Ask Uncle Bill

2011-02-09T09:10:05-08:00

Dear Abby, Dear Abby II

Last week we talked about Under Water, a youngish investor who was bemoaning the whack to his investments. Given this silly market, Under Water is probably now Belly Up, not an uncommon position in bear markets. Some call it capitulation, the turning point, or resignation. I call it the “Hell with it” model where everybody sighs, gnashes teeth and finds something else to do until the majority of people realize that the sun will come up tomorrow, to paraphrase a really bad musical.

But the danger is real. Not that the sun won’t come up but that bad economic times carry real risks with job loss being the big one. Since we have had record employment until recently many people are not familiar with job loss. For simplicity purposes, job loss is when you get fired. Money doesn’t quit going out but it quits coming in.

You really can’t control it completely just as you can’t control the nonsense going on on Wall Street. But you can react both before it happens and after.

Step One—make yourself invaluable. This won’t do you much good if you work for a firm that lays off people basis seniority. This is also known as the LIFO strategy—Last In, First Out. If you work for one of these types, you may want to consider a job change just because you will never get anywhere until you are old and gray. Or fired anyway because companies like this have a tendency to disappear. Back to invaluable. Invaluable means you get the job done. In times like these, you have to get the job done well, on time or ahead of time, and with a smile on your face.

Step Two—bail out the boss. Unless your boss is a total jerk (to be addressed next) and idiot, he or she needs help. Bosses figure out the things are going to get tough and cringe. Go and offer your services along with suggestions on improving the business.

Step Three—if you work for a jerk and idiot, now may be a good time to look around before things get really bad because you may be the first one to go in a real downturn. Samuel Johnson said nothing concentrates like a hanging. That goes for job loss as well. Concentrate, look at your options, evaluate your skill set and figure out who might want it more than the jerk you work for now. Also, look for who is hiring and figure out how to change your skill set (training, college, on the job) to get that job.

Step Four—Put things in perspective. I was rocked to my socks on this the other day. I volunteer at the USO at DFW and our site looks out over the boarding areas. A man stopped, looked inside and came in. It was hard not to notice a missing arm, a hook on what was left of the other arm and a huge scar running across his face. A smiling face, in fact. He said he wanted to thank us for all we did for our young men and women. We were speechless—he was thanking us. If this guy can be thankful after what happened to him in a war forty years ago, a financial crisis is nothing to jump out the window about.

2011-02-08T14:30:09-08:00

Dear Abby, Dear Abby,

This from a youngish reader awhile ago but worth sharing.

Dear Bill,

Is there any way you can calm my fears about the current economy? Everything I see is Doomsday everywhere.

I figured I'd let the people at Fidelity do their jobs, but it’s getting worrisome to me. Should I trust them enough to keep my same funds going at this time, and just believe that I'm getting stocks on sale as you put it?

I'm thinking this is getting out of control, I could laugh and groan earlier when it was at -10% to -13%, but now its just climbing higher and higher:

Personal Rate of Return from 01/01/2008 to 09/23/2008 is -18.6%

I know markets go up and down, and I'm obviously in this for the long run, but its getting unsettling for me. And I know the media loves to focus on negative outlooks, but it’s starting to add up. Can you lend your experience to me?

Signed,

Underwater

Dear Underwater,

Well, to be blunt, what do you know that Warren Buffett doesn't? Warren just plunked down $5 billion for a piece of Goldman Sachs and is probably sitting there in Omaha licking his chops and waiting to pull the trigger on a bunch of other buys.

Warren aside, there is danger but it is a danger that the whole thing will grind to a halt. It is not a credit crisis, it is a liquidity crisis because everybody is gun shy (with the exception of Warren) and won't lend anything. Add to that, stupid accounting rules as a result of Enron (Sarbanes/Oxley) and you have quite a mess that will work itself out, as usual, I think.

But in the meantime you are down 18%. So what are you going to do about it? The time to do something is before it happens but we live in the here and now, not yesterday. Sell? That would lock in your 18% loss. But it may go to a 30% loss, or 40% or 50%. Maybe. So what? Painful, you bet, but you have 30 plus years to make it up.

And when do you get back in? Nobody rings a bell to tell us to buy.

Suggest you look at it the way I did when I was in your position--if the market is going up, I would assume that trend would continue. When the market went down dramatically, I had already missed, as you did, the opportunity to sell so I would smash the computer, quit looking at Yahoo Finance, gnash my teeth and go do something else. The damage was done. The market corrects or we all end up in the streets with a lot more to worry about then our portfolios.

That is not to say you are not at risk but your risk is somewhere other than Wall Street. You can’t time or control the market. But you can control you and that we will discuss next week assuming your head is still above water.

Bill

The Traits of the The Rich and Not So Famous

2011-02-04T15:31:11-08:00

Do It Yourself Millionaires

I have to admit I am a sucker for those home improvement shows where some good looking woman drops into a wreck of a house and renovates the thing in one thirty minute episode. Having renovated a few homes and done more than my share of “projects” I know nothing gets done in thirty minutes and nothing gets done right the first time. And the only good looking woman that helps me out is my wife. But I watch the shows anyway out of envy and do pick up a tip once in awhile.

I also look for financial DIY tips and Fidelity came up with ten regarding millionaires. Actually they are not tips but characteristics. Some I agree with and some I don’t. And they don’t relate only to millionaires, they relate to anybody that is making it or, more importantly, wants to make it. Here are the ones I agree with. If you want to see the other ones, call Fidelity.

First, the rich don’t think they are rich. Most act like the wolf is still at the door and shop accordingly. They do so because the vast majority came from middle class backgrounds. Watching your spending at all times is the key to financial success.

Secondly, they took risks and borrowed money to do so. I don’t dislike debt. I dislike what people do with it. I consider debt to be great for 1) buying a car to get to a job where you make money to pay off the car, 2) buying a house but a house you can afford to pay for out of your cash flow and 3) starting a business. If you can convince somebody to lend you money to start or buy a business, you probably have a pretty good shot at success.

Thirdly, rich people know how to work the tax system. Not through fraud but by owning their own business. Half the millionaires in this country own their own business. And they deduct everything because they are taking a lot of risk and the tax code rewards risk. See that cup of coffee you are drinking? Deductible, if you own your own business. And you can get the breaks even if you start out part time while keeping your day job. Of course, there are limits but that is why you hire a good tax accountant to keep you out of trouble.

Fourth, most successful people were B students. At best. Boy, was I glad to read that one.

Fifth, and most important, successful people are happier. Depression and mental illness for wealthy people is way below the norm. The same goes for physical health. Being broke is not good for your health and it is hard to have a bright outlook on life if you’re carrying around $30,000 worth of credit card debt at 25%. One analyst put it this way—“It’s the freedom that money buys.”

Or as Albert Einstein put it, “The lack of money is the root of all evil.”

Boring Bonds--The Time May Be Right To Avoid Them

2011-02-03T11:22:00-08:00

When the stock market goes in the tank, people that have invested in bonds breath a sigh of relief. And that is good. But there is some risk here as well, some major risk in some parts of the bond market.

Bonds carry three kinds of risk. The first is interest rate risk. When you buy a bond you are buying an interest rate. Let’s say 5% on a five-year $1,000 bond. If you are happy with 5% and hold the bond for five years you get your interest and your principal back. But maybe you need the money for some reason and you have to sell the bond before the end of five years. And let’s suppose that interest rates on five-year bonds are now 8%. The bottom line is that you can’t sell your $1,000 bond for $1,000. The buyer will discount your bond to get his yield up to at least 8%. A bit complicated but think about it—it makes sense.

The second risk is inflation risk. If inflation is greater than your interest rate you are losing money. Let's assume some hypothetical interest rates and inflation rates. Assume the current yield on a short-term corporate bond fund is 4%. Assume the annualized inflation rate ss 5%. A lot of that is gas prices but hey, you buy gas so your inflation rate is 5%. And your bond yield is 4% so you are under water. And you pay taxes on your 4%. Inflation is always after tax.

The third and greatest risk is credit risk. Who is issuing the bonds and are you going to get your money and interest back? This is where bonds are definitely not boring. The current issue of Forbes magazine looked at a couple of bond funds that haven’t done so well recently. One fund is the Morgan Keegan Select Intermediate Short Term Bond Fund. In 2006 the share price was $9.60. Today the share price is $.97. Let’s repeat that—the share price is now $.97. Put another way a 2006 investment of $1,000 is now worth $101. Ouch. What did Morgan Keegan invest in? You guessed it—collateralized mortgage obligation bonds.

Surely, they had to tell the investor what they were investing in. The truth is that they did. The problem is the answer was buried in a prospectus that runs tens, if not hundreds, of pages causing eyeballs to glaze over after the first paragraph.

How can you avoid problems if you want to invest in bonds? Easy. Just remember that if it looks too good to be true, it probably is. If someone pitches you a bond compare the rate with alternative bonds. If a Treasury bond is yielding 4% and somebody is offering you something at 8% check out their credit worthiness. The finance answer is always simple—the higher the risk, the higher the return.

If you want to do bonds, go for quality. Any banker or reputable, key word here is reputable, financial planner will explain to you the quality of one bond over another.

Or stick with CD’s if you are really conservative. You may not like the low rate but at least you will get your money back

The Roaming Gnome Builds A House

2010-03-04T07:50:52-08:00

A post I wrote awhile ago about building a house. The house is finished. The blog lesson still applies.

Sorry about being late but had to meet a framer to talk about this new house. Nothing like pulling up to work site in 103 degree Texas weather feeling like an idiot, or a complete fraud, or both. But with plans in hand I slid out of the truck and went looking for John Hughes, the frame guy. For those not in the know, the framer frames the house. Easy so far.

John had his head stuck in the back of a truck trying to get a balky compressor to compress. He was sweating and so was I. One of his guys saw me, nudged John and said something. Probably "Hey, the idiot that thinks he can build his own house is here."

Suddenly I felt like the Roaming Gnome. "Would you chaps feel like framing a little cottage for the missus and me. You would? Oh, goody." Actually I mumbled my way through an introduction which wasn't necessary since I had done that over the phone earlier. John was eyeing the plans I had rolled up in my hand. Yep, just like in the Chevy commercials--unrolled the plans and put them on the hood where they promptly blew off. Grabbed some tools to hold them down and John looked. And looked. And looked. And I tried to keep my mouth shut but the Roaming Gnome busted out again. "It's a frightfully simple plan, old chap. Nothing to it." John kept looking.

Looked at the front outside elevation, then the back outside elevation, then the first floor floor plan then the second floor floor plan. Finally he said, "What's the pitch?" I wasn't sure what I had to pitch when I realized he meant the roof pitch. "8 in 12, I think." "No, he said, looks lie 12 in 12. Pretty steep." I was pretty proud of myself for just remembering what pitch meant--8 in 12 means that the if you walk off 12 feet, the roof would be 8 feet over your head at that point. A 12 in 12 means walk 12 feet, the roof would be 12 feet over your head. Conversely a 6 in 12 means a less steep roof and so on.

"What about trusses?" I don't know, what about them? Seems there is a large space for the living room and the dining room. John likes plywood trusses, not web trusses. He explains the difference and the cost can't be that much more so fine with me.

"You want the house wrapped?" he asked. "Wrapped?" I almost said when I realized he meant weatherproofed with the white stuff that is 'wrapped' around the house. I could tell he didn't think much of the stuff but I thought and muttered, "Lots of people doing it." "We do it better, paper don't keep out nothing." Seems he foams the plywood with insulation and I had to agree that foam seemed more substantial than 'paper.' He also uses reflective barriers on the roof plywood so thought he was pretty much up on the energy saving side of the business.

That's about it. He looks around and rubs his chin, takes off his baseball cap, wipes his brow and proclaims, " I get about $4 a square." I almost said "Square what?" but figured it out. So we did the numbers. Total slab space is 3,918 square feet so that times $4 is $15,672. Good, bad, I don't know but I have a number. And that is progress.

The book says get three estimates and I have calls into other guys. But so far John is ahead on points.

The moral of the story. I believe we, we being over educated office folk, all have deep seated fears of guys that build things. Because we can't, or think we can't, do it. Plus we might get screwed and we don't know what we are doing. I always have to force myself to look at it the other way around--hey, he's the guy that has to make a living doing this stuff. I'm a paying customer. I should get service.

Make's sense but we don't think that way. Well, I have to if I'm going to get this house for what I want to get it for. So forge ahead. And as usual the aniticipation far exceeded the actual event--John seems like a pretty nice guy.

The Cincinnati Kid Redux

2010-03-03T07:34:49-08:00

More info from Carl--I will jump in where I feel like it.

Bill,

Thanks for the really good feedback in your Cincinnati Kid article ( http://askunclebill.typepad.com/my_weblog/2006/08/bill_congratula.html). I appreciate the time you spent on it, and the unbiased advice. And I think that I owe you some additional input in response to your article. (You also indicated that you might want to weigh in on the pros and cons, so I thought I might get started by adding my own pros and cons).

So, let me take your comments one by one, as well as add some background.

"Second reason--money tends to slide around and accommodate change"

I agree. Currently – we (long-term girlfriend and myself), are very good about sticking to our budgets. We don't eat out or shop nearly as much as we could, and the money saved here goes toward investments, and the "long-weekend" vacations that we take (taking long-weekends keeps me from having to take vacation days at work). Now, vacations are a great way to burn though money; but that being said, all of our vacations have the dual purpose of also being in places that we're considering living after we get married (Chicago, San Francisco, Seattle, etc.). Since we're currently able to take the trips, I want to get a feel for different areas, and long-weekends are a nice (albeit expensive) way to do it.

Don't worry about the expenses involved with looking around at places to live. These are start-up costs and well worth the investment. They will go away once you move.

"Carl needs to get where he can become a manager, not a guy. That is what Carl is talking about, I think. If he is not, he should be."

So now I'm going to take the other side here, and instead of talking about the pros, let me address the cons… Being a "career manager" makes me nervous. It's not the responsibility, or having a new focus either. In fact, your response here was a bit of a surprise, so let me explain... The other career advice that I've solicited from people who are either late in their careers, or retired… and all of which I consider to be successful both in monetary terms, and in career terms, have said something different. When asked about their careers, and what they might have done differently they've all said: "Stay technical for as long as you can; find a way to get paid a premium for your trade, and only move into a management role when you've reached a certain financial state and can afford to risk losing your technical skills".

Ah, ha. Now we are getting to the crux of the matter. Cruxs (cruxi ?) usually revolve around that old issue--what do I want to be when I grow up? Also, Carl brings up a really important issue--do I want to be management or do I want to be labor?

The key phrase here is the advice Carl is getting from other sources--"Stay technical for a s long as you can; find a way to get paid a premium for your trade..." Let's take that one first. I look at that as a lone gun for hire. I don't want that for me. I always wanted to be part of a team, actually leader of a team, that was committed to making an enterprise work in the long run. Couple this with the fact that I had absolutely no technical skills of any kind and I really had no choice. I was good around a balance sheet or foreign exchange but I didn't know a mainframe from a bread machine.

I also figured out that I wanted to set, or at least help set, the rules. I don't like being dictated to and I figured out that managers set the rules.

Managers also set compensation. They will pay x plus benefits for techies but no more. They will pay car allowances, stock options, bonuses, supplementary pension plans, retirement health care, travel, and any other thing they can get past the compensation committee for themselves.

Plus I always want to do different stuff. As a manager you do different stuff from hiring and firing to travelling around all over the place doing...different stuff.

Finally, if you are going to going to work every day, you might as well run the place.

So the reasoning here is that with technical skills (being an IT guy), I can get a job almost anywhere. Say the company I work for goes bust; I get laid off, etc… I can go down the street, or half-way around the world, and find another job in my field. I know middle-managers, in their early 40's with families and real responsibilities that've been laid off and out of work… I don't want to be in that situation. I also realize that I can't remain an IT guy forever; but might not 4-years out of college be too early to make the transition?

Guess what, I just met a 40 year old IT guy yesterday that was out of work. Maybe he wasn't any good but I don't think so. I view technology as a commodity. Look at prices of the stuff. This guy was at Sabre and it was "I need 10 tech guys tomorrow." When the project was over, those 10 techies were on the street. Sounds like day laborers.

Everyone is in danger, all the time, of being out of work. That is why I made it a practice to have the best job I could, paying management wages with all the bennies and then saving like crazy so I could say Screw You when the time came. That is the secret to success.

I'm not sure there is a need for a 'transition.' I think the goal is to think vertically, rather than horizontally. (Is that spelled right?) Well, you get the picture. If you think flat you say what job can I jump to at the same level and survive. If you think vertically, you are saying what can I do now that will help me up the ladder.

Which leads to Do You Want To Go Up The Ladder. The ladder has taken a lot of knocks, believe me, I grew up in the sixties. The strange thing is the higher up the ladder I got, the more interesting the people. Maybe not always nicer but usually and smarter as well. Plus the pay was better.

The other side of the coin is, as Groucho Marx put it, "I wouldn't join any club that would have me as a member." It's your decision.

So, moving on to your comments about the options…

2) Start a business where I'm at, serving a market that I anticipate

being successful in.

Carl is a go-getter. That is good and I feel he will be successful at whatever he does. But, and there is always a but, he may learn a lot from a stint at a big company. These people aren't stupid--you have to be smart to succeed. You can learn a lot in a big company if you pay attention.

I think that working for a big company would give me a different, and valuable perspective. But in my mind, I keep going back to a quote I remember… "Only those who dare to fail greatly can ever achieve greatly." (Robert F. Kennedy). And in thinking about the profiles of other successful people… Richard Branson - started with writing magazine in his parent's basement and built Virgin. Bill Gates, we all know his story… right now, I'm young with few responsibilities, I'm more capable of taking risk now then I might ever be.

So… if I go to work for a big company, I'll probably learn some things that will give me a new perspective on starting a business. But, I might have too many commitments by that point (family, mortgage, etc.) to justify the risk Or, I start a business now, put down really deep roots, and possibly get "stuck" in a niche that might disappear in time.

This is the issue. But first some words on greatness. Bobby Kennedy had a way with words (not as good as his older brother but not bad) and he also had a lot of money so he could "fail greatly." Also, don't think Bill Gates was eating dog food. I hate to go up against Bobby but my strategy was always "Bet but don't bet the farm. Don't take so much risk that you can never recover. Take calculated risks."

The comment on big companies was as a place to learn, not necessarily sign on for a life term. Also, they might pay for an MBA. Or you may figure out that the people running the thing are so stupid that you could do it better and make a fortune. I think that is what Bill Gates did with IBM. Not sure he worked there but he sure took advantage of them.

3) Go back and get an MBA (possibly part-time while I work) and use

the MBA to transition into a new role.

Alas, a business reality. If you really want to be a manager in a big company, you have to get an MBA. Sorry. But Carl already knows this or he wouldn't mention the part time thing. Go for it, Carl. Find a company that will pay your way, grit your teeth and slog on.

My currently employer will probably pay part of my way – they've hinted at it during past reviews – but it's not certain. In that case, I'll have to do it part time though (which some people think is a bad idea – though I can't seem to figure out why). The previously mentioned advice that I've gotten from successful late-career people is NOT to get the MBA. They don't think it's valuable… though they also question the value of moving into management until later in my career.

While I haven't made a final decision yet, your advice has been on my mind over the past few days. Since it wasn't exactly what I expected, it has really challenged me to start re-thinking the options. If you are interested in weighing in on the pros and cons of the three options (1. Big company, 2. Start a business, 3. Get an MBA) that would be great! I'd be especially interested in your take on full-time MBA, vs. part-time MBA. But in any case, I do appreciate your existing feedback.

As far as the MBA goes, I was stating the reality. Big companies give the best jobs to people with MBA's. Sorry, not my rules, their rules. If you want to get to be a brand manager at Pepsico, you better have a MBA. Or Colgate. Or P&G. Or Coke. Again, not my rules.

As far as successful people without MBA's...yeah, there are tons of them. Thomas Edison didn't finish high school and look at him. Again, the reality is that big companies require MBAs for the best jobs. If you want to get on the train, you have to get your ticket punched. Just depends on which train you want to get on.

As far as part time vs. full time, this has generated a bit of mail that I will go into later. For now, I have no problem with part time given the school is worth it. When I was in Chicago a fair number of my co-workers went to Northwestern or UC. And the company paid for it, all of it. The attendees paid for it too as they dragged themselves to work each day.

Full time or part time doesn't matter to me. Again, I'm just saying that an MBA is a hoop that traditional companies make you jump through.

Enough about MBA's.

And back to Yogi--When you come to fork in the road, take it. What Yogi was really saying is Do Something. I don't worry about Carl. He will and is. He's thinking about it, he's looking at his options, he's travelling and seeing what is out there. He's also talking it over with his girl friend. He will make the Decision. Right or wrong? Who knows? Who cares?

The people I worry about are the ones I view as paralysed. They have too many options or too few or no chances or too many or they are victims or they don't know what to do or don't know how to do it. So they do nothing. Nothing leads to nothing. Doing something is a risk. A greater risk is doing nothing. Enough preaching.

One final note. I loved The Devil Wears Prada. Actually, I hated it at the beginning because I remembered I had a boss that made Meryl Streep look like Mother Theresa. But I loved it when the newbie went to the gay guy and said, basically, make me one of them. She committed. A lot of people view this as getting in bed with the enemy. I viewed it as a movie that finally had a bit of reality to it. And she learned what she really want to do. To be successful, to find out what you really want to do in the long run, you have to commit.

The Cincinnati Kid Gets Some Career Advice

2010-03-02T08:32:26-08:00

Carl from Cincinnati writes--

Bill,

Congratulations on finishing your book! I enjoy reading following
your blog, and put into into practice much of what you post!

In catching up on some reading, in your post titled "We're Back"
(http://askunclebill.typepad.com/my_weblog/2006/07/were_back.html) -
you made two points that I actually had a bit of a hard time trying to
figure out if you serious or not about.

Concerning San Francisco - "nobody can afford to live there", and
Chicago - "you can't afford that place either"... I agree, you're
right, both places are very expensive. But both are big cities and my
impression is that they have career opportunities that might not be as
available in other markets.

Okay, so why am I bothering to ask you this?

Career advice.

Right now I work in the Cincinnati, Ohio area in IT (Senior Systems
Admin at a company with 50 employees). I've lived here my entire life
- not out of any particular interest for the area, rather it's worked
from a career standpoint so far. For the area, I'm doing okay... $65k
4-years out of college. Two promotions since starting. Plus an
additional $10k in side-work. I'm debt free, but still renting. For
the market, and in a primarily technical role, income tends to max out
in the low $70s. So I've reached a point where I have to (and
continually do) re-evaluate my career. In considering my next career
move, I've interviewed in the San Francisco area (actually, Monterey),
and talked to contacts in Chicago. Both areas are great, and I'd
enjoy doing what I do now, in either location. That being said, the
real cost of living in both locations seems to be more substantial
then the anticipated pay increase would compensate for.

From a career standpoint, I need to do one of three things to advance.

1) Same job in a larger market, at a company with room for continued
advancement (larger company).
2) Start a business where I'm at, serving a market that I anticipate
being successful in.
3) Go back and get an MBA (possibly part-time while I work) and use
the MBA to transition into a new role.

[Or, perhaps just quit. Travel for 6-months and decide what I really
want to do with the rest of my life (probably far more romantic
sounding than in actual practice)].

Do you really consider Chicago and San Francisco so cost prohibitive
as to be unaffordable for a young person? Salary.com suggests the
cost of living increase would be manageable - but personal experience
hints at otherwise. I want to make sure I keep progressing from both
financial, and career standpoints.

Looking back it's possible - indeed likely - that I over analyzed your
post - since your main point had nothing to do with Chicago or San
Francisco. It really just struck me because those are two places I'm
actively interested in.

In any case, thanks for the blog. Any input would be appreciated.

Carl

Great comments which we will take one by one. First thanks for liking the site and the compliments. I'm a sucker for compliments and will go the extra mile for anyone that says anything nice about what I do. So thanks again, Carl.

First, the comments about San Francisco and Chicago were throwaway lines. They can't be serious or no one would live there. Believe me, there are a lot of people living in both places so they must afford it somehow.

The truth is I'm just in a different mode than Carl and most of you. One, I'm older and the career thing kind of took care of it's self. Not that it wasn't a lot of work at the time but now I can chose not to live in Chicago or San Francisco. I do live in a major metro area but WAY on the outskirts where I have a nice house, pool, stable, pool house, on three acres. (As a side note, I built the stable, pool house and pool so it ain't like I had the help do it.) And the whole thing is worth...less than a two bedroom, one bath house in San Jose. Or Winnetka. And what am I doing? Building a new, bigger house that won't be worth as much as a three bedroom house in San Jose.

That said, Would I advise Carl to move? In a heartbeat. To either place. Or maybe New York. Or London. Or Toronto. Or Houston. I'm a big believer in moving and trying new things. Scares you to death but that's what makes life interesting. Trying to write a book was scary and rejection, boy do I know about that, is pretty demoralizing but I just got so mad I plunged ahead. Same with moving. Why do it? Because you need to learn new things and grow. Maybe you will be back in Ohio in six months but at least you tried it.

Second reason--money tends to slide around and accomodate change. Huh? Say you move to Chicago and live in an apartment on the north side. Leave the car with the folks and take the El. I bet Carl spends a lot of money on entertainment and meals in Cincinnati. He can afford to--he makes a lot for the area. In San Francisco, that goes out the window. Hiking, biking and eating hot dogs with friends (ok, organic hot dogs) will take the place of going out all the time. Money slides around to fit the budget. There is one risk here--lifestyles may not change if the individual starts maxing out the credit card. That is a no-no. Carl sounds like a pretty steady character so doubt this will happen.

Now for career. Carl is a smart guy, he figured out the business model. He's an IT guy. Everybody starting out is a guy, even women. You are a finance guy, a marketing guy, an accounting guy, or an IT guy. You may even get mixed up--I was a finance guy and hated being called an accounting guy by an ignorant marketing guy. But as people move up the ladder, they tend to become managers, not guys. Carl needs to get where he can become a manager, not a guy. That is what Carl is talking about, I think. If he is not, he should be.

Let's look at the facts. Four years out of school, two promotions (congratulations), but with a small firm. Plus Carl is smart enough to figure out that salaries flatten out in Cincinnati. He is also smart enough to figure out that a job in SF or Chicago will pay more but not enough probably to offset the cost of living.

Uncle Bill's advice--look at the job content and see if it will catapult you into the future. IT in a small firm means a steady paycheck but isn't the route to the chairman's office. Alway's look a step ahead. My first real job was a division job. Since I was in corporate headquarters I quickly figured out that corporate was the power base and wormed my way in. Stayed nine years. Then said the hell with Chicago (Chicago is a great town but too big for me--even at three years old I knew my son was not going to have an easy time at New Trier High School. Plus I was tired of the cold.)

Stayed eleven years at the new job down here and then, with the kids in high school, took a flyer. Why? Because the job had a VP title. Carl should look to Chicago and San Francisco as job opportunities that will get him on the track to manager. If they are laterals for a bit more money, forget them.

Let's look specifically at Carl's three options.

1) Same job in a larger market, at a company with room for continued
advancement (larger company).

Not bad. Having Intel or Apple or Sun (are they still around?) on your resume will look better than Cincinnati Widget. Plus, by definition, big companies offer more opportunities. Look for a company that promotes from within. Believe me, this is getting harder but companies still exisit that do it. At this stage in Carl's career, I would look for a few years in a multinational looking for opportunities on the inside.

2) Start a business where I'm at, serving a market that I anticipate
being successful in.

Carl is a go-getter. That is good and I feel he will be successful at whatever he does. But, and there is always a but, he may learn a lot from a stint at a big company. These people aren't stupid--you have to be smart to succeed. You can learn a lot in a big company if you pay attention.

3) Go back and get an MBA (possibly part-time while I work) and use
the MBA to transition into a new role.

Alas, a business reality. If you really want to be a manager in a big company, you have to get an MBA. Sorry. But Carl already knows this or he wouldn't mention the part time thing. Go for it, Carl. Find a company that will pay your way, grit your teeth and slog on.

Or, perhaps just quit. Travel for 6-months and decide what I really
want to do with the rest of my life (probably far more romantic
sounding than in actual practice).

Hey, Carl, when you find out what you want to do with the rest of your life, let me know. I need some help in this area as well. Don't think Carl will go this route. Too ambitious.

Feel like I kind of let Carl down here. No answer like DO THIS. Well, one thing, don't reject any place because of living costs--but do calculate the potential payback. If the payback is not there in career advancement, don't do it. You will never know for sure going in but, again, that is what makes life interesting. Plus, mistakes, especially career mistakes, can be reversed. You learn from mistakes.

So, Carl, take Yogi Berra's advice. When you come to a fork in the road, take it. But do an analysis first. Pros and cons, money, lifestyle, potential, family, adventure, surviving. Then make your decision and jump off the cliff.

Enough lecturing. Let me know what you decide. Also would love to weigh in on the pros and cons. But remember, this advice is worth what is cost you.

MBA--The Dismal Science

2010-03-01T08:25:21-08:00

Actually economics is the dismal science but hey, I needed a title. I don't really like to talk about MBAs because the topic is pretty boring, to me anyway. But I know it is on the minds of a lot of young people so here we go. Got a few comments/questions regarding MBAs from the Cincinnati Kid post so let's look at one.

I wonder what one stands to gain from an mba....if its is all I am hoping it will be.Doing an mba has been on my todo list...i hope to get to it within 1 yr. Would you be kind enough to give me your opinion about part-time vs full time mba. Though i can't pay for the full time, I am wondering if it will be worth taking a loan out for. thanks,C

C has basically boiled the issue down into three issues. What is it good for? Part time or full time? How much does it cost?

What is it good for or I wonder what one stands to gain from an MBA? Great question. First let's subdivide the world. Accounting, advertising, retial, engineering, some banks, software, computer companies genereally do not put a premium on MBAs. They may want you to get one later but for entrance into their world the door is open to mere undergraduates. Consumer goods companies like pharmaceuticals (Merck, J&J), companies like Coke, Pepsico, P&G, they do. Companies like GM, Ford, Daimler take engineers but their finance guys probably have MBAs. (This analysis is my own--it may be wrong. I don't care. It is what I have observed.) So first find out if your industry puts a premium on an MBA.

My case is illustrative and may be a bit dusty but I think it still holds true. I was a history major at the University of Illinois. Graduated with absolutely no idea of what to do. Vague notions of law school and thank God I didn't get in. My sister did make it (Stanford, no less), has her own law firm, loves left wing Democrat clients and staying up all night getting ready to go to court over some school issue thing. Bores me to tears but she loves it so I'm proud of her. But not for me. So got tossed out of the house, moved to Denver (everybody did in those days), got a job selling door to door and then driving trucks in the worst winter in Denver history (global freezing) and said, there's got to be a better way. MBA school started to look pretty good. At least it was indoors.

Took the test, did ok, applied to Illinois because it was cheap and had a good reputation for accountants. Not that I wanted to be an accountant but figured some of that would rub off. Had to take summer school because calculus was not a requirement in Liberal Arts. (Can anyone define calculus?) Started the fall semester and the cold fist of reality hit me hard. Because here is a fact. The MBA came into being a long time ago as a noble idea--business training for the non-business major. The idea was to take English majors and history majors and engineers and such that had somehow wormed their way into business and then have them get an MBA to round out their education. Hey, that's me, I thought. Until I showed up for Accounting 301 or whatever it was. I took the first test and got the second lowest grade in the class. I beat out a Turkish woman who couldn't speak English. Here is the truth I soon found out--90% of the people in a MBA program were business majors who already had this stuff. Why are these guys here? I thought this was business for Liberal Arts dummies? But anyway, sucked it up and went forward.

So why were they there? Because the best job opportunities go to people with MBA's. As noted in earlier posts, Human Resources divides up jobs. The best ones in traditional industries have an MBA required. You don't get the job unless you got the MBA.

So the answer to C's first question of what do I have to gain from an MBA is You Get Your Foot In The Door of some of the biggest companies in America.

The only problem is that the biggest companies get their MBA's from the 'best' schools. Back to the case in point-me. I was near graduation in the biggest recession since 1929 and desperate for anything. Along comes Quaker Oats. Quaker Oats doesn't exist anymore. Well it does but as part of Pepsico. (Hey, how about that lady CEO at Pepsico? A woman no less and from India. There goes the glass ceiling. And reverse outsourcing.) But Quaker hired from Stanford, Wharton, Harvard. Not Illinois. Except me. And one friend who became VP and Treasurer of the Tribune Company. Not bad.

So let's summarize. First, if you want an entry level job at a big company do this. Graduate from undergraduate in anything, get a few years job experience, look at the schools you want to get in, see if you can and go.

We will discuss what to do about part time vs full time tomorrow.

But lastly the real reason for getting an MBA. If you were not a business major undergraduate, you will learn something. You will learn a lot. You will learn how a business is run. You won't learn everything but you will learn that because a lot, not all, of what you learn in business school is used in a real business.

More tomorrow.

College Rankings--What A Mess

2010-02-26T08:38:34-08:00

As mentioned last week US News and World Report has come out with their listings. I know they are wrong. They have to be because my alma mater, the University of Illinois, came out ahead (41) of the University of Texas (47). I've seen both and I'll take Austin anytime, anyplace, anywhere. And doesn't a number 1 football team count for anything?

I went to the web site of the magazine. A side note here--there are three news magazines in the US and US News and World Report is the smallest so I place them in bottom tier of their group. Dead last in my ranking system.

But back to the web site. After a cursory look I couldn't find any information on how they determine their ranking. Mentioned this to a friend and somehow he did but I didn't so this is from memory.

Endowments--seems a lot of weight is given to alumni giving. This is naturally going to rank the private schools higher since most alumni of public schools give nothing, I mean nothing, to their schools. I mean, what are taxpayers for? I went to two public universities--the University of Illinois and the University of Vienna. Haven't heard a word from them in 30 years. Went to Stanford and Northwestern for a bunch of bad seminars and my mailbox is clogged with junk from them. If alumni giving is a criteria, this ranking is a joke.

Class size--who cares? At large universities, the professor gives a lecture to 200 students and then you meet with teaching assistants to discuss the lecture. This probably drives the 'class size' criteria right off the charts. But the classes I remember were the large lecture halls with the best professors. So what if you're sitting with 200 other people? These guys were good. I'd rather get first hand information from a great professor surrounded by 200 people than some mediocre professor in a class of 25.

Location--Univerisity of Illinois or University of Texas. Location wise and night life wise, UT wins. Hook 'em. I assume some of these editors visited the sites but maybe not.

Cost--obviously a factor to parents but apparently not to editors since private schools OCCUPIED the top 20 spots. Not 50% or 80% but 100%. How stupid is that?

Financial Aid--we've been through this. If you want to graduate with $150,000 in student debt to attend a top 20 school, go ahead. Not me.

Admissions--public schools are under different pressures than private schools. In Texas the courts knocked down breaks for minorities so the legislature came up with letting the top 10% graduates of ANY high school automatic acceptance to any state school. That has to drag down SAT scores. This is something Stanford and any private school doesn't have to worry about.

Freshman Retention Rate--who cares? Just because you stuck around that means you had a great experience? Illinois, when I went, would always over admit because they knew that X% were going to quit or flunk out. In fact, they tried to flunk you out early because they knew you were going to flunk out eventually if you were leaning that way. Freshman rhetoric was designed to make you quit.

Student body--and that academic buzzword, diversity. Hey, the University of Illinois was founded to serve the people of Illinois just as Texas is for Texans, Iowa for Iowans and so on. Stanford gets people from all over so their 'diversity' rating by definition is going to be higher which I guess is good in the ranking biz.

Enough. Because here is the real reason these rankings don't mean anything. An example--Rice University is ranked number 20 in the top 20 of the US News and World Report Rankings. The Times Higher Education Supplement (Times as in the London Times, the most prestigious newpaper in the universe) ranked Rice at NUMBER 150. Did these guys even go to the same place? How does one publication rank a place Number 20 and another publication Number 150? I don't know and I don't care because these rankings don't mean a thing.

What matters is what you get out of your college experience--good or bad.

The absolute single best bit of advice I ever got, I got from the University of Illinois. Freshman week and I went to see my counselor. Had my course catalog, three ring binder, ready to go over my courses with my wise sage. Walked in and they guy was yelling into the phone with a picture of Chairman Mao (this was the Sixties) behind his desk. Took one look at me with a what the hell do want look and hung up. I started to say something, he held up his hand to stop me and said " I got to go. You figure it out. You're on your own." And with that he was gone, probably to blow up some building somewhere since he was the head of the local SDS chapter. For those not in the know, SDS was the Weathermen who were the biggest bunch of left wing bad guys in sixties. Don't know what happened to him, probably in jail or dead. But I took his advice--from then on I was on my own and I figured it out.

Don't think that was a criteria for US News and World Report but I owe Illinois for that one.

My Kind of Survey and Investment Advice

2010-02-24T07:06:58-08:00

Told you so. Told you University of Texas should be ranked higher and it is---NUMBER ONE party school.

What is interesting is the Bottom Ten party schools. And they are:

1. Brigham Young

2. Wheaton College

3. College of the Ozarks

4. Grove City College

5. Naval Academy

6. Coast Guard Academy

7. Air Force Academy

8. Queens College

9. Wellesley College

10. Calvin College

Not sure about Brigham Young. My only experience with the school was following Jim McMahon, the one eyed ex-Chicago Bears quarterback who took them to their lone Super Bowl in 1985. Jim showed up at training camp in a limo, in a tuxedo, drinking a beer. That guy had to know where the parties were.

Wellesley at number 9? Didn't Hillary go there? My sister was going to but our dad put the stopper to that one--too much money. Probably saved my sister from four dreadful years.

Ok, enough about school. Back to finance and making money.

Take a look at this http://finance.yahoo.com/columnist/article/yourlife/8168. The title is "Do I Hear Cannons?" The theory is not to buy stocks when everybody else is but buy them when no one is buying them. In my category on investments, my quote is similar--Buy when there is blood in the streets. Which was actually said by a Rothschild but let's not quibble.

This article is by Ben Stein--late of "Ferris Bueller's Day Off" and the great TV show "Win Ben Stein's Money."

Read the article but the theory is summed up here.

Buy at the Bottom

"But," I thought as I sat in my little seat, my head reeling, "this makes no sense at all."

In fact, their advice was precisely opposite to the truth: The exact time to buy is when stocks are low -- when there's fear in the market and sellers are flocking to sell.

That's when you get the same stock -- or the same basket of stocks if, like me, you buy and/or hold ETFs or mutual funds and variable annuities -- with the same long-term prospects at a bargain price. When everyone else hates the XYZ Widget Company because of rockets flying over Israel and Lebanon, it's still the same company, but you get it at a discount.

Eventually, the fear will go out of the market. Economic conditions will right themselves. There will be a ceasefire in the Middle East (alas, probably only a temporary one) and stocks will rally. It may take awhile, but it always happens. And then the buying opportunity is nowhere near as good.

Another way of summing it up is the concept of sales. When there is a sale at Best Buy or Macys, people flock there. They don't flock to the stock market when the bottom falls out. They should but they don't. Well, not all don't. The smart ones jump in and buy.

In the 2001 collapse, a collapse that scared the heck out of me, I was talking to a financial planner who had just got off the phone with a client who ordered him to sell his stocks--all of them. Why did the client want to sell? Because the stocks were going to zero. Yes, zero. The planner moaned that the client was basically saying the US economy, all of it, was worth less than the stapler on his desk.

Of course, the client was wrong and lost his shirt. Bet that made for some interesting conversation around the dinner table.

You don't have to worry about this if you are investing on a regular basis. But read the article anyway to make yourself feel better.

In the next couple of days we will look at a few more "bad things" that may actually be good for you, you and your wallet.

When Bad News Is Good News--KInd of

2010-02-23T09:01:36-08:00

Being a contrarian has at least one beneficial side effect--you tend to try and find good news in bad news. As a French philosopher (whose name escapes me) said, "To those that feel, life is a tragedy. To those that think, life is a comedy." Oh, those crazy French. A bit harsh but there is some truth in it.

So on to oil prices and why high prices are good, or at least not a tragedy.

First, prices aren't all that high historically speaking. Inflation adjusted, the high was in 1979 which was a pretty miserable year all the way around. If you can guess who was president then you win a prize.

Secondly, due to conservation and other things our energy use as a percentage of GDP is now 2.5% versus 4.5% in 1979. That is a huge drop. The 'other thing' is primarily a shift from a manufacturing economy to a service economy. Technology and financial services are not energy intensive like manufacturing. So outsourcing and a shift away from manufacturing is actually a good thing. A good thing if you consider energy but not necessarily a good thing if you are an autoworker. See yesterday's post for that discussion. But the fact is that our energy use is not a big a deal as it was 30 years ago.

So why are oil prices high? Because of demand around the world. Those manufacturing jobs we switched away from are now in China and India and they are using oil to make our products. Also, there is a fear factor in prices due to terrorism and the fact that God, as one old oil man told me once, put oil in dangerous places. Hugo Chavez comes to mind.

Oil prices are also high because there is not a lot of supply out there. There will be but this takes time. Exploration takes awhile but it is going on. Just look at the horizon here in Texas and there are rigs all over the place. When the price becomes attractive it attracts supply which will eventually have a downward impact on prices. Also, we have a lot of oil offshore and in Alaska but that is a political football which for now I will punt.

So oil prices are good mainly because it means economic growth is getting strong again which means you have a job. It doesn't make you feel real good to fill up your car but imagine trying to fill it up if you have no money because you have no job.

Finally, the real reason that high prices are good. It makes us think of alternatives. I'm not talking about buying a Prius. If you do that you are just showing off. The savings from the gas will never make up the premium paid to buy this billboard from Toyota. Buy a gas Honda or Toyota and enjoy the savings without paying the premium. But back to alternatives.

The best alternative is insulation. Forget green and solar. Go for windows and insulation and your bills go down. Ours did.

Being Rich Can Be A Hassle

2010-02-22T08:59:27-08:00

Saw this article on line. http://biz.yahoo.com/special/luxury083106_article1.html

Here are the highlights, or lowlights, depending on your perspective. Seems a couple of researchers (shouldn't they have something better to do?) researched private jet owners and found they have an average income of $9.2 million and a net worth within bragging rights of $100 million.

They spend $30,000 a year on alcohol which is a lot of beer no matter what anybody says. Essential travel, whatever that is, takes up $98,000 a year. Hotels and restaurants eat up (sorry) $157,000 a year and spas cost over $100,000.

It gets worse. $147,000 on watches, $117,000 on clothes, etc. etc. etc.

How can you spend anything near that on watches and clothes?

One interesting statistic is that the average ultra rich person (how can a ultra rich person be average?) is 57 years old. I better get going.

Enough to want to make you a communist or a socialist or a Democrat. No justice, no peace. Up against the wall.

Well, not really. I could care less about these people. And somebody has to keep those watch and alcohol people in business. I could care less about these people but I am not going to try and stop them or tax them or have them give to charity (most probably do) because social engineering through taxes doesn't work. The prime example is the luxury tax. Can't remember exactly which president came up with this disaster but I am leaning heavily toward Jimmy Carter. Somebody got the bright idea to tax yachts and luxury cars priced above some level. Yep, the yacht people went out of business and the car sales went in the tank.

Do I care about the yacht industry? Not really but a surprising number of people lost their jobs and some south Florida communities really got clobbered.

The real reason I am not going to go too hard on these folks is that they pay the taxes in this country along, of course, with most people with fairly good paying jobs. A statistic I remember from somewhere is that 5% of the population pays 55% of the taxes. That means a lot of people are not paying taxes which means they have no desire for tax reform. I am in favor of tax reform so if everybody paid taxes then they would be mad as well so we would get tax reform but we won't so we are stuck with this insidious systm that no one understands.

OK, here is the real reason I don't care about these people. I don't want that much money. What a hassle. Money will not buy happiness (there's an original thought) but it will get rid of a lot of problems. But too much money brings it own problems so I will be a Goldilocks here and tell you to strive for just enough but not too much.

And the Winner is? North Dakota

2010-02-16T06:58:28-08:00

The California legislature or something like that passed a new emissions law yesterday and it looks like Arnold is going to sign it. I'm all for clean air but, and there is always a but, what is the economic impact of such a move? I don't know. It is always worthwhile though to view what people do since people vote with their feet. They go where they get the best deal. Housing prices in California would say people are dying to get there but they have had a negative migration rate and where are these people going to work if business decides to abandon California? Actually, companies don't abandon places, they usually just don't do continued investment there.

Here's how it works. A company wants to build a plant. The choices are California or, say, Kansas. So the bids go out and Kansas says cheap land, ample energy, 'reasonable' government regulations, tax breaks, a somewhat educated workforce. California says 'screw you. But we have better weather.' Not a real hard choice. The company picks Kansas. But it doesn't happen overnight.

So what is happening? An interesting article in the Wall Street Journal indicates that the current hot spot is...North Dakota. I have some experience with North Dakota. My son's bomber group had two navigator openings--two in Louisiana and one in North Dakota. They had three single nav's--my son, his roommate Tye and another guy. Somebody had to go to North Dakota. So the Air Force did a pragmatic thing--they locked the three guys in a room and said you figure it out. Now my son is from Texas, Tye is from Missouri and the other guy was from Massachusetts (sp?). They said you've been in the cold and you can handle it plus my son and Tye are pretty big guys and the other guy wasn't so...well, you can figure that one out. To my son's credit he later offered to go since he felt bad about putting pressure on the other guy but the other guy said it was ok. I thought that was rather noble but glad he didn't go because you can't get there from here.

But somebody is because here are the states that have had the fastest growth in per capita income-

-North Dakota

-Wyoming

-Montana

-New Mexico

-West Virginia

The losers are-

-California

-New York

-Illinois

-Michigan

The growth in the leading states is the result of energy resources (including renewable like wind power), technology, and financial services. The thing about energy I kind of thought of but not the magnitude. Seems that North Dakota, Montana and that part of Canada have a field capable of pumping out 200-300 billion barrels of crude on top of coal coming out their ears. Wow.

But technology and financial services? Great Plains is there as well as Microsoft's business systems division. According to the National Science Foundation, North Dakota ranks number two in academic R&D dollars per $1,000 of gross state product. Financial services? Citibank and other bank credit card operations.

So how do the companies attract people? Good schools, reasonable housing prices -the median is under $150,000, short commutes, the nation's lowest crime rate, and outdoor recreation, at least in the summertime.

The people have voted--with their feet.

Thinking About Getting An MBA? Part Six

2010-02-15T07:47:43-08:00

Coming down the stretch.

This one sounds a wee bit technical so grab that computer geek and keep him warm.

Modeling
Disciplined thought is often based on analytical models: simplified, quantitative depictions of a complex reality that allow you to focus your attention on a few key issues. Management runs on numbers and models. Whatever your current level of modeling skills, improving those skills is a key to success. Even if you never construct models yourself, as a manager you will be a consumer of them; to be an intelligent consumer, you must know from experience the strengths and weaknesses of quantitative models. The base-level course focuses on models built using spreadsheets and, in particular, concentrates on optimization of spreadsheet models. A more advanced option focuses on the use of discrete event simulation to model phenomena subject to random influences. And if you have very strong modeling skills, two options explore the use of quantitative models in specific contexts. One concerns the use of models and analytics for the control of manufacturing supply chains; the second concerns their use in revenue and yield management, as practiced by, for example, the civilian airline industry.
Any time I see "discipline" I shudder knowing there is math and statistics and perhaps a professor who does not have English as the primary language involved in this type of class. If it turns out to be all math this one could be a bear. Just read the second sentence--"simplified, quantative depictions of a complex reality" and that scares me. I'm all for making things simple but this doesn't sound simple to me. So, all you liberal arts majors out there, watch out for this one.

One note--the course description says "Even if you never construct models yourself, as a manager you will be a consumer of them." Let's get one thing straight right here. Academics like to pump students up by calling them managers. If you get an MBA you will not go into any company as a manager. You will go in as an analyst or assistant where you can't do any real damage right off the bat. You will be doing the 'model' or analysis or whatever grunt work they assign you so don't gloss over the details. Pay attention to detail because that is how you learn the business.

Two to go.

Non-Market Strategy
Markets and the business environment are increasingly interrelated; conversely, the profit-maximizing activities of firms often give rise to issues that involve governments and the public. As a business leader, you will need to participate in complex decision-making involving the legal, political, and social environments of business. This area considers the strategic interactions of firms with important constituents, organizations, and institutions outside of markets. Beyond the base-level course, an extended option of the course uses analytical models to enhance your understanding of political institutions, while a second alternative concentrates on business law.
This could be pretty good. It is highly dependent on the professor. The writer of the course catalog is right--you will deal with government regulations, a lot. I dealt mostly with the tax code trying to figure out what we could or couldn't do. Didn't do much good. The tax code is pretty illogical. The group that deals with the government the most is HR so I always tried to avoid those people.

Finally, near the end.

Operations
This area addresses basic managerial issues arising in the operations of both manufacturing and service industries. You will learn about the problems and issues confronting operations managers and gain language, conceptual models, and analytical techniques that are broadly applicable in confronting such problems. The base-level course gives a broad introduction to operations. If you have some background in the subject, you can elect a course that is focused on business process design. If you have a very strong background, you may choose an alternative that is focused on the latest developments in global manufacturing.

This is an important class that is not important because you can't bring a manufacturing plant into a classroom. So you end up with a lot of arrows beginning with raw materials, then assembly, then packaging, then warehouse. Most executives never even see a plant because they are located in the boonies or overseas. Because I was in international I saw a lot of plants and loved them. It's fun to actually see what you are selling being made. But as far as the class room goes, this one is just to be endured.

Well, that is it. The first year explained. The second year is just electives based on the core courses so no need to go there. Plus the second year is spent looking for a job so not that important. I really can't say if a MBA is worth the money or the time. Actually, I can. It may not be worth it but if you want to get ahead, it helps since corporations value them. If you really want to get ahead, start your own business but that is a whole different subject.

Thinking About Getting An MBA? Part 5

2010-02-12T06:51:21-08:00

These courses are starting to get a bit redundant but I said I would go through the process so I will finish it.

Managerial Accounting
To evaluate business strategies and outcomes, you need to understand the many ways that firms account for, control, manage, and utilize costs. In this area, you’ll learn about alternative costing methods, and how the resulting cost information can be used for decision-making. One of the base-level options emphasizes performance measurement and executive compensation. Another emphasizes strategic cost management and control. If you already understand cost accounting and alternative methods for determining the cost and profitability of different products, and you have career interests in either management consulting or general financial management, an advanced option emphasizes frameworks for “value-based” management.
This is the old fashioned Cost Accounting course with FIFO (First In First Out) vs. LIFO (Last In, First Out.) In accounting this relates to inventory. In Human Resources, it relates to people. But for course purposes, this is one of those got to take it but don't expect it to be a lot of fun courses. The takeaway from the course should be that there sure are a lot of ways to value something and accounting isn't as precise as one would think. Think Enron here.

On to the fun stuff.

Marketing
These courses introduce you to the substantive and procedural aspects of marketing management. You’ll learn about analyzing the needs and wants of potential customers, and creating and delivering goods and services profitably. Beyond the base-level option, one alternative uses learning-by-doing (through simulations), with an emphasis on business-to-business marketing; a more advanced option stresses the use of advanced statistical techniques in the practice of marketing.
Well, it should be fun but this doesn't sound fun. It should be fun because this is where you get to play brand manager for Gatorade rolling out a new drink or somebody at P&G rolling out whatever P&G rolls out. But this course has some pretty heavy math code words--substantive, procedural, advanced statistical techniques. Actually, this is not all bad as major marketing companies usually have new MBA's doing a lot of statistical stuff before they do any fun stuff like commercials. Kind of boot camp for new hires.

The dismal science comes next.

Microeconomics
The discipline of microeconomics is the foundation of much of what you study in business school, as well as being a tool of analysis of specific market and non-market interactions. The base-level course provides you with the essential frameworks and concepts to study market equilibrium, firm and consumer behavior, and competitive interactions through the lens of microeconomics. More advanced options spend less time on the basics and instead apply those basics to specific contexts, such as auctions, price discrimination, and business strategy. A very advanced option, for students with extensive background, teaches you to analyze difficult microeconomic issues empirically.
There are two economics--micro and macro. Micro, as the name implies, means small like in individuals and companies. Macr0 means big as in government or international economics. Micro concentrates on stuff like consumer income and purchasing decisions while macro does GNP kind of stuff. Get ready for a lot of charts showing behavior. A classic would be the impact of gasoline prices on consumer spending. Some people actually like this kind of stuff but most don't so something to be suffered through.

Just a few to go but this is just the first year. But I'm not going through the second year because it is primarily electives based on the first year courses. So we are almost finished with MBA school.

Side note. One does get some interesting e-mail in this business. Go to this guy's site and let me know if you can figure out what is going on. http://us.f522.mail.yahoo.com/ym/ShowLetter?MsgId=9349_3015896_247507_1428_5700_0_7981_15830_3452982249&Idx=0&YY=11170&inc=25&order=down&sort=date&pos=0&view=a&head=b&box=Inbox

Thinking About Getting An MBA? Part 4

2010-02-11T07:22:13-08:00

I don't know if these posts are doing any good (maybe people don't care what the courses are really about) but I'm going to finish what I started. What I didn't figure on was how many courses Stanford made you take which tells me these are short condensed courses. Oh, well, my mistake.

Financial Accounting
Business leaders must read, understand, and use corporate financial statements. The base-level options in this area orient you to using financial accounting data (rather than preparing such data) and emphasize the reconstruction and interpretation of economic events from published accounting reports. If you have the requisite background, advanced options allow you to pursue the nuances of global financial reporting.

A bit of a snob wrote this one..."the base level options in this area orient you to using financial accounting data (rather than preparing such data)" Us MBA's don't want to get our hands dirty. This is probably not a bad course and you should pay attention because figuring out financial statments is hard work and don't expect the guys in the contollers department to help you out. And that is because they don't know. These people are under tremoundous time pressure and they use GAAP (Generally Accepted Accounting Principles) and if you question their numbers they will throw that in your face. Think of a major company--operations in 50 countries, 10 separate divisions, 50,000 employees and everything roles up into one balance sheet and income statement. Trying to figure out the business is near impossible. But if you dig into the numbers and learn the operations you will figure out how the company operates and you will become valuable and you will make lots of money. But you will, and you have to, get your hands dirty.

Now on to the course for "people who want to work with people"

Human Resources (HR)
We will provide you with a framework for understanding and thinking strategically about employment relations and the management of human resources in organizations. This area draws on insights from the social sciences to explore how employment relations are influenced by cultural, economic, legal, psychological, and social forces. The base-level option emphasizes four fundamental topics: (1) the selection of employees; (2) the development of their skills (human capital); (3) the use of pay to motivate workers, and other types of incentives; and (4) the organization of the workforce into teams, hierarchies, and so forth. Options allow you to specialize in HR practices for high-skill “knowledge” workers or how HR practices vary across the globe.

Sounds like fun. And it is, in the classroom. Readers of this blog will soon get the impression that I don't like HR people. That is not the case. I have been frustrated with HR people but mostly I feel sorry for them. Because they go into the job wanting to make life better for employees but they end up saying no. No to raises, health benefits, promotions. Then couple this with government regulations that never end and I'm surprised there isn't a HR manager jumping off the roof every morning. Have fun with the class but it ain't real life.

From touchy feelly to number crunching.

Information Technology (IT)
Knowledge of technology – computing, networks, software applications, etc. – is a prerequisite for a successful manager. In this area, you will learn the implications of technology for managers and organizations. A meaningful course that focuses on particular technologies is difficult because rapid changes in any technology quickly render today's lessons obsolete. Therefore, you will learn fundamentals and trends, rather than a snapshot of the current status of different technologies. The base-level course in IT offers you a broad survey of technology, while more specialized and advanced options include courses on the uses of IT in manufacturing supply chains, electronic exchanges, and electronic commerce.

It's time to bring that Indonesia guy out of the closet again. Watch out for this--"therefore you will learn fundamentals" If you get a really mean old crotchety professor that could mean writing code. My first experience with IT was the professor saying that behind all the bells and whistles, a computer system is really only a big adding machine. That's when I went looking for the man from Indonesia and so should you.

Thinking About Getting A MBA? Part Three

2010-02-10T06:38:20-08:00

In Parts 1 and 2 we went through part of the class catalog to tell you what all this stuff really means, what you will be studying. We trudge on.

Strategic Leadership
This course examines fundamental issues of general management and leadership within an organization. You will learn about setting an organization’s strategic direction, aligning structure to implement strategy, and leading individuals within the firm. You will master concepts, frameworks, and tools to assess an industry and a firm’s competitive environment, and to craft alternatives. You will study the interplay among formal structure, informal networks, and culture in shaping organizational performance. By integrating leadership theory, the lessons of practical application, and your own experience, you will develop skills and capabilities essential to leading others. And you’ll gain a better understanding of your own leadership preferences, strengths, and weaknesses.

Not sure about this one. Long on promises but a bit short on details. Or as they say in Texas; all hat, no cattle. So will take it one sentence at a time--"examines fundamental issues of general management and leadership within an organization." You may end up examing them but from this discussion you don't know what they are. "study interplay among formal structure, informal networks, and culture"--this is code for networking and gossip. "By integrating leadership theory, the lessons of practical application, and your own experience, you will develop skills and capabilities essential to leading others"--quite a mouthful but not exactly sure leadership is teachable. Usually is learned on the job and in a crisis. Classroom exercises are rarely crisis situations unless you didn't read the assignment.

Here's my read on this course. It could be life changing but I doubt it.

Ok, all you ex-liberal arts majors, watch out for this one.

Data Analysis and Decision Making
General managers require a sophisticated understanding of what you can (and cannot) infer from data, and how to use those inferences to make good decisions. Courses on Data Analysis and Decision Making provide you with analytical techniques for making smart decisions. If you have limited prior background, the base-level course covers topics such as probability theory and decision analysis (including decision trees, decision criteria, the value of information, and simulation techniques) and statistical methods for interpreting and analyzing data (including sampling concepts, regression analysis, and hypothesis testing). If you have more extensive background and/or quantitative exposure, you can select courses that cover topics such as advanced regression, conjoint analysis, and other statistical programs. These choices enable you to leverage your background by applying statistical techniques to specific applied topics.

My blood runs cold. I didn't really like algebra or calculus in high school, college or grad school. I just didn't see the relevance to problem solving. I'm sure I have used all of these math subjects in real life without even knowing it. If you're a liberal arts person you probably have the same attitude. So here is how you get around this. Go back to team and form a team. Which is what I did. Sitting there in statistics or calculus or whatever class I knew I hated, I looked around for inspiration. And found it. Somebody had to like that class and there he was--a guy from Indonesia with definite English issues. But he was happy in this class because numbers are numbers no matter what the language. He was in my marketing class as well and that was a different story. He was petrified. The prospect of making a presentation is bad enough but in English was terrifying to this guy. So I cornered him and cut a deal--he would do the math and I would do the marketing. Which is what business is all about anyway. Find a way to solve a problem. So don't let this course scare you off. Just find somebody with a language problem.

Back to Finance.

Finance
Building from the fall-quarter course in Managerial Finance, you have two basic paths: you can learn more about investments and financial markets or you can hone your skills in the use of financial markets by individual corporations. Advanced courses allow students with more extensive background and experience in finance to extend your knowledge of financial markets and corporate finance.

Now we have an either/or. Investments and financial markets means Wall Street or you end up as a financial salesman at Edward Jones. I would go the second route which is the use of financial mrkets by individual corporations. Corporate finance is pretty easy--once you figure it out. (What isn't?) A working knowledge of balance sheet preparation, cash flow analysis, capital ratios and debt vs. equity will get you a long way in the corporate world so I recommend that route. Also, there is that old trick of finding what is wrong with any company by studying the balance sheet. You can find the problem but not always the solution. But finding the problem is half the battle.

We're getting there. Remember the purpose of this exercise is to figure out what each course is really about so MBA school won't overwhelm you. Or more importantly, scare you off.

Thinking About Getting An MBA? Part Two

2010-02-09T07:09:03-08:00

The next course at Stanford is

The Global Context of Management
The objectives of this course are twofold: to help develop your understanding of the cultural, economic, financial, and political forces that drive the global marketplace and individual markets within the broader market, and to provide you with a framework for, and experience in, learning quickly about specific markets. You will understand the important questions to ask and answer when contemplating entering or allying in a new market.

Sounds like International for Dummies. This course will probably concentrate on all the miscues that we dumb Americans do when we try to do international like ordering a Coke in a five star Paris restaurant. I actually saw that once and even I was appalled. For the most part Americans have huge inferiority complexes thinking everyone is smarter than us because they speak ten languages and went to an ecole. Forget it. You'd speak ten languages too if there were ten different countries within two hours of your house. The thing to remember when dealing with foreign types is that we have the largest economy in the world and they don't. Be nice but when push comes to shove that is the bottom line. Doubt if they will include that in the course at Stanford.

Next up is

Managerial Finance
The aim of this course is to enable you to apply the fundamental ideas of financial economics to problems in the area of corporate finance. You will gain an overview of valuation principles, and how financial decisions – capital structure, dividend policy, investments, etc. – can affect valuation, learn basic principles of corporate finance from the perspective of a financial manager, and analyze many of the important financial decisions made within firms and other institutions

Wow, clarity. Take this course and pay attention. The key word here is overview. A tendency of managers (and you are all potential managers) is to get tunnel vision and see only what impacts you and your division or department. In Treasury or Corporate Finance you have to look at the company the way Wall Street or an investor looks at the company which is in its totality. It is also the way senior management looks at the situation. So if you want to get to senior managment you have to understand how the total company works. Start thinking this way and you will have a leg up on your competition. Don't cut this class.

The third class for today is

Managing Groups and Teams
This course introduces you to the structures and processes that affect group performance and highlights some of the common pitfalls associated with working in teams. Topics include team culture, fostering creativity and coordination, making group decisions, and dealing with a variety of personalities. You will participate in a number of group exercises to illustrate principles of teamwork and to give you practice not only diagnosing team problems but also taking action to improve total team performance.

I'm actually a fan of the team approach. It works to bring people from various disciplines together to solve a problem as long as it is a team approach and somebody doesn't decide to hog all the glory. Remember, as the football coach always says, there is no "I" in team. But there is "me" so watch out. Probably not a bad course as long as it doesn't degenerate into those silly exercises like falling backwards and somebody catching you. I always kind of wanted to watch them just fall but that is slightly jaded.

Watch out for this one-

Organizational Behavior
Building on the discipline of social psychology, this course helps you cultivate mindsets and build skills to understand the ways in which organizations and their members affect one another. You will learn frameworks for diagnosing and resolving problems in organizational settings. The course relates theory and research to organizational problems by reviewing basic concepts such as individual motivation and behavior; decision making; interpersonal communication and influence; small group behavior; and dyadic, individual, and inter-group conflict and cooperation.

Quite a mouthful. Firstly, all organizational behavior, or OB which we called Out of Bounds, professors are frustrated shrinks. Probably couldn't get into medical school and ended up in the business school for which they are totally ashamed but you got to make a buck so...they end up trying to figure out how organizations behave thus the name. Don't think you will learn much here but it certainly is not a tough class unless you are a foreign student with a great grasp of mathematics but not a great grasp of English.

People that do well in this class usually end up in Human Resources so be warned. If you can figure out how to manipulate these people you will probably have a pretty good career.

Can't handle any more of this stuff today.

Thinking About Getting an MBA? Read on. Part One

2010-02-08T06:54:49-08:00

I'm getting dragged back into this subject but will go there because it is important. As I said in an earlier post the MBA was set up for non-business majors who somehow end up in commerce and don't know a thing. The poor liberal arts major or education major can then get up to speed and compete. That's the theory but not the fact as many, if not a majority, of MBA students are undergrad business majors who are just doing some retraining. You know who you are so quit reading.

If you were a liberal arts, computer science or education major and thinking about an MBA here is the truth about the most important thing, the courses. But first a fact or two. Going from liberal arts to business school is kind of like going from liberal arts to plumbing school. In liberal arts we spouted nonsense about the Industrial Revolution, the Sung dynasty and the role of the boyars in Russian society. Fun but not really going to make you a lot of money in the long run. Business school is more of making balance sheets balance and figuring out discounted cash flows. Not real exciting but it is what you do in the business world.

Secondly, a little secret about business school. If you get in, you will not get kicked out. Grading is pretty easy in grad school. If you don't show up for classes you will get kicked out but if you try, you won't.

But what do you do in the classes? I know what I did but that was a long time ago so went to the class catalog and found that some liberal arts types had invaded the writing so it is almost impossible to figure out what goes on in the class. But Uncle Bill will interpert for you.

First, the traditional MBA is for two years with the first year being mainly requirements and the second year being requirements plus electives. Forget the fourth semester--you will be so busy interviewing for a job that you, and the school, won't be paying any attention.

Finally, on to the catalog. This is Stanford University Graduate School of Business. Couldn't get in there unless I built them a building but did go for the Senior Executive Program so know the lay of the land. I highly recommend Stanford if only for their golf course.

And the first course is--

FIRST YEAR COURSES

GENERAL MANAGEMENT PERSPECTIVES
Your time at Stanford begins with a unifying academic experience to build community within your class and to give you a shared base for approaching general management problems. Every student in your class will study General Management Perspectives, comprising seven required courses in your first quarter and one required course in your second quarter. The goal of this coursework is to give you insight into the perspective of a senior manager and leader.

Through the Perspectives experience, your faculty advisor will get to know you and your experiences, abilities, and aspirations. He or she will guide you in choosing the most challenging course of study to maximize your personal, intellectual, and professional development. You begin to shape your future here.

This doesn't sound like a course, it sounds like a party. See what I mean about the liberal arts language? Vague but not too threatening. What's next?

Accounting Information
This course gives you perspective on key accounting concepts and role of accounting in markets and firms. You will learn the structure of financial statements, including balance sheets and income statements, and the accrual basis of accounting. In addition, you will cover the role of accounting numbers in providing information to investors and managers. Finally, you will assess the value created by a business or business segment, and the distinction between economic and accounting profitability.

Ok, finally some clarity and I have to give Stanford credit. Their accounting classes are oriented toward USING accounting as opposed to DOING accounting. If you are a manager you use accounting information, if you are a CPA or in the controllers department you do accounting which means just piling the numbers together but no real analysis. This class is not easy but absolutely essential to business success because if you don't know how a balance sheet works then you will never be successful in business. Us finance guys used to have fun with the marketing guys because a finance guy can take a balance sheet and in 30 seconds tell a marketing guy what is wrong with his business. Inventories too high, receivables too long, margin too low, debt too high--it's a no brainer. The smart marketing guy will then say "Tell me how to fix it?" Then they have the finance guy because that is the tough question. But anyway, this is a good but hard class.

Critical Analytical Thinking
Critical Analytical Thinking (CAT) will address issues that transcend any single discipline or function of management. In 15-person sections, you will analyze, write about, and debate fundamental issues, questions, and phenomena that arise in many forms in management. You will explore these critical issues broadly, as well as hone your analytic and persuasive skills. CAT will enhance your ability to identify critical questions when exploring a new business issue, to parse issues, to develop reasoned positions, and to make compelling arguments. CAT also will help you explore the principles and ideals that you will seek to uphold as a leader.

I've read this three times and have no idea what it is about. Even looked for buzz words that would give it away. Words like 'critical' and 'analytical' usually are code for math or computers. Really not sure about this one but math and computer professors know that students hate their classes so they veil them in verbiage. Watch out.

Ethical Analysis
In the winter quarter, you will take a course on ethical analysis. This courses emphasizes both frameworks for conducting ethical analysis (on what basis can you say that a course of action is or is not ethical), the analysis of ethical dilemmas (how do you think about situations in which different ethical precepts collide), and how to deal on a day-to-day basis with the practical issues of ethical behavior in organizations.

Oh, please. Enough is enough. This Sarbanes Oxley 101. Believe me, if you go on to be a manager in a public company you will come to hate Sarbanes Oxley. Take my word for it. Also, business school will give you examples so black and white that only a psychopath would not be able to figure them out. The real world is a bit different. Here's one I heard about in Argentina--you are a pharma company trying to register a new drug, you go to the right ministry, they say you didn't fill out the form right and need someone that knows the local customs. You go there and pay the 'consultant' a huge fee. Part of that money goes back to the ministry offical. A bribe? You bet but a common practice. What are you going to do? I don't know but this course isn't going to give you the answer. It depends on your moral compass and the moral compass of the company.

Will look at a more courses tomorrow.

Caught In Middle Management Hell

2010-02-05T07:16:09-08:00

Saw this article and was pretty disappointed with it but read it anyway if you feel stuck. http://biz.yahoo.com/weekend/midhell_2.html

Seems the article is about a bunch of people with good jobs, kind of, but can't move up because their geezer bosses won't keel over and get out of the way. It appears that industry got all concerned about the 'brain drain' of aging boomers thinking about checking out that a HR campaign got started to keep them around. Here is how they explain it because it makes no sense to me.

And that, oddly enough, is exactly what employers had in mind when they helped build the Gray Ceiling during the late '90s. Though at that time your 19-year-old neighbor was a dot-com entrepreneur and anyone over 35 was considered a dinosaur, forward-looking companies were starting to panic about the "brain drain" that could result if the boomers retired en masse.

So began the campaign to keep older workers kicking around. The Society for Human Resource Management reports that more than half (55%) of big U.S. companies are "giving managers the tools to increase retention of baby-boomers," including flexible or reduced schedules and retention bonuses.

Other factors are coming into play too. Thanks to federal and state laws against age discrimination enacted during the past 20 years, mandatory retirement has all but disappeared (airline pilots and CEOs are about the only employees who can still be compelled to stop working).

Then there's the financial squeeze: The age at which seniors can receive full Social Security is inching north (it's now 66) at the same time that employer retirement benefits are heading south.

Finally - as the squash-playing, real-teeth-possessing sixty-something down the hall can attest - having six or seven decades under your belt doesn't always seem that old.

But can't you just wait it out? After all, boomers have to retire eventually, right? Right?

HR strikes again.

Actually, I do not think that having an old boss that won't get out of the way is the main reason people hate their jobs. If an old boss is the real problem than you have a better deal than I had. When I started out my boss was two years older than me, his boss was four years older and the VP was seven years older. The only way to get rid of these guys was a well coordinated plane crash.

And the guy I worked for was a jerk. A beautiful guy outside of the office and smart, really smart, but a jerk. An arrogant, condescending, brilliant jerk. And I worked for him, on and off, for the better part of seven years. So how do you survive and even prosper?

First, if you work for a jerk the other people in the company will know it. Don't undercut your boss but make the most of your misery. Turn your disadvantage into an advantage. I found people coming to me to figure out how to get this idiot to approve something. I soon had a cottage industry going in the approval business. And those people owed me and I eventually collected.

The jerk will eventually get it. Mine did but here is a story about another guy. A friend of mine, a prince of a guy, got transferred to a plant run by a dictator. But nobody at corporate knew the guy was a nut case until my friend, who had a lot of friends at corporate, started dropping a few hints. Since some of the stuff was border line illegal the rumors ran like wild fire and the top guys eventually got wind of it and the guy was gone. Overnight? No, but eventually so try and tough it out.

Yean, but how? You can't change jobs every time you run into an issue so admit you got a problem. And it's not you, it's the other guy, so develop a strategy for survival.

Network. I hate that term but do it. You may have to get another job so start meeting people and getting your name out there. I didn't do enough and should have.

Get a project. I was at a conference at Nestle in Switzerland and the CEO got up and said the company was not there for our personal well being. No rot about passion or empowerment. We worked and they paid us. If you want to find a cure for cancer, do it in your spare time. Only a Swiss could get away with saying that. But he was right. When I was working for that maniac, we bought a 100 year old house that needed a total redo. I would get home and dive into that thing. Sledge hammers smashed walls and my mind wandered. It paid off, too, when we sold it for a 400% profit. My brother-in-law got a punching bag and put it in his basement. I prefer projects that have a postive payback.

Start your own company. Nothing like planning for the future. Everybody wants their own company but few do anything about it. Look into it and start small. With today's technology you can do just about anything except make cars from your computer.

Do something creative. A great way to rise above a nut boss is to rise above it. Write a story, a screenplay, research an article.

Exercise. It works to get exhausted. Run, walk, swim, pump iron. A side benefit is that you will be in such great shape that your boss will be scared of you.

Get an MBA. Enough of that already.

The take away is do something. Doing drugs or alcohol is doing something but I don't recommend that. Do something positive is a much better strategy than waiting for your boss to drop dead.

Ten Things To Get You Hired

2010-02-03T07:35:00-08:00

Came across one of those articles that when you see it you are sure it has all the answers. Not really. But let's take a look anyway.

1. Customize your résumé and cover letter.
It might seem faster to blast off generic materials to dozens of employers, but this will cost you time in the long run. Tailor your résumé and cover letter to each open position to clearly demonstrate how your experience fills the employers' requirements. For example, if you're applying for a public relations role, give your PR experience a prime spot on your résumé.

Not bad. With today's technology there is absolutely no reason to send out a run of the mill, generic resume. In the old days you did a resume, took it to the printer and ran off 500 copies. If there was a mistake, you were screwed. Today it takes a minute so take a minute and do it. But beware mistakes. I had a rule to toss a resume if there was a typo. If somebody doesn't take the time to read their resume I don't think I want them to work for me.

2. Diversify your search.
If you've been responding to newspaper ads with no response, also post your résumé online, search some job Web sites, talk to your friends and attend an industry trade show. The more ways you search, the more likely you are to connect with the right employers.

Duh? This is kind of worthless advice. If you aren't doing this already, you don't really want a job. Plus there are more ways to get a job then newspapers and web sites. I had a friend who set a date of a month to get a job. If he didn't have a job by then he was going to put on his fatigues (he was a Vietnam Marine), put on his medals, paint a sign and walk down Michigan Avenue in Chicago at noon. Unfortunately, he got a job. I really wanted to see that.

3. Don't go solo.
Your friends, family and former co-workers each have a network of their own -- and a friend-of-a-friend might hold the perfect lead. Don't be shy: Reach out to your network and let your contacts know you're on the job market.

More questionable advice. See number 2.

4. Find a company where you fit in.
Browse potential employers' Web sites and ask your friends about what it's like to work at their companies. Employers are looking for candidates who would be a good fit and thrive within the company culture.

Companies are made up of individuals and departments. It makes sense to check companies out but you may have a friend with a great boss, you join the company and end up with Captain Bligh. The truth is you will never know till you get in there. Also, don't shy away from companies in trouble. There may be a leader in there turning it around and you could join a company just starting to take off. Of course, it may go in the ground but, hey, it's not going to kill you.

5. Don't get discouraged.
Experts estimate the average job search to last anywhere between three and 10 months -- and that means a lot of rejection. Keep at it: Your dream job is out there.

This is pretty stupid. If you are just starting out, don't take 3-10 months. You'll have a big hole in your resume plus you will be starving. Take what you can get and figure out what you don't want to do. Beware of 'finding' your dream job. Looking for a dream job is an excuse for not getting a job.

This one comes in handy if you are interviewing to be a Boy Scout leader.

6. Always be prepared.
You can never be too prepared for your first meeting with a potential employer. Before your interview, always browse the company's Web site. Find out as much as you can about the company's products, leadership, mission and culture, and prepare answers to common interview questions.

Ok. How about reading the annual report and 10k's as well? The web site will be propaganda. The financials tell the real story. Just google SEC and Edgar and you will get to the web site with the financials and commentary.

7. Be on time.
Whether it's an informational interview, an open house or a formal interview, always arrive about 10 minutes early. Allow plenty of time for traffic and poor weather.

Please stop. Arrive 30 minutes early. Or if you have a flat tire or get robbed and are 30 minutes late, rub dirt all over yourself and run panting into the interview. At least they will remember you.

8. Dress and act the part.
In a business setting, always dress in professional clothing in the best quality you can afford. Take the industry and employer into consideration, but a business suit is almost always appropriate for interviews.

Ok, this one is important. I don't want to hear a bunch of stuff about clothes don't matter. If you go into a store and there are two boxes of, say, crackers and one is a bit smashed you will buy the other. Same with clothes. They probably won't help you but they can kill you. For men, if you are in doubt, go to Jos. A. Bank and throw yourself on the mercy of the staff. Women, go to Liz Claiborne. And don't forget the shoes.

9. Listen more than you talk.
Even if you're nervous at an interview, try not to ramble. By keeping your mouth shut, you can learn valuable information about the company and avoid saying something that you'll wish you hadn't.

Don't know about that one. The best training for interviews is to do a lot of interviews. The more you do, the better you get. If you are sitting there trying to figure out if you are talking too much, I think you will soon be in trouble.

Finally, number 10.

10. Ask good questions.
At the end of an interview, the employer will inevitably ask if you have any questions. Have a list of questions prepared that showcase your company research and interest in the position.

Maybe. But I think you really should think about your closer. Something not quite as radical as "I would kill for this job" but something unique to really show you want it.

So that is it. The ten things to do to get a job. Pretty weak but not totally worthless. The thing to remember is that getting a job is a job. Spend 10-12 hours a day on it, read everything you can, talk to anybody that will talk to you, research, and you will get a job. It may not be perfect but life isn't.

Ten Things That Will Get You Fired

2010-02-01T06:48:06-08:00

In these hard economic times, you don't want to get fired. If you do, for some reason, here is how you do it.

1. Don't bother learning what's expected of you.
Sit down with your manager and make sure you understand exactly what your job entails, your deadlines and any relevant department policies. This eliminates ambiguity and ensures you'll know how your performance measures up.

This writer seems to have a pretty good handle on the subject, probably has been fired a time or two. This works only if your boss knows what is expected of him/her. Not always the case.

2. Learn to say, "That's not part of my job description," and use it frequently.
Everyone needs to set limits, but doing only the bare minimum sends a clear message that you're just interested in a regular paycheck. Sooner or later, your boss will start looking for someone willing to take more initiative.

If you say something like this you deserve to be fired as your boss writes your job description so he/she (I'm going to can this he/she stuff, will go with he for writing ease) can tell you to do anything they want, within legal things that is.

Go shopping in the supply closet.
While you're at it, run a few errands with the company car and pad your expense report. Stealing from the company is one of the best ways to guarantee your immediate dismissal.

Everybody ends up with the odd company pen or pencil at home, just don't overdo it. I doubt if few people raid the company store on a regular basis, I mean how many staplers do you need? But the expense account is a different story. I have seen more careeers go down the drain because of this than any other source. One big place to watch out for is if the COMPANY allows and even encourages you to 'pad the expense account.' I don't know if many companies do it now but a few years ago many companies allowed executives to view the expense account as additional income. The worst example I have seen is a guy went to work for a company, he was encouraged to pad the expense account with personal items, then the company fired him for some reason. He wanted a package and they said no, you stole from the company. And he had.

For those of you clucking about the evil American capitalism that would allow such a thing, it is my experience that most companies that allow expense account padding are foreign companies. The tax rates are so high that living off the company is viewed as ok. But don't make it ok for you.

4. Abuse company technology.
Think your boss won't notice that you spend more time instant messaging your friends than you do working? Think again. Most companies monitor all their employees' e-mails and Internet usage -- and that includes what you do with your laptop after hours. Never use your company computer for anything illegal or X-rated.

This one is on the money. Just read an article in Newsweek or Time and the programs they have to catch you are unreal. I wouldn't go near a computer at work any more for personal stuff. Stay away.

5. Complain about your job to anyone who will listen.
Whether your pay is too low, the work is drudgery or you think your boss is an idiot, be careful of who hears you complain. If it gets back to your boss, she may just put you out of your misery.

It is a sad fact that you spend more time at your company than with your family but it is true. And familiarity breeds contempt. Companies are just huge rumor mills so the least said the better. Get a dog or a punching bag but try and limit the bitching. This is really hard. Believe me, I know.

6. Forget teamwork -- look out for No. 1.
No one wants to work with an arrogant employee who steals ideas or an egotistical worker who demeans others. Helping your co-workers doesn't make you a pushover, it makes you smart. Likeable employees move up the company ranks more quickly, and your colleagues will be more likely to help you find leads when you launch your next job search.

No one wants to work with arrogant employees but we all do. Number 6 is not a bad idea but it doesn't tell us how to handle the situation. Be patient is the best way. I had a boss who when he really got ticked about something would write a memo to the moron that made him mad and then stick it in a drawer for at least 24 hours. Then he would pull it out, read it and decide whether to send it or trash it. He said in all his years of corporate politics he only sent one memo. And it was the biggest mistake of his life.

This is not to say you just bend over for anybody. But don't talk about it. If you got a problem go to the source and confront the person. Unless the problem is your boss and then you have to be more creative.

7. Bring your personal life to work.
It's inevitable that personal business is going to pop up during work hours. But keep in mind that cubicles don't lend any privacy, so the whole office can hear -- and are distracted by -- you making that appointment with your waxer. Keep personal calls and errands to a minimum during work hours.

This one probably won't get you fired. But it is annoying so keep it to a minimum.

8. Consistently work "abbreviated" workdays.
Want to show your boss how little you care about your job or career progress? Regularly come in late and leave early. After all, if you can't be trusted to show up on time, how can your boss trust you with more responsibility?

This is pretty stupid. Work the hours your boss works, at least until you get promoted or there is some sign your boss thinks you walk on water. Bad habits become annoying. Walking past your bosses office 15 minutes after start time when he has been there an hour already will not get you any points. I know because a friend of mine had a guy that did that. Drove him crazy. So for the first few months the solution is easy--arrive when or before your boss does and leave when or after your boss does. May be a bit of a hassle but well, as my wife says, that's life in the big.

9. Treat deadlines more like guidelines.
When you procrastinate, everyone suffers. Your missed deadlines reflect poorly on you and your boss, and they delay everyone else on the project, since they can't finish their work until you do yours.

Again, if you need to know this, you are already in big trouble. They don't call them kind of deadlines. They are deadlines and if you miss more than one your job will be dead.

10. Operate the gossip mill.
While you can't avoid office gossip completely, don't get caught spreading it. Think about it: Do you really want hurtful or untrue rumors to be traced back to you? And remember: A few martinis are no excuse for getting loose-lipped.

Not a problem for me. A few martinis and I can't talk.

Well, that is it. The ten things that will get you fired.

What Will Get You Fired

2010-01-28T17:12:07-08:00

Read a couple of article by some journalists on what they thought will get you fired. Maybe, and some of the points were well taken. But here are a couple more from my experience. (Not being fired but seeing people get canned for stupid things.)

Don't Get Into Fights

I'm not talking politics here, I'm talking real fights. I have seen two and they were ugly and three of the four people got fired. The first fight was between two Human Resource people that finally went over the edge. The woman won, the man didn't. But they both lost because they both got fired because most companies fire anyone involved. The second fight was between an Indian and a Pakistani. These guys were top level PhD's who let a little nationalistic, religious rivalry get out of hand. One of them got fired. The other would have but he was the key guy in a certain drug development program so he got off but they locked him up in his own wing.

Abuse Expense Accounts

The number 1 reason for getting canned has to be this. Or close. Many people view expense accounts as supplemental income. They are not and they get reviewed and you can lose your job if you abuse the privilege. My rule was if I incurred an expense because I was away from home, I expensed it. This did not include the morning paper.

Some companies encourage use of the expense account, even to abuse it. My experience has been that foreign companies do this the most because personal tax rates are so high internationally that the expense account becomes a company benefit. It can also be used against you because a boss that wants to get rid of you knows what you expensed and he will use it against you. As always, honesty is the best policy.

Do Something Stupid

In business, as in life, accidents happen. Just don't let them happen to you. Becoming the laughing stock of the company is not a good idea. I know of one tax lawyer that was sent on an assignment to Brazil. Only thing was he didn't make it. Got on the plane in Chicago, transferred in Miami, flew to Sao Paulo where he got turned away. Seems you have to have a visa to enter Brazil and he didn't have it. The guy never lived it down and his nickname became Brazil. I'm surprised the guy didn't jump out a window. But he did get fired. Was he fired because of his Brazil stunt? Probably not but it sure didn't help. Try to avoid stupid.

Get Drunk At A Company Event

Enough said. The free drinks aren't free. Be careful, you are being watched.

And the Number One reason for getting fired--Not doing your job.

Amazing that the author of the article did not mention incompetence, anywhere. You will keep your job as long as you are useful to the company. If you start screwing up, thinking two and two is five, you are on your way out.

So forget the office gossip, the expense account and doing stupid things. Concentrate on getting the job done and you will keep your job. Not only keep your job, you will get promoted.

Working Hard But Not Working Smart

2010-01-27T08:45:26-08:00

A friend sent this regarding working hours.

I also know through one of my contacts that they didn't give it to the other
manager who left awhile back. I know these guys work long hours. I just don't
understand these tech companies, everyone seems to be working 80 hour
weeks. I don't know where they get all the work?

He's a nice guy but works
too much - creates alot of it himself. They are doing an efficiency study
trying to convince people that they need to hire more folks, which they may
or may not. But he said the study has said that he has averaged over 15
hours a day this year (includes weekends). Again - I don't know what they are doing.

Some people love to work, most don't but the trend is to longer and longer hours which is really stupid.

Take a look at the quote above from my friend commenting on the lack of success of a colleague. I also know through one of my contacts that they didn't give it to the other manager who left awhile back. I know these guys work long hours. My friend is commenting on a job opening where they didn't give the job to the first in-house canditate and then didn't give it to the other in-house canditate. A lot of companies don't trust their in-house canditates.

Then look at the next part. I know these guys work long hours. So long hours and dedication to the job don't always translate into success. In fact, often they work the opposite direction with the boss sitting there going "Why is that guy always taking so long to get something done?"

He's a nice guy but works too much - creates alot of it himself. This smells of busy work. Also smells of not being able to prioritize tasks.

They are doing an efficiency study trying to convince people that they need to hire more folks, which they may or may not. But he said the study has said that he has averaged over 15 hours a day this year (includes weekends). Again - I don't know what they are doing.

Why hire anybody else when you have morons like this willing to work 15 hours a day? And not just work days but weekends.

Plus they didn't get the promotion. So how do you handle a work place and work hours?

1) If you have just landed that first real job adopt the "When in Rome, do as the Romans" approach. If your boss is a nut and works 2 million hours a week then so do you. For one year. Then evaluate the situation. Do I mind working 2 million hours a week? If so, no problem. If you do mind, then see if your boss even notices if you start cutting back. He may have a problem you don't like a home life that is out of hell and he doesn't want any part of it. Try cutting back and see what happens.

2) What if it is the company culture? Nobody works 2 million hours a week but many work 50. If 50 is ok, do your 50 and no more.

3) What if the culture is a 100 hours a week? Do your 100 for a year, see if you get promoted. If not then do the 100 and take the rest of your time to look for a new job. You can't just get a new job every day but you have put in your year and you know this is a dead ender so now is the time to get with the job search.

Now here is the real thing to watch out for-- don't get caught up in it. If you are a workaholic, great. If you are not, don't become one because you can end up a real zombie. I hate that "Get a life thing" but ... Working long is not smart. Getting the job done is smart and will get results. Find an environment that rewards results.

Remember Winston Churchill. When asked for his success secret--He said "Economy of effort. Don't do anything standing up, you can do sitting down. Don't do anything sitting down that you can do lying down." The guy drank a magnum of champagne a day, all day long. He also took naps, probably had to from drinking. But, boy, did he get the job done. Just ask the Germans.

A Not Very Good Article On How To Get Rich

2010-01-26T06:49:00-08:00

Saw this article that I thought would be of interest. Of course, like most finance article, it isn't. The perfect finance article would be:

Buy this stock at $20, it will go to $100 in twelve months, then sell it.

I've seen this article but it has never come true. Or maybe it has but I didn't act on it but I don't think so.

Anyway, take a look at this http://articles.moneycentral.msn.com/RetirementandWills/EscapeTheRatRace/5LessonsTheRichCanTeachYou.aspx?GT1=8473

The problem with this type of article is that it doesn't tell us HOW to become millionaires. So I will because there are only four ways to become millionaires. Winning the lottery does not count as one of them.

Actually, becoming a millionaire is not the thing we want. The thing we want is to have enough funds to not work if we don't want to. Fair enough?

So the four ways are:

1) Inherit the money.

2) Work your way up the corporate ladder.

3) Own your own business.

4) Invest wisely.

As far as number 1--it is in the same category as winning the lottery. You can't change your parents.

Number 2 is not that hard. It does take time and time doesn't seem to go fast when you are young. Believe me, it will but not right now. Sitting there at 22 or 23 saying I might be a millionaire by the time I'm 45 is pretty hard to imagine, let alone put into reality. So we will make it easier by breaking it up into steps.

Step 1 is maxing out every tax deferral you can imagine. At work it will be your 401k. Don't think about it, just max it and go on. You will learn to live on the money you have left over. If you don't then you have other problems.

Step 2 is getting promotions. In any entry level job you get your salary and maybe a company match on your 401k. That's it. But you don't know what your boss gets or her boss or all the bosses above you. Benefits kick in the higher you go and they get pretty juicy. If you hit manager then you probably get into the club called, you guessed it, the Management Bonus Plan. Think 20% to 50% of your salary paid out in a lump sum every year. Not too shabby.

Then maybe at manager or director, you get some stock options. I remember my first options and I didn't even think to thank my boss because the stock market was doing nothing. But I held on to the options and made a lot of money. Still got 'em. Then when you reach a certain grade level you get enhanced retirement plans along with perks like car allowance and maybe even a country club membership. I got both which I really liked.

Groucho Marx said he wouldn't belong to any club that would have him for a member. But if you want to make the big bucks in business, get promoted. Then don't spend more than you make. If you get pretty far up the ladder you will make a lot of money. Just don't fall off.

Your Own Business--The American Dream

2010-01-25T07:52:43-08:00

I think this is what most people dream of. At least I did. Here's the scenario--driving to work at any time you want to in your vintage sports car, being greeted by your adoring but subservient employees, meeting with your loyal and satisfied customers and then driving home, say about three or four in the afternoon, to your palatial estate. That's what I wanted. The reality is somewhat different but doable.

I worked for two guys that had their own businesses. One was a crook and the other was a social misfit. They had to have their own business because they really couldn't work for anybody else. So if you can't stand to have a boss then start or buy your own business. (In reality everybody has bosses. If you own your own business, the boss is the customer.)

But how do you get your own business? One of two ways--start one or buy one. Starting one is not hard and, thanks to technology, can be done in your spare time. If you sell something on Ebay, you have your own business. If you mow lawns, you have your own business. (Don't laugh about the lawn mowing. I was at a golf tournament with a friend and commented about a huge home overlooking the course. Turns out the house was owned by a friend of my friend and the guy owned, you guessed it, a lawn service business. In other words, he, or more correctly his employees, mowed lawns.)

When people think of starting their own business they usually think of inventing something or coming up with a new product that everybody needs. That doesn't happen very often. There is only one Bill Gates in the world but there are lots of lawn care businesses. If you want to start a business, find someone that has already done it and do what they do. If a guy can become a millionaire mowing lawns then you can become a millionaire doing something similar. My experience is that very successful business people know everything about their industry and are great delegators. They are also efficient. They work long hours but they report to themselves so who cares? The first steps to take are go to the libary and read books on running a business. Then find somebody in the field you want to work in and do what they do. You may fall flat on your face but you can do that anywhere. The key is trying.

The second way to get your own business is to buy one. This is the preferred approach by most experts. You can start by looking up business brokers in the phone book or going on line. You don't pay a commission to buy a business, the seller does. Also, you probably won't find the business you want right off the bat unless you want a liquor store or a dry cleaner. But you will learn something about the world of small business.

Here's the main thing you need to know--you don't need a lot of money. A person selling his business almost always has to offer financing. Banks will usually only lend against hard assets. Hard assets are plant, property and equipment. Stuff they can sell if you default on the loan. The majority of successful companies are worth much more than the equipment. Starbucks is a franchise worth millions, billions, but not because of the expresso machines. But a bank will lend only on the value of the expresso machines.

So the majority of sellers of small companies must provide financing to prospective buyers. That means you can buy an established business even if you don't have a lot of capital. And most likely you will be successful. A business broker told me that a new owner, on average, increases sales 20% in the first year just by bringing new blood to the business.

The action steps are the same--go to the libary and get a bunch of books on buying a business. Then get out the phone book and talk to a bunch of business brokers. Or put an ad in the business section saying "Young Buyer Looking To Acquire Established Business."

But after the books and the brokers, take a long look inside yourself. Try to determine if your desire to own a business is a reality or just a fantasy.

Look At What People Do

2010-01-22T07:00:00-08:00

I hate deadlines. They come too soon. For some reason I agreed to do a blog for something alled TBF's "Being Broke Ain't Cute" Personal Finance Series. It is due today. The lady involved (TBF stands for The Budget Fashionista) suggested the following for me--

Bill at askunclebill- What I tell my daughter (Financial management
tips a father tell a daughter)

This lady obviously does not have children. Or if she does they are young and at that great age where they adore their parents. This too shall pass.

The only person less likely to take fatherly financial investment advice than a daughter is a son. But the gap is not large. They could care less. Think back to being 13, 14, 15, or 16 and ask yourself if you were wandering around wondering if the S&P was going to break downwards 20 points or when the next time the Fed chairman was going to raise the discount rate. If you can honestly say you thought about these things when you were a teen then you are someone I don't want to meet.

But the lady at TBF seems very nice so I will plunge on. Ok, here is the one financial management tip every father should tell his children--SPEND LESS THAN YOU MAKE!

Now any parent will immediately see the problem with this--the kid doesn't make any money. He/she bums off you. So that piece of advice will only take hold when the kid gets out in the real world and starts making a buck. This is not to say the kid will not hear you when you say it, they may. They just won't show it. Things do come back. In college my son bounced a check and I bounced him a couple of times ending with the warning that a bounced check would have a negative impact on his credit rating. Huh? I told him it would make it harder for him to borrow money. His response--"I thought you said never to borrow money." Could have knocked me over with a feather. Till then I was convinced he heard nothing I ever said to him. Wonders.

But that kind of thing is an exception. Ok, so verbal financial advice is pretty worthless. If so, then how does a parent impart, what were the words again? Financial management
tips. Financial management tips for kids. Doesn't work. Here is what does work.

Kids do not always hear what you, the parent, say. But they watch you all the time. Not out of fear necessarily or awe, rarely, but because you control the purse strings. If they want something, the only route to get it is through you. So they watch you and they learn from you.

If you are always buying new stuff, not taking calls from creditors, worrying about money, getting fired on a regular basis, buying a new car every year, living in too big a house that you can't afford, living paycheck to paycheck than you can bet, pretty safely, that your kids are going to end up doing the same thing. Maybe not but the odds are they will.

If you save, invest in your 401(k), look at the business section, keep a job, build a business, buy stocks, invest in real estate, and have some money in the bank then the odds are your children will do the same.

Now I did listen to my father though I never acknowledged his wisdom, well maybe later I did, but his best advice was "Don't listen to what people say, look at what they do."

You reap what you sow. So be a good example and your kids will follow. Parents--go and sin no more.

Get Off The Dime, Fight Intertia, Get Rich

2010-01-21T07:36:35-08:00

Wrote this a while back but still germane though the inerest rates are way down from these examples. Makes it even harder to save but give it a try anyway. Save it , don't spend it.

Inertia is a great concept. If you are stuck, you tend to stay stuck. If you are in motion, you tend to stay in motion. Here is the dictionary definition.

1 a : a property of matter by which it remains at rest or in uniform motion in the same straight line unless acted upon by some external force b : an analogous property of other physical quantities (as electricity)

Actually I like my defintion better.

A case in point is financial activity. If you are not saving, you tend to not start. If you are not investing, you tend to continue not investing. Conversely if you do save, you tend to save more. If you are investing, you tend to invest more. Like I said, if you are stuck, you tend to stay stuck. If you are in motion, you stay in motion.

Here are some examples of stupid finanical inertia. Number 1) Large cash balances. There is something in our psyche that likes to see piles of money sitting around doing nothing. I'm as guilty as the next person. Flip on the computer, go to Chase.com, and look at that big pile of cash doing, like I said, absolutely nothing. We're not the only ones that like large cash balances. Banks love them. Number 2) Tax refunds. Nothing like getting a big check from Uncle Sam. Except for one thing--it is our money. We just loaned it to those morons in Washington at a zero interest rate. Ok, enough.

What about smart financial inertia? One is setting up your 401k ASAP and then not touching it until you, well, for a long time. You start it and inertia takes over with those regular investments cashing in on the greatest investment tool ever--weighted average dollar cost investing. Not sure that is the right term but close enough.

Another one, after you max out your 401k, is investing the money you have just laying around. Here the inertia is against you because banks don't like you doing this. Case in point--Margot.

Seems with this new job in the oil bidness, Margot is forsaking the usual model (Rolexes, new cars, swinging from the chandeliers) and focusing on saving. A good rule for this business is Make It and Bank It. When times are good they are real good and when...

So got an email from her saying she had a bit of cash laying around (after maxing out her 401k) and what is a girl to do? How about a little reimbursement to good old Dad for braces, horses, soccer, clothes, cars, prom dresses, college tuition, ad nauseum? Not a chance.

You got to take a shot, right? No dice. So did next best thing. To keep Margot's focus on her job and continued employment, I went looking for investment opportunities in the short term market. Thought it would be easy.

I have an account at Chase that is earning 4.9% so went to the Chase site and plugged in 'Savings' and got...1%. Huh? Thought I got the wrong page so tried again. Same thing. Ok, Chase, screw you. Over to BOA. Same thing.

This can't be right. So called my personal investment banker at Chase. When you get a few assets and leave them sitting around at financial institutions like Chase, you get a personal investment banker. Which is good if you need cash fast but not good for much else. Hey, what is the deal on the savings? Seems my rate was a brokerage rate and the low rate was because Margot (and 90% of the rest of the world) has only a checking account. So for housing a few stocks at Chase, I get close to 5% but Margot gets next to nothing.

I'll show 'em. On to the mutual funds. Vanguard and Fidelity and T. Rowe Price. Great rates. Some over 5%. But minimums from $2,500 to $3,000. Minimums mean the money has to stay there. Not exactly the definition of an emergency fund. Not the right financial tool for Margot at this time.

Getting a bit frustrated so Google. Type in 'money market, no minimum' and got this.

An easy way to get higher
rates on your savings.

No fees

Free checks and an ATM card*

No minimum balance

Easy online transfers to and from your existing accounts*

FDIC insured for up to $100,000 per depositor

Convenient online account access—

see how it works

Actually I got more than that but I am graphically challenged so can't move everything. What it said was that Capital One is paying 4.8% with all the things pointed out above like automatic transfers from and, more importantly, back to banks. The best thing is no minimums.

So linked it over to Margot, she called them up, verified no strings and plunked down her $1,500. Got to love that girl. She's in financial motion and will continue to be.

Plus I like Capital One. Somebody there is using their head. I kind of like those Viking commercials, too. Don't ask me why.

A Nice Place To Visit But Don't Want To Live There

2010-01-20T07:47:08-08:00

I love New York. I used to have to go there once a month and when I started going I hated it. Getting off a plane at LaGuardia at 10 in the evening and then putting your life in the hands of a New York cabbie was highly stressful. Then Rudy Guiliani came along and really changed things. My wife once asked if I would ever want to live in New York. Without thinking, I said only if I was single. That ended that but I still liked to visit.

The key word there is 'visit.' I wouldn't want to live there and maybe you shouldn't either because of taxes and reverse migration--people leaving rather than coming to the state.

First for salaries. Most people are smart enough to figure out that some places have higher costs than others and the pay is adusted accordingly. But starting out this is often not the case ie., the gap is narrower. So assuming there is no great monetary advantage to New York for somebody just starting out lets look at some things that are higher in New York, courtesy of Forbes magazine.

A married couple will hit the state's top rate of 6.85% at earnings of $40,000. That is $40,000 together. A single person gets hit with the top rate at $20,000. Put another way, if you make $50,000 in New York you pay an extra $2,055 in taxes than if you lived in Texas or Florida or one of the other states with no income tax. Ouch.

Forbes notes a few results of high taxes--people are fleeing the state and upstate New York is "an economic wasteland." I used to have to go to Buffalo as well and I loved the people but they all left.

So why are taxes so high in New York? Spending. The biggest expense is Medicaid which does not apply to you if you are young and half way healthy. You are paying for somebody else. Medicaid costs $46 billion in New York. So what? Put another way that is more than what Texas and Florida pay COMBINED. And there are a lot of old people in Florida. Why so high in New York? Fraud and politics according to Forbes.

If you want to get into theatre or fashion or work for the New York Times, head to New York and put up with the nonsense. If you don't, look to live somewhere else. Remember--it is not what you make that matters. What matters is what you take home.

Never Explain, Never Complain--Getting Over Your Losses

2010-01-19T08:00:26-08:00

This quote is attributed to Henry Ford II who had more wives than Henry VIII and ran Ford Motor Company. Successfully.

The point is don't look back and don't bitch.

I just got off the phone with an acquitance. An acquitance is almost a friend but not quite. Anyway, I like the guy. High school education, Vietnam vet, worked at a bunch of jobs, saved some money, has two kids doing pretty good, owns his own house, cash he can get his hands on quickly--about a million. Hey, pretty good for a working man.

But everytime I talk to him I know that somewhere along the line he will bring up his BIG, STUPID investment. Seems he invested a big chunk of money--$250,000 or so--into the dot.com deal through a broker with a big name investment firm that will remain nameless. Went up to about $750,000 and my friend/acquitance sold. Got out, clean and simple.

And then got back in. He blames that move on his wife which must make things a little tense at home because the $750,000 went to $100,000.

It crawled back up to about $300,000 and he got out. But he sure hasn't forgotten about it.

Each time I talk to him I try to steer away from the dot bust and back to his kids, his IRA, his paid up house, his rental houses, his great investment in San Diego townhouses but no, the talk always centers around the dot deal and that son of a bitch broker. My friend expends a lot of energy on that guy who, surpise, got cashiered out of the investment business and is probably in jail right now. Which is probably a good thing for him since I'm sure my friend would blast him away with a M-16 if he had one.

We all make mistakes, pass on good deals, invest in bad ones. I should have bought a house in San Francisco when I was three but I didn't. The real thing to avoid is betting the house on one deal. Or if you do, be ready to lose it all and walk away. People that buy businesses or start a business, do this all the time. That's fine but be ready to lose everything and be ready to start over again.

The only thing I fault my acquintance for is ignoring the good and concentrating on the bad. It is the human thing to do but try and avoid it. It is a waste of energy. Take that energy and focus it elsewhere.

You won't always be successful. I'm not for sure but I try.

Finally, things could be worse. When Margot and I went to France to set her up there at school we took a sidetrip to Normandy and Omaho Beach. Think Saving Private Ryan. It was a cold, blustery, damp and miserable morning. Standing on the beach I looked out at where those soldiers had to get out of the boats and where many died. I turned to Margot and said, When things really get really, really bad--think of those guys.

That will get you through just about anything.