1. We should leverage the engineering team for this project.
2. Can we gain any synergies by doing this?
3. We don’t have the bandwidth on our team to take this on.
4. Let’s discuss this offline (as in not in the current meeting).

Meaningless business jargon is so commonplace in daily corporate life that someone created Business Buzzword Bingo a while back — a fun game to play while sitting in meetings.

I recently heard a new term which a quick internet search reveals isn’t apparently all that new: “bad optics”. I saw this in some meeting notes that were being sent around, and I chuckled at the time, thinking whoever took the notes either misunderstood what was being said (perhaps “OpEx”, often short for “Operating Expenses”, or “Operational Excellence”) or had an overly aggressive spell checker.

But I discovered I was wrong after seeing the phrase pop up more and more at work. A couple of my teammates finally confirmed that saying something “is bad optics” means that something “looks bad to an observer”.

I have no idea how that came to happen.

The word “optics” to me — perhaps because I studied physics, but also for most people, I’d still guess — is a branch of physics dealing with light and its interaction with matter. “Bad optics” conjures up the embarrassing problem with the Hubble Space Telescope mirror, or an image that’s out-of-focus, perhaps due to dirt on a lens. It does not mean that something shouldn’t be done in order to prevent a PR gaffe. Besides, what’s wrong with saying something “looks bad” instead of “it’s bad optics”?

To readers in other countries, I’m curious. Do you experience meaningless business jargon where you work, especially if you work in languages other than English? If so, what are some common phrases you hear?

According to its description, 'needs work...but great value!' in Burlingame, CA, priced at $1.05M

We’re a few weeks into seriously starting to look at the Bay Area housing market (as in actually going to open houses and going on trips with our real estate agent to get to know neighborhoods).

Although we’re starting to get a bit more accustomed to prices of houses in the area, I still can’t get my head around the idea that a basic 3bd/2ba house will likely cost nearly $1M. These are houses that would run in the low hundred thousands anywhere else, let alone in Tennessee, where I spent most of my childhood.

We’re basically looking for a solid house that will retain (or possibly even appreciate) in value over time and that doesn’t involve an unreasonable commute time to my work; nothing fancy, and we don’t even care if it’s new, although not having to cross the Bay every day would be nice.

Here’s what I’ve been able to pick up so far from our trips:

1. Now that we have a little one, school districts are a factor, but from what I’ve been able to tell, people around here pay either a few $100K extra for a house in a good public school district or the same amount for a private school education in exchange for a lower cost house located in a worse public school district. This trade-off happens in other places in the US too, I suppose, but the amounts involved here are just incredible.
2. In some areas, one house that’s priced at $600K (a fixer-upper, as in unlivable condition at move-in) could literally be next to others that are north of $2M.
3. There are these things called “short-sales” that appear to be good deals but whose sales (at least in this area) are seldom completed or completed in any reasonable amount of time. It seems like every time we find a decently priced house on Redfin, it’s listed as a short sale. In short sales, the seller still owns the house, but owes more on the mortgage than he or she can get from selling the property. In many instances, more than one bank holds a mortgage on the house and each one must approve the sale in order for it to go through. Moreover, there are usually multiple bids on the property (including some with all-cash offers). The advice I’ve heard is that should we find a house we like on a short-sale, we ought to make a bid and then continue seeing houses because the likelihood we would get the house is next to nil.
4. Then there’s the mortgage….the various flavors of mortgage loans are an area we’re still learning about. We’ve been talking to a loan broker and asking all sorts of questions. I never realized how complex mortgages could get (jumbo loans, FHAs, points, you name it).

Because of where we live (close to Silicon Valley), there are probably more people willing to forego the use of an agent or a loan broker and instead head straight to Redfin. We are content with the agent we have so far, but it’s interesting to see how many different ways there are to go about finding a house to buy.

Despite the sticker shock, I have to say that it’s been somewhat fun looking around and seeing if we can picture ourselves and our family living in the houses we’ve seen. We’re currently renting a house and have until next March, so at least we aren’t on a tight deadline. Still, I sometimes wonder if we will ever get to the point where we find something we like enough to pull the trigger on signing a HUGE mortgage. Our agent claims that the day we find our house, we’ll know it even before we walk in. I personally find that hard to believe, having never had that feeling about anything I’ve purchased, let alone a house.

What’s been your experience, and what advice do you have for a first-time home buyer? I’d be interested in hearing people’s advice, whether you’re in the Bay Area or not!

Still, these are things you have to do once you’re a parent. One thing that became evident through the estate planning process we’ve begun is that we’re woefully underinsured. My husband and I had always just signed up for whatever default life insurance was offered by our employers, but all that’s changed now that we have a child.

So, the last several weeks have seen us looking into term life insurance options. There are actually many types of life insurance policies, but we opted for term since it’s the simplest and inexpensive, and suit our needs.

Here are some things we learned through the process so far:

Why would you need life insurance through an independent provider? This was the first question I asked. It turns out that although many employers offer life insurance and even options to purchase additional coverage, you lose that coverage if you leave your employer for any reason. We ended up purchasing policies through a Prudential agent that came through a personal recommendtion, although there are obviously several different insurance companies out there, and just as you’d do with auto or any other type of insurance, it’s worth shopping around a bit for prices and service.

How much insurance should you get? Life insurance is basically “income replacement”, meaning that if something were to happen to you, you would want your family to (ideally) be able to survive and pay living expenses like mortgage payments, school tuition, food, and other recurring monthly expenses. With term life, you receive a one-time death benefit in a lump sum payment which is not taxable. You would then calculate what kind of a return you might reasonably expect to earn off of that (say, for example, 5%) to determine how much you would receive per year.

For example, if you took out a $1M policy, at 5% a year, you would receive $50K a year, which you can then compare with how much you spend a year on living expenses. However, keep in mind that the $50K could be taxable in the form of interest income or capital gains (depending on how you choose to invest the $1M). A few simple calculations will allow you to back into the amount you would ideally need to cover living expenses. Just make sure to capture all expenses and any additional ones you might see in the future (such as school tuition). To be honest, this exercise is a sobering one as you’ll quickly see how fast expenses start to add up :(

What’s the pricing structure like? The pricing structure varies by the amount of the policy and the length of the term. The longer the term or the higher the amount, the higher the price. There are also several tiers that depend upon your health status. Different insurance companies have different names for these (e.g. “Elite Plus”, “Preferred”, etc.) but as you can guess, the healthier you are, the better the tier you qualify for, and the lower the price. Men generally cost more than women, and your age, cholesterol level, blood pressure, and health history all play a role in determining the premium you pay.

When I called different insurance companies to check, most of them had consistent criteria for qualifying for their best rates, which included diastolic blood pressure readings (the lower number in the blood pressure reading) below 80, and total cholesterol to HDL cholesterol ratio below 5. Of course, there are many other criteria as well that they didn’t mention. Most seemed to focus on items related to heart condition and cholesterol levels though.

What’s involved in the process to get life insurance anyway? First, the agent runs through a series of questions (your age, lifestyle, general health), and provides you with some price quotes for different terms and insurance amounts (but usually only the pricing for the best tier). The next step, at least with Prudential, involves a more in-depth interview with a rep over the phone that lasts 20 min. or more during which the rep will run through a detailed questionnaire of your and your family’s health history. After that, you will likely have to go to a lab (or have a lab tech come to you) to provide blood and urine samples and get your blood pressure readings done, and even an EKG (depending on age), all of which are sent to official labs for testing. Often, medical files from your doctor are also requested. In general, the process takes about 4-5 weeks to complete. Once results come back, your final rate is determined, and then policies are drawn up for you to sign.

Insurance isn’t the most exciting topic, and applying for life insurance definitely made me feel old (probably from seeing too many life insurance commericals on TV), but it’s the responsible thing to do. Oh, the myriad ways life changes when you become a parent… :)

It was a pretty compelling argument — $29.95 for standard cable (plus they threw in Starz and Encore, even though they’re channels we don’t care about) and $22.95 for internet for 12 months, with no contract. With Comcast, we’d been paying $59.95 for standard cable and $42.95 for internet.

I looked at the reviews for Astound services, and they were positive overall, although some people complained that their internet speeds were more comparable to DSL than cable (we’re on the 12Mbps package).

However, since we’d been happy with Comcast, I figured it was worth calling them up to see if I could get better pricing. After selecting the “downgrade or discontinue your service” option on the telephone menu, I explained to the rep that we’d been happy with their service but that Astound was offering the same services at half the price, which we had to consider. I asked if there was anything they could to to price match or decrease my monthly bill.

It turns out Comcast doesn’t do price matching, but they were willing to drop the rates we were being charged. They offered 12 months (and no contract) at $39.95 for cable and $34.95 for internet at the same speed, meaning I managed to knock almost $30 off my monthly bill. I also could have downgraded our internet speed in exchange for an even lower bill.

Negotiating (either a bill or your salary) basically much involves the same basic steps: doing some research to find benchmark data, whether it’s a similar position you’re applying for or a competitor’s services, being polite and respectful but asking for what you want, and seeing where it goes. If you’re a reader in the Bay Area, you might be able to reduce your bills by giving the quotes from Astound to your provider and seeing if they’ll budge.

The worst that can happen is that you get declined, but it can’t hurt to ask.

First, let’s suppose this simple table is what we originally start with:

Step 1: Change the font to “Gill Sans MT”. This is the font recommended by Edward Tufte, an expert on the visual display of data. In Excel 2007, the default font is something called “Calibri”, which is also an improvement over the default “Arial” that came in previous versions of Excel. Here’s what that simple change does to our table:

Step 2: Don’t use extra decimals where not needed, and consider changing 0s to “-” for readability. To do this, simply select the numerical data you want to format, click on the “,” icon on the menu bar, and then click on the icon that decreases decimals (it looks something like “.00 -> 0″). Just doing that makes things much more readible:

Finally, step 3: Turn off the gridlines. To do this in Excel 2003, go to Tools >> Options >> General and make sure the box by “Gridlines” is unchecked. Our table now looks like this:

And voila. How much better does that look? Of course, there’s plenty of additional stuff you can do (put in lines to separate totals, put in dollar signs in some areas), but these three steps can always be done on any Excel model. Give it a whirl sometime.

Which version of Excel do you use?

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We called Allied Waste to request a new recyclables bin. As soon as I mentioned what happened, they responded knowingly with “We’ll drop off a new bin for you. What’s your address?” No account number or anything needed. According to the representative, this is really prevalent now because of the downturn in the economy. Wow. They said they were working with the police department to crack down, but since people tended to operate either late at night or very early in the morning, and the vehicles used don’t have license plates, there isn’t a whole lot they can do about it.

I guess to make enough money (even though it’d be tax-free), you’d have to steal recyclables en masse. Recycling centers in California apparently pay $0.05 per less-than-24-oz. container. I don’t particularly care if people take my recyclables (especially if they really need the money), but it’d be nice if they could leave the bin.

On the other hand, maybe we should just start bringing our own recyclables to the local recycle center.

I found QLTI through a 2/3 NCAV screen at Fat Pitch Financials’ Contributors Corner, of which I’m a subscriber. Note that again, there are many different Graham stock screens available, each of which may show a different set of stocks based on definitions and criteria. I narrowed down the list from FPF’s screen against another one based on value, momentum, earnings quality, and predictibility and came up with a much smaller subset of candidates. Of the 8 remaining, I looked at specific financial ratios for each one and QLTI was the one that really stuck out as an anomaly. Keep in mind that Graham emphasizes having sufficient diversification among even stocks trading a 2/3 NCAV, so at least in theory, my just buying this stock should be just the first step among many others to follow.

As of the closing price today (April 13, 2009), QLTI is trading at $2.18, which represents 58% of its net current asset value. And, at least as of its balance sheet at the end of December 2008, QLTI has $4.40/share in cash. It has no debt and has been restructuring and divesting some of its products in order to focus on its core business of opthamological biopharmaceuticals. It recently paid out $2.50 a share for 20M shares in a tender offer at the end of January. Additionally, there has been plenty of insider buying taking place over the last few months. All of these factors made QLTI a particularly attractive stock.

In reading their 10-K, one thing jumped out immediately (which goes to show that you should always read a 10-K form). For US investors, QLTI is considered a passive foreign investment company or PFIC, which has significant negative tax consequences for US investors. Unless you’re willing to jump through hoops to invest in PFICs, you might be better off purchasing these in a tax-advantaged account like an IRA or Coverdell.

Are there other risks? Definitely, as there are with any stock you purchase, particularly ones in the microcap category like QLTI. The stock is trading at a discount for a reason, after all. In the case of QLTI, they have a limited number of products in their pipeline, many of which are only in Phase I of the FDA’s approval process. Their main competitor is behemoth Genentech, which has a few products that not only compete directly but dominate the market. These are just a few I can mention off the top of my head.

Unfortunately, since the time between the day I discovered QLTI (when it was trading at $1.80) and today’s purchase, the stock has gone up 20% already….which goes to show you how much time it takes to really look into a company (and even moreso when you’re trying to juggle a full-time job and a 9-month-old baby!)

Earnings are due to be released toward the end of April. We’ll see how this one plays out.

In the article, Johnson describes what’s happening in the US as akin to the crises he’s seen happening in various emerging markets, details what he believes is one of the root causes of the current crisis (the recent ascension of the financial industry into a favored and powerful position in the US and globally), and his view of the likely outcomes. Johnson also writes a blog called The Baseline Scenario, which I subscribed to this morning. It’s kind of like Leopoldo Abadia’s blog (an economist’s view on the global crisis). Johnson has also appeared in interviews on popular programs like NPR’s Fresh Aire and the Colbert Report. He is critical of he current administration’s approach toward solving the crisis but also believes we are at least doing more than Europe; nevertheless, his outlook for the global economy is pretty negative.

I admit all this is not light (or necessarily enjoyable) reading. Some readers might be either tired of reading about this or wondering why I seem to spend every other post writing about the economic crisis. It’s because I think what’s happening really merits people’s attention even though everything is very complicated and difficult to understand. Personal finance bloggers always write about how the average American needs to be more educated about personal finance, so I’m basically taking my own advice.

Given that I have a physics degree, an MBA, and work in corporate finance, you’d think I was someone who should have a better grasp of what’s happening around us and their implications, and yet I still struggle with understanding it all. (As I’ve said before, I’ve always found economics a hell of a lot harder to grasp than physics.) And it’s not getting any easier given how quickly things change every day. So, I spend time reading these long articles and publicizing (in my own small way) the ones that I think do the best job. If you know of any others, feel free to leave a comment below.

What I haven’t figured out is what all this means for the average individual investor (e.g. someone like me). I know that the market doesn’t necessarily move in sync with the economy and usually leads it by a decent margin, but I still find the whole situation pretty perplexing. If the global economy tanks further and we head into a deflationary long-term state, does that mean cash is king? What do you think?

The contribution limit for both the 2008 and 2009 year for IRAs is $5K for those below the age of 50 and $6K for those 50 and above. For Coverdells, you can contribute up to $2K per beneficiary. Since Coverdell contributions must stop after the beneficiary turns 18, missing a year can make a big difference. For more on Coverdells, check out this comprehensive Fairmark article, which pretty much covers all the basics.

The type of consultations I’ve provided so far have varied from how to use functions like IF and VLOOKUP to create spreadsheets for analyzing compensation payouts and inventory levels to calculating returns within confidence intervals and more. Usually, people find my site through a Google search and give my tutorials a try, only to realize they need a bit more hands-on help for their particular situation.

As long as you have a legitimate question or project you’d like help with, feel free to contact me and we can decide whether or not I can help and agree on a fee for the consult. You can also read a little more about me in my “About and contact” section. I will, of course, continue to offer and create free tutorials on this site.

By the way, I’m sorry to have to qualify questions with the word “legitimate”, but I also receive lots of requests from students who blatantly copy-and-paste homework questions and demand answers. Just check out the comment section on my NPV tutorial, for example!

Jonathan Jarvis, a grad student at the highly regarded Art Center of College of Design in Pasadena, California (source of such designs as the Mazda Miata and Nissan Pathfinder, and Chip Foose’s alma mater) has created a very nice animation explaining the credit crisis and its causes in a simplified way. I think it’s easier to digest than the written explanation I provided earlier, so I’m providing it below.

If you still aren’t sure what caused our current situation, spending 10 min. to watch the two videos is probably worth your time.

In the meantime, feel free to fill out the following simple poll:

How much of your positions have you taken out of the stock market since October 2008?

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Needless to say, it’s been a rough past few months. The emotional ups and downs I’ve experienced the have been astounding: happiness when we learn his condition is not the worst possible scenario or when we’ve finally been able to see one of the best pediatric urologists in the area (who has an incredible waitlist, though I’m simultaneously thankful that we live in an area where there are leading experts in children’s health); sadness when we think about the possibility of his having undergo surgery at such a young age. The hardest part has been watching our infant undergo tests — ultrasounds, which are easy, and other ones like a VCUG or a Mag-3 scan, which haven’t been. I don’t think I’ve ever felt so helpless.

There are the unexpected changes too, like suddenly not being able to watch some TV shows (such as Grey’s Anatomy, for example) that have story lines involving sick kids. Or reading the expectant mothers’ email list at work and smiling wryly at threads debating the merits of various strollers. I can remember when figuring out the best equipment to buy was the concern of the week. Now I know how luxurious and lucky it is to have only those concerns, and even more so how lucky we are that our son has a treatable condition.

Quite amazing, really, how quickly my priorities in life have changed upon becoming a mom and how emotionally invested I’ve become in my child’s well-being. In large part, that’s why it’s taken me this long to write a reasonable post on everything that’s happened.

What I do know is where my charitable contributions will be going this year. So many people have kids who are undergoing much worse illnesses and conditions. I don’t know how to say this without sounding trite, but I cannot fathom how parents can handle such situations, and yet they do.

The one thing I’ve learned to do better because of this experience is to enjoy the time I have with everyone important in my life, knowing that health is not something that can be taken for granted. Though the experience is not one I’d voluntarily choose to go through again, I do feel like I’ve become better, humbler, and more grateful.

I will get back to writing relevant posts soon. There’s no lack of material being a working mom (with a husband as a stay-at-home dad), and we’re still working on all the other financial preparations for him that I wrote about in an earlier post. As with most parents, my most valuable commodity these days is just time.