The Essentials of Silver Investing Under New Fed Leadership

The following post is by David Parker from

Silver investing is a great way of entering the commodities markets as it allows traders to diversify their investment portfolio with a safe haven asset. It also has the added attraction as it goes through periods of volatility giving great trading opportunities. With the change of chair of the US Fed we could see some interesting trading for silver.

Since the beginning of the latest global financial crisis in 2008, the number of investors who went in search for alternative investments grew dramatically. The downhill slide of several stock indices and shares, together with ever present volatility in the financial markets, pushed many traders to consider investing in safe haven assets. Even though silver is viewed by some as ‘gold’s poor cousin’, it remains as one of the most traded precious metals. Like its cousin, it is used as safe haven investment by traders who want to diversify their portfolios and add some relative stability. Demand for silver is relatively constant as it is a component used in manufacturing, jewellery, photography, and even medicine because of its conductivity and strength.

Even though it is produced in most countries, more than half of silver’s global production comes from the East (China and Australia) and Latin America (Mexico, Peru, and Chile). Silver is a commodity used for both industrial and investment purposes but in recent years most of its demand comes from the industrial sector. According to The Silver Institute, as of 2010 the industrial demand of silver has been more than 50% of its production and hence its price is mostly driven from there. It is estimated that this percentage is likely to increase in the future as technological advancements may find more uses for silver in electronics, cars, and the solar power industry.

Entering the silver market can be achieved by two main methods – either though physical purchase of silver or by investing in exchange-traded products. The purchase of physical silver is always more fulfilling because it puts the actual metal in the investor’s hands but it comes with a variety of costs from storing and insuring it, and even costs when selling it. Probably the most common method of silver investment is through Exchange Traded Funds (ETFs), where traders get all the benefits from investing in silver without having to store it, however ETFs have more price volatility. A trader wishing to stay away from both high price volatility and physical silver ownership may look to invest in silver mutual funds. These portfolios may be combinations of different silver mining stocks and physical silver ownership which diversifies the risk. The downside with these funds is higher trading costs and the investor should have some knowledge of the stock market.

The sharp rise of silver prices during the first eight years of the 21st century was mainly due to the vast demand from emerging markets such as China and India. However, the last few years’ recovery of the European and U.S. markets, together with the slowing down of China’s growth, pushed silver prices very low. The ongoing speculation for the U.S. economy outlook and the future moves by the Fed as regards to the slowing down of its asset purchasing program are expected to be the main driving factors for the price of silver. The imminent appointment of Janet Yellen as Fed Chairman might be the beginning of a different approach to the U.S. economy’s Quantitative Easing (QE) program, and any holding back from further easing of the QE program may lift silver prices upwards.

As with any investment, traders should commit to researching for insights about silver before investing any capital. Silver was regarded as a symbol of wealth and prosperity but now new technologies require increasing quantities of the precious metal for the production of many products. Investors can enter the silver market in many ways and should always keep in mind that it’s going to be an exciting ride.

Making Big Profits with a Powerful Shopping Cart

Making Big Profits with a Powerful Shopping Cart

More and more people are using the Internet to take part in one of the greatest wealth creating opportunities, running their own business. But making big profits right away isn’t always easy, and with positive cash flow crucial for a small business to cover original startup costs and overhead expenses, many small business owners can get overwhelmed. Many are so focused on doing what they need to cover their expenses now, they tend to overlook things they could do to grow profits in the future. All small business owners have the resources available to help them generate more money. The first thing they need to do is look into accepting payments online with a powerful shopping cart.

Gain More Money by Working with an Expert

It makes sense to start a small business website with a powerful web based shopping cart. Working with a reputable company that specializes in creating these features on websites is a smart investment early on in a business. This is because a well-designed shopping cart allows a company to make a seamless transition into doing larger volumes of business. Using an inferior shopping cart tool on a website to save money in the beginning could mean losing business later. Think about it. If you have to shut down your website to accommodate a larger audience or to handle additional volume, you will lose money. Having a powerful shopping cart in place from the beginning means not having to sacrifice profits which could be lost making upgrades in the future.

Saving Your Businesses Reputation

A business’ reputation is extremely important, especially when just starting out. People want to buy from businesses with good reputations. Many people start judging that reputation by the systems a company has in place online. For many consumers, this indicates how successful a business is at what they do or sell. One of the most important features to help make an online company’s reputation is its shopping cart. People are most impressed by those which can accept payments quickly and easily. The shopping carts also need to be able to accept a wide variety of payment options, such as several different credit cards and PayPal. Having these tools communicates to a consumer that a business is reputable and knows what it’s doing.

Finding the Best Options for Your Business

So how do you get started the right way, with a powerful shopping cart that’s going to add to your business and not detract from it? The answer is simple. Have one created by a business that specializes in that kind of thing, and knows what it’s doing. Before you can choose your shopping cart provider, you need to know what you are looking for, according to Leigh Mason of Smash Figure out which options for accepting payments you will need. For example, do you have a lot of foreign customers who will need to pay with currency other than U.S. dollars? Knowing this is crucial to the success of an online business.

Successful Shopping Cart Solutions

Several studies have been done on the reasons why customers choose to abandon their online shopping carts at such high rates. The number one reason listed, according to, was because shoppers were presented with unexpected costs. A notable 56 percent of respondents decided not to make the purchase because of this. Let’s face it, nobody wants to go into a transaction thinking they’re about to pay one price, and then get to the end of the process finding out they will have to pay much more. Other top reasons why the sale didn’t go through included several key things that can be fixed with a good shopping cart host, including:

  • Website navigation too complicated
  • Website crashed
  • Process was taking too long
  • Concerns about payment security

These are common issues people have with poorly created shopping carts and these are all things that can be fixed with a little help from an expert. If your current shopping cart has any of these issues, it’s time to take a look at making a change. Start off by doing a little research and make a list of what your ideal shopping cart will need. Maybe it’s an easier to navigate process with fewer steps; maybe it’s a more secure payment processing system. If you get stuck anywhere in this process, you don’t have to worry. With expert help at your fingertips, you don’t have to go it alone. A good online shopping cart provider will be able to help you assess your needs and point you in the right direction. These experts will know which features will offer your company the most powerful options for doing business online and succeeding in the eCommerce market as it continues to grow.

You may also want to check out this related article: Making Credit Card Payments in the eCommerce Environment

What Is Share Market And Its Significance?

If you have acquired sufficient savings, it must be high time that you look for an investment option that has a better potential of increasing your money. Most of you already know that depositing your money in the bank is the safest way to keep your money, but the interest banks will pay you is very minimal that it could hardly be called an investment. Risking on putting up your own business, on the other hand, do offer a good probability of getting a huge profit, but only if you really work hard and enter the right business. Another way you can invest your money is on the share market. However, many may still be wondering what is share market?

Share Market Basic Definition

To define a share market it is best to split the words and understand each. First is share. A share is basically a piece of a company’s ownership. For instance, a huge company can divide the bulk of its assets into one thousand shares, which they can own solely for themselves or offer to the public. Second is market. As most of you know, a market is where a seller and a buyer meet to transact a sale. A share market, therefore, is a venue where buyers and sellers of company shares meet to do business.

The Need to Sell Shares in Stock Market

Most companies start their businesses with a capital. They either loaned this or financed it from their own pockets. Once the business progresses and grows bigger, the amount of money needed to keep the operation going and to finance the growth will also increase. Now, the company owner has two choices. That is whether he takes additional loan or sells part of his ownership of the company to raise the money he needs. A practical solution is to sell a part of the ownership. Here, the company is not obliged to pay back the money raised and there are very little strings attached. Whoever buys their shares are now deemed co-owners, who in a way are risking their money on the future of the company.

What is share market

How Share Market Works?

In a share market, those who already own a share on a specific company can still sell their shares in the future. This could be because they need their money back or they do not want to be a co-owner of the company anymore. Usually, you would need a broker to do the transaction between buyer and seller. Brokers can be individuals, banks, or other financial institutions. They match buying and selling prices, and they attend to orders based on who made the orders first. Therefore, if a buyer is interested to buy shares of a certain company, he has to speak to his broker and make his orders before he runs out of shares to buy, which happens if the share is showing a great potential for growth.

What is Share Market: Benefits of Having a Stock Market

A share market provides a venue where seller and buyer meet to transact business legally and with utmost reliability. Here, buyers are obliged to pay and sellers are obliged to issue certificates. In other words, risks are eliminated. A share market also allows for the discovery of fair price for shares of certain companies. Everyone is on level ground, buying and selling at a price that is determined by the current market.

European Stock Market; Its History, Progress And Performance.

European stock market is a public entity in Europe where shares of a company are traded at an agreed price. The stocks or the shares are listed and then traded on stock exchanges which are owned by brokers. Such brokers have specialized in selling and buying shares from a listing of stock and securities on behalf of the companies. Participants in this market include insurance companies, banks, mutual funds and individual retail investors.

European Stock Market And it’s Importance

The European stock market was started with the purpose of facilitating the exchange of securities between sellers and buyers in Europe. In a way, this provided a marketplace where real or virtual. The exchanges facilitate price discovery by providing a real time trading on all the listed securities. The exchanges are either are physical locations or virtual kind. The physical locations involve carrying out transactions on a trading floor through the open outcry method. The virtual kind exchange is composed of a network of computers where exchange is done electronically through traders. A potential buyer bids a specific price for stock while the potential seller asks for a specific price for the stock. If the bid and the price match, a sale takes pace.

European Stock Market

A few decades ago especially after the Second World War, buyers and sellers on The European stock market were mainly individual investors like wealthy businessmen. However, this has changed over time because institutional investors have become the major players in this market. This change has caused some improvements in the operations of the market such as reducing the fees favoring the ‘small’ investor.

The European stock market is determined to provide a considerable amount of useful information all over Europe daily. This has increased the demand of this information by all key players in the market including the small investors. For efficiency, the news analysis consists of the recording, tracking, analysis and interpretation the flux. The analysis include the performance all companies over Europe no matter its popularity. The information is also posted in the internet which is now a medium of choice for several stock market watchers in Europe. It is preferred more because it is capable of providing detailed the up-to the-minute reports on trading.

The European stock market has now scaled into heights despite the longest recession in Europe and the highest levels of unemployment. This simply shows that the stock market growth has very little correlation with the economic growth. Many investors are now trading on shares instead of fundamentals as it is tracking the most. Only Greece’s new political crisis has knocked the local stocks down.

Last week on Friday, the European stock market attempted a rebound which ran out of gas as the day went on. The major European stock indices began to fade although the bargain hunters had accomplished their mission during the first half of the session. This has made the Euro group finance ministers to meet in Luxembourg in order to agree upon a protocol for rescuing or winding down insolvent banks and create a banking union.

Everyone is now positive on the European shares. Many investors are now buying them since they are still underweight now. They are cheap in terms of value but it is going to increase within the next few months. Make a wise decision now, buy some shares now and for real, you will enjoy huge profits within the next few months.

Should You Contract Retirement Companies?

With the relatively recent introduction of the private pension system, we could say that the palette of retirement saving instruments has become larger. In this regard, retirement companies play an important role. Thus, in addition to the state pension pillar, participants under 35 years contribute mandatory and those between 36 and 45 years optionally, the mandatory private pension (pillar II) and voluntary pension (Pillar III). In addition, insurers have to offer policies with component retirement life – products that represent solutions for retirement income support.

Advantages of Retirement Companies

If we refer only to optional solutions of this potential product portfolio for retirement – Pillar III and life insurance pension component – it must be said that although they have a similar purpose, each of the two has specific characteristics and advantages.

First, even if it is also meant for retirement savings, the financial plan provided by retirement companies has the main role of assuring your life. In other words, its main role is to provide financial protection for unforeseen events and, in addition, to provide a means of investment. In addition, the financial component of this pension plan allows the contractor to add, depending on the need and demand to the insurer, different extra insurance options.

More and more retirement companies offer life insurance with retirement component, which allows the contractor to choose one age at which he/she benefits from the accumulated amount in the account. This represents a suitable means of saving for those who want to retire before the age standard. At the end of the first payment period, the insured can choose either to collect the full amount at the time the account or benefit for a given period, the annuity. Voluntary pension (pillar III) is a product exclusively for additional retirement savings and the amount accumulated in the participant’s account is available only after the age of 60 years, being granted by retirement companies.

Retirement Companies

The two products work differently and in case an unforeseen event happen to you. Thus, if the person who contracted insurance policy with pension component dies, his/her loved ones will benefit from financial protection. In this case, the insurer pays the sum insured – a set amount from the start and is guaranteed regardless of the number or value of the premiums paid by the insured event. The voluntary pension, on the other hand, comes when the participant suffers from a permanent disability and cannot continue contributions. In this case, he/she benefits from money raised in account as a payment. In case of death, the legal heirs receive money from the account. Both these products are provided by retirement companies.

The voluntary pension can contribute monthly, with up to 15% of gross income, to which the employer can contribute further (if he wants to) or you can contribute together, respecting the maximum limit of 15% of gross monthly salary. By comparison, life insurance from assurance and retirement companies gives you the freedom to participate with the amount you want and allows you to set single premium payment frequency.

Regarding the tax treatment of contributions, it differs in these two products. The amount that you contribute to the voluntary pension is deducted from income tax, a maximum of 500 USD per fiscal year. This benefit is available only for you and for the employer, if he participates in your pension. In case of life insurance from retirement companies, the investment is not taxable, neither the payments you receive.

Last but not least, the two products are regulated and supervised by different authorities, the same companies that provides and manages. Thus, the insurance market (and thus the component life insurance scheme pension) is regulated by the Insurance Commission, while the private pension market is regulated by the retirement companies in charge.

An Introduction To The Indian Stock Market

Mark Twain had once divided the whole world’s population into two kinds of individuals: those who’ve visited the renowned Indian monument, Taj Mahal, and the ones who haven’t. A similar thing could be said about the investors. One can find two groups of investors – individuals who are aware of the investment options in India and others who don’t. Though India might look like a tiny dot to a professional investor in the United States, but upon a closer inspection, you’ll notice the things you’d typically observe in any promising market. Below we’re going to provide an introduction to the Indian stock market as well as how interested investors could gain exposure to this arena.

Indian Stock Market Overview

The majority of the trading happening in the Indian stock market is taking place on its 2 stock exchanges – the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Interestingly, the BSE has been around since 1875. While the NSE, however, was founded in the year 1992 and began trading two years later, in 1994. Having said that, the two exchanges adopt the exact same trading mechanism and procedure, trading hours and duration, settlement process, and so on. At the previous count, there were over 4700 listed firms in the BSE, while the NSE had around 1200. Of the many listed firms trading on the BSE, just about 500 firms amount to greater than 9/10th of its market capitalization, and the remaining bunch includes highly illiquid shares.

When you find yourself comfortable enough to begin independent trading, you should open up a Demat account with any bank or stock trading firm (or stock broker). Even though you are confident enough to trade, it’s highly recommended that you trade in small amounts and under the guidance of someone who has got working experience of investing in the Indian stock market.

For beginner level, it is suggested that you get started with a “virtual” Demat account in order to get acquainted with the trading routines and activities along with their pattern. Plus it will make you recognize the area in which your trading interest actually lies. There are numerous virtual trading accounts offered by the large firms, some even for free, while the others with a low start-up fee to help you learn the strategies of trading in the Indian stock market.

Indian stock market

It’s a well recognized fact that there is substantial participation from institutional investors the Indian stock market. This is great news, however on the other hand, it makes the Indian stock markets more susceptible to global financial shocks. The Flls often move the investments and the swings produce intense price fluctuations leading to increased volatility. And when episodes just like the one from the year 2008 re-occur, the flight of the capital will certainly have a worse impact not merely on the actual financial markets, but additionally on the real economy and the economic climate. The anticipated slowdown in the Eurozone as well as the US may result into an outflow of large amount of foreign money from the Indian market.

Bothered about the present condition of the market? Well, ebb and flow is usually a part-and-parcel of not just the Indian stock markets, but all the global markets. So, the way you swim along is totally dependent on the kind of trading decisions you generally take.

3 Useful Tips On How To Become A Millionaire

Wondering how to become a millionaire? We all have imagined, even if only at night before bed, how would it be if we were millionaires. But is there any special recipe to reach this status? Are these people completely different from the rest? Do the “millionaire” genes exist?

How to Become a Millionaire

Forbes interviewed some of the world’s famous millionaires, as well as other rich people who have amassed fortunes of over 1 million dollars. If many of them said that the main “ingredient” was luck and proper timing, there are some similarities between their responses that could guide us in the future.

Most of the very rich, surprisingly, are not so different from the rest of the world. They have the same concerns about their children, the same anxieties in terms of their health state and the well-being of their dear ones. But there are differences and they can be easily synthesized. Forbes revealed the 3 “secrets” of the rich people who helped them get where they are today. Read on to find how to become a millionaire!

1. Fear, hand in hand with poverty

A special attribute of the first people who call themselves millionaires is that they were never afraid of failure. Many of those interviewed said that at some point in life they had to choose between staying on the easy, safe side and taking a risk, and after analyzing both variants they have chosen the hard way.

Thing which is not deprived of sense at all, given that if you want to become truly rich you have to assume a certain risk. If you look only look towards the safety of your workplace and you are afraid to learn something new, then you can stop dream of being a millionaire.

Even when they have failed, and each one has done it at least once, the rich said that they used those experiences in their advantage and learned from the mistakes they have made. They got back on the wave stronger and left no failure to ruin their optimism and passion.

2. Creativity springs profitable solutions

The second secret of men who were able to raise millions is the way in which they watched each issue to find new and profitable solutions. Those interviewed by Forbes always told how they look at a problem from different angles and chose the solution that was “against the tide”.

But you must not imagine now that if you are against everyone you will reach the top of the pyramid. Critical analysis is the basis of success.

An oil magnate told journalists how, decades ago, he wanted to release more of the gas stations they own. They were profitable enough, but have the feeling that he wasted an opportunity, that he wasted space.

People came, fed, paid and then walked away. But what else would they have to do in a gas station? Solution – stores. At first, his idea was ridiculed. The question was who would come to buy and gasoline and coffee from the same place?

Well, today you have to make efforts to find a gas station that does not have a shop or a restaurant (or even both) within it, and the person we are talking about is currently one of the richest men on Earth.

3. Marry wisely

The third great secret of the rich ones is … marriage. And we do not refer here to the fact that they have found someone who inherited grandparent’s wealth.

If you’re wondering how to become a millionaire, you must listen carefully to their advices. All who were able to raise millions, and especially those who have started from scratch, said that having someone along is essential.

To start a company from scratch or to drive one requires many sacrifices. Stress here can be fatal. So to have someone besides to encourage you and, most importantly, make you believe in yourself is essential for your success.

Many of today’s riches had long periods of poverty and have struggled as we all do. Some have worked for years as a mechanic or had several jobs to be able to do what they really wanted. So, make sure you have someone there who believes in you and is willing to accept and the worst of things.

For any person wondering how to become a millionaire these 3 tips are a real gold mine. Keep them in mind wherever you go and you’ll be one step closer to success.

Facts You Must Know About How To Invest In Real Estate

Real estate for the last 10 years has been the best investment vehicle for those individuals who have capital, knowledge and expertise in this field of capital market. Although this kind of investment has many investment avenues, it is not as complicated as investing in bonds or stocks. This means that real estate investment is more predictable in terms of returns when compared to stocks or bonds. The following information will try to unveil hidden facts beyond purchasing a home/ house and introduce you what we term as current real estate investment.

How to Invest in Real Estate

So, how to invest in real estate? First, is to understand the basic terms used in the field of real estate investment. Some of these terms include; mortgage, property owner, lesser, tenant, home- equity loans, rent and REITS among other related terms. Remember without proper understanding of the above terms, you will never get to know the untold facts and secrets of real estate investment.

The second secrete on how to invest in real estate is to obtain adequate capital. Real estate is one of the investment opportunities that require a huge amount of capital due to its profitability. You can get this through venture capitalist, financial institutions such as banks or even margin buying (you borrow from REITS to do real estate investment). Once you have the capital needed, you can know join the real estate investment groups known as REITS or in full real estate investment trusts. Through these institutions, you are able to identify land, property, assets among other investment avenues in real estate. These groups also have special ways to give you guidance if you are a beginner on the best ways to maximize your returns. Through the groups, you can also collectively bargain for better property prices from the customers. This will ensure maximum returns that ultimately may lead to success.

Process on how to invest in real estate? What you need to do is to buy pieces of land and sub-divide them into small plots before selling to clients at relatively cheaper price that the original land. Alternatively, you can develop the plots to apartments where clients can buy an apartment. As a special tip on how to invest in real estate, it is important you diversify your portfolio of investment to reduce the chances of market risk.

How do you deal with real estate risks? The main risk associated with real estate is known as prepayment and market risk. One way of dealing with the risk id through formation of collateral debt obligation (CDO) and collateral mortgage obligation (CMO). Through both CDO and CMO, you can classify your real investment into classes depending on the customer preference to risk. Risk averse, seeker, and neutral customers will have to choose which property to buy and therefore reducing all the real estate risks.

If you have assessed the various kinds of real estate investment, nevertheless, that can be your guess. You must analyze the market and mark the peak of season when customers are looking for homes/properties. I believe the above information will help you make informed decisions and answer your question of how to invest in real estate.

8 Ways to Spend Less on Gas

Gas prices have gone up again and it’s time to be even more careful with your expenses. Here are eight ways to spend less on gas and be more cost-efficient when it comes to commuting.

Consider your transportation options first.

Don’t let driving be your default mode of transportation. Consider your other options first.

Can you walk or bike to your destination?

Is there public transportation that can take you there? Can you carpool with other people?

Try to think with cost savings in mind and you’ll find that driving your own car may not always be the best option if you’e trying to save money.

Get on the road with a purpose.

If you’ve decided to take your car, plan your trip carefully and avoid unnecessary trips.

Schedule your errands in one day and plan out the most efficient route to save on trips and mileage.

If you need to go a specific store, make sure they’re open or that they have what you need. You can also try calling first to check if they deliver. Avoid traveling during rush hour or peak times to lessen the time you’ll spend in traffic.

Make sure your car is in good condition.

Keeping your car properly tuned up can help you save on gas.

Check your car to make sure everything is working fine.

Check tire pressure, axles, springs, the suspension and chassis parts.

Make sure the air filter isn’t clogged. Keeping your air filter clean can improve your gas mileage by as much as 10%. Go for energy-conserving motor oil, too.

If your car is working properly, the engine won’t need to work harder than it should.

Remove the unnecessary.

If you don’t really need them, remove bike racks or vinyl tops to avoid air drag that can be a stress on your car engine.

Remove extra weights if possible. Take out unnecessary stuff you have in your trunk.

Extra weight means more work for your engine, which burns more gas.

If you can go without air conditioning, do it. Roll down windows if you have to. Reducing air conditioning can reduce gas consumption.

Drive carefully.

Aside from keeping you safe, driving steadily can help with your gas consumption, too.

Drive within speed limits.

Avoid sudden and hard stops and don’t weave around or swerve around. Also, pay attention to traffic reports so you’ll know when to avoid traffic jams on the roads.

Be smarter when parking your car.

Look for a shaded spot during hot months to keep your car cool and avoid overworking your AC later. If you can’t find a parking spot with shade, roll down your windows just a little bit to let air circulate.

Don’t spend too much time driving around looking for the nearest parking spot. Don’t be afraid to park and walk a few steps to where you’re going.

Be smart at the gas pump.

Go for the lowest octane or grade that is appropriate for your vehicle; premium fuel that’s priced higher won’t exactly improve your car’s efficiency. Avoid filling the tank to the brim as it can result in fuel spilling over, which is an unnecessary waste.

Be aware of gas station loyalty or membership card benefits if they are available. Also consider grocery or department store membership cards that offer fuel discounts.

Don’t be too concerned with brands since they all use the same pipelines and refineries anyway.

Think about cost savings more than branding although be aware of quality as well. Check out gas prices while you are out and about to see which gas stations are offering the best deals available.

Track your gas expenses and even your trips.

If you’re intent on spending less on gas, then learn to track your fuel expenses and your trips. Every time you purchase gas, write it down. Note down mileage and how much you bought. Through your records of your trips and gas expenses, you’ll be able to assess how much you spend every month and you’ll be able to make adjustments if you have to.

Why George Bailey, not Mr. Potter, is the true capitalist of it’s a Wonderful Life ?

It’s not anywhere near the Christmas season (unless you really, really like to get you shopping done early, but that’s for another time and another column) but with the issue of banks and financial institutions being at the forefront of international news, I too often witness capitalism getting the blame for the world’s woes.

This is tragic, especially when it is the exact opposite.

One of the reasons why is because there are images that are so intertwined with the word that it can be hard to separate them. We all know the iconic stereotypical capitalists.One of the more famous and well known is the Monopoly game mascot Rich Uncle Pennybags, whose black suit and top hat, along with his distinct moustache, gives him a superior air that is easy to associate with wealthy individuals who profit at the expense of others.

Another figure who I often hear used as an example of capitalism is Mr. Potter from it’s a Wonderful Life,a 1940′s film by Frank Capra that has become a Christmas classic.

In the film, George Bailey, the main protagonist, runs a small building and loan to help people in his small town of Bedford Falls afford a home, all while trying to hand the business over to someone else so he can pursue higher career aspirations in the world.

Meanwhile, Mr. Potter is an elderly man who owns a number of businesses in town, including the department store and the bus lines, as well as shacks that he rents out to the majority of people in the town.

Unlike Bailey, who is seen as a man of the people and remains in the business primarily to help the residents, Mr. Potter is cruel, mean, nasty, greed, and selfish. Throughout the entire film, he attempts to run Bailey out of business or buy him out, all to no success. Finally, when he accidentally receives $8,000 from Bailey’s building and loan, he steals it, knowing it will put Bailey out of business.

Mr. Potter is often used as an example of a capitalist, and the film an attack on capitalism. Regardless of whether this was or was not the director Frank Capra’s intent, to think Mr. Potter is at all capitalistic is to infer a gross misunderstanding of what capitalism actually means.

Capitalism, in its basic essence, is the free exchange of goods and/or services between two private parties. That’s it. And whenever there is a third party interfering in the exchange, it is no longer purely capitalism.

In reality, George Bailey is the true capitalist (though not a pure one) of the film, while Mr. Potter is what I would refer to as a small town socialist.

A small town socialist is defined as someone who runs a business in a small town, but loathes competition and seeks to hold a monopoly to keep prices high so they profit at the expense of the customer, who has no other place to go. They also rely on protectionism through government to protect their business from competition.

Mr. Potter fits this description perfectly. Because he lives in a small town like Bedford Falls, he does not have to worry about someone competing with him, because there is not a big enough population to support another similar business. As a result, he is able to charge outrageously high rent for his shacks. The source of his wealth, therefore, is the direct result of the absence of competition.

This is where George Bailey comes in. He is a competitor to Mr. Potter by offering the residents of Bedford Falls the opportunity to own their own homes, rather than pay rent to Potter, at a cost that is near to what they pay for their rent.

The difference in their attitudes is that Bailey sees the people as customers whereas Mr. Potter treats them more like feudal villeins, people who could not legally leave their lord’s land without his permission.

In order to beat Mr. Potter, Bailey doesn’t appeal to the city, to the county, or to the state to pass a law or ordinance that would negatively affect Mr. Potter’s rent racket while benefiting his own building and loan.

Instead, he beats him in a capitalistic way by offering a better service. He allows them to buy homes, however modest, which then become worth twice as much as it cost to build them. Bailey is able to do this because, unlike Mr. Potter, he knows he can’t possibly compete if he demands the same salary, so he keeps very little money for himself.

From there, the outcome is both obvious and inevitable. The residents flee Mr. Potter’s rented homes and flock to Bailey’s residential homes. This is demonstrated in a scene where Mr. Potter’s rent collector explains to him in a very blunt manner that his business model can’t sustain itself, because it is clearly inferior to Bailey’s.

Mr. Potter’s reply is telling. All he can say in return is that Bailey isn’t becoming rich off of it. In no way is he unwilling to change his habits.

In reality, he has two options. One is to act like a capitalist by acknowledging the business model is poor and amend it. But that would mean his income would be hit substantially, and even with all his wealth, he isn’t willing to surrender a dime.

So, instead, he tries to buy Bailey out by offering him a huge salary to work for him, which Bailey is smart enough to see will only be temporary. He also understands that Mr. Potter’s superior position is also fleeting and won’t last forever.

Unable to beat Bailey in any other way, Mr. Potter has to resort to theft, which even then is thwarted at the end when the residents come to Bailey’s aid.

There are also several scenes that indicate Potter uses political connections to gain favors and advantages. When Mr. Potter is listening to his rent collector, his receptionist informs him a senator is waiting to see him; Mr. Potter, of course, tells her the senator can wait, which infers he owns the senator and probably bankrolled his campaign.

On the other side of the coin, Bailey looks at it from an entrepreneurial perspective. When he inherits the building and loan from his father, he actually hates working there. But he understands it has an essential purpose by providing the people of the town with an alternative to Mr. Potter, i.e. competition so he cannot raise his rent even higher.

Very much like Walt Disney, who only started to make an actual profit from his company in the 1960′s after numerous decades in debt, Bailey puts all the revenue the building and loan receives into further investments. This allows him to offer homes at affordable prices.

This isn’t to say Bailey is a good businessman, which in many ways he isn’t. Like most people during the late 1920′s, he relies too much on artificial credit, gives risky loans, and puts his building and loan way too far in debt. When the town bank comes to collect its money during the 1929 Stock Market Crash, they’re forced to hand over everything dime they have, all while in the midst of a bank run in which everyone comes to the building and loan to pull out their money.

Yet, even when faced with the consequences of his poor business decisions, Bailey takes personal responsibility for it. He doesn’t expect the government to bail him out or foot the bill. He takes $2,000 he intended to spend on his honeymoon and gives it to the building and loan so it can remain solvent; he also does it to prevent his customers from selling their shares at artificially low prices to Mr. Potter.

Too often people equate capitalism with greed and selfishness, i.e. a person’s attitude, not their business practices, is what makes them a capitalist or not.

To quote Adam Smith, It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

What makes a person a capitalist is not their attitude, but how they engage in business. George Bailey may not be the best example of how to run a business, but Mr. Potter is certainly not a good example of what capitalism is all about.