wealthier and more prosperous people are, the more freedom they have. Freedom = money and money = freedom.
Freedom is one of the most important wealth principles. How can you become wealthy if government bureaucrats force you to give them huge sums of money in taxes? How can a business prosper if government bureaucrats force them to be regulated into the ground?
Reports #01: Introductory Freedom Guide and #04: How to Find Out Who You Are are just a few of the Reports which are essential reading to appreciate what I mean by real free enterprise, and why our organisation encourages people to operate according to the principles described therein.
HOW TO CUT YOUR LOSSES
by Harvey Mackay
[The following article by Harvey Mackay appeared in The Arizona Republic of May 21, 1995 under the title, "Key to success is learning ways to cut your losses."]
We're surrounded by winners. Advertisers flood us with images of winners. Winners guzzling soda pop, winners munching burgers, winners strutting around in their underwear. Winners, winners everywhere.
Business columns like these are with the program, full of well-meaning advice on how to act like, think like, dress like and be a winner.
But there's very little out there about how to be a loser. And there should be, because most of us are losers most of the time. The highest lifetime batting average in baseball history, Ty Cobb's .367, represents a failure rate of nearly two out of every three times at bat. Even the biggest and best companies are aced out by their competitors on more than half of their potential sales, unless they're Microsoft, in which case, they have the Justice Department screaming "unfair competition."
It's easy. Just learn how to cut your losses.
That's what Coca-Cola did when it realized the mistake in abandoning the company's classic formula. That's what Intel did - finally - when it realized it couldn't stonewall its way out of a problem with the faulty Pentium chip.
That's what we all have to learn, sooner or later.
A large number of turkeys
Eighty percent of new products vanish from the marketplace within two years. Eighty percent of movies fail to earn back their costs. How do companies that launch so many turkeys stay in business?
Eighty percent of new products vanish from the marketplace within two years. Eighty percent of movies fail to earn back their costs. How do companies that launch so many turkeys stay in business?
Repeat after me: "They cut their losses." They didn't bet the farm on any single product. They diversified. They kept refilling the pipeline. They lived to sell another day.
The 3M Co. maintains that 25 percent of its sales five years from now will come from products that have not yet been invented. That implies that a significant amount of current sales is coming from products that will be dropped within five years.
What separates the winners from the losers is that winners realize they can't always win. 3M officials know there will be losers.
They plan for them. They control them. They contain them.
A business or an individual can survive any number of bad decisions if they have the courage and wisdom and discipline to accept them as part of life and abandon those positions when they become untenable.
How do you know when to jump?
If you cannot trust your instincts, adopt a formula and stick to it.
In the stock market, when a position moves against you by a preset amount, don't hold it, don't chase it, don't double up, get out.
In life, it's two years, three max. If the job doesn't work out, if the product doesn't sell, if the company doesn't turn around, find something else to do.
Rules for abandoning ship
Isn't that a tad arbitrary? Isn't the world full of examples of investments and products and experiments that took a lot more than three years to pan out? Yes, but that's not what we're talking about.
Isn't that a tad arbitrary? Isn't the world full of examples of investments and products and experiments that took a lot more than three years to pan out? Yes, but that's not what we're talking about.
If you're making real progress, if the ship is turning around, if you can see the light at the end of the tunnel, then no matter how long it takes, it's worth it.
What I'm talking about is a situation where there is no marked progress, or even a decline, after two years. Then it's time to start drafting your good-byes.
A case in point: Michael Jordan.
What makes him one of the greatest athletes of all time is that he also is one of the smartest. He has always known how to win. By leaving baseball after 18 months, he proved he knows how to lose, too. He took a hard look at where he started, and where he was, told himself the truth, and headed back to basketball. That was an act of real courage and self-knowledge.
Mackay's Moral: It doesn't matter how much milk you spill, as long as you don't lose the cow.
[Harvey Mackay is the author of such books as Swim With the Sharks Without Being Eaten Alive and Sharkproof. He resides part of the year in Paradise Valley, AZ. Write to him in care of United Feature Syndicate, 200 Park Ave., New York, NY 10166.]
Editor: One of the qualities of the person with a "millionaire-mentality" is being an expert at learning from the experience of losing. You have to know how to lose, when to cut your losses, and how to learn from them. Dr. Robert T. Lewis has written a book on the subject: Taking Chances: The Psychology of Losing & How to Profit from It. Dr. Lewis is also co-author (with Herb Goldberg, Ph.D.) of Money Madness: The Psychology of Saving, Spending, Loving, and Hating Money.
