Good morning!
Anyone want to talk about money and investing--seems that it would fall under employment and careers.
2. CalGal - 2/23/2001 12:38:14 PM
Erin,
One thing that has been in my mind a lot lately is how getting rid of a lot of my debt has really opened up my options as far as employment changes.
As you know, I've toyed with the idea of going back to school, and am still prepping for the GMAT. But I really thought it was a pipe dream--between paying for Spawn's education, needing to keep money coming in for bills and so on, and then even when I was done with the degree I'd have to find a job that made as much money.
Now that I've paid off all of my debt, am investing regularly (including for Spawn's education), I realize that if I keep it together (not a given) I will have a lot more options. I won't have to make as much money if I don't want to, I might be able to keep my school costs and bills paid working only a few months out of the year, and I can do it all while still saving for Spawn's education and making other investments.
I wish I had begun saving even small amounts sooner, because I'd be even further ahead of the game. But while it has been a huge relief to be in this position financially, the employment ramifications have only just started to sink in.
Has anyone else had this sort of crossover between financial needs and employment?
3. Erin R. - 2/23/2001 12:52:31 PM
Cal,
I'm in a place I suppose you were a while back.
I've doubled my salary recently, which has had the curious effect of reminding me of how tenuous anyone's position and ability to work for income really is. This applies to direct employees like me and independent contractors like yourself.
I recently read a book on my trip to Dallas called Rich Dad, Poor Dad. It was all about education yourself on how money works, and raising children with a similar mindset.
It has forced a sea change within me. I'm no longer thinking of saving money and buying mutual funds, but saving money to invest in real estate and stocks. No longer do I simply wish to make more money, but to place my money, over time, in investments that will generate the income needed for an upper middle-class lifestyle.
My income places me in perhaps the top 10 percent of all wage earners (I'm guessing), but I still depend on my employer. I want to, over time, invest and replace my eared income with cash generated from investments.
Sounds crazy to the vast majority of people, I know. Few people will say bluntly that they want money--people are uncomfortable with greed. I don't see why I shouldn't be looking for ways to work less for money, and to get money to work for me.
I'll be back later to post more.
4. Erin R. - 2/23/2001 1:53:53 PM
Anyway, I know where you're coming from WRT saving.
Years ago, I came into $10K in college and blew the whole thing on pizzas, clothes, doodads. If I had invested the money (back in 1991), I would have something to show for it. Oh well!
I spent most of my 20s running up debts. Now, the majority of my consumer debt is paid off; the rest should be paid in about six months. We will then be looking at paying off our car in a couple of years, and are looking for ways to move that schedule up. I have student loans and we have a mortgage.
Once we have our credit cards paid, we'll be looking to start investing. Conventional wisdom is that no one who owes money should invest, but frankly, working for someone else gives me a level of insecurity. You never know what can happen.
My goals: continue to pay off consumer debt, get my toes wet by investing in liquid assets such as stocks, and look to building a nest egg to purchase income-generating real estate.
So I'm looking for good books to buy on investing, and asking people what they do to build their assets.
5. Erin R. - 2/23/2001 2:07:28 PM
Has anyone else had this sort of crossover between financial needs and employment?
Not yet, but we're working on it!
6. PsychProf - 2/23/2001 2:11:45 PM
haha...the crossover has been college-delayed for me. I just cashed in $17,000 in bonds, gave it to a College, and now I have to pay the damn taxes on it. Delayed indeed...
7. seadate - 2/23/2001 2:35:25 PM
Has anyone else had this sort of crossover between financial needs and employment?
Cal (or whoever), what is meant by "crossover".
8. CalGal - 2/23/2001 2:37:17 PM
I've doubled my salary recently, which has had the curious effect of reminding me of how tenuous anyone's position and ability to work for income really is.
I have always felt that my ability to work for the type of income I made was tenuous and in fact I think that contributed to my resistance to think of myself as a member of the upper middle class. But the goal you have--generate income to maintain that lifestyle--has to start by thinking of yourself as in that set. (incidentally, this is true no matter what income you have, or what quintile you belong in).
I think that people's feelings about money and investing has a huge amount to do with the income and "class" of their parents. If you consciously set out to accumulate assets, obviously, it won't matter where you started. But if you're just someone who intended to work and do well in life, the lessons of your family of origin are probably the ones you unconsciously pick up on. I know I did--I make far more money than my parents, but it never occurred to me that I might not have to live solely on what I earned by using that money a bit more wisely.
9. CalGal - 2/23/2001 2:38:05 PM
Conventional wisdom is that no one who owes money should invest, ...
That's my feeling, as well. I could easily have figured out a way to save $100/month even while paying off a huge amount of debt, and I'd be better off now. Happily, I did decide to start saving three years ago, so I am now well started on my investment plans. Clearly the priority should be on getting rid of debt, but I think it is perfectly appropriate to put some small amount into asset accumulation that you can't touch.
A year ago, your goals on income stream would have seemed unreachable to me--although not greedy. As you know, I think the most important thing about employment is income, because income gives you options--including the option of putting together enough money so you don't have to care about income.
But now, I am also working at saving money, putting it to different use. Sure, I have mutual funds, but I am also telling my fp to take some of my money and be more aggressive, since I have some to spare. I have a home in NC that has always just paid its way, but I am refinancing and now it will generate a healthy chunk of change each month--which I plan on investing. Eventually, I will look to selling that property and rolling it over into a more appropriate property, since my NC home was never intended to be a revenue stream. On top of all that, I have my own investing in stocks, which is a smaller percentage of my total at this time.
I find that this has really changed my thinking on my current employment, too. Employment is now an income stream, as well as the way I make my living and the way I pay for me and my son. This makes me feel less trapped, for some reason.
10. CalGal - 2/23/2001 2:45:55 PM
Seadate,
You know how a lot of people have career changes? At the point I thought I might want to consider it, I realized that I had incredibly few options because I have to make a fair amount of money in order to pay off debts, be able to save--or at least have enough income to borror--for Spawn's college, and so on.
Now that I have my debt paid off, I realize that I have a lot more options as far as employment goes--even if not right away--and that I can think of educating myself for new careers and still have enough money to send Spawn where he wants. Assuming no disasters, of course.
That's what I mean by crossover, anyway. I don't think it is an issue for everyone. Some people are perfectly happy with what they are making, others have already thought of these issues from a much younger age and planned for it, and still others have enough options at their income level that they could move about without taking a huge hit.
So it's not necessarily universal. But I do think that our own values about finances and lifestyles plays into our career choices and I was wondering if anyone else had this sort of interaction going.
PP--until recently, I assumed that I would have all my debt paid off just in time to borrow more for Spawn to go to college. The fact that I'm saving money for him is a real kick.
11. CalGal - 2/23/2001 2:48:32 PM
On the subject of income protection:
How many of you have disability insurance? If you are employed, what protection does your job give you?
I strongly recommend you investigate. If you are employed and unprotected, go get a good policy now and keep it up no matter what. I am right now going through the steps to upgrade mine--I have a five year policy based on what I made five years ago. Since I am self-employed, it is much harder to get disability insurance, especially to protect my actual income. The best time to lock down a policy is when you have a job.
12. Erin R. - 2/23/2001 2:49:57 PM
Yes, I understand how you feel: employment is my *primary* income stream, but I sure as hell don't want it to be the *only* income stream!
My parents basically taught me to go to school to find a good job, buy a house, and have a family. I was told nothing of asset accumulation. Because they regarded the house they lived in as their primary asset (in truth, it's a liability), I have really only even begun to understand what an asset is in the past couple of years.
I don't want my son to go through that. I want him to have a level of economic expectations that I didn't have growing up.
How did you find a financial planner?
13. PsychProf - 2/23/2001 2:56:51 PM
Cal...indeed. I have spoken with many parents who disagree, but I always assumed that college payments were my responsibility. I promised my sons a free ride to college...their job was to take advantage of this opportunity. This was our last payment, so Ms PP now gets to go to Latvia for the first time and visit her birthplace.
Spawn sounds like the independent type that will flourish in college...
14. CalGal - 2/23/2001 3:10:17 PM
PP--I have always told Spawn that I would go into debt for him to go to college, but that I would expect him to work for it as well. I still hold that position. He'll never have to limit his college choices because I wouldn't come through with money, though.
Erin,
He was a fresh out of college American Express/IDS cold caller, and I had strep throat and was home sicker than a dog the day he called with a check from my last job's 401K plan that had been sitting on my desk for six months collecting dust. Since that time he has built his own clientele, left Amex, and only takes people above a certain asset base. I didn't have that base when he first left, but he kept me because I was one of his first five clients. I am happy to say that I qualify now.
He is self-employed, but he works through Linsco Private Ledger.
While I'm doing links, I also highly recommend Netstock. I wish I'd known of it earlier.
15. Erin R. - 2/23/2001 3:12:16 PM
I do not have disability insurance, but we are looking into life insurance for me (my husband already has life insurance).
16. CalGal - 2/23/2001 3:14:50 PM
Erin,
Read up on disability insurance. I haven't ever needed it, but I really do think it is the most useful protection I pay for--and in my case, it costs less than car insurance. (however, keep in mind how many tickets I get).
Life insurance is important, particularly now that you are the main breadwinner. I'm sure you have some through work. That's the other thing I'm upgrading at this time--I got my current policy 10 years ago when I made about 25% of what I make now. Term life is usually considered the best thing to do unless you want to use life insurance as an investment tool.
17. Erin R. - 2/23/2001 3:27:19 PM
We found a life insurance policy for me that is less than $200/month for $500,000. We think this is a good place to start, but we imagine that it will be more in the future. My husband has significantly less, but we'll probably double his amount.
18. CalGal - 2/23/2001 3:32:10 PM
We found a life insurance policy for me that is less than $200/month for $500,000.
?????
That can't be term life. I'm older than you, and I'm getting quotes for $45/month, locked in at that price until I'm 65.
19. Erin R. - 2/23/2001 3:36:11 PM
It's universal, I think.
Our insurance saleswoman says that only 11% of people die during the term, so it isn't a good policy in general.
Have you heard differently?
20. CalGal - 2/23/2001 3:45:06 PM
Erin,
Yes. I have heard differently. The real issue is whether or not the whole life policy is the best you can do with that money. It is something you should read up on, because the difference in commission between whole life and term is huge and so you need to be informed on your own, rather than rely on the insurance salesperson. To contrast, my financial planner gets a commission if I buy whole-life but he gets most of his money based on the performance of my entire portfolio. Does he recommend I buy whole life? Hell no, because he knows that he and I will both make more money if I buy term life and then put the rest in other investments that will pay off far better than the policy.
Suppose you could lock in insurance at your age for $35/month. That's about $150/month you could invest with. Look at the payout on the whole life and see if you think you could do better than that.
This is not to say that there aren't times when insurance policies as investment tools aren't the right thing to do. I remember reading an article on the times when it's appropriate and I'm pretty sure that they all involved income protection for the super rich--something that isn't a high priority for you right now, you want to invest.
Don't take my word for it--but don't take your insurance salesperson's word for it, either. Read up on it, is my recommendation, and if you find a list of the reasons when whole life is the right choice, let me know where it is so I can refresh my memory.
21. Erin R. - 2/23/2001 3:54:50 PM
I'll have to look at the quote she prepared us, then do some research this weekend. Maybe even get a quote for comparison.
This is why I need to find a financial planner. The sales person is our next-door neighbor. We've known her since 1997. She seems like a trustworthy person, but I wouldn't just assume that.
And I do want to start investing. My husband is concerned about the possibility of needing life insurance on me, since I am the primary wage earner. If he died, I would only need a certain amount of income to pay for the things he does around the house.
I want to get out of this mindset and start building wealth so that this is not a concern.
22. Erin R. - 2/23/2001 3:57:06 PM
I'm searching life insurance at the Motley Fools...
23. Erin R. - 2/23/2001 4:03:42 PM
There isn't enough information there for me to determine whether this is a good deal for me--I'll have to review the quote when I get home.
For those of you who invest: what are you doing now that you wish you had done five or ten years ago?
24. CalGal - 2/23/2001 4:08:29 PM
Dollar cost averaging stock purchases. I wish to hell I had started that ten years ago. Or even five. At the time I would have had to do the DRIP stuff (something I never heard of until five months ago) instead of Netstock, but that's my big wishlist.
I wish I had realized sooner that paying down debt is more important than a sterling credit history, and that cash flow is the best way to insure that I don't get more debt.
And since you're travelling a lot, I will hand over my other wishlist--that employers would pay for their employee travel costs, rather than making us front the money on credit cards and then using the cash for other things. Please don't misunderstand me, it was my choice (something I did early in my career) but it easily added up to some $8K of debt that I didn't need, and I think that employers rely too much on their employees for that sort of thing. If it's travel for the business, then why should employees even have to use their credit cards?
25. CalGal - 2/23/2001 4:14:11 PM
Erin,
Whole life vs. Term Life
It's off the net, but it describes the basic issues that I've read many times.
26. Erin R. - 2/23/2001 4:37:49 PM
What is dollar cost averaging stock purchases?
27. Erin R. - 2/23/2001 4:45:10 PM
Travel: I have a corporate AmEx--I will charge even concessions at the airport to my card, then submit the expense report right away.
28. CalGal - 2/23/2001 5:10:56 PM
Dollar cost averaging in general is when you purchase the same dollar amount of something with a variable cost every month (or week, I suppose).
If the price goes up, you are buying less--if the price goes down, you are buying more.
This has always been possible with mutual funds, but unless you went directly to companies that offered DRIPs--and not all companies did--you couldn't do it with stocks. Well, you could, but it would cost a fortune. Imagine deciding to buy $25 of IBM every month, when the transaction fee was $10.
So along comes Netstock (also buyandhold) and you can now buy stocks on a periodic basis by a dollar amount--and it only costs $2/transaction. $1 for custodial accounts.
So you can buy a lot of different stocks, whether they offer DRIPs or not, keep track of them on one account statement, and do it fairly cheaply.
29. Slackjaw - 2/23/2001 5:12:45 PM
Dollar cost averaging is the process of buying a certain, fixed dollar amount of a stock at regular intervals. The fixed amount will buy you a lot of the stock when the price is low, and less of the stock when the price is high. The claim is that it's a way to operationalize "buy low, sell high."
I think it's borderline senseless, despite its persistence among financial advice givers.
30. Slackjaw - 2/23/2001 5:14:56 PM
(stocks or any asset I guess)
31. Erin R. - 2/23/2001 5:20:01 PM
Why is it borderline senseless?
Come to think of it, I think I heard Bob Brinker talk about this years ago--I actually haven't listened to him in a while.
32. CalGal - 2/23/2001 5:23:10 PM
Well, dollarcost averaging isn't going to work if the stock continues to drop, obviously. And if you know the stock is going to increase dramatically, then you're better off buying a whole bunch at once.
33. Slackjaw - 2/23/2001 5:29:43 PM
The future price trajectory of any asset is, to a first approximation, random. That's not exactly true, but it's true enough that the exceptions are basically irrelevant for the everyday investor.
So, when the price of a stock is low, it's equally likely to keep dropping as to rise again. (That's also not exactly true because there is an overall upward trend in asset prices.)
Dollar cost averaging is sensible if you reasonably expect the price to rise in the future. But like Cal said, if that's true, there's a better strategy still -- buy the whole pot asap.
In short, dollar cost averaging will certainly implement "buy low," but only low relative to the past. That's irrelevant; the expected future is all that counts.
34. seadate - 2/23/2001 5:29:54 PM
Erin,
Peter Lynch's first book ("One up on Wall Street")provides some good fundamentals. An excellent comprehensive book on investing is "The Power of Money Dynamics" by (Vinita Van Caspel?).
Erin, if you want life insurance, buy term, period. If you want to invest for a return, then do so, but not in the form of additional life insurance premium. Whole life policies are a scam and should be outlawed (seriously).
35. Erin R. - 2/23/2001 5:33:22 PM
Why are they a scam?
36. CalGal - 2/23/2001 5:35:54 PM
Dollar cost averaging is sensible if you reasonably expect the price to rise in the future.
But suppose you expect stock to go up, but over time, and you also don't know that it will go up a huge amount. Suppose the price varies from $20 to $80 and back down, over and over again--and then shoots up to $150 for a while, and then back down.
You never know what high or low is. So why not just shrug, pick stocks that are going to be around for a while, and buy the same amount every month?
37. seadate - 2/23/2001 5:52:48 PM
Erin,
Insurance companies take your principal (let's call that the difference in whole and term life premiums - the amount you could've invested in another vehicle), invest it (your principal!), make a fortune over the years, and then only return a *portion* of the principal when you cash out.
People think, "wonderful, I get a $50,000 check when I cash out" - This amount is less than their principal! ... and they might have millions with compound interest!
38. Erin R. - 2/23/2001 5:57:52 PM
It honestly doesn't bother me that insurance companies invest my money and make a profit on it.
I'll have to look into this further.
39. seadate - 2/23/2001 5:58:28 PM
Erin,
Insurance companies are successful with this scam by confusing insurance and savings/investment.
Consider insurance and savings/investments as separate financial outlays.
I'd be happy to discuss this at greater length later, but I'm getting out of this office for the weekend.
40. seadate - 2/23/2001 6:01:57 PM
Erin,
They are investing the amount *over* what you would pay for term life - they are investing money you could've invested.
I'd like to go through the math with you later, if that's ok.
41. Erin R. - 2/23/2001 6:02:19 PM
I understand the difference between insurance and investments. I'm just trying to understand the best use the the cash.
42. Erin R. - 2/23/2001 6:03:06 PM
Yes, please when you come back on Monday, I'd really like to understand this.
43. seadate - 2/23/2001 6:04:01 PM
Erin,
Right on, the best way to make any financial decision is with pen and paper.
44. seadate - 2/23/2001 6:07:16 PM
You're on. Here's what we need:
1. Whole Life Premium
2. Term Life Premium
3. Duration of the Whole Life policy you're considering
4. Cash value of the Whole Life policy at it's maturity.
Have a nice weekend, Erin.
45. seadate - 2/23/2001 6:09:21 PM
BTW, I don't sell insurance. I just consider whole life policies a great tragedy.
46. Erin R. - 2/23/2001 6:10:54 PM
You too!
47. Erin R. - 2/23/2001 6:11:42 PM
I'll try to remember to bring the policy in with me on Monday.
48. Shannon - 2/23/2001 10:34:35 PM
On another money subject: I just started 529 plans for my kids' college. I started putting money in a mutual fund about a year ago as a college savings plan. I'm still doing that too, but the tax advantages of the 529 are quite nice.
49. Slackjaw - 2/23/2001 11:45:50 PM
But suppose you expect stock to go up, but over time, and you also don't know that it will go up a huge amount.
If these are your beliefs you should take all the money you would have spent on the asset in the future and spend it now. The magnitude of the change doesn't matter.
Suppose the price varies from $20 to $80 and back down, over and over again--and then shoots up to $150 for a while, and then back down.
You mean as in a regular pattern to the price change? There's a much better way to exploit that than dollar cost averaging.
I'm not sure I see exactly what you are postulating about the expected price changes over time. If I am reading these examples right dollar cost averaging is transparently inferior to another approach.
You never know what high or low is. So why not just shrug, pick stocks that are going to be around for a while, and buy the same amount every month?
Generally, it exposes you to more risk than you need to get a certain expected return. Say you go to Vegas with a gambling pot of $X and you're going to play R roulette wheels (in expectation identical). The equivalent of dollar cost averaging is to play A on the first wheel, 2A on the second wheel, and so on to R on the Rth wheel, with (1 + 2 + ... + R)A = X. You get the same expected return with less risk by simply betting X/R on *each* wheel. Dollar cost averaging places too little on the early wheels and too much on the late ones.
50. CalGal - 2/23/2001 11:58:24 PM
No, roulette isn't a good analogy because all stocks aren't the same.
There's no advantage to dollar cost averaging speculative stocks.
51. Slackjaw - 2/24/2001 12:33:54 AM
they don't have to be the same. The point is that stock price changes, which is what you're betting on, are as if drawn by the spin of a wheel. (Try it with the changes in the daily closing price of your favorite stock, it's fun!) Different stocks have different wheels, but that's irrelevant. Dollar cost averaging is about adding $X of GM or whatever given stock to your portfolio at given intervals.
52. Slackjaw - 2/24/2001 12:38:04 AM
I once heard someone an investment call in show irately sputtering to draw out the differences between investing and gambling. Which is strange, because they are exactly the same thing. They may create different sensations in one's head, but they are both about obtaining some amount of money if some uncertain event happens in the future, and losing some money if it doesn't.
In fact the modern theory of finance is built on exactly the same apparatus as the modern theory of decisions in a casino, or any other risky situation.
53. CalGal - 2/24/2001 12:47:44 AM
Oh, okay. I see the roulette analogy now.
54. CalGal - 2/24/2001 12:49:12 AM
I once heard someone an investment call in show irately sputtering to draw out the differences between investing and gambling.
No, that's not what I was objecting to.
55. Slackjaw - 2/24/2001 1:08:57 AM
no, I know that, it just got me thinking about it.
I think his main point was that you can go to school to learn how to pick assets (no you can't, any financial advisor who says otherwise is of course a hack), and you can't use research and information to do better in gambling (sometimes you can, try counting cards in blackjack -- certainly more valuable than poring over past stock price changes).
56. CalGal - 2/24/2001 1:30:15 AM
Slack,
As for dollar cost averaging.
Suppose you bought 12,000 dollars of stock for $90/shr. Someone else bought 1,000 dollars of stock every month for 12 months and, because the price varied, their average price was $86.50/shr. At the end of the year, the stock is at 91/shr.
Is my math that screwy that I'm wrong, and the 12K up front has made more money?
Heck, I can look at my own investments over the last year. If I take my current amount owned and multiply it by the original price I bought in at, the cost of my investments (and my loss) would be much larger. Granted, the market has gone down--but that means that if it stays down, I've lost less--and if it goes up, I've made more (having bought in at a smaller amount).
Obviously, if the stock goes up religiously every month, you're better off having bought it at the lower price. But given how stock prices vary, it seems to me that you are most protected against a down market and positioned to take advantage of variable prices, which is common.
It also seems to me that you are more protected in the event that you need your money in a hurry. If you sink the whole 12K in and then need 5K after 4 months, you may have to sell it at a loss. In the other case, you have $5K available.
57. alistairconnor - 2/24/2001 3:31:55 PM
I have made a major switch over the last year. After 20 years on a salary, I pretty much expected to stay that way till retirement, for lack of entrepreneurial spirit or ability. But then, when in New Zealand (where I worked and my wife didn't), we decided that when we went back to France, she would work and I could look after the kids, garden etc for a couple of months, then look for contract work, ie no pressure to go back to a salary job.
This was a viable option because, although my wife only earns a modest schoolteacher's salary, we have no debts, and we own our house with no mortgage.
As it turned out, she got short changed... a contracting opportunity came up sooner than I had expected, and I never really had time to look after the kids etc...
58. CalGal - 2/24/2001 3:36:07 PM
You were salaried before that? I didn't realize. How do you like contracting thus far? I'm assuming you are working directly for the company, or are you going through a third party?
59. alistairconnor - 2/24/2001 3:53:09 PM
Starting out as an independent, I have very little money going out. After a couple of years, I'll be paying 40% to 50% of my gross income in tax and various compulsory social security contributions. But currently, I'm paying peanuts, based on last year's non-existent income.
After several months of ridiculously big bank balances, I had a serious think about money for the first time in my life. One day, I may want to go back to a salaried job, and I'll have a year or so of catch-up payments to make. So I need to put away a hefty chunk of money to cover this. And if I just stay on being independent, it'll be retirement money.
I am currently buying about $1500 worth of a share fund every month. The fund seems to track the value of the French stock exchange pretty well (since I've started buying, it's been heading steadily down!).
But the point is, I'm not a worrier, and I have no intention to become one. I set aside a fixed amount every month which is automatically invested. I don't want to think about it any more than that; I've got other things to think about, and a lot of them are more enjoyable to me than thinking about money.
And besides, even if I was sure that the stock market was going to rise suddenly, and wanted to buy six months' worth in one hit, where would I get the money?
Borrow it I suppose... and worry.
60. alistairconnor - 2/24/2001 4:06:06 PM
I'm astonished at how much more serene I am as a contractor. I'm a hermit by nature, and I get to sit around at home and work when I feel like it. I don't have to drive to work, I don't have to be polite to colleagues, I get to see my kids at lunchtime, heaps of advantages.
Until three years ago, I worked for the same company for ten years, then everyone left around the same time. As a result, I have plenty of potential contacts for finding work. But in practice, I work almost exclusively for one company, which is a simplification which I'm very happy with.
But now, I have to learn enough accounting to do my books for 2000 and declare my tax. A nightmare.
61. wonkers2 - 2/24/2001 8:04:33 PM
The best long-term investment for working Americans who are eligible is a Roth IRA invested in a Vanguard index fund, in my opinion.
62. Fielding - 2/24/2001 10:49:23 PM
The biggest mistake that people make in managing their financial condition is to look only at one small aspect. Questions about personal finance are invariably inter-related.
63. alistairconnor - 2/25/2001 7:01:28 AM
... um you invest your funds in the Irish Republican Army, Wonk?
What sort of pay-off do you expect, exactly?
64. Erin R. - 2/25/2001 5:41:50 PM
Why is a Roth IRA such a good strategy?
65. wonkers2 - 2/25/2001 10:53:51 PM
Alistair, Ha!
Erin, A Roth IRA compounds tax free from the time the money is invested until you take it out at age 59 1/2 or later. And, best of all, in contrast to a regular IRA, you pay NO TAXES WHEN YOU TAKE THE MONEY OUT. The downside is that you do not get a tax deduction for the original contribution, $2000 or less, from your taxes for the year in which the contribution is made. That is, Roth IRA contributions are made with after-tax money and regular IRA contributions are made with pre-tax dollars. Both compound tax free, but payouts from regular IRAs are taxed as regular income. Roth payouts are completely tax free under current tax laws.
66. Erin R. - 2/26/2001 8:27:47 AM
Morning!
Question: what individual stocks are people buying? I'm hearing a lot of buzz about tech blue chips (Intel, Microsoft, Cisco, Dell) and was wondering if folks here would like to discuss their purchases.
I'm checking in from home. I'll be in the office at around noon and I'll have the insurance quote with me then, so I'll be ready to discuss it then. I hope that others can also take something away from the conversation.
67. seadate - 2/26/2001 9:53:08 AM
Good Morning Erin,
My email is cloudysail@hotmail.com.
You asked about a Roth IRA .... whether this is the best choice for you depends on your specific situation and your goals ... and, of course do the math comparing this tool with a conventional IRA, 401(k), etc.
68. wonkers2 - 2/26/2001 3:48:01 PM
Most people are better off not buying individual stocks. Transaction costs and taxes tend to make them a losing or less attractive proposition than a good low-cost index fund. The stock buying process has been likened to a gambling casino where the odds favor the house. If you are interested enough to spend some time on it and you find stock picking enjoyable, take ten percent of your savings and dabble in the market. Put the rest in something surer, like a low cost Index 500 fund.
Microsoft has been strong for the past couple of months, perhaps on the assumption that the final remedy won't be as onerous as the initial decision by the jackass Penfield.
69. alistairconnor - 2/26/2001 3:55:00 PM
That's my thinking too, Wonk. Imagine that I spent a few hours every week studying the stock market, and making my own investment decisions. I'm lucid enough to believe that my picks would be significantly worse than those of the people managing my fund, in the long term. Plus, since I wouldn't enjoy doing it, that time would come out of my working hours rather than my leisure, i.e. I'd be billing less. Sounds like a very expensive proposition to me.
70. wonkers2 - 2/26/2001 3:57:14 PM
Seadate is, of course, correct that what is best differs from person to person depending on their situation. But Roth IRAs offer great advantages for many people.
Seadate is also correct that term life insurance is the only way to go, if you really need life insurance, that is. You can get the same coverage for a much lower premium and invest the difference in something with a much higher return. Also, shopping around is worth while. Buying from a salesman always costs more. There are life insurance companies that sell direct for lower prices.
71. CalGal - 2/26/2001 4:08:59 PM
I combine the two. I think that mutual funds are a good place to put your money and unless you want to devote your life to the stock market, you want the majority of your money in a good spread of funds--or a straight index fund, which is what I'm going to do next.
But I have found that I have had a lot more interest in how companies work and what decisions they make since I started dollar cost averaging purchases in various stocks. I would never be the sort who watches the market to buy high and sell low--but I find that buying stock to hold in companies that we all expect to be around for a long time has really helped me stay more involved in my investments.
But it's only because of Netstock that I can indulge this. I can buy $25-50 of a bunch of stocks and keep my stock portfolio diversified.
I buy a mixture of stocks, at this time I have tech, financial, services, and retail covered. Then I keep looking for other industries that interest me (or interest someone) and pick new stocks accordingly.
But mutual funds are the majority of my "portfolio", such as it is.
72. wonkers2 - 2/26/2001 4:17:11 PM
That's a good way to do it. I also own several stocks, mostly because I enjoy trying to pick winners. All of them are tech stocks, except for Wells Fargo and Exxon, so last year didn't treat me very well, to put it mildly (Cisco, Intel, Microsoft, Applied Materials, Amazon). Luckily, most of my savings is safely tucked away in a Vanguard IRA. If only I could get it out without paying income tax on the withdrawals. Hence my fondness for Roth IRAs, but alas I don't have any!
73. CalGal - 2/26/2001 4:19:17 PM
Isn't there an income requirement on Roths as well?
74. wonkers2 - 2/26/2001 4:33:38 PM
Yes, it's $100k, at least for converting from a regular IRA to a Roth IRA. Also, you have to pay regular income tax on the full amount of the regular IRA converted. That didn't seem attractive at my age. But, on my advice, my three kids converted their regular IRAs to Roth IRAs while they were still in school or in low tax brackets. That money will compound tax-free for 30-35 years if they don't touch it, and they will be able to withdraw it without paying any taxes at all. I believe they can withdraw it early, without penalty, for certain specified purposes such as a downpayment on a home or for big medical expenses.
75. Erin R. - 2/26/2001 4:45:40 PM
Is $100K the upper limit?
I'd like to play around with about $50/month in the stock market through some vehicle like netstock. I think it would be fun. But we'll also be looking into mutual funds as the basis of our portfolio.
OK, the insurance plan: it's called a flexible premium adjustable life insurance plan that pays a death benefit of $500K if the person dies before the maturity date. I don't understand this part: "The policy will mature on the policy anniversary following the insured's 100th birthday"
???
76. wonkers2 - 2/26/2001 5:17:18 PM
$100k adjusted gross income is the upper limit for CONVERTING a regular IRA to a Roth IRA. I'm not sure what the limit is, if any, for making a $2000 annual ROTH IRA contribution. I'll look it up and let you know.
I am not an expert on life insurance and individual circumstances vary. However, most financial advisers recommend plain old plain vanilla term insurance purchased after shopping around to find the cheapest policy from a reputable company.
I'm not familiar with netstock. I do know people who belong to investment clubs which meet and invest monthly in common stocks. It's a good way to learn about the market and invest modest amounts if you can find a compatible group. Another way to do it would be to put your $50 a month into a good no-load, low cost mutual fund. You could put it into a broad index fund if you want to be cautious or into a sector fund (health care, energy, biotech) if you want to be more venturesome.
77. wonkers2 - 2/26/2001 5:26:55 PM
ROTH IRA eligibility limits:
$95,000 adjusted gross income for single taxpayer
$150,000 adjusted gross income for married couple filing jointly
78. wonkers2 - 2/26/2001 5:30:41 PM
A good source of accurate information on investments, IRAs, etc., is www.vanguard.com/.
79. Erin R. - 2/26/2001 5:32:02 PM
In a few months, once the credit cards have been paid off, I'll have significantly more to invest. Probably something in the neighborhood of $500-$1,000/month, not including quarterly bonuses.
My insurance salesperson says that relatively few people will die during the term with term life insurance.
How exactly does term life insurance work? What is the term?
Looks like a Roth IRA would work for us. What happens when you go over the ceilings? Are you grandfathered in?
80. ScottLoar - 2/26/2001 5:38:46 PM
I cannot understand why reasonable, responsible and evidently intelligent people suddenly become unreasonable, flat-out dumb and irresponsible by distrusting a financial advisor to help assemble and manage a portfolio (great or small) but insist on making their own investments.
Let's assume one may know a little about how to make money by my job, but that same one rarely knows how to invest the money in the stock market. Sure, anyone can "play around" in the market risking whatever amount they feel comfortable with, and that's their choice, but that's not serious investment. At least I don't think so. It's more akin to throwing darts at a carnival to win a kewpie doll.
I suggest most persons link up with a good financial advisor (not a stockbroker!), sock away more money than first blush suggests you can afford, invest for the long-term (15-20 years at least),never-ever get in credit card debt, and become fiscally responsible.
Me? The bulk of my investments are above 10 years old and in mutual funds. I have above 30 investment vehicles. I continue monthly, religiously, to invest a fixed sum, as I have for years.
81. CalGal - 2/26/2001 5:41:51 PM
Scott,
I do have a financial planner. But I do other things as well, primarily because I find it keeps me vested in the outcome and thinking more often of investing (in mutual funds and everything else). Every time I decide to increase my fun investments in stocks, I also call up my financial adviser and tell him it's time to increase my savings.
It's my goal to get to 30 investment vehicles.
82. ScottLoar - 2/26/2001 5:46:13 PM
CalGal, you seem to be doing okay. My point was directed to those who for some reason known only to God and themselves believe they are the best ones to manage their investments. You know, in my whole circle of acquaintances I must confess (but never to them!) not one of'em seems qualified. The dive in the NASDAQ really hit some.
83. Erin R. - 2/26/2001 5:48:45 PM
Who is suggesting that anyone not talk to a financial advisor?
84. seadate - 2/26/2001 5:51:18 PM
Erin, the*term* for Term life insurance is much like car insurance - say monthly, quarterly, or semi-annually.
85. wonkers2 - 2/26/2001 5:52:00 PM
Financial planners are a mixed bag. Some are disguised mutual fund, insurance and variable annuity salesmen. If you're going to pay a financial planner, get a FEE ONLY planner who does not get a commission on anything he recommends or a commission on any trades, as in the case of a stock broker. However, Vanguard offers plenty of free financial planning advice on it's website or through the mail. For a reasonably intelligent person who has the time and is willing to take the time to find out things for himself it's not necessary to pay for a financial planner, especially one who is raking off a commission on the investment vehicles he recommends.
86. Erin R. - 2/26/2001 5:54:18 PM
I don't understand how this is different from other types of insurance a person would pay for periodically.
87. seadate - 2/26/2001 5:55:28 PM
Erin, you're catching on.
88. wonkers2 - 2/26/2001 5:57:05 PM
And even Warren Buffet doesn't have 30 investment vehicles. There is a lot to be said for simplicity. Unless you enjoy picking individual stocks or mutual funds there is no need for 30 "investment vehicles." That just unnecessarily complicates your record keeping and tax preparation without improving your returns.
89. seadate - 2/26/2001 5:57:28 PM
Erin,
I don't intend my previous post to be condecending, but it's really no different.
90. CalGal - 2/26/2001 5:58:37 PM
Scott,
I know a lot of people who are very upset about the NASDAQ dive and have sworn off investing in any way. They sold low. In most cases, this wasn't a good idea. If I were holding Microsoft, AOL, and Cisco, I'd hold onto them before I'd sell them (assuming that they'd already bought high).
Earlier in the thread, Erin was asking about financial planners. But they do vary, and you have to be careful.
91. Erin R. - 2/26/2001 5:58:46 PM
So you're saying there is absolutely no difference between the two?
I found tons of quotes for $1 million at quotesmith.com, for less than $1,000/year. I'm at the fool.com website trying to find more information.
92. ScottLoar - 2/26/2001 5:59:19 PM
Mundane Money Lesson 1
a) Save money. Do it now, no excuses, no procrastination. Do it now. Save more each month than you think you can afford, because you can afford it if you (see b)
b) Organize a budget by looking at income then looking at expenses. Look for waste and you'll find it. Cut back on damned pizzas delivered to the home. Apply discipline to your spending.
c) Look to the future, not short-term gains. I don't care if your uncle made a return on investment of 66% the last three quarters, think about making 12-15% over the next three decades. Yep, time goes faster than you think.
c) Never, never, never accrue debt, especially credit-card debt. Home debt is different; it's tax deductible, but shame on them who buys a home beyond their means.
d) Do invest in the education of your children, especially grades K-8. Yes, be lavish, do whatever it takes to get them into a good school with an established history of academic achievement and moral instruction. I myself, a Methodist, find Catholic schools best for that purpose.
e)Once you're investing do not break the habit. If you need something that bad and so forgoe the custom for some while or, God forbid!, ever even consider taking money out of your investment, then you don't need that something that bad.
f) Your spouse is your partner in this. You need their understanding, their fullest support, their confidence and mutual cooperation.
93. Erin R. - 2/26/2001 6:01:10 PM
Wait--my sales person said that only 11 percent of people die during the "term" with term life insurance. What does this mean, exactly?
94. seadate - 2/26/2001 6:02:45 PM
Erin, could your salesperson answer that question?
95. Erin R. - 2/26/2001 6:05:34 PM
I haven't asked her for clarification yet--but she made this point as a selling point, as if it were very important.
96. ScottLoar - 2/26/2001 6:07:03 PM
Yes, I have more than 30 investment vehicles, Warren Buffet be damned.
97. seadate - 2/26/2001 6:09:24 PM
Erin,
You sure appear to have a lot going on. I expect you'll make well informed decisions in these matters you're confronting because you've got some snap and aren't afraid to ask the "dumb" questions in pursuit of the facts.
98. CalGal - 2/26/2001 6:09:53 PM
Erin,
The reason she is making that point is because the policy she wants to sell you will give you money back for the term whether you die or not. This implies that you are "wasting" your money on term life, since you only get payback 11% of the time.
But the real issue is what you do with the cost differential.
In other words, suppose the term life policy is $400/year and the whole life is $4000/year. In both cases, if you die you get $500,000. If you don't die, you get nothing from the term life. If you don't die, you get [number] from the whole life anyway.
What do you do with the other $3600? If you invest it and you can get far more than [number] from the whole life (and you can) then nothing else really matters. What Seadate (and most people) are saying is that you can almost put the money in your mattress and do better than [number].
99. wonkers2 - 2/26/2001 6:18:19 PM
Scott's Mundane Money Lesson #1 is right on. Especially the part about credit card debt. Credit cards are great IF you pay them off in full at the end of each month.
So, step one for investors is to pay off any credit card debt in full.
Step two, in my opinion, is to max out your contribution to your 401k plan, especially if
your employer makes a matching contribution. This enables you to invest at a discount. The maximun contribution for 2001 is $10,500, if my memory serves me.
Step 3, put your contribution to the 401k in an index 500 fund or a good growth stock fund. Don't put it in bonds. You want it to grow and compound for the next 10-20-30 years.
Step 4, don't put any more than you have to into stock of the company you are working for. This is putting too many eggs in one basket (your job and your life savings and very possibly the value of your house which could go down in value if your employer goes under, depending on the size of your employer and the community where you are located.)
Step 4, then look at other possible investments such as no load growth mutual funds or individual stocks if you like to gamble.
100. wonkers2 - 2/26/2001 6:23:32 PM
And if your employer doesn't offer a 401k do a Roth or regular IRA every year, putting the $2000 in a no load growth mutual fund.
101. Erin R. - 2/26/2001 6:23:36 PM
You know, that's another good point.
I joined my company when the stock was at $15. I've been here three months and the highest it's been is $24, after the quarterly earnings call.
I'm locked in to buy 500 shares (I think) at $15 in nine months, my one-year anniversary. Assuming that I plan to buy and sell right away, how do I determine at what price to do this?
102. CalGal - 2/26/2001 6:31:43 PM
Is that your option? I believe that if you get the options and buy/sell immediately, you have to pay it as a short-term capital gain. If you can buy the options in advance and hold onto them for over a year, then the purchase and sale isn't treated as such.
That is an accountant question, though.
103. Erin R. - 2/26/2001 6:33:10 PM
I'll look at the paperwork they sent me and touch base tomorrow.
Hopefully, this advice will help someone other than me!
104. wonkers2 - 2/26/2001 6:37:34 PM
There is no magic answer to that question. It depends on what the overall economy and stock market do and how successful your company is. One thing you might do is get on the Web and see what analysts are saying about your company--Yahoo or other services. Or go to your local library and look up your company in Standard and Poors and whatever other investment services are available. Then use whatever knowledge you have about the profit outlook for you company. Then make up your mind.
In my career of 30 some years with a big, blue chip company with a stock option plan and a stock purchase plan, I followed a simple rule nearly every year: I sold all the company stock that I was eligible to sell and invested the money in an index 500 fund. This worked out pretty well. I had to hold the company's stock for 3 years as I recall. At the end of the three years I didn't try to predict whether the stock was going up or down. I just sold it on that date. Forecasting the price of an individual stock is very difficult. I had a good friend in the company who kept all his stock until one day during the middle of a recession when he was in his late fifties his job was reorganized out of existence and he was asked to retire. Due to the recession the price of the company's stock was less than half of what it had been a year earlier, he had trouble selling his house he had bought a couple of years earlier at a peak in the market and took a big loss on it, and of course his early retirement pension cut his income in half. He still had a couple of kids in college. Sad story.
105. CalGal - 2/26/2001 6:48:15 PM
While I completely agree with Wonkers post about priorities, it is worth mentioning this: of the five people I know who became millionaires because of company stock, three of them worked at Charles Schwab. Schwab's stock has been a phenomenal performer, and not much discussed as such.
So you never know what is going to happen with stock. That's the bitch of it all.
Another true Schwab stock story: When I opened my retirement fund after leaving Schwab, I had 1227 shares. My retirement planner (not the same guy I have now) recommended I sell all the stock. I was reluctant, because it had done reasonably well. But he pointed out that it was 50% of my portfolio and it was ill-advised to keep half my account in one stock.
I figured he was right, so I said he could sell 1200 shares. He said that it was best if he sold all. I said, Naw. Keep the 27.
At the time I sold the stock, those 27 shares were worth about $600 and were 1% of my overall portfolio. Those 27 shares are now 783 shares and represent anywhere from 8-15% of my portfolio, depending on the price. My financial planner keeps on telling me I should sell. I keep reminding him that if I had refused to let the other guy sell my shares, I'd be a millionaire.
106. CalGal - 2/26/2001 6:49:22 PM
Ack. Not priorities, company stock. Where did priorities come from? Beats me.
107. CalGal - 2/26/2001 6:57:11 PM
Scott,
What sort of investment vehicles do you have? I am investing in three mutual funds in my non-retirement investing plan thus far, although I have a host of others in my retirement portfolio.
I am wondering if there is ever a short term reason to put money in a bond fund at my age. It seems to me that it would be a good way to offset inevitable losses in other areas and that you could then sell off when it hits something reasonably high.
108. wonkers2 - 2/26/2001 7:00:32 PM
Cal, You beat me to it. I came back to say that my attitude toward owning the company stock reflected the fact that I was working for a large, mature and shrinking company. Back then I heard tales of Sears Roebuck secretaries that became millionaries in Sears stock and I knew a couple of Xerox millionaires in the sixties and seventies. Today, if I were working for Cisco or Microsoft or Schwab might well make sense to hold on to a chunk of the company stock. But even with the best of them you have to be prepared for some uncomfortable roller coaster rides and even total disaster as in the case of the dotcoms dropping like flies. Merck employees who held onto their stock over the years have done very well as have those at Pfizer and Wells Fargo, another great Bay area company, formerly Bay area I guess. So, even at a growth company it is prudent to diversify, at least partially, as the opportunity presents itself.
109. ScottLoar - 2/26/2001 7:19:09 PM
Wonkers2, you ain't dumb. Sound advice, all of it. And, you know a lot more about investments than I do.
110. wonkers2 - 2/26/2001 7:58:47 PM
Thanks for the compliment. Not sure that's true. On the individual stocks that I own I continually feel that I am at the end of the food chain--i.e. the last to find out both the good news and the bad news. So, I sell before the good news makes the stock go up and after the bad news makes it go down!
111. Erin R. - 2/26/2001 8:36:43 PM
OK, the fools say only deviate from term life insurance if you are old and infirm, and you can't find any other way to save money.
But my husband has non-term insurance. We'll have to look into that.
Next, I'm looking at my company 401(k) and stock options plans.
112. CalGal - 2/27/2001 11:45:47 AM
Erin--that link doesn't work. If you post the book name I'll look it up.
Money Magazine website. I bought the March 2001 issue on impulse and it was most useful for taxes. It also discussed retirement and insurance issues, Erin. I don't know how much of it is available on the website, so if you see the issue (Warren Buffet is in the right corner of the cover) you might want to pick it up.
113. Erin R. - 2/27/2001 11:54:50 AM
The Wealthy Barber, by David Chilton.
Has anyone read The Richest Man in Babylon. I'm going to order it from Amazon.
114. Erin R. - 2/27/2001 12:00:18 PM
I wish I could get my husband to read books on financial planning--they all say to pay yourself first. He's very conservative, and believes in paying bills first. Of course, we're not very motivated right now to save, if we pay bills first, because what's left over doesn't seem like much.
I'm thinking of using most of my quarterly bonus checks for my 401k plan. Since it's technically gravy, and we don't count it in our budget, I don't think we'll miss it.
115. CalGal - 2/27/2001 12:02:12 PM
The Wealthy Barber
The Richest Man in Babylon
Another one I've heard a lot about: The Millionaire Next Door
Wonkers, you mentioned wanting to start an investment and money thread. Are you interested in hosting?
116. Erin R. - 2/27/2001 12:10:28 PM
I would love to see an investment and money thread. I wouldn't mind hosting, if Wonkers doesn't want to.
Although I don't know near as much as Wonkers does!
117. CaroBeth - 2/27/2001 3:15:00 PM
ScottLoar, a question. Yesterday, when you posted your Mundane Money Lesson (which I have since printed out, to remind myself) you stated that one should never accrue debt. In general, I agree with this, but I have read that if you are applying for a loan, they like to see that you have some debt and that for that reason you should always keep some small amount of credit card debt. I am currently not a homeowner, but would like to become one and if maintaining some credit card debt helps me get a home loan, then I would do that. But if not, then I would prefer not to have the credit card debt. Opinion? Comments?
118. ScottLoar - 2/27/2001 3:27:46 PM
CaroBeth, your point is very well taken indeed but slightly off the mark.
When I first returned from overseas to live in the US as a tax-paying adult consumer I had no debt, nor employment record, nor credit history and so no credit card. It seems you do need some small debt that requires constant payment - a mortgage, or a major purchase like a car bought on an installment plan - which proves you have a history of paying debt. But, do not confuse this with credit card debt! Credit card interest is high in the extreme, sometimes above 18%, much, much higher than the interest on a home or car loan. Moreover, I can't prove so, but my instinct tells me money owed on a home or car seems more "responsible" than that for credit cards. Why not buy major appliances on the installment plan to help you establish a credit history? I don' want to appear overly severe, but I know of no one who can afford credit card debt; it is simply the most foolish use of one's money.
Anyone else with an opinion on this?
And on a separate note, when using a credit card make sure you get a bonus for using their money. My favorite is airline mileage for every dollar I spend on the credit card.
119. ScottLoar - 2/27/2001 3:28:55 PM
CaroBeth, I advise you to copy down Wonkers2 advice which will prove to be of greater use as you get on several years later.
120. ScottLoar - 2/27/2001 3:32:14 PM
CaroBeth, the only debt I now have is my home mortgage, which I could pay off with a single stroke but dare not for I'd lose the tax break. My point being, a small debt conscientiously paid on time over a certain period is needed only to establish a credit history.
121. Erin R. - 2/27/2001 3:33:21 PM
I honestly don't think credit card debt is the end of the world. This may be easy to say now that my husband and I will be CC-debt free within a few months.
From my perspective, depending on your individual situation and preferences, it can even make sense to even invest when you have consumer debt.
CaroBeth, do you not have student loans and the like? Why not get a copy of your credit report and see what's on it.
122. ScottLoar - 2/27/2001 3:38:04 PM
Well, Erin R., you do have the choice of prolonging your credit card debt, yes? Surely the interest you pay is better spent elsewhere?
123. CalGal - 2/27/2001 3:39:19 PM
Scott, Wonkers, I suggested an investment thread and either one of you would make a great host (see Suggestions). I'd be happy to move these posts over, too, if such a thread occurs.
About credit card debt: those who don't have it, it is wise not to get it. Those who have it, I have some unorthodox recommendations to consider for paying it off. One of the problems I have with those who say "Just pay it off" is that those people quite often never had the debt to start with.
The single biggest problem I had that caused me to acquire debt was cash flow. If this is also a problem you have--as well as a lot of debt--then I recommend prioritizing cash flow above timely payments when necessary. I found that sacrificing my credit history in the short term (for payments that were up to 60 days late) did a great deal to eliminate my need for credit.
I think a lot of people who have debt problems are also disorganized. Many recommendations for paying down debt (and doing it before anything else) are made by people who are extremely organized. It is not a happy mixture.
124. Erin R. - 2/27/2001 3:47:53 PM
CalGal's last paragraph is right on, as far as I'm concerned. If you have to wait until precisely the right moment and circumstances to invest, you might never do it. I haven't.
In my case, I really don't have that much consumer debt. I need to get into the habit of finding good investments, and investing on a regular basis. At this point, that is worth much more to me than the few hundred dollars I would save by paying everything off and waiting even longer to start investing.
The Wealthy Barber suggests that even with poor day-to-day financial management, a majority of people who pay themselves first will come out ahead--way ahead.
125. CaroBeth - 2/27/2001 3:49:11 PM
I'm not worried about credit history. My husband and I each have separate credit cards, which we have held for years and which we are currently paying down. We've had car loans and student loans. I should get a copy of my credit report, however, to make sure everything is clean.
My point was, that I thought I remembered reading somewhere (Motley Fool, TT?) that some loan organizations liked to specifically see credit card debt on someone's application. That somehow a car loan or student loan was not sufficient evidence of credit worthiness. Now, perhaps this is all bullshit. I don't know. That was my question.
(Apologies for sending this off-topic. We should perhaps start an investing thread.)
126. Erin R. - 2/27/2001 3:54:05 PM
Find a mortgage broker (or two), sit down for a consultation, and get their opinions.
I second the idea of an investment and money thread (again).
127. CalGal - 2/27/2001 3:54:36 PM
Caro--no worries. We'll get back to employment soon enough. I like the idea of an investment thread, so if either Loar or Wonkers is interested (or if Erin wants to take on two threads) we can move all this over. I originally thought it was on topic because there is a clear intersection between employment options and money requirements. How do we all work towards a point when our employment isn't our only income stream?
As for your question: I think you could meet both Scott and the loan organizations requirements by having a credit card that you use periodically and pay off immediately.
128. CaroBeth - 2/27/2001 4:05:33 PM
Cal, that is an interesting question you've put out there. It struck me the first time you posted it. I had never considered the possibility of employment not being the only income stream before retirement or hitting the Lotto. I guess I just assumed that until I retired, all income would go towards building a retirement fund or debt servicing. I did not envision enough income from investments that they could be used for living expenses before retirement. Most certainly something to think about.
129. CalGal - 2/27/2001 4:06:31 PM
Erin brings up a point that I don't think a lot of financial writers touch on enough: debt and investing are two entirely different things. Also, discipline in paying down debt is arguably more important than getting rid of it at all costs.
For example, I had $13,000 worth of debt a year ago. (down from a much higher number). I also have well more than that in a high-yield savings account. A lot of financial advisers would have told me to take the savings and pay off the debt. But the savings was there as my 3-5 month buffer against unemployment. If I paid off my debt right away, I wouldn't have had as much protection in a down cycle. Sure, I could have used credit cards in that case--but isn't that what I'm trying to avoid?
More importantly, though, I didn't get into that debt all at once. I got into it month by month, year by year. Having the discipline to pay it down, and feeling that satisfaction, was well worth whatever it cost me in interest. More importantly, learning how to pay down all that debt, learning how to keep my cash flow a priority at all times, has been a much more important lesson.
At the same time I started paying down this debt aggressively (some four years ago) I also began tentatively investing in mutual funds. I find committing to savings to be far more stressful than committing to paying down debt. I can't even think why, but there you have it.
So what might make sense financially, to hyper-organized financial planners, may not make sense behaviorally to less organized or less disciplined people--whether they have money or not. I find that learning the behavior is far more important and well worth the price paid in higher interest.
130. Erin R. - 2/27/2001 4:20:38 PM
The idea of paying yourself first frightens me a bit. It makes excellent sense, but it freaks me out to think of actually *keeping* some of my money rather than sending off every spare cent to the CC companies.
131. Laura C - 2/27/2001 4:24:44 PM
And the MWT gang says you ignore the emotional/psychological side. Hmmph.
Naive query:
Say I can devote a monthly $100 to investing, over and above my IRA. I don't want to buy individual stocks and probably can't due to a conflict at DH's job.
Moreover, I believe that the markets are headed for a prolonged slide - not just individual stocks, but the overall index will decline in the next year.
Why is investing in an index fund superior to, say, putting the money in a CD for 12 months, and reassessing then? What am I missing?
132. Laura C - 2/27/2001 4:25:45 PM
The first paragraph to CalGal, of course.
133. CalGal - 2/27/2001 4:27:52 PM
I know. Especially the 10% part. I am saving what seems to me a huge amount now, but am still not quite at 10% (a goal I intend to reach by yearend). But at this point it isn't reluctance to spend, but a desire to think more about where and how I want to spend it.
Of course, as Alistair points out some time ago, most mutual funds are going to pay off sufficiently in the end.
Hell, if all I did was take the money and put it in my mattress it would be better than spending it--so the value of the investment hasn't been my top priority up to now.
But I'm trying to change that by thinking more about it, reading up a bit.
134. Erin R. - 2/27/2001 4:29:46 PM
It seems to me that it would be better to let the market hit bottom, but who's to say what bottom is? I'm faced with a similar situation. If I do max out my 401k plan, that still leaves me with some monthly cash left over, some of which I'd like to put in mutual fund(s).
135. CalGal - 2/27/2001 4:31:38 PM
Laura,
I'm not sure it is worse. It's just that I would find trying to time the market to be wearying, you know? How do you know when it's time to take the money out of the CD and start buying index funds again--when the prices are still low enough to benefit from the rise?
The one thing that seems likely about an index fund--it's going to turn around and go back up, too. So if you buy into them at the lower prices, your return is much better over time, I think.
If you need the money quickly, though, and don't want to risk it then it seems to me that a CD makes a lot more sense.
136. Laura C - 2/27/2001 4:33:28 PM
Exactly. We are still paying down student loans, but I should be investing (outside the 401k) on top of that. But I don't want to buy at the top of the market. I'd rather get a small but guaranteed return until things stabilize a bit.
137. CalGal - 2/27/2001 4:34:11 PM
I am having a similar quandary about a bond fund. It seems to me that right about now, bond funds would do well. All my advisers say, "Ack! No! Put your money in other investments that pay back more over time!!!"
But if I'm willing to sell my investment in a year or two, wouldn't it make sense to put money in a bond fund, which probably has a guaranteed ror of 6%? It will offset the depressing downturn that some of my other investments will make in the short run--even while I'm taking advantage of all the cheap buys.
138. CaroBeth - 2/27/2001 4:34:45 PM
I read an interesting article in the NYT recently about behavioral economics and how this is a new field. That for years economists have assumed that individuals, faced with monetary decisions, will do the "rational" thing, rather than the emotional one. Only recently have they begun to examine how people's emotional responses effect their behavior with regards to investing, planning, etc.
Money is so obviously an emotional issue with many people. I find it amazing that these things were not taken into account before.
139. CalGal - 2/27/2001 4:35:52 PM
Caro,
You should read up on the Slow Thread. Slack is our game theorist God (just got hired at University of Chicago) and has much to say about behavioral economics. There is a recent discussion about it--something to do with buffets.
140. Laura C - 2/27/2001 4:38:27 PM
Yes, that's it - my gut tells me that while the economy will continue to grow and blossom over time, consumer confidence is shaken enough, and enough people are either being laid off or fearing they will be, that 2001 will be a bumpy year.
But then I am almost pathologically risk-averse, which is a problem.
I should really run some numbers, figure out how much we need in the short-to-medium term (to move from the apartment into a house, say 2-3 years from now) and how much I can play with for the long term.
141. Erin R. - 2/27/2001 4:40:46 PM
Another way to look at it is that $100 isn't really that much money. I mean, it's not nothing, but I personally could easily waste that much money each month. In fact, I probably do.
142. CaroBeth - 2/27/2001 4:43:06 PM
My husband has his MBA from U of Chicago and one of my good college friends got her Ph.D. in either math or economics there. I have great respect for that place.
143. CalGal - 2/27/2001 4:43:24 PM
That's what finally got me started--my first amount was $125/month. I figure hell, I spend more than that a month on lunch.
Scott's post about how much you have to save really hits home for me. I'm saving a huge amount and am still not taking a hit in the way that I live.
The only major savings decision I have made recently is that I'm not going to buy a new car. What with car payments and my already ungodly insurance, it has occurred to even me, the lover of all things new in cars, that I can do without for awhile.
144. Erin R. - 2/27/2001 4:46:27 PM
I would love it if we could drive our present car into the ground. We financed it over five years. I think we still have two years to go.
I will make a lesson of myself: buy a used car, never buy new.
145. wonkers2 - 2/27/2001 5:38:13 PM
Mortgage and credit card balances aren't comparable--7% vs 12-18%, tax deductible vs. not tax deductible. So, the after-tax cost of a home mortgage may be 5% compared to 12-18% for a credit card balance. High credit card balances don't help your credit rating. They reduce the amount of a mortgage you can qualify for based on your income. What can help is having a credit card and paying the balance off on time every month. Having a small balance, say, under $5000, and making regular payments is okay. Anything more is a definite minus.
The problem with credit card balances is that the interest rate on them is higher than the 7-10% average long run return you can expect to get in the stock market. Therefore, the math says that carrying credit card balances and, instead of paying them off, putting the money in stocks or mutual funds is a losing proposition. If the balance isn't too big, it may make sense to go ahead with investments while whittling away at your credit card balance. [I'm not suggesting that credit card balances not be used as a matter of convenience for vacations, etc, without disrupting regular savings and investment.]
An exception to paying off credit card balances before investing, would be where your employer offers an attractive 401k plan with a generous matching contribution. Then your likely return in the long run might well be higher than the cost of carrying the credit card debt. Again, income tax savings is an important factor--contributions to 401k plans reduce your taxable income dollar for dollar up to the maximum of 10% or $10.5k. The tax savings, together with the employer match, make a good 401k plan a very attractive investment, probably the most attractive investment around. The next best is a wisely invested IRA.
Cal, I don't have any desire to be a host. I'm content to shoot my arrows from the sideline. I will promise to contribute to the dialog.
146. CalGal - 2/27/2001 5:42:44 PM
What can help is having a credit card and paying the balance off on time every month. Having a small balance, say, under $5000, and making regular payments is okay. Anything more is a definite minus.
This is pretty much what I was saying to Caro, and I agree.
One thing, though, to those who say that all of your money must go to debt reduction: sometimes the market can do better than your credit card interest rates. So while I think it's best that most of the money go to debt reduction, I see nothing wrong with some small sum going monthly into mutual funds at the same time. I wish I had started saving even earlier, given how good the market has been.
147. Slackjaw - 2/28/2001 1:42:15 AM
Cal Message # 1420, re dollar cost averaging
It's not that you can't construct a trajectory of asset prices that makes dollar cost averaging work out better, after the fact, than another given strategy. It's that that is not relevant for decision purposes. The question is what you expect before the fact, and how dollar cost averaging stacks up in that way. And I think you'd need to postulate a very special and particular expected trajectory to make it look decent.
It also seems to me that you are more protected in the event that you need your money in a hurry. If you sink the whole 12K in and then need 5K after 4 months, you may have to sell it at a loss. In the other case, you have $5K available.
Liquidity constraints can definitely be an issue. But then, suppose you expect daily asset price changes to be as if drawn from a spin of a roulette wheel (and more specifically a random walk). Say you have $X in your gambling pot and would have used DCA over R periods. Compare dollar cost averaging to putting $X/R on the stock in the first period, and every subsequent period, keeping the level invested on that stock at $X/R.
Now you have some tax issues to worry about if you cash out your gains in any period, granted, but modulo that, the liquidity issue is obviated with this alternative strategy (a one commonly discussed in basic finance I think) *and* you have more favorable risk exposure for the given expected return of DCA. (In fact that strategy is exactly like the one I mentioned for the roulette wheels in Message # 1413.)
148. CalGal - 2/28/2001 1:49:39 AM
It's that that is not relevant for decision purposes.
????
The question is what you expect before the fact, and how dollar cost averaging stacks up in that way.
But what if what I expect is in line with how dollar cost averaging stacks up?
149. Slackjaw - 2/28/2001 1:56:14 AM
????
????
But what if what I expect is in line with how dollar cost averaging stacks up?
See And I think you'd need to postulate a very special and particular expected trajectory to make it look decent.
In particular, it couldn't be a random walk. That you have to adhere religiously to that belief. But it is probably your best bet.
150. CalGal - 2/28/2001 2:07:15 AM
And I think you'd need to postulate a very special and particular expected trajectory to make it look decent.
I am not seeing your point, and I hate it when that happens.
I have x number of stocks, and I don't know how any of them will do--although I expect all of the companies to be around for the duration. I have x number of dollars I want to spend every month, and I want to buy more stock when it's cheap and less stock when it's expensive.
What is unusual about that expected trajectory?
151. Slackjaw - 2/28/2001 2:17:54 AM
There is not an expected trajectory of the stock price implied by that. How do you think the stock price will move? Or is that what you mean by "don't know how they'll do"? This can't be evaluated without a specification of exactly how you don't know.
152. Slackjaw - 2/28/2001 2:19:46 AM
For example, imagine a bell curve of tomorrow's price, centered at today's price. Tomorrow's price could be anywhere on the curve. It's more likely to be around places near the hump.
153. Slackjaw - 2/28/2001 2:21:11 AM
...in that case, you don't know what they'll do, but you don't know in a different way than if tomorrow's price lies on a two-humped curve with humps on either side of today's price (aka a bimodal distribution).
154. ScottLoar - 2/28/2001 8:54:27 AM
No, I can't have my name affixed to any work not of my making or control, please. I am simply absent far too often, and my narrow knowledge of investments is limited and personal.
155. CalGal - 2/28/2001 3:15:13 PM
Whooops--154 was an accident. Okay, Erin, take it away.
156. seadate - 2/28/2001 3:31:32 PM
Erin,
I finally sent a response.
157. Erin R. - 2/28/2001 4:30:21 PM
We're home, we're home!
First order of business, seems to me, is setting up relevant links.
Cal, can you help us set up links? And does anyone have any really good websites they'd like to link?
158. wonkers2 - 2/28/2001 4:57:16 PM
Here are two good ones:
www.vanguard.com--for information on IRAs and Vanguard No Load Mutual funds and general information on investing for the long run.
www.personalfund.com--for analyzing the cost of mutual funds you own or are considering.
159. Indiana Jones - 2/28/2001 5:00:50 PM
160. Fielding - 2/28/2001 5:06:29 PM
Nice thread!
161. CalGal - 2/28/2001 6:02:41 PM
I have a Vanguard Index fund set up for Spawn; it is a very good site.
Second the mention of The Motley Fool, which I love--I also use it to track my own investments.
Netstock is a great place to buy stocks in small amounts monthly, no matter what Slackjaw says about the practice. (g) Transaction fee is $2 ($1 for custodial accounts), but they charge $20 to sell--so make sure you only put investments in there for the long haul.
Erin--Did you see my instructions for setting up links in Suggestions? I can't do that for you, but it's pretty easy. Email if you have questions, or post in Suggestions.
162. wonkers2 - 2/28/2001 10:14:26 PM
Cal, Here's an idea for your son perhaps when he's older and gets a summer or part time job. Let him keep the money he earns as an incentive in a savings or investment account but transfer an amount equal to what he earned to an IRA account, Roth, preferably. Report his taxable earnings to the IRS so that he can get a refund for taxes withheld. Continue contributing up to $2000 of his earnings to an IRA each year that he has earnings from a summer or part time job. By the time he gets out of school he will have a good start on a retirement nest egg that will continut to compound, tax free, until he retires or reaches age 70 1/2. [This really works. I started small IRAs for my kids with their baby sitting and paper route money when they were in junior high school. Later they got higher paying summer jobs which permitted $2k IRA contributions in most years. Now the three of them, all under 30, have IRAs ranging from $25-60k. And they all converted from regular to Roth IRAs, before they got into high tax brackets. Their IRAs are invested in Vanguard Index funds where the lower cost will add significantly to the return over 35-40 years or so.]
163. joezan - 2/28/2001 11:32:44 PM
Here is a pretty nifty Quicken tax calculator for figuring your taxes, individually, under the Bush tax proposal. Just for the heck of it, try a few differnt brackets/situations. It's quick (immediate).
164. Indiana Jones - 2/28/2001 11:48:15 PM
I think a good stock to look into right now is Intel (INTC).
165. CalGal - 3/1/2001 12:06:41 AM
It seems to me that chips are going to become even more of a commodity. I'm still debating about Intel. I'm thinking of adding Philip Morris to my list of purchases, along with the half of HP that isn't any more. (I can never remember its name).
Don't tell anyone in my state about the cigarette company, though.
166. CalGal - 3/1/2001 12:09:18 AM
Wonkers,
Spawn is still a bit young to work--but I've told him that he will be putting money into an IRA.
167. Erin R. - 3/1/2001 11:34:44 AM
I'll try to set up the links later today. If not, it'll have to wait until tomorrow--I have *six* meetings today.
Have to protect that income stream!
168. CalGal - 3/1/2001 2:26:32 PM
Question: if you are self-employed, is the cost of a financial planner to manage your retirement fund tax deductible?
169. Indiana Jones - 3/1/2001 2:39:04 PM
Cal: My experience with chip stocks is that they're very cyclical. If you buy a good company at the bottom of the cycle, hang on and are patient, you'll do well.
I've made good returns on Micron Technology several times doing that. It's probably been my biggest winner.
Intel is an even better company, and it has taken a beating. (Though just about anything can happen to anybody in this market now. The only thing I think is fairly certain about it is no one ought to expect anything like we were so fortunate to see for two or three years there, especially in techs.)
There may be more downside in the NASDAQ because when people are emotional they do unreasonable things. But I think it's been wrung out pretty well and if you have the stomach for it, you can buy good companies now and expect to profit. If not sooner, within five years or so.
Unfortunately most investors have been so spoiled they've lost the discipline for looking at that large of timeframe.
170. CalGal - 3/1/2001 2:41:19 PM
I'm the sort who will probably forget to sell altogether. If it requires organization, ferget it.
I agree about chip companies in general. My point about Intel was simpler--a good deal of its value is due to its dominance. I'm not sure that it's going to dominate as completely.
171. PsychProf - 3/1/2001 2:44:08 PM
172. Indiana Jones - 3/1/2001 2:44:15 PM
Question: if you are self-employed, is the cost of a financial planner to manage your retirement fund tax deductible?
I'm fairly certain you can deduct it against taxable income, meaning if the investment income is taxable now, yes (against that income). If it's tax-deferred, you could deduct it when you do pay taxes on the income.
Also, IRA administration fees are tax deductible.
But IRS advice is something I wouldn't trust to discussion boards.
173. PsychProf - 3/1/2001 2:46:19 PM
I invested with Intel at 41...so I will not advise on this page...
174. Indiana Jones - 3/1/2001 2:47:08 PM
If you still have it, PP, just hang on.
175. CalGal - 3/1/2001 2:50:31 PM
Also, IRA administration fees are tax deductible.
This is what I was looking for. And actually, since I also have taxable capgain income, I suppose I can also deduct a small percentage of the admin fees.
I know what you mean about IRS data--on the other hand, it has been established time and again that no matter how hard you try to find the right answer, you will have to pay if the answer is wrong. And it doesn't matter if the people giving you the wrong answer work for the IRS--so what difference does it make where you get the answer from? If it's wrong, you're gonna pay.
176. Indiana Jones - 3/1/2001 2:57:45 PM
Cal: That was just me covering my own ass.
177. grannypatsy - 3/1/2001 3:15:37 PM
I uasually wath the tape while I have my coffee; lately I just have my coffee. There is something moderately depressing about watching a string of red go by.
178. CalGal - 3/1/2001 3:33:41 PM
I try to comfort myself by remembering I'm getting some really good buys. It helps a bit.
179. Fielding - 3/1/2001 5:00:31 PM
If you still have it, PP, just hang on.
Actually, if you still have it in an after-tax account, you should sell it, realizing a nice tax deduction, and buy an equal amount for your IRA. You won't have to pay taxes on the IRA gains until you withdraw them, so you've acquired a nice tax advantage for nothing.
I recommend doing this with any stock that has lost a large amount of value in an after-tax account.
180. Indiana Jones - 3/1/2001 5:06:16 PM
Fielding: Unless there's a special exception about IRAs that I'm not aware of, you have to wait 30 days before buying a stock again as you describe (if you want the tax deduction). But if you think INTC will still be about where it is now 30 days from now, yours is a reasonable suggestion.
181. Fielding - 3/1/2001 6:04:43 PM
Indy:
That's a good point. The wash transaction rule does apply. There are a few ways to get around it. One is for a spouse to make the transaction. I have asked a tax attorney friend for others.
Also, you can always buy the INTC now for your IRA, and sell the INTC in 31 days. The risk is that you double your downside exposure for 30 days.
182. wonkers2 - 3/1/2001 10:24:04 PM
Or sell the INTC and buy a no load index fund where the odds of making more money are better for most people. Aside for the entertainment value, trying to pick individual winners in the stock market isn't a very reliable way to make money. Or, at least, there are more reliable ways.
183. wonkers2 - 3/1/2001 10:47:04 PM
Trading stocks generates high commission and tax costs even if you are able to pick winners. Buying good stocks and holding them for a long time can work if you pick the right ones and buy at the right time, ie, when they aren't overpriced which is hard to determine because they can either be overpriced because the market is over priced or because the company is over priced. Hard to tell when either or both are not the case.
184. CalGal - 3/1/2001 11:31:43 PM
I said earlier why I buy individual stocks: it's fun and it gives me a feeling of being "vested" in the outcome that mutual funds don't provide. I would never recommend that someone only buy stocks, and I agree that if you buy and sell a lot you're wasting a lot of money in commissions and taxes.
But buying stock in well-established companies and holding it for a long time is not going to hurt, if considered as part of an overall strategy. I was just talking to my financial adviser about this and he was saying that I am sufficiently diversified that he thinks that I can start using some money to buy "chunks" of stock--up to now I've been buying small amounts monthly. I don't plan on doing it right away, but it's nice to see that I'm progressing.
185. wonkers2 - 3/2/2001 8:42:38 AM
Investing on the Internet--Watch those decimals!
Paul Parsons, a day trader in Dallas, was a big loser in a NASDAQ fiasco this week. On Monday morning he saw the stock with ticker symbol ACLS rising and decided to bet that the gain would not last. He put in a short-sale order through Bloomberg Tradebook, an electronic network. With the Nasdaq quote then at $18.81, he expected to get that price. Instead, it was filed at $24.94. "I thought that was fantastic," he said later. He sold more stock, at prices up to $54.44
The stock was Axcells Technologies, although Mr. Parsons did not know the name. Nor did he know why it was moving: because a hedge fund trader had entered an order to buy the stock at any price from $10 to $95. The trader meant $9.50, not $95, but decimals can be confusing. The electronic network he used, RediBook, sprayed the orders all over Wall Street, driving the price as high as $93.
The rising price started take-over speculation, which hit the rumor sites on the Internet. Mr. Parsons bought stock to cover his short position. He made $145,908.
He got the bad news at 11am Tuesday. Most of his short sales had been cancelled, on the ground that the prices were "clearly erroneous." But his purchases stood. He owned 14,400 shares, bought at an average price of $19.03. With the stock down now to $10.06, his profit has turned into a loss of $130,065.
Behind the scenes, there was chaos on Mon. Brokerage firms called Nasdaq, which had no answers until it consulted with officials from the SEC. Eventually, Nasdaq decided to cancel trades above the arbitrary price of $22, but only if the buyer complained and if the trade had gone through a Nasdaq system. It did not consider adjusting trade prices. Richard G. Ketchum, Nasdaq's president, did not know that was allowed by Nasdaq's rules.
more
186. wonkers2 - 3/2/2001 8:50:45 AM
Confusion still reigns. At first Nasdaq said it could not have halted trading, and then yesterday said it could and should have done so. Then, last night, it said the SEC had told it that it had no such authority.
The electronic networks did as they chose. Some canceled all trades above $22, some adjusted them to lower prices, and some canceled trades only if the buyer complained promptly. The trader who started the mess did complain and his purchases above $22 were canceled.
Wall Street is not ver wympathetic to the losers. "What we did is absolutely fair," Mr Ketchum said. Larry Leibowitz, RediBook's chief executive, said he saw no reason to compensate Mr. parsons or others like him.
Speaking privately, some Wall Streeters express scorn for day traders. "they are just momentum players who don't care about fundamentals," one said. "This is not your Aunt Millie from Dubuque," another said
That should not be the attitude. It was not Mr. parson's fault that the hedge fund trader erred. it was not his fault Lthat RediBook's systems did not stop the ridiculous orders. It was not his fault that Nasdaq failed to halt trading, or to put out a warning, or to act promptly to adjust or cancel trades. But he and other traders like him are the ones hwo lost. Wall Street should find a way to compensate them. Otherwise, Nasdaq looks a lot like a casino that values a customer's business only until he starts winning.
Floyd Norris NYT
187. Erin R. - 3/2/2001 10:45:32 AM
Well, I talked my husband into maxing out my 401k with my bonuses. Even with the max out, we'll still get a bit from each check. He's suggesting an index fund and a stock fund with more risk. So I'm going to discuss it with the investing company my employer uses.
He wants to start investing in stock. We're going to discuss it this weekend--I want to do mutual funds and stocks.
188. wonkers2 - 3/2/2001 4:18:09 PM
Now may be a better time to buy stocks and mutual funds than any time in the past couple of years. But if you buy individual stocks be prepared for a roller coaster ride. For example, about a year ago CISCO Systems, the premier tech stock in recent years, traded at 82. Today it is trading for 22 1/2. Nothing has changed much at CISCO. It is still growing rapidly. It dropped because it became apparent that the U.S. stock market was quite high compared to historical levels, the tech stocks were even higher, and CISCO at more than 100 times a year's earnings per share was the highest priced of the tech stocks in Nasdaq that were profitable. Then CISCO missed the quarterly earnings forecast by a penny (18 cents instead of Wall Street's expectation of 19 cents).
Plenty of others that were not yet profitable dropped even more than CISCO. Amazon, Healtheon (Webb MD) Teligent, Loral and a host of others lost more than 90 percent of their value. And nobody is predicting whether, let alone when, they will ever recover to their former peak prices. (I speak from my own personal experience, having owned some of all the above companies.)
If you are interested in mutual funds, read John Bogle's latest book. It contains a lot of impeccable advice. And don't EVER pay anybody a commission or load (sales charge) to buy a mutual fund. Pay attention to the annual fees. They are a big drag on the return you get on the fund. The cost calculator linked to one of my posts above is a good tool to illustrate the effect of management fees, taxes and other costs on the return you realize on your investment. (www.personalfund.com)
189. Erin R. - 3/2/2001 4:33:03 PM
My husband and I agreed that this is a good time to get into stocks and mutual funds.
In addition to the 401(k), we're prepared to invest a modest amount each month. As we get our feet wet, we'll be better able to determine what's working for us and increase that amount.
I ordered another book, I think I mentioned it a couple of days ago, "The Richest Man in Babylon." I'm trying to read a book at a time, then do additional research and reading to make sure I understand the concepts.
190. wonkers2 - 3/2/2001 5:07:28 PM
I haven't seen "The Richest Man in Babylon." Who wrote it? Let us know how it is. The classic book on investing in the stock market is "The Intelligent Investor" by Warren Buffet's professor Benjamin Graham. There are plenty of other good ones, except I'm not much of a believer in investing in individual stocks although I am addicted to it with a fairly small percentage of my assets (growing smaller daily).
191. wonkers2 - 3/4/2001 11:16:44 AM
THE SHORT AND HAPPY LIFE OF HENRY BLODGET, MERRILL LYNCH TECH ANALYST, Front page article i
in Sunday's NYT
Thirty-five year old Yale history major grad, Merril Lynch ace tech analyst paid in the millions and a fixture on CNBC...his recommendations are down 79 percent, on average, from the beginning of last year, with several trading for less than $1. But Mr. Blodget, the senior Internet analyst at Merril Lynch, keeps his chin up.
"Things change," he said last week, furrowing his brow after every few words. "The market went from saying 'We like companies that are growing quickly but are losing a lot of money' to saying, 'We ant to see earnings.' It's very hard to predict a 180-degree turn like that."
Starting in 1998 Blodgett's ratings on AMAZON were BUY when the price went from under 20 to nearly 100 and back to about 65 when Blodgett lowered the rating to ACCUMULATE when the price soared to over 100 and then back to just over 40 when Blodgett raised the rating to BUY and the price rallied again to nearly 90 and then dropped to around 60 when Blodgett lowered his rating again to ACCUMULATE and the stock soared again to over 100 before dropping to 60 and bouncing to 80 when Blodgett increased the rating to BUY wherupon the stock dropped again to just under 40 when the rating was dropped again to ACCUMULATE where it remains to day with the price just under 10. (Prices in the table adjusted for splits. Actual price soared to over $400/share.)
"I don't think we fanned the euphoria," Mr. Blodget said. "I said over and over that all trees don't grow to the sky." (But some do??)
192. wonkers2 - 3/4/2001 11:25:28 AM
cont'd
Such warnings didn't prevent investor complaints. D. Kanjilal last week filed a formal complaint, seeking arbitration, with the NY Stock Exchg; he blames Mr. Blodget and his firm for hundreds of thousands of losses on an investment in InfoSpace [Beware of companies with interior capital letters in their names!], an online Yellow Pages. Despite Mr. Blodget's recommendations the stock has fallen 96 percent since Mr. K bought it.
Mr. K argues that Mr. B was trying to protect a deal Merrill had been netotiating. Merrill says the charge is baseless and that Mr. Blodget didn't know about the deal until a few days before it was announced.
Merrill continues bo back Mr. Blodget strongly. The firm recently gave him a choice, added assignment, covering Microsoft. "He is a top-rated analyst of absolute integrity, and Merril Lynch stands begind him." Susan McCabe a company spokeswoman said.
193. CalGal - 3/4/2001 11:39:18 AM
I read that article. Blodget is a history major who said that Amazon would go from 70 to 400. Cohen, his predecessor at Merrill Lynch, said that it would drop. Amazon went up past 400--Cohen quit, Blodget got his job. Of course a year later, Amazon is within pennies of Cohen's most recent prediction. Blodget had recommended buy.
The article makes the interesting point that Merrill Lynch is well-served by Blodget. It is actually better for ML that he makes covered predictions that are far too optimistic. People buy, IPOs get funded, ML makes money.
This point was also made in a Money article earlier this month. I hadn't intended to listen to analysts in any event, but it is actually spooky to realize that analysts are shills.
194. wonkers2 - 3/4/2001 11:46:57 AM
Right.
"But where are the customers' yachts?" [Customer to J. Pierpont Morgan or some other mogul, as I recall reading several times somewhere.]
195. JudithAtHome - 3/4/2001 12:19:36 PM
I read something interesting today about "cashless collars" on stocks...Mark Cuban, who sold his Broadcast.com to Yahoo made a fortune in Yahoo stocks and when they started to tank, he was home free...lost no money at all because of this cashless collar thing. It kept the value of his stock at high amount. (I can't find the link to the story which explains it.)
But don't get excited...investment firms only offer this option to large accounts, like $5 million and up.
Must be nice...I'd like the option to do that on our piddley little account but I guess that's reserved for the people with serious money only.
196. CalGal - 3/4/2001 12:36:27 PM
Cashless collars are just two options--a call and a put. It's a way to protect a stock position that you don't want to sell, or can't sell--but yes, I believe it has to be a large stock position.
Cashless Collar
197. JudithAtHome - 3/4/2001 12:41:43 PM
Well, the article explained it that way, about the calls and puts...and it said $5 mil and up. Of course, to guys like Cuban, who made the remark Yahoo could go down to $1.00 a share and he'd still have a (B) in front of his name, $5 mil is probably peanuts.
198. CalGal - 3/4/2001 12:55:02 PM
But keep in mind, you have to be really sure that the stock is going to go down--you could take a serious hit if the stock goes up.
It also requires a financial institution--it's not something you can decide to do yourself, and that's why the financial requirements about size of the investment. It has to be worth their while.
Requirements
Creating a collar requires a "counterparty," a financial institution (usually a major bank or brokerage) that simultaneously buys the call from and sells the put to the investor.
The financial wizards at the counterparty carefully structure the calls and puts so their firm can make a profit. As a result, counterparties have stringent rules when it comes to collaring a stock.
To be worth the effort, the stock that the investor controls must have a minimum market value of $2 million.
In addition, the stock's market cap -- the current share price multiplied by the total number of available shares -- must exceed $500 million.
Also, the stock must be liquid, trading at least 20,000 shares daily on Wall Street. And the current share price should be at least $10.
Individual investors can protect their stock positions with puts and calls, too.
199. JudithAtHome - 3/4/2001 1:05:30 PM
Cubans partner, Todd Wagner, said this:
"A lot of people kept saying, 'Why collar? The price is only going to go up.' But it would have been crazy for us not to do it. Unless you're the greediest SOB on earth, it only makes sense to lock in the gains."
Maybe a billion or so is more than enough for some people.
200. CalGal - 3/4/2001 10:55:16 PM
Question: I want to open a money market account for the bulk of my savings--just use my business savings as the depository. My financial planner told me that it makes more sense for me just to open an account at my bank. But when I checked out their description of their money market account, it said:
An investment in a [bank name] money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the [bank name] money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds. Past performance is no guarantee of future results and yields will fluctuate. The collected balance in your account is swept daily to and from a [bank name] money market fund. The daily sweep constitutes a purchase or redemption of fund shares which are not FDIC-insured.
I know this sounds dim, but is it really possible to lose money in a money market account? How likely is it?
201. wonkers2 - 3/5/2001 12:06:31 AM
Theoretically, but I don't think it has ever happened. That's why they all sell for $1/share.
202. CalGal - 3/5/2001 12:13:08 AM
So this is the usual money market? I was worried that I wasn't looking at the right sort of account.
203. alistairconnor - 3/5/2001 6:06:46 AM
After evaluating options for my short-term liquidities, I discovered that all I could get is about 3.5% for on-call money at a bank. The interest is taxable, so it works out closer to 2% net.
However, there is an "alternative" bank which provides funding for good works (third world aid, environment, rehabilitation etc) and encourages people to choose their own interest rate, with the possibility of opting for 0%.
The difference between the maximum rate offered and the chosen rate is considered to be a donation to charity, and therefore qualifies for a 50% tax reduction.
So : if I invest 10 000 F in a normal bank, that's going to net me about 200 F a year. If I invest it in the charitable bank (which I have), it will net me about 150 F (tax reduction). It costs me 50 F, and the charitable bank gets 300 F or so.
204. wonkers2 - 3/5/2001 8:04:35 AM
Cal, I'm no expert on money market funds, but my impression is that they only invest in short term government and triple A corporate securities, meaning the only real risk would be some kind of fraud in a fly-by-night organization. The risk at Vanguard, Fidelity or Wells Fargo would be about as close to zero as you could get.
205. wonkers2 - 3/5/2001 8:05:42 AM
allistaire, Almost like alchemy!
206. Erin R. - 3/5/2001 10:46:28 AM
OK. We had dinner last night with the insurance saleswoman. My husband made the mistake of mentioning that we would be getting term insurance for me, at a cost of roughly $50/month, rather than the universal rate she was recommending, which was $200/month.
She went into a hard sell, reasoning that the policy was about buying a lifetime policy over the space of 30 years, with a payoff of $500,000.
I did an investment calculator for the difference. $150/month over 30 years at 12% comes to $524,244.62. A 15% return comes to $1,038,491.94.
So we're making our decision by the numbers. Overall, I've really enjoyed figuring out how to make this decision. I learned a lot in the process. And I'm excited about being a millionaire when I'm 60!
I also did a calculator to determine the value of maxing out my 401K contributions. Over 30 years, contributing $875/month (the maximum contribution currently allowed), in pre-tax dollars at a 12% return I will have $3,058,093.62. At 15% that comes to $6,057,869.66.
207. Erin R. - 3/5/2001 10:57:45 AM
BTW, I welcome any comments on my analysis. I am a novice and want to hear any criticisms on my thinking.
208. seadate - 3/5/2001 11:01:15 AM
Judith,
Have you traded options before?
209. seadate - 3/5/2001 11:08:50 AM
Erin, your analysis is dead on.
210. seadate - 3/5/2001 11:15:21 AM
Judith,
The reason I ask is that buying options as a hedge has been a common practice for a number of years and is what keeps CBOE in business. A hedge is insurance purchased for protection against the down-side and (although sometimes justified) I've *never* seen free insurance of any type.
211. JudithAtHome - 3/5/2001 11:24:49 AM
seadate:
At the risk of sounding like a boob, I've never traded options before and what I know about investing is zilch. All I know is we are debt free and own our house...
212. seadate - 3/5/2001 11:32:44 AM
Judith,
You certainly don't. I have utilized options heavily in the past, but haven't traded in the last 5 years. As I see it, a collar is very simple (as options strategies go) - you're buying a put as a hedge (to cut your losses) an selling a call to cover the cost of the put (to cut your gains). I'm convinced this is rarely a good strategy for the individual investor (ad would be happy to explain ad infinitum - later). For a fund manager, it may be a good strategy so he/she won't get fired if they're wrong on a stock pick.
213. seadate - 3/5/2001 11:33:54 AM
Judith,
It's amazing how one F-16 can put you on easy street (g).
214. JudithAtHome - 3/5/2001 11:41:51 AM
seadate:
Isn't it just?
215. wonkers2 - 3/5/2001 12:14:26 PM
Erin, Good analysis. My only question is have you analyzed whether you really need even term life insurance? Have you analyzed what you are insuring against? Do you have children or expect to have children? That might be a good reason if they would need money in the event of your untimely death. If you see a current or down-the-road need for insurance another possible reason might be to get it now while your health (and that of your spouse) is good and you (and your spouse) are insurable, rather than waiting until later when you might not be insurable. Also, are you getting a non-smoker discount? If not,wait and quit smoking and re-apply.
Another factor to consider is what may be offered by your employer. It can make sense for some people to "go bare" on life insurance and instead put that money in a good no load growth mutual fund.
216. wonkers2 - 3/5/2001 12:31:58 PM
There's a great Tom Toles cartoon in my paper today showing a fat cat boss behind a big desk talking to a rather small and thin employee:
Cell #1 Boss says "We've changed your retirement plan so it will build benefits more slowly."
Cell #2 "And be smaller overall."
Cell #3 "And you never know about Social Security."
Cell#4 "So figure on working longer, possibly forever."
Cell #5 Employee asks "Isn't there an EARLY retirement plan? What about that?"
Cell #6 Boss replies "We have several, in a size to meet your needs." And he holds up a paper labeled "EARLY GRAVE."
Toles footnote: "Depending on what you urn."
[This is a wry commentary on what is actually happening to a lot of retirement plans these days, at the shrinking number of employers who even have a retirement plan other than a 401k.]
217. Erin R. - 3/5/2001 12:32:57 PM
I am married and I have one child. We will probably have another within the next couple of years.
A $1 million term policy would just about cover debts, living expenses for my survivors, and a private college education for my son.
I do smoke, half a pack a day, and I'm getting more and more motivated to quit, not only for health reasons. I read "The Millionaire Next Door," about the money habits of people with a net worth of more than $1 million. One example that was given was a couple that smoked something like three packs a day between them, over 46 years. If the couple had invested their cigarette money during that time in Philip Morris, they would have accumulated $2 million!
I do intend to go as cheap as I can on life insurance, and do a 20-year term. By the time I'm 50, it's entirely likely that I will have accumulated $1 million.
Question: the insurance saleswoman said that the life insuranced payoff is tax-free. I didn't think about it at the time, but surely she means it is free of estate taxes, but not of income taxes, correct?
IOW, my family gets $1 million when I die, but that is considered income, no?
218. wonkers2 - 3/5/2001 12:48:20 PM
I'm not qualified to answer questions about income or estate taxes. I do know that wealthy people sometimes use term life insurance for estate [tax] planning purposes. Exactly how that works I'm not sure.
219. wonkers2 - 3/5/2001 12:54:49 PM
Cal, Schwab is trading at $19.73. Let me know when you think it has bottomed out. (I own a few shares, too.)
220. CalGal - 3/5/2001 1:11:53 PM
Wonkers,
I was just talking to my financial planner about Schwab. He had a sell order at 38 that he was going to execute whether I liked it or not, and the stock's high was 37+. I would be surprised if it will go much lower, although I would still hold onto it in any event. Schwab has nearly a trillion dollars in assets and one of the best management teams going. The slowing in the stock market will obviously hurt it, but they have always been creative about dealing with down times--from spotting new opportunities to reducing employee costs to avoid layoffs.
The "furlough" that is in the news now is not their first. Back in 1988 they offered a number of innovative programs that ranged from voluntary to mandatory, depending on the organization. You could/had to take a day off every week (without pay or as a vacation day) or take a 3-month sabbatical at 25% pay. Within 6 months the crisis was over. I think it's actually a good idea to cut costs immediately, rather than be forced to layoff later.
I think Schwab's a good buy right now. But then, I originally bought it at 16 in 1987 (at the IPO) and then watched it sink to 6 after the crash of 87, where it sat for a number of years. Some of my co-workers sold it again at 16, in relief. Dumb, dumb, dumb. I don't see myself selling it anytime soon--worst case, it won't be a sterling performer for a while and will pick up with the economy.
221. CalGal - 3/5/2001 1:13:20 PM
Thanks for the responses on the market rate funds, Alistair and Wonk.
Alistair, I don't generally worry about taxes--although that may change. In any event, I am currently paying taxes on 2% interest, so it makes more sense to pay on 5.
222. Erin R. - 3/5/2001 1:43:09 PM
I'm at Nolo doing some research on life insurance taxes vs. regular estate taxes.
So far there doesn't appear to be much difference. And the ceiling on estate taxes will be $1 million by 2006.
223. Erin R. - 3/5/2001 1:49:03 PM
You know, this is all rather fascinating stuff. Now that I'm getting into it, I don't know why more people don't take the time to learn how to get their money to work for them.
224. CalGal - 3/5/2001 3:58:12 PM
A few questions:
1) Am I the only person who didn't know that you could have only six transactions per month on a savings account? I got a warning letter in December, which I took quite seriously--but I had assumed that the problem was due to it being a business account. But I was talking to a bank teller today and it's any savings account. Another reason to get cracking on a money market account.
2) Has anyone seen the "involuntary unemployment insurance" forms at the bank? I assume these are some variation on the ones you get from credit card companies, but I'm wondering if they are new, and if they are worth it.
3) Third call on bond funds or bonds in general. Anyone have any feedback on whether it's a decent short-term investment?
225. dusty - 3/5/2001 7:24:53 PM
The Motley Fool Money-Making, Life-Changing Special
Despite the less than reassuring name, the boys at Motley Fool do have decent advice, and they attempt to keep it in ordinary language as much as possible.
I'm recording this show this evening; it is on at various times and dates around the country. I will try to give a summary after I've seen it, but get your VCR's and Tivos ready.
226. wonkers2 - 3/5/2001 7:56:37 PM
I have seen a number of recent recommendations to buy junk bond funds (high yield corporate bonds). They have already moved a fair amount in the past couple of months, but could move some more if interest rates continue downward. Also the spread between junk bonds and investment grade bonds has been unusually wide and could narrow. Vanguard has a good high yield bond fund, but they discourage short term trading and have a withdrawal penalty if you sell it within 3 years.
For a short term investment, intermediate or short term bonds may be better than long term bonds. If you have enough money you can buy these direct without using a bond fund. I have never done either. I have either used a money market fund or bought a junk bond fund. Of course a lot of people use CDs to park cash for short periods.
227. CalGal - 3/5/2001 8:15:09 PM
Dusty,
Motley Fool is just awesome. Thanks for the heads up.
Wonkers,
I wasn't thinking of junk bonds. That's interesting news about Vanguard Bond funds, since they were the ones I was considering. Still, 3 years is pretty short-term for my normal investment pattern.
228. Slackjaw - 3/6/2001 5:20:04 AM
Money & Investing Poll:
do you think that a good financial advisor is capable of predicting future changes in an asset's price? For example, "Intel will reach $X by May," or at the very least direction of change over some specfied interval?
229. wonkers2 - 3/6/2001 9:39:07 AM
Doubtful for common stocks, especially short run price predictions. But if your definition of "asset" includes,e.g., $10,000 invested in a good no-load Index 500 fund, a financial adviser can predict with high confidence that it will appreciate in the future. And the longer into the future, the greater the confidence in the direction and range or approximate rate of appreciation.
230. Erin R. - 3/6/2001 10:25:55 AM
Just finished reading "The Millionaire Next Door."
I recommend this book to anyone who wonders why they earn a high income, but don't have any assets.
A recurrent theme throughout was the fact that poor and middle-class parents don't teach their children about frugality, investing, discipline and independence. This really struck a chord with me because my parents were and are great accumulators of belongings, and I was raised to believe that upper-class people drive nice cars, live in huge homes, and wear expensive clothing.
Yet the book points out that the average millionaire never spends more than $399 for a new suit.
231. Dusty - 3/6/2001 11:45:17 AM
Slackjaw
I'll largely echo wonkers2 comments: if the statement is about a specific stock with a price and a time horizon, the "prediction" is almost useless. I'll also add that this conclusion depends on another part of your example—that it is made by a finacial advisor. I am open to the possibility that there may be some people in the world who have the ability to make prediction, with enough predictive ability that they are worth something, but those people aren't financial advisors.
(Sorry if this is mildly disparaging of financial advisors, but I've had a few call on me over time, and I usually know more about investing than they do. I'm sure some are btter than others, and many know enough to be valuable totheir clients, but I haven't met one I would use.)
232. Dusty - 3/6/2001 11:46:07 AM
(Sorry for failing to do spell check before hitting post)
233. Dusty - 3/6/2001 11:49:30 AM
Slackjaw
Extending the comment, I do think that there are people who can make probabilistic comments about classes of assets, such as equities or bonds of a certain quality, over some time horizons. I confess to a bias in this belief, as this is core to what my division does for a living.
234. Erin R. - 3/6/2001 11:55:48 AM
I have never worked with a financial advisor. Wouldn't have any idea how to find one or what to look for when hiring one.
I do have a poll: how long have you been investing? What made you start?
235. Dusty - 3/6/2001 11:56:39 AM
Slackjaw
David Dreman wrote a book—I think the title was Contrarian Investment strategies. The anecdote I recall isn't precisely your scenario, but I think it is close enough. He didn't look at stock price predictions, he looked an analysts predictions of earnings. To oversimplify his conclusions, he concluded that analysts are abysmal at estimating earnings, even over fairly short periods of time. While I suppose it is theoretically possible to predict stock prices without being able to predict earnings, I would think it should be at least as hard, if not harder.
236. CalGal - 3/6/2001 12:01:32 PM
Slack,
do you think that a good financial advisor is capable of predicting future changes in an asset's price?
No. That's not why I go to a financial adviser, btw. In fact, we almost never talk stock--the conversation I referenced above is the first time I can remember that we specifically talked about price.
Erin,
I've been meaning to get that book for a while; your review has bumped it in priority.
What started me investing? In mutual funds, it was my financial planner, who looked me straight in the eye and said, "You are living hand to mouth, not like someone who makes as much money as you do." I really thought about that, and realized he was right--that there wasn't anything stopping me from starting to save other than my own fear. I told him right then and there that he was right, and that now his number one job was to get as much money away from me as he could every month. I started at 125/month back in 98, and increased the amount dramatically over the next two years.
I began investing in stock because of the Daniel Kadlec article on Netstock. I had thought about investing in stocks before, but I couldn't justify the capital. Netstock made it possible for me to invest in a diversified portfolio with small amounts monthly.
237. CalGal - 3/6/2001 12:04:03 PM
I agree with Dusty and Wonker's responses, btw. I was thinking more specifically.
Erin,
A recurrent theme throughout was the fact that poor and middle-class parents don't teach their children about frugality, investing, discipline and independence.
My parents taught me about frugality, discipline and independence--they just didn't mention investing. My attitudes toward debt and spending were learned from my ex-husband, a classic Yuppie boomer when we met--but another one who came from a lower income background with no knowledge of investing.
238. Dusty - 3/6/2001 12:11:56 PM
Erin R.
That's a good question. I've never searched for one, so I may not be the best person to ask, but I'll take a stab at it.
My first piece of advice is that you have to do some homework yourself, if only to be knowledgeable to tell the difference between a good advisor and a bad one. Many people call themselves financial advisors, when they are little more than life insurance sales people, with a access to a few mutual finds, and a company generated spreadsheet.
In the same way that knowing nothing about cars means that finding a good mechanic can be tough, knowing nothing about finances you could get a poor financial advisor.
So how does one go about getting a basic education in finances?
I'd start with:
239. Erin R. - 3/6/2001 12:13:04 PM
I can't imagine "The Millionaire Next Door" not having a positive impact on any reasonable person's outlook on money.
As I said, my parents own great stuff--not assets. When I got the $10K windfall in college, I was given no advice or guidance. Not even a beginner's book on investing, or a subscription to the Wall Street Journal.
I don't blame my parents, though. They came from very poor backgrounds and struggled to become middle-class people. They didn't have a lot of knowledge to pass on to me.
240. seadate - 3/6/2001 12:26:44 PM
I do have a poll: how long have you been investing? What made you start?
Since '86 ... MFs (numerous types and families, long-term, short-term), Stocks, Options.
1)Make lots of money to: retire early (whatever that means - I don't think I'll ever "retire"), not have to stay at a job I don't enjoy, never be afraid of losing my job.
2)It can be fun and challenging.
241. Slackjaw - 3/6/2001 12:36:53 PM
interesting comments. I believe you Cal, and that's not why anyone should get a financial advisor, at least not specific predictions of the variety advisors do sometimes think they can make. They can be immensely useful (I'm sure) for developing a profile that suits your goals and gives you a tolerable risk exposure.
242. CalGal - 3/6/2001 12:40:35 PM
They can also be useful for taking money from you and nagging you. As I think I mentioned a while back, until I found my financial planner my 401K check sat on my desk. He'd have to work hard to do worse than that.
243. Erin R. - 3/6/2001 1:52:35 PM
I think of the qualities I mentioned above, investing is the most important, followed by independence, discipline and frugality. The authors pointed out that while most millionaires do budget, the ones who don't pay themselves first and live off of what's left over.
244. CalGal - 3/6/2001 2:21:21 PM
I think frugality is a bit overrated, particularly if you come from a lower class background. In the book, Erin, how many of the millionaires came from upper class or professional families?
245. CalGal - 3/6/2001 2:21:58 PM
Incidentally, I'm not quibbling with your order--I agree with your order. I was commenting more generally on the perceived "moral value" of frugality.
246. Erin R. - 3/6/2001 2:44:50 PM
From "The Millionaire Next Door:"
Consider the following facts that our research uncovered about American millionaires:
--Only 19 percent receive any income or wealth of any kind from a trust fund or an estate.
--Fewer than 20 percent inherited 10 percent or more of their wealth.
I don't have a problem with reasonable frugality. I turn off the lights we don't have in use around the house. I/we keep the place clean ourselves. I don't mind taking lunch to work a couple times a week.
I do personally have a problem with excess consumerism. One family profiled in the book had I think three kids, two adults, and spent $30,000 a year for clothes.
And my next-door-neighbors, while they seem pretty well off, I don't think invest at the level they should. The wife/saleswoman revealed recently that they each have about $400K in universal life insurance, equity in the condo, assorted other small investments, and a $100K in a 401(k) plan through the husband's job. They each earned over six figures last year, so it seems to me that they ought to have more investmented. They live large--own two luxury cars, send their daughter to a private school, eat out at fancy restaurants several times a week, etc. But she also said that they save 25 percent of their income--but there seems to be a disconnect.
I mentioned this couple in TT a few months back--she spends $500/month on beauty treatments.
Don't get me wrong--it's her money, her choice. She's maximizing the enjoyment of her money now, while it is more important to me to plan for the future and eat at the local diner instead.
247. seadate - 3/6/2001 3:00:44 PM
Not having kids, I tend to live more for the moment with an ear to the past and an eye on the future.
248. CalGal - 3/6/2001 3:19:02 PM
Erin,
That's a bit different from what I was asking. For example, are more millionaires the children of lawyers or truckdrivers?
249. Erin R. - 3/6/2001 3:26:22 PM
The book doesn't say. However, it does point out that a high proportion of immigrants are millionaires, because they tend to own their own businesses. But, they don't generally encourage their children to be entrepreneurs.
250. CalGal - 3/6/2001 3:35:08 PM
The reason I was interested is because I think materialistic goals are excellent for those who start out poor or lower middle class. Whereas if most of the millionaires came from either immigrant or upper income families (even if not millionaires) such behavior would be discouraged--and would be reflected in the survey.
My parents had very limited goals and always tried to keep their spending below their income. I did the opposite, and as a result throughout my 20s and early 30s, my constant drive was to make more money. I am making far more money than any self-respecting English major/single mom has a right to expect, and it is certainly in large part because I was driven to. I wasn't terribly self-indulgent, but I wanted a better life for me and for my son than I'd had, even if it meant spending slightly beyond my means and being ever on the lookout for a better job and more money.
But it would have been simple enough to add to this drive a simple credo--sure, kid, but put some money away, too. Even if it was only $100/month in mutual funds throughout the 90s. I could have afforded that much and still driven up the same amount of debt, made the same choices, and so on. I could have been just as clueless but had a lot more assets than I do now.
But so many financial planners lecture you--pay down the debt, then save. Sure, that's optimal--but I wish my financial adviser had started taking money away from me a lot sooner than he did, even if it meant that money wouldn't go towards paying down debt.
251. Erin R. - 3/6/2001 3:42:35 PM
We had this conversation over in MWT.
I think materialistic goals should focus on assets, not belongings.
My parents were struggling middle-class people with poor upbringings, and they wanted their children to have more. As a result, three of the kids have graduated from elite universities.
However, one of them declared bankruptcy a few years ago, another was close to it (me), and only one seems to be OK with money.
Given what I've read in the past couple of weeks, I am determined that my son gets into some kind of investment plan the moment he starts getting an allowance.
I agree that if debt it manageable, you should invest. Having some debt isn't the end of the world.
252. CalGal - 3/6/2001 3:48:41 PM
Erin,
I think you're right--but my point is that no one ever told me that, dammit! It is a neglected area of media coverage.
I have already started Spawn investing--he has a Netstock account and a Vanguard fund. We just started him on an allowance again--he kept on forgetting his wallet and so I discontinued it for several months. He finally went a month with his wallet always on him, so we restarted the allowance with the caveat that he loses it if he is ever caught without his wallet.
As part of his money management, he will have to put some of the money into a savings account and then put it in his index fund. But I am looking for ways to help him be more organized than I am about money. The only problem is that I am disorganized about getting him organized.
253. Erin R. - 3/6/2001 3:57:10 PM
I am nothing if not organized. I keep the house clean because I can't stand not finding something immediately when I want it. The financial statements are meticulously filed with check number, amount and date mailed indicated. Most recent statement at the front of the file, etc.
And I still don't have a pot to piss in. So organization, too, is overrated.
254. CalGal - 3/6/2001 3:59:41 PM
That's comforting--Js have no real advantage in money management. I am much relieved. (g)
I really do feel this whole area we're discussing--and have discussed in the past--is really quite neglected in the media, in financial adviser training, and so on.
255. Erin R. - 3/6/2001 4:01:48 PM
The reason I was interested is because I think materialistic goals are excellent for those who start out poor or lower middle class. Whereas if most of the millionaires came from either immigrant or upper income families (even if not millionaires) such behavior would be discouraged--and would be reflected in the survey.
I just wanted to point out that the book repeatedly draws a distinction between high-income and wealthy people. I thought this was a very interesting point to make. Asset accumulation, not possession accumulation.
256. CalGal - 3/6/2001 4:21:01 PM
Yes, I saw that. I think you are right, too. However, my debt was acquired primarily due to cash flow issues and my need to pay for private school for Spawn, as well as therapy post-divorce for me. Neither expenditure was either materialistic or asset driven, but both were important.
However, I did keep the therapy on as a luxury for a lot longer than I would have had I been more focused on asset accumulation. My thought was hey, I can afford it and it's useful.
Once I quit therapy, I was astonished at how much more money I had, how much more quickly my debt went down, and so on. I gave up a housekeeper at the same time, and between the two I saved close to $1000/month. Was I being materialistic? Not really, I was trying to make my life easier--and it is a stressful life I have. But had I known I was trading off more rapid asset accumulation--had I consciously considered that as an option--I know I would have made a different decision.
257. Erin R. - 3/6/2001 4:26:20 PM
More women would find their mental health and self-esteem would improve if they focused on asset accumulation early in their lives, I think.
Not a direct comment on your situation, just a general comment on women and money.
258. CalGal - 3/6/2001 4:35:18 PM
No, I agree. I was happy that I was able to afford therapy, but at least three years of it I would now have traded for being able to pay down my debt and focus on more investing. But it seriously never occurred to me as a priority until my financial adviser mentioned it--and hell, he could have mentioned it sooner.
259. CalGal - 3/6/2001 4:36:20 PM
That said, I try and remind myself I did do a lot right, too. I have a hefty retirement account and a house, and am now positioned to purchase another house. So it's no use beating myself up.
I keep on thinking that disaster is right aroudn the corner. I wonder if that's a personality trait or if it hits people at various points in their careers?
260. Erin R. - 3/6/2001 4:59:33 PM
Actually, the authors say that part of the reason that business owners are more likely to be millionaires is because they view the world as having lots of uncertainty. So they plan for ups and downs.
261. Erin R. - 3/6/2001 5:06:22 PM
I did some things right, too. I paid off my debt (well, most of it), bought a condo, and improved my income stream. I'm getting educated, I'm only 31, so I still have time on my side.
My new book just got here: "The Richest Man in Babylon," by George S. Clason.
I won't be around much for the rest of the week, but perhaps I'll have time to post a review this weekend.
262. CaroBeth - 3/6/2001 5:35:12 PM
It's been very interesting reading your review of "The Millionaire Next Door", Erin. In my own marriage, I tend to be the frugal one. When my parents divorced, there was not a lot of money around for a while, and what I learned was not to want things. I still have difficulty buying for myself. DH comes from a lower income background than I do, but his way of dealing with it is to not restrict himself, as if to make up for what he couldn't have in childhood. Between us, we do not have a very good financial plan. We need to get one.
263. Erin R. - 3/6/2001 5:41:18 PM
CaroBeth: don't do what so many of us do, which is to feel intimidated and afraid to get started.
Let me suggest that you first do some reading, talk to some people that you know who seem to be more savvy than you, and go from there. This is an important point--previously I have sought opinions on assets from people who have none.
264. wonkers2 - 3/6/2001 5:42:00 PM
Re #238 Andrew Tobias is very good.
265. wonkers2 - 3/6/2001 5:45:42 PM
And Vanguard sets the curve for looking out for investor interests.
266. Erin R. - 3/6/2001 5:59:21 PM
The Amazon.com reviews for "The Richest Man in Babylon" are almost all five stars.
267. CalGal - 3/6/2001 7:57:18 PM
Caro,
You're in my area, so if you want to talk to my financial advisor, just email--I'll give you his name. He only takes clients with a net worth above a quarter million (I'm grandfathered in) so if that is more than you need to have him handle, he also gives referrals.
I just saw this article in Newsweek on selecting financial planners--billing by the hour is becoming more common.
268. HollyW - 3/6/2001 11:06:00 PM
I've read every word of this thread...I am very interested in the subject, as I do want to increase my standard of living and to get a substantial nest egg going, but I don't savor the notion of working more hours a week to get it, necessarily.
I'm surprised no one has mentioned real estate. My husband is a big believer in owning rental property, probably because it worked well for his parents. His parents have made many, many savvy financial decisions, and I'm all for following in their footsteps, but rentals look like a bunch of headaches to me. We have just bought a condo--getting our feet wet, our first property--and he really wanted to get a two-family fixer-upper (all we could afford) but I balked. He has finally forgiven me for that (g).
269. CaroBeth - 3/7/2001 2:00:45 AM
There was an interesting short article in today's Newsweek about financial planners and how some are changing to set-fee pricing, rather than a continuing relationship. You pay for two or three hours, go in and discuss your life and financial goals and walk out with a plan. Could be a good way for beginners to start. The article also gave some tips on how to find someone who was qualified.
270. CaroBeth - 3/7/2001 2:02:00 AM
Oops - I was behind a few posts - just saw yours of earlier, Cal.
271. Erin R. - 3/7/2001 8:41:18 AM
Halfway through "The Richest Man in Babylon." Will report back later--I'm in an all-day meeting today and out of pocket for the rest of the week. Definitely won't be able to check in until Saturday at the earliest.
272. Erin R. - 3/7/2001 8:50:18 AM
One important point I will share now:
A portion of what you earn is yours to keep.
Ten percent is the minimum for everyone in this regard. Pay yourself first.
Invest your gold, invest the children of your gold, invest the children's children of your gold, and so on.
273. ScottLoar - 3/7/2001 9:10:47 AM
The logic of pay yourself first is to save. Save some money from every paycheck (10% is a good start; I save up to 40% like mainland Chinese), then live on what remains. In other words, don't live up to and surely not beyond your means.
274. Erin R. - 3/7/2001 9:18:07 AM
I would like to save even more than 10 percent--but ten percent is a good place to start for everyone.
Gotta go--will try to check in if we have a break in the meeting.
275. Erin R. - 3/7/2001 11:09:37 AM
Break time!
Another good point from TRMIB: don't trust a bricklayer to give you good advice on jewelery investments.
In my case, this means don't trust an insurance saleswoman to give you good advice on cash flow and investment strategies.
276. CalGal - 3/7/2001 11:13:58 AM
I'm really glad that you mentioned that here, about the insurance policy. The resulting conversation really gave me some good approaches to use when trying to talk someone out of it--instead of just wailing about what a bad idea it is, show the numbers.
And of course, I'm also glad that you had the opportunity to get the info. But that's just a nice to have. (g)
About stocks: is there ever a time when you should sell a stock, even if your strategy is always buy and hold?
277. Erin R. - 3/7/2001 11:18:23 AM
When you retire?
278. CalGal - 3/7/2001 11:30:52 AM
I dunno--even retirement isn't considered a time to get rid of stocks these days, given how long we're all supposed to live.
But I was thinking more of portfolio maintenance. I am buying 10 or 11 stocks each month and I have two questions I want to regularly revisit: should I still be buying this stock and, in the event that I decide not to buy anymore, should I sell the position or just hang on to it?
I'm only buying stock in companies that will be around for a long while, so in my cases I expect my answer to be "yes" and, even if I decide to stop buying a stock, "hold". But I'm looking for parameters and criteria to use.
279. Indiana Jones - 3/7/2001 11:37:09 AM
Cal: The usual guideline is to keep a ratio in your portfolio of 100 - your decade as non-stocks. When you're 30, you have 70 percent of your portfolio in stocks. At 40, 60 percent.
So as you age, you gradually divest.
280. Indiana Jones - 3/7/2001 11:40:02 AM
Also, when you say you're buying 10 or 11 stocks, I assume you don't mean 10 or 11 new stocks, but additional shares of existing stocks. If an individual wants to own more than say 10 stocks, I think she should buy a mutual fund because IMO you can't own that many stocks and stay on top of them (unless you make investing your career).
281. CalGal - 3/7/2001 11:42:51 AM
Also, when you say you're buying 10 or 11 stocks, I assume you don't mean 10 or 11 new stocks, but additional shares of existing stocks.
Yes, that's what I mean. But I think I'll go over that amount of regular purchases--although probably not much over. Since I plan on just buying and holding, there isn't as much to keep track of. I am investing only a small amount every month--about 10% of my total.
As for the guideline, I don't think that is a valid one anymore--too many 60 year olds followed that guideline in the 90s to make me feel comfortable with it.
282. Indiana Jones - 3/7/2001 11:44:44 AM
Institute of Consumer Financial Education
283. Indiana Jones - 3/7/2001 11:47:12 AM
As for the guideline, I don't think that is a valid one anymore--too many 60 year olds followed that guideline in the 90s to make me feel comfortable with it.
Do you mean that you think they missed out by not having more in the market?
284. CalGal - 3/7/2001 11:56:55 AM
They not only missed out, but their portfolio in "safe" investments didn't keep up.
Also, we are generally living longer, which means that stocks are a reasonable risk for 60 year olds.
285. Indiana Jones - 3/7/2001 12:20:06 PM
They not only missed out, but their portfolio in "safe" investments didn't keep up.
True, but now you have last year's correction. Personally, I don't think the long-term rules really changed in the 90s--not the ones based on math. That is, you couldn't just keep compounding at the rate stocks were compounding forever.
So the alternative is either to follow some kind of rule of thumb like the above or try to time the market. If you could have exited the market at just the right time, that would have been the optimum strategy, but inherently that's an impossible strategy for the overwhelming majority of people (because they constitute "the market").
I do tend to think more aggressively than most, but that's because I have a higher tolerance for financial risk. At any given time, I probably have 90 percent or more of my assets in stocks (including mutual funds). Briefly I sold off a substantial portion last year and avoided the first NASDAQ correction, but boy did I suffer with the second. And that was because greed made me ignore reason.
If I had extra cash now, I'd certainly be buying. But most of my money is already in stocks, I just bought a new house, and I therefore can't swing it. I wonder how many others are in this situation (already fully invested) and thus can't help revive the markets.
286. Indiana Jones - 3/7/2001 12:26:24 PM
Also, we are generally living longer, which means that stocks are a reasonable risk for 60 year olds.
I agree with the idea, but I wouldn't characterize the reason as "risk." Traditionally, you don't want to keep money in stocks that you might need in the next five years, so the idea has been that you need more of your money once your retire. That's what you're living on. But yes, now that you live longer past retirement, you have to get more out of your portfolio to pay the bills, so keeping it in low-earning investments won't do.
And that people are working longer comes into play as well for the same reason.
287. CalGal - 3/7/2001 12:31:06 PM
I wonder how many others are in this situation (already fully invested) and thus can't help revive the markets.
Happily, I'm doing my part. I have nearly tripled my investments over the past year. I will be buying a condo soon, but given that my rent is $2100/month right now I don't expect to lose much in the way of cash flow with my purchase. It will decrease the large chunk of cash I'm sitting on, but that's the plan.
But yes, now that you live longer past retirement, you have to get more out of your portfolio to pay the bills, so keeping it in low-earning investments won't do.
Yes, that's what I meant.
Traditionally, you don't want to keep money in stocks that you might need in the next five years, so the idea has been that you need more of your money once your retire.
But don't you want to be living directly off your investments as well, if possible? I was talking to a woman at the bank the other day and lord, she was depositing a huge dividend check. I imagine that you start investing more heavily into income stocks as you age?
288. Erin R. - 3/7/2001 3:01:50 PM
There's some kind of big announcement coming out of Yahoo! at 4:15 pm CST. Wonder what it is?
289. CalGal - 3/7/2001 3:05:28 PM
Yes, they suspended trading after cancelling an Internet conference. There has been much talk of a merger with a media corporation, apparently. I can't find the link I just read. Very irritating.
290. Erin R. - 3/7/2001 3:07:24 PM
I was at cnn.com
291. Erin R. - 3/7/2001 3:25:11 PM
Indy- 292. CalGal - 3/7/2001 3:27:53 PM Erin, 293. Erin R. - 3/7/2001 3:29:50 PM When do people typically start to buy? 294. wonkers2 - 3/7/2001 5:26:44 PM Now is as good as any to start to buy and continue buying regularly every month. 295. CalGal - 3/7/2001 10:58:31 PM Yahoo Warns on Sales, and Its Chief Resigns 296. Erin R. - 3/8/2001 9:12:53 AM From The Richest Man in Babylon, the seven cures for a lean purse: 297. wonkers2 - 3/8/2001 9:39:22 AM ABBY SAYS BUY! 298. wonkers2 - 3/8/2001 9:41:54 AM MORE ABBY 299. Erin R. - 3/8/2001 9:48:56 AM In English, please, for the novices? 300. thoughtful - 3/8/2001 9:50:13 AM Erin R....I thought the old babylonian financial advice was Buy Sheep, Sell Deer. 301. Erin R. - 3/8/2001 9:50:54 AM No deer in Babylon. Sheep, maybe. 302. Erin R. - 3/8/2001 9:51:25 AM Cal: where does one find independent analysts? 303. wonkers2 - 3/8/2001 10:02:48 AM 70 % stocks or stock mutual funds 304. wonkers2 - 3/8/2001 10:14:04 AM Independent analysts are ones that charge a fee and who are not selling or recommending insurance or mutual funds or any other product for which they receive a commission or other compensation. They are called "fee only" advisers. The theory is that they are looking out for your interest more than an adviser who makes his living off commissions from funds or insurance companies. 305. CalGal - 3/8/2001 1:52:44 PM Erin, 306. ScottLoar - 3/8/2001 2:21:53 PM American Express financial advisors are no longer limited to American Express' offerings but can now work beyond as well. 307. CalGal - 3/8/2001 3:34:19 PM Really? That's news, and I appreciate you telling me because I generally recommend them quite a bit already, with that caveat. 308. wonkers2 - 3/8/2001 4:03:46 PM My impression is that American Express charges a lot for what they offer. Okay I guess for someone who just doesn't want to be bothered. 309. CalGal - 3/8/2001 4:06:46 PM Or someone who doesn't have enough money to go to a financial planner or enough assets to turn it all over. Yep. That's their market, and it's perfectly okay. Lots of people wailed when I said I went to Amex and I reminded them that my check was collecting dust on my desk. 310. ScottLoar - 3/8/2001 5:21:17 PM My American Express advisor won't take on any new accounts, and those he has have assets well above six figures. No, this type of financial advisor is not for those just starting out, but great for someone who has respectable assets, looks to invest 15-20 years, and has several financial goals to meet. 311. ScottLoar - 3/8/2001 5:23:14 PM I myself work on commissions and I have no reluctance to work with others who rely on commissions. The formula is real simple - you get paid on performance, which seems to scare the hell out of most people. 312. CalGal - 3/8/2001 5:25:04 PM I don't have a problem with it either, for the same reason. But I think that only works for people with larger accounts. 313. ScottLoar - 3/8/2001 5:37:01 PM CalGal, yes, my Amex financial planner started small and found us at a meeting of Montessori preschool parents. We were the only ones to take him on from that group, which included at least two single mothers who like many others left before his presentation was finished. 314. ScottLoar - 3/8/2001 5:39:16 PM I'll confess, our initial investment with him was US$20,000.00. That was a long time and many, many subsequent investments ago. 315. CalGal - 3/8/2001 5:41:49 PM As I mentioned a long while back, I had strep throat the day my planner called and count it a lucky accident. He was 23 at the time and eventually he became one of the very few CFPs in the country to qualify before the age of 30. 316. ScottLoar - 3/8/2001 5:46:06 PM Yes, again you're right! Mine also a CFP last year limited new accounts to 250K+. 317. Laura C - 3/8/2001 5:47:33 PM CalGal, Scott, what made you decide to commit to these advisors? 318. Laura C - 3/8/2001 5:50:06 PM Oh, and Erin, I took to heart what you said about the Netstock money - that I could easily be spending it on spa treatments or restaurants, so why not commit it to this? That's what got me over the hurdle. Thanks. 319. CalGal - 3/8/2001 5:51:51 PM Erik told me that I saved like someone who made a third as much money as I did, and that the main difference between the wealthy and the middle class was their attitude towards money--saving and investing. I was thinking as if employment were my only income stream, and not focusing on my net worth at all. 320. ScottLoar - 3/8/2001 5:53:57 PM I used this advisor because he was associated with a reputable firm, worked on commissions like me, drafted a proposal which I had checked out by others interested in my small business, and I had the ease to invest and see returns over a one or two-year period. Moreover, I made other investments at the time from which he could not benefit but which he endorsed (zero coupon bonds, Illinois college bond funds). 321. ScottLoar - 3/8/2001 5:53:59 PM I used this advisor because he was associated with a reputable firm, worked on commissions like me, drafted a proposal which I had checked out by others interested in my small business, and I had the ease to invest and see returns over a one or two-year period. Moreover, I made other investments at the time from which he could not benefit but which he endorsed (zero coupon bonds, Illinois college bond funds). 322. ScottLoar - 3/8/2001 5:55:02 PM Be back later on. Crisis on the phone. 323. CalGal - 3/8/2001 5:58:39 PM Laura, 324. wonkers2 - 3/8/2001 7:39:51 PM Those of you who use American Express or similar firms might want to go through the exercise of using Yahoo or some similar site to compare each of your funds for the past year, three years, five years and ten years with the S & P 500 and plug them into the mutual fund cost computer on www.personalfund.com. You might be surprised at the results. The longer the time period the more significantly management fees and commissions affect your return. If your funds' returns don't match the S & P 500 you might want to consider Vanguard's S & P 500 fund which virtually guarantees you a return very close to the S & P 500. 325. CalGal - 3/8/2001 7:57:13 PM Yeah, but Wonkers, no one recommends that you sink all your 401K money into an S&P 500 fund. At least no one that I've read. 326. wonkers2 - 3/8/2001 8:04:48 PM Some do. You could do worse. But Vanguard has other index funds, as well. Another even broader one, based on the Wilshire 5000, is the Total Stock Market Index fund. They also have three small cap funds, an international fund and a Growth Index Fund that invests in large cap growth stocks like Microsoft, Merck, GE, et al. All of these funds charge management fees lower than other funds. Every year several funds, perhaps 20 percent of all funds, beat the broad indexes, but they tend to be different ones every year. And their turnover, and therefore your tax bill, is higher. The differences in management fees and taxes and commissions, if any, add up to real money over 10-20-30 years. 327. CalGal - 3/8/2001 8:07:22 PM But suppose you are someone with only 10K in retirement funds to invest. Would you feel comfortable taking your money and putting it into one fund if you didn't have much knowledge? 328. wonkers2 - 3/8/2001 8:26:23 PM I did just that (invested my entire 401k fund in an Index 500 fund) for more years than I care to remember. It treated me very well. Now I am a bit more diversified, but I'm not sure I'm actually doing any better. In the long run the before tax returns for good no load index funds, Index 500, Total Stock Market, Small Cap tend to be similar, around 9-10 percent, before taxes. And taxes are lower, in taxable accounts, than with managed funds because the turnover in index funds is much lower. An index 500 fund offers quite a lot of diversification--the 500 largest cap stocks in U.S. companies. Some advisers would tell you that that's plenty of diversification. For a while they were advising investors to put 5-20 percent in an international fund, but lately with the growth of the global economy most of them say that you get plenty of international exposure through large U.S. companies. 329. ScottLoar - 3/8/2001 8:26:51 PM Wonkers2, I do not stint paying a professional to help manage my finances. I was quite clear about that. 330. ScottLoar - 3/8/2001 8:29:31 PM Overseas investing. On a recent trip from Hong Kong to Chicago the guy next to me was an investment banker stationed in Hong Kong. A quarter hour of swapping opinions and he confessed all his money is invested in the US. Just like me. 331. wonkers2 - 3/8/2001 8:48:08 PM Scott, If you are happy, that's fine. But I maintain that you can get just as good or better "professional" advice from Vanguard at a fraction of the cost. I'm not saying that the adviser or salesman, as the case may be, isn't performing a worthwhile service for those who want it. But, with a little research, you can do better with an organization like Vanguard that is a mutual organization that exists for the benefit of the owners of its funds, not for the owners of the organization, as is the case with Fidelity, bank trust departments or American Express. There are no shareholders or owners of Vanguard expecting a maximum return on their investment. 332. ScottLoar - 3/8/2001 8:50:48 PM Wonkers2, your advice (as always, I kid you not) is well taken. I may act on your advice independently of my current relations and see what happens. 333. CalGal - 3/8/2001 8:55:23 PM Wonkers, 334. Autodaffy - 3/8/2001 10:20:28 PM Why would someone invest in an index fund as opposed to a fund that has a markedly higher rate of return over a long period of time? Ultimate security? 335. CalGal - 3/8/2001 10:41:20 PM I thought that index funds usually outperform mutual funds? At least lately, they have. 336. wonkers2 - 3/9/2001 7:04:35 AM Broad index funds, year-in-year out beat the vast majority of managed funds. Sector index funds, as do sector managed funds, fluctuate much more widely. 337. ee - 3/9/2001 10:23:10 PM My understanding is that 80% of managed funds have not beaten the SP 500 over an entended peiod of time. 338. wonkers2 - 3/9/2001 10:30:57 PM Mine too. And in most years they haven't beaten the Index 500 either, and the ones that do beat the S&P550 tend to be different every year and usually they are sector funds--e.g., health care, value, Asia Pacific which may be hot for a year or two, but In the long run the Index 500 leaves them behind. 339. ee - 3/9/2001 10:39:15 PM I've had most of my investment money split between 4 funds for the last 10 years. 2 of the funds are Vanguards 500 and total market. Thankfully I went to 50% cash in Jan. of 2000. 340. wonkers2 - 3/10/2001 9:15:26 AM Good move. Let us know when you decide to put it back in. 341. thoughtful - 3/10/2001 9:19:52 AM Another reason for investing in index funds is management fees which on managed funds, depending on the fund, can be substantial. Another reason is that all that managing means buying and selling stocks all year long which can generate taxable capital gains. Index funds only change stocks when the definition of the index changes, thus capital gains are not realized as often and taxes are deferred. 342. wonkers2 - 3/10/2001 9:23:12 AM ee, As you might have gathered, I too am a Vanguard fan. My plan is to get everything switched over to two or three Vanguard funds while I still have most of my faculties. Most of what I have is in the Index 500 and the Total Stock Market fund. I also have some Growth Index. (And a bunch of tech stocks that have killed me over the past few months.) 343. dusty - 3/11/2001 9:37:36 AM 344. dusty - 3/11/2001 10:02:46 AM Message # 218 345. dusty - 3/11/2001 10:03:05 AM continued 346. CalGal - 3/11/2001 10:21:11 AM Dusty, 347. dusty - 3/11/2001 12:25:44 PM CG 348. wonkers2 - 3/11/2001 1:41:47 PM Dusty, I'm not sure I understand your comment. My take on which is better, Roth or regular IRA, is it depends. One case where it seems to me a Roth is clearly better is for young investors who are in low tax brackets. They don't lose much by giving up the $2000 reduction in taxable income when they start the Roth. And, as you said, it compounds, tax-free until age 59 1/2, or later, when it can be withdrawn with no tax obligation. That is a big advantage, as I know from personal experience as someone most of whose savings is in a regular IRA (converted from a 401k) where I can't withdraw it to spend or give away without paying income tax on every dollar. I have been drawing on a home equity loan in order to get cash to buy a car, a boat, vacations, etc., which I would rather not do. I would give anything if my IRA were a Roth. 349. dusty - 3/11/2001 2:17:03 PM wonkers2 350. dusty - 3/11/2001 2:25:29 PM wonkers2 351. wonkers2 - 3/11/2001 2:30:49 PM Dusty, If I had a Roth IRA I could take it out. That is, I'm older than 59 1/2. My income is sufficient to cover my ordinary living expenses but not an occasional new car, vacations, etc. I haven't made any withdrawals from my IRAs because I don't want to pay the taxes. I find this frustrating--having a chunk of money that I can't touch without giving 30 percent to Uncle Sam. 352. wonkers2 - 3/11/2001 3:37:55 PM Due to the compounding of the tax savings on the regular IRA? 353. dusty - 3/11/2001 6:30:08 PM yes 354. dusty - 3/11/2001 6:32:31 PM I don't want to make a big deal of it. 355. wonkers2 - 3/11/2001 8:46:04 PM I don't think we have a disagreement. 356. Erin R. - 3/12/2001 12:17:55 PM Good morning! 357. Erin R. - 3/12/2001 12:20:01 PM The two inherited brothers are now at a stalemate a dispute--neither of them has the wherewithal or will to buy the other out. Meanwhile, the first brother and his wife have moved onto the farm and have lived there for almost two years. The brother in Atlanta does not return phone calls to meet and straighten out the family's affairs. My MIL named the BIL who is living on the property executor of the estate. 358. Erin R. - 3/12/2001 12:31:08 PM The other part of the trip was truly enlightening from a financial planning standpoint. We stayed with a childhood friend of my husband's a staunch Republican who would have voted for Pat Buchanan if he thought he stood a chance in the past election. 359. ScottLoar - 3/12/2001 12:34:41 PM No, an abject lesson that things easily gained - especially through inheritance - are rarely appreciated. Sibling rivalry over the deceased parents' estate is common and particularly vicious. 360. Erin R. - 3/12/2001 12:38:42 PM The BIL took care of the mother for many years when she was dying. He grew up in the house. One would think that he would appreciate its value. 361. CalGal - 3/12/2001 12:42:10 PM Erin, 362. Erin R. - 3/12/2001 12:48:26 PM The Millionaire is especially pertinent to this conversation. The authors point out that people who plan for their financial futures don't see taxes as a threat, merely a consideration. It's a totally different mindset than what my husband's friend has. 363. ScottLoar - 3/12/2001 2:26:54 PM The brother's an ass, undeserving of any consideration, and yet he'll surely be among those who will bawl the loudest for social security relief in his doterage and the US government, always alert to the suffering of seniors who'll represent a huge voting block, will doubtlessly "feel his pain" and penalize those who've spent an employed lifetime of frugality to prepare for a safe retirement by using liquid assets to determine one's social security eligibility. 364. CalGal - 3/12/2001 2:51:33 PM Yeah, but you know--we'll still be better off. Not that it removes the sting, but it's a small application of Calamine. 365. Erin R. - 3/12/2001 3:19:19 PM That's what's ironic--my husband's friend doesn't see the contradiction with railing against the government (especially those damned Democrats) for ruining the country, but he hasn't done what is within his power to get the government out of his pocket. 366. seadate - 3/12/2001 3:56:37 PM Many who post here love index funds, so I know this post will likely fall on deaf ears. 367. CalGal - 3/12/2001 4:00:32 PM It's funny you should say that. I have been considering putting more of my own money into an index fund, but had decided not to direct my financial planner to put the money I give to him in index funds unless he thinks it appropriate. I figured that I've done well with him, and it's best to let him do what he thinks is best with my money. 368. Erin R. - 3/12/2001 4:08:26 PM From what I've read, index funds are the foundation of retirement planning. 369. seadate - 3/12/2001 4:12:11 PM Erin, what does that mean? 370. Erin R. - 3/12/2001 4:16:17 PM From what I've read, since you're investing for the long term, but are also investing for retirement, a good portion of your investments should be in index funds, because they offer good returns over a long period of time, with relatively little downside. 371. wonkers2 - 3/12/2001 4:26:52 PM Seadate, good luck. I hope you find some that beat Vanguard's S & P 500 Index Fund, year-in-year out, on and AFTER-TAX basis. There are a couple of Fidelity and Janus funds that might fill the bill. But managers come and managers go. With an index fund it doesn't matter who's managing the fund. The key is the expense ratio. 372. seadate - 3/12/2001 4:29:03 PM Erin, 373. janjon - 3/12/2001 4:30:58 PM today is not a good day to look at what is happening to your emerging markets funds. But, it has been that way for over a year now. 374. seadate - 3/12/2001 4:34:10 PM wonkers, 375. seadate - 3/12/2001 4:35:32 PM There are other good families, btw ... I'm just familiar w/ Am Century. 376. Erin R. - 3/12/2001 4:35:33 PM My 401(k) is in the S&P 500 for steady, long-term growth with minimal risk. 377. seadate - 3/12/2001 4:44:40 PM What fund family is your 410(k) in, Erin? 378. seadate - 3/12/2001 4:45:34 PM wonkers, 379. CalGal - 3/12/2001 4:46:29 PM Don't you mean 10/87? I wasn't in the market, but I worked at Schwab. 380. seadate - 3/12/2001 4:48:24 PM got me 381. Erin R. - 3/12/2001 4:48:52 PM Putnam. I've just starting reading up on what to look for in mutual funds, so I don't know whether to recommend any of their other funds. 382. wonkers2 - 3/12/2001 4:49:16 PM seadate, yes. 383. seadate - 3/12/2001 4:52:00 PM Cal, 384. Laura C - 3/12/2001 4:55:47 PM My 401(k) is through Vanguard. 385. seadate - 3/12/2001 4:56:25 PM Erin, 386. janjon - 3/12/2001 4:57:41 PM Hey, look. Things could be - make that are - a lot worse elsewhere. There was a fascinating article in today's Times about the havoc being created by deflation in Japan. Among other interesting facts, I hadn't realized that the price of real estate in major cities (including Tokyo) had fallen by about 65% over the past ten years. Leaving a lot of people with houses/apartments worth much less than what they still owe on their mortgages. The link is here: 387. wonkers2 - 3/12/2001 5:04:00 PM Erin, Compare the annual expense ratio of Putnam's Index 500 fund with Vanguard's. I would be very surprised if Vanguard's isn't significantly lower. The expense ratios are included once a week in the NYT or Wall Street Journal. Vanguard's is under .2 percent per year. I believe it's the lowest available. Differences in expense ratios have a very significant impact on your return over several years. Also, some are more succesful in matching the performance of the Index than others. Vanguard invented the concept and comes very close to the indexes every year. i assume Putnam would also. It is a reputable organization. 388. wonkers2 - 3/12/2001 5:08:14 PM Erin, Scratch my comment. If your 401k offers Putnam, not Vanguard, that's fine. Go with Putnam. And go with the Index 500 option or a growth fund, if they offer one in your plan. Putnam's a good company. With money other than your 401k Vanguard would be worth looking at, in my opinion. 389. Erin R. - 3/12/2001 5:14:11 PM My 401(k) only offers Putnam. Other types of investments, including other mutual funds, are a bit down the road for us until the #$%&! refi is done. 390. Erin R. - 3/12/2001 5:16:07 PM I'm about to hop on a call. When I'm done, I'll post a rant about our refinancing debacle. 391. seadate - 3/12/2001 5:17:04 PM Vanguard's strengths: 392. seadate - 3/12/2001 5:18:50 PM Erin, 393. CalGal - 3/12/2001 5:20:03 PM Like in options? I'm far too cowardly to go near options. 394. seadate - 3/12/2001 5:21:47 PM Exactly. 395. CalGal - 3/12/2001 5:22:17 PM Jan, 396. janjon - 3/12/2001 5:26:28 PM Well, yes, come to think of it, I am aware of times and places in the U.S. when real estate values have declined markedly. Living in the bubble of NYC/NYC metro/NYC again (with a couple of one year excursions to London which don't count since my real estate costs were covered/protected) as a co-op/home/co-op owner again, I've seen nothing but upsides. 397. janjon - 3/12/2001 5:28:38 PM And, as for Japan generally - I must say that it really does look like they are going to bite the big one this time. As best I can tell, they've run out of tricks and they are going to fall into a true recession. I am of the school that that indeed means real trouble for us, and still wonder how the trigger/ripple effect didn't cause more trouble for us, say about four years ago. 398. CalGal - 3/12/2001 5:30:25 PM In this part of the world, values rarely drop much. That's because the employment is very strong, even at the worst of times, and behind every person who must sell are several people (like me at the moment) who were just waiting until the prices plateaued. So you almost have more people desperate to sell than you do those able to buy. It's only those who buy at the height of the insanity and must sell within a year or two that get stung. Most people in that situation will just wait it out. 399. CalGal - 3/12/2001 5:33:57 PM So you almost have more people desperate to sell than you do those able to buy. 400. Erin R. - 3/12/2001 5:43:30 PM My condominium association has a restrictive clause in the condominium bylaws, which means that FHA/VA will not underwrite loans for people trying to purchase here. 401. CalGal - 3/12/2001 5:48:55 PM Erin, 402. janjon - 3/12/2001 5:52:10 PM And, for those of you who are looking for an excuse to go out and have a double espresso or perhaps something a wee bit/lot stronger, here is a link to a summary story about today's sell-off in the markets: What Goes Up Must Come Down, But Why So Dramatic All of a Sudden 403. Erin R. - 3/12/2001 5:56:46 PM Cal, 404. seadate - 3/12/2001 5:58:38 PM Erin, 405. Erin R. - 3/12/2001 6:02:44 PM LOL! 406. wonkers2 - 3/12/2001 6:07:35 PM janjon, right, a double! 407. seadate - 3/12/2001 6:08:13 PM Erin, Is your refi FHA/VA? I'm assuming the association bosses would prefer you finance using DumbA. 408. seadate - 3/12/2001 6:10:40 PM janjon, wonkers: 409. Erin R. - 3/12/2001 6:13:45 PM It is FHA. Our original financing was also FHA, but it didn't come up before because we were broke enough to take advantage of a city program for first-time buyers and our application was basically rubber stamped. 410. seadate - 3/12/2001 6:18:15 PM Good Luck Erin. Sounds like you'll need it. Never underestimate the power of a strategically placed idiot. Especially when, as it appears in your case, they're working against you. 411. Erin R. - 3/12/2001 6:20:09 PM Thanks. 412. wonkers2 - 3/13/2001 8:49:24 AM NASDAQ'S BIGGEST STOCKS--PERCENTAGE CHANGE SINCE MARCH 10, 2000 413. seadate - 3/13/2001 11:55:11 AM Good post wonkers. Where'd the money go (cash vehicles, I would assume)? 414. CalGal - 3/13/2001 12:45:01 PM Oracle would probably be worth buying. And yes, where did the money go? 415. Dusty - 3/13/2001 12:48:13 PM I don't understand your question. When a stock declines, the money doesn't "go" anywhere, unless you consider the ether a place. For nit-pickers, there does has to be a trade for a stock to go down, but technically, it could be a miniscule amount. 416. janjon - 3/13/2001 12:53:17 PM perhaps seadate was thinking of the proceeds of IPOs. Although most of the companies on that list are well beyond the stage of having IPOs, even of new series or classes of stock. 417. CalGal - 3/13/2001 12:53:38 PM For nit-pickers, there does has to be a trade for a stock to go down, but technically, it could be a miniscule amount. 418. Erin R. - 3/13/2001 12:56:52 PM I know a couple of ex-Oracles--they say the company regularly lies to Wall Street. Just an FYI. 419. janjon - 3/13/2001 12:59:03 PM Erin - if they didn't, they would be an exception. Depends on the form and forum of the lies. 420. Dusty - 3/13/2001 1:04:04 PM CalGal 421. seadate - 3/13/2001 1:05:58 PM Dusty, 422. CalGal - 3/13/2001 1:06:52 PM Oh, the company is scum and Ellison is worse. That company has a line item on its budget for his sexual harassment suits. 423. Laura C - 3/13/2001 1:07:37 PM I'm still wondering if I should put some money in a bond fund as a temporary (1-2 year) measure. 424. CalGal - 3/13/2001 1:11:20 PM Laura, 425. Erin R. - 3/13/2001 1:13:03 PM I would think a money market would be better for short-term savings. 426. Erin R. - 3/13/2001 1:14:14 PM Cal, please do. The Budget Nazi has approved our allowances for the week. I want to buy another book. 427. Dusty - 3/13/2001 1:15:32 PM But that quick "yes" hides a more complete answer. 428. seadate - 3/13/2001 1:17:56 PM Although they have less volatility, bonds have more downside than stocks (in the same company) and less upside. This comparative risk is buffered with bond funds versus stock funds. 429. Dusty - 3/13/2001 1:21:02 PM seadate 430. seadate - 3/13/2001 1:25:30 PM CalGal 431. Dusty - 3/13/2001 1:27:52 PM seadate 432. Dusty - 3/13/2001 1:31:40 PM seadate 433. seadate - 3/13/2001 1:32:00 PM Dusty, 434. Dusty - 3/13/2001 1:35:08 PM Laura C 435. Dusty - 3/13/2001 1:37:06 PM seadate 436. Laura C - 3/13/2001 1:49:08 PM Dusty, thanks. That's what I thought. Yes, 3 years or so, depending what happens to the local real estate market. A lot of people in the NYC area seem to have bought at the top of the market, based on stock options and huge Wall Street bonuses, so I'm guessing prices will cool a bit. 437. seadate - 3/13/2001 2:00:28 PM Can you elaborate? I don't know what you mean by "more downside". If you mean potential downside, they have identical potential downsides—100%. 438. seadate - 3/13/2001 2:12:07 PM I'm still interested in your reaction to Message # 429 439. seadate - 3/13/2001 2:15:22 PM I was concerned, and I'm still concerned that you think the amount of the reduction in stock value can be used to estimate the amount of money moved. 440. seadate - 3/13/2001 2:22:32 PM Cute Story: 441. Dusty - 3/13/2001 2:35:38 PM seadate 442. Dusty - 3/13/2001 2:37:57 PM seadate 443. seadate - 3/13/2001 2:41:03 PM No shit? 444. seadate - 3/13/2001 2:42:12 PM I'm suffering from short-term credibility loss. 445. Dusty - 3/13/2001 2:42:20 PM No shit. 446. seadate - 3/13/2001 2:42:52 PM Seriously Dusty, are you sure about that? 447. Dusty - 3/13/2001 2:43:38 PM Oops, that was to Message # 443 448. seadate - 3/13/2001 2:45:17 PM If a company goes down the crapper, payroll & taxes first, I think. I thought the last were stockholders, then bondholders. 449. seadate - 3/13/2001 2:45:51 PM hahaha, xpost of the day... 450. Dusty - 3/13/2001 2:47:29 PM seadate 451. seadate - 3/13/2001 2:49:39 PM Interesting, Dusty. Thanks for bearing with me. 452. Dusty - 3/13/2001 2:50:47 PM seadate 453. seadate - 3/13/2001 3:02:53 PM Thanks for the link, Dusty. 454. thoughtful - 3/13/2001 3:03:54 PM Just to confirm, dusty is correct. Bondholders first. Stockholders get the dregs. 455. seadate - 3/13/2001 3:04:14 PM ok, TMI. 456. thoughtful - 3/13/2001 3:05:43 PM preferred stockholders come in between 457. janjon - 3/13/2001 3:05:51 PM well, there are probably some bond issues out there that expressly state that they are pari passu with common stock in terms of liquidation rights, so that they would be paid (ha) at the same time. 458. seadate - 3/13/2001 3:07:38 PM oops, xpost. 459. janjon - 3/13/2001 3:11:39 PM "I'm not sure, but I think it was my substitute for sex while I was married. 460. seadate - 3/13/2001 3:16:01 PM janjon, 461. thoughtful - 3/13/2001 3:33:51 PM TMI? 462. seadate - 3/13/2001 3:36:49 PM :( 463. thoughtful - 3/13/2001 3:38:09 PM I'm sorry....I don't know what TMI means? 464. seadate - 3/13/2001 3:41:18 PM Thoughtful, 465. thoughtful - 3/13/2001 3:42:57 PM Ok. Thanks....I'll add that to my list of TLAs (three-letter acronyms). 466. wonkers2 - 3/13/2001 5:08:01 PM To afford a divorce you have to either be very rich or very poor! 467. seadate - 3/13/2001 5:11:41 PM Reminds me of an old saying, if it flys, floats, or fu***, it's cheaper to rent ;) 468. CalGal - 3/13/2001 5:17:26 PM I stumbled across this article on the worst performing mutual funds. 469. wonkers2 - 3/13/2001 7:22:37 PM The list of poor performing mutual funds would have been much longer! Most of them charge too much and deliver too little. 470. thoughtful - 3/14/2001 12:29:00 PM My investment experience started early...I went to broker with a lot of money and said make it go away -- meaning I didn't want to have to pay taxes on the money and I wouldn't be needing soon it so it could be invested for a long time. Well, I guess he took me too literally as he put it all into a fund that went bankrupt. With that as a baseline, I figured I could do better and I have --much much better -- mostly by keeping an eye on capital conservation, being diversified, willing to invest for the long term, willing to take on more risks but only with a small share of funds, and avoiding the "gambling" aspects of investing. I'm not as rich as warren buffet and never will be....but then again, I've got enough that, should we decide, we need never work again and could maintain a comfortable lifestyle. 471. thoughtful - 3/14/2001 12:33:45 PM We also enjoy bargain hunting, including flea markets and the good will stores, and clip coupons for grocery shopping with the goal of a minimum of 10% off the bill but usually closer to 20%. 472. wonkers2 - 3/14/2001 1:43:34 PM Thoughtful, you are a kindred spirit. My car just turned 140,000 miles, and we try to remember to turn the lights and the heat down and pay off our credit cards in full every month. When I was in graduate business school there were some fairly rich guys in the class. Nearly all of them drove old cars because they preferred that their money appreciate in an investment rather than depreciate in a new car. 473. thoughtful - 3/14/2001 2:12:27 PM It's funny how despite having the same parents, my brother is completely different with money -- always in debt skirting bankruptcy. We were married a year apart and at the time he and his wife were making about the same in annual income that we were and they bought a 3-family house where the rents covered their mortgage & tax payments, while we bought a single-family house and scrimped to pay the mortgage and taxes. Still they were always running up debt, while we were saving. 474. ScottLoar - 3/14/2001 2:59:31 PM Laudable habits, both, but I detest stinginess. One can be frugal without being shabby, and I damn those who do not reciprocate kindness and generosity within their means. 475. CalGal - 3/14/2001 3:55:20 PM I agree that financial organization and spending habits have something to do with personality, but that parents can help with the basics. 476. Indiana Jones - 3/14/2001 4:19:54 PM Secrets of beating the bear market 477. janjon - 3/14/2001 4:23:10 PM Style does not correlate with money. Any more than taste does. 478. ScottLoar - 3/14/2001 4:40:26 PM Of course. That is painfully self-evident. But money can buy the advice of people with taste and an image can be bought; hell, look at those popular in film and popular music. 479. seadate - 3/14/2001 4:46:11 PM Scott's right. Look at Pamela Anderson ... now she's a rich hooker (g). 480. wonkers2 - 3/14/2001 5:07:59 PM Just saw John Bogle, my guru, on cable being interviewed by Neil Cavuto. Bogle says the days of double digit returns are over for a while. Expect 7-9 percent returns for a while. If you have money to invest, put it in broad index funds, S & P 500 or Wilshire 5000. If you have money in tech stocks, hang on, don't sell now. He refused Cavuto's invitation to call the bottom or the level of the market at the end of the year. His horizon is much longer, more like 20 years. Amazing since he's over 70 and had a heart transplant a couple of years ago. 481. CalGal - 3/14/2001 5:16:29 PM That reminds me; I tried to watch the Motley Fool's PBS special last night and was very disappointed. It was pretty much what was on their website, but Foolishly presented. 482. Erin R. - 3/14/2001 7:29:18 PM I am growing a reputation among my peers at work of being frugal, i.e., cheap when it comes to expenditures. I hate paying for anything with no demonstrable return. And this carries over to my own life. My husband wanted to order a pizza for dinner last night, even though we have a refrigerator full of leftovers. 483. ScottLoar - 3/14/2001 8:43:11 PM Frugal? When I was 36 years old I worked the night shift in an assembly factory for US$4.25/hour. My wife always packed me a box dinner of Chinese food, so I started to sell boxed dinners for US$3.50 each (I had to compete with fastfood). Those same guys who'd buy the boxed dinners would throw pennies away for kicks, sometimes nickels, yet their wage was not much more than mine. I was frugal; they were... big American kids with no experience of anything else and not much ambition. My situation was temporary, theirs lifelong. 484. ScottLoar - 3/14/2001 8:47:26 PM On the whole my portfolio value is now down 24.52% from this time last year. I think myself well off. 485. Erin R. - 3/14/2001 8:52:29 PM Cheap to me is never going out to dinner at a nice restaurant; frugal is going out to dinner infrequently. 486. CalGal - 3/14/2001 9:07:06 PM I am neither frugal or cheap. Still, given how far I went in making job decisions based on maximizing income, I'm content. 487. Autodaffy - 3/14/2001 9:38:45 PM Anyone who thinks that style correlates with money should visit Graceland. 488. wonkers2 - 3/14/2001 10:43:07 PM Scott, mine is down about 28 percent. 489. Erin R. - 3/15/2001 12:58:06 PM Crown Books is having a huge going-out-of-business sale now. I picked up a (Peter?) Lynch book on stockpicking for $9 and change, and a mutual fund magazine for half price. 490. seadate - 3/15/2001 12:59:46 PM Erin, 491. seadate - 3/15/2001 1:01:34 PM Peter Lynch quoted Will Rogers in his first book ... 492. seadate - 3/15/2001 1:03:11 PM Erin, I like Peter Lynch because his concepts are timeless. Th "fashion-conscious" may get lucky and make money, but they come and go. 493. Erin R. - 3/15/2001 1:18:40 PM It's "Learn to Earn: A Beginner's Guide to the Basics of Investing and Business." 494. Erin R. - 3/15/2001 1:27:02 PM Review from Amazon.com: 495. Erin R. - 3/15/2001 1:28:07 PM "Buy and Hold and Buy and Hold and Buy and Hold"--Harness the power of time in growing your portfolio and compounding your investment returns. 496. Erin R. - 3/15/2001 1:28:27 PM One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life and can't fully harness the power of time still can find the guidance they need to become wealthy. 497. seadate - 3/15/2001 1:30:11 PM toys 498. seadate - 3/15/2001 1:30:27 PM toys? 499. seadate - 3/15/2001 1:30:59 PM toys? 500. seadate - 3/15/2001 1:32:23 PM Toys 501. Erin R. - 3/15/2001 1:33:26 PM Why is everything in italics? 502. seadate - 3/15/2001 1:36:34 PM Did you post a "close italics" tag? 503. Erin R. - 3/15/2001 1:37:29 PM No, I didn't think I needed to. The format here is different from other Internet forums I am used to. 504. seadate - 3/15/2001 1:39:24 PM I think it's been changed recently so that it's not always necessary (although it apparently still can cause problems). 505. Erin R. - 3/15/2001 2:01:13 PM What books are you all reading and recommending? 506. Erin R. - 3/15/2001 5:49:59 PM Hm...you guys must know everything, if you're not reading anything! 507. CalGal - 3/15/2001 5:52:49 PM I am reading the business sections of all the papers lately. NY Times, Post--as well as the weeklies. As I mentioned, I bought The Millionaire Next Door but haven't cracked it yet. 508. Erin R. - 3/15/2001 6:00:15 PM Do you like to read? 509. CalGal - 3/15/2001 6:40:11 PM Yes, I like to read. But I have found that I read a lot more online articles than I would if I subscribed to all the magazines and papers. I read much of the Times and Post every day, which I would never do if they were delivered. I only subscribe to Vanity Fair and the New Yorker. 510. dusty - 3/15/2001 7:24:54 PM thoughtful 511. dusty - 3/15/2001 7:30:36 PM wonkers2 512. dusty - 3/15/2001 7:31:54 PM BTW, I'm probably going to refinance my house next week. I think I know what I'm doing, but if anyone has any advice or questions, let's talk. 513. CalGal - 3/15/2001 7:33:11 PM I'm refinancing mine, too. It always takes me forever. I started back in January and they always have other requests. It is also complicated by the fact that it's on the other side of the country and I need to get a power of attorney for my property manager to sign the stuff. 514. wonkers2 - 3/15/2001 7:50:57 PM Dusty, makes sense to me. I have been nibbling on tech stocks a bit recently, but in every case but one, Microsoft, I jumped the gun. They all went down after I bought them. Cisco, EMC, Gateway, Amazon, Schwab. I also jumped the gun on Vanguard's Growth Index fund, several months ago. It's down to 25 from 30. I feel confident that in a year or so I'll be at least even on most of them. And in 5 years I'll be significantly ahead. 515. wonkers2 - 3/15/2001 8:12:02 PM Well, maybe "confident" is too strong a word! Please substitute "hoping." 516. CalGal - 3/15/2001 8:12:21 PM Time Magazine's two financial editors--Kadlec and Epperson--have a lot of useful tips. I first heard of Netstock through Kadlec, for example. 517. Erin R. - 3/16/2001 10:12:56 AM My husband wants to redo the baby's room. I've got to figure out a way to talk him into scaling back the project. We're supposed to be holding steady on expenditures until the refi is over. 518. CalGal - 3/16/2001 1:51:45 PM Try again. Does it have to be expensive? 519. CalGal - 3/16/2001 1:52:59 PM Phew. Last post didn't make it through. 520. Erin R. - 3/16/2001 2:10:31 PM It will be expensive because a labor of love usually turns into an expensive proposition. 521. Erin R. - 3/16/2001 2:45:13 PM Do you mean are were worried about losing our jobs, or are we worried about the effect on our investments? 522. ycmeehan - 3/16/2001 2:48:05 PM Probably both, Erin. 523. CalGal - 3/16/2001 2:49:23 PM Good question--I was thinking about jobs. In general, I've decided that my investments are going to be depressing to monitor for the short term. 524. Erin R. - 3/16/2001 2:56:09 PM I'm not worried about my job. I'm learning a lot here, making contacts, the company has lots of room for growth, etc. And I would think the Bear Market makes it a good time to invest in stocks for the long run. 525. CalGal - 3/16/2001 3:01:33 PM It's one of the companies I randomly picked last year to invest in--based on the fact that I go there all the time. It hasn't been doing too well recently, but I think it will be fine in the long run. 526. CalGal - 3/16/2001 3:03:20 PM Out of the 11 stocks in my "portfolio" of purchases starting last June, it is in 4th place, comparing annualized return (or IRR). Above it is Timberland, Fedex, and Remedy. 527. Jon Ferguson - 3/16/2001 3:06:06 PM Nortel is a strong buy at 15.55. It's easily worth double that. 528. Laura C - 3/16/2001 3:09:45 PM Home Depot is pretty solid, Erin, and you could argue that if the economy continues to slow, people will still want to improve their homes, but will do more of the work themselves instead of hiring it out. 529. Erin R. - 3/16/2001 3:11:47 PM I think the long-term prospects are quite good. 530. Jon Ferguson - 3/16/2001 3:13:32 PM I wait 6 months and then look at what it's trading at. 531. Erin R. - 3/16/2001 3:13:43 PM Laura, 532. CalGal - 3/16/2001 3:18:58 PM The company is well run, and they just hired a new CEO, one of three guys up for the GE CEO position recently. 533. CalGal - 3/16/2001 3:20:54 PM Some Shocked at Tax Bills on Options 534. Erin R. - 3/16/2001 3:22:07 PM The price does seem to be depressed for both stocks. Home Depot is at a plateau, and Nortel is way down. 535. Erin R. - 3/16/2001 3:25:18 PM I've read it, Cal. There was another excellent one in Business Week. I read a lot of business magazines. 536. CalGal - 3/16/2001 3:33:03 PM The thing I hate about business magazines is that they often aren't free online. I hate throwing away magazines, so I'm reluctant to buy too many. 537. Shannon - 3/16/2001 3:33:06 PM Question: is anyone at risk, or worried, about layoffs? 538. CalGal - 3/16/2001 3:34:15 PM It is becoming increasingly common for states to outsource IT staff, is it not? Or did that trend die out when I wasn't looking? 539. CalGal - 3/16/2001 3:35:11 PM I always worry about contracts, but I've been checking DICE and there seems to be plenty of work. Besides, I've been at this contract for 8 months which is my second longest contract ever, and it appears that I will be extended. 540. Erin R. - 3/16/2001 3:38:24 PM I am looking long-term at going out on my own. But I'd like to stay in tech marketing on my own for now. 541. CalGal - 3/16/2001 3:39:43 PM You're exactly the sort who'll be running her own company in ten years. 542. Shannon - 3/16/2001 3:46:58 PM Yes, CalGal, it is quite common. I don't imagine my function will be outsourced soon--from what I understand there are other things that they want to focus on first. Hardware/PC support, that kind of thing. 543. Erin R. - 3/16/2001 3:47:11 PM I think so. We discussed it during our lunch. But I want to get well networked before I go out on my own. 544. wonkers2 - 3/16/2001 5:02:49 PM Cal, I read When Genius Failed. It's a great book and a good object lesson about what can go wrong, even for Nobel Prize economists and big hitters from Wall Street. More of a how not to invest, rather than a how to book. 545. wonkers2 - 3/16/2001 5:07:44 PM Another book in a similar vein is the one about Jim Clark, "The New New Thing." Only it was written before his health care data company, HEALTHEON, turned out to be a fiasco. (Currently around $9 a share, down from $120 or $150.) That book could have used the same title as the one on Long Term Capital. 546. Erin R. - 3/16/2001 5:45:39 PM I'm almost done with this freakin' presentationm--I think it was worth the effort. I'll do my weekly update, clean my desk, get the hell out of here. I'll be gone by six, or I'll just take the overflow home and do it tomorrow morning. 547. wonkers2 - 3/18/2001 10:03:41 AM POSITIVE LESSONS FROM A TAX RETURN BY Jan M. Rosen 548. CalGal - 3/19/2001 1:08:33 AM Companies Turn to Grades, and Employees Go to Court 549. AytchMan - 3/19/2001 1:13:50 AM Protest expands to fill the law available. 550. CalGal - 3/19/2001 1:24:16 AM You are saying it is a gaseous substance. Surely that can't be. 551. wonkers2 - 3/19/2001 9:03:42 AM Cal, It's true that appraisal systems have been around and creating mischief forever. Much depends on how they are applied or used, as in "high stakes testing" in schools. When high stakes appraisals or forced ranking systems are used to parcel out merit raises or to determine who gets laid off problems arise. The most basic problem is that they undermine teamwork in the workplace by introducing competition among INDIVIDUAL members of the work group or team for the top ratings and whatever goes with them. The higher and more obvious the stakes, the more destructive the system is according to organizational behavior theory. Of course, teamwork and cooperation are quite important in most organizations. 552. CalGal - 3/19/2001 9:42:34 AM Oh, I don't really think it matters which method is used, and teamwork is overrated. Managers will either know who the useful people are in their staff or they won't. If they are the sort who can be manipulated then the staff is screwed anyway. It's easy for a manipulative co-worker to either steal credit or present someone as "not being a team player", depending on what the manager values. 553. wonkers2 - 3/19/2001 10:53:28 AM Your opinion that teamwork is over-rated is definitely a contrarian one. The correct answer as to the importance of teamwork is of course that, "it depends." If you are talking about door-to-door Bible or vacuum cleaner salesmen, it's not important. You just give them a territory and a straight commission and let them go. But if you are selling (or making or designing) something complicated, teamwork is very important, and it's virtually impossible to separate out the contributions of individual team members. A company like Microsoft doesn't hire people who are "dull normal," but it allegedly forces managers to apply a bell curve when rating their employees (the HR VP denies that). This tends to cause destructive competition among employees who should be cooperating in order to get the job done. Sometimes competition manifests itself in downright silly ways--e.g., competing to be the last one to leave the office at night and/or to be the first one in in the morning. I've seen that escalate until the quitting time gets later and later, even when there is nothing urgent to be done. Even more serious results can occur such as the withholding of information needed by an associate to get his job done on time. The greater the stakes attached to the ratings, the greater the potential for destructive effects on teamwork in the workplace. 554. CalGal - 3/19/2001 11:33:06 AM Your opinion that teamwork is over-rated is definitely a contrarian one. 555. wonkers2 - 3/19/2001 1:28:35 PM That's quite a novel and off-the-reservation view. You are entitled to your opinion, but it is a very minority one. Typical appraisal/compensation systems are based on fallacious,over-simplified theories of motivation. If they are over-emphasized they can do significant harm to companies. 556. wonkers2 - 3/19/2001 1:51:08 PM There are two worthwhile articles in today's WSJ. 557. wonkers2 - 3/19/2001 2:02:38 PM Personally, I don't think risk is a factor as long as you aren't dealing with a fly-by-night institution. Rate of return and convenience are more important. And there are significant differences in returns. 558. CalGal - 3/19/2001 2:06:40 PM Employee discontent is not irrelevant. That is a crazy thing to say. Discontented employees withhold their full effort, they are disloyal and some even steal from their employer. 559. wonkers2 - 3/19/2001 6:28:06 PM "Most corporations don't care about more than 20-40% etc." 560. CalGal - 3/19/2001 6:36:58 PM Please. Just exactly where do you suppose the 80-20 rule came from? Corporations, of course. Everyone knows that 80% of the work is done by 20% of the people. If we could ever figure out a more efficient way of figuring out who did the other 20%, we'd probably be able to can 70% of any given work force. Although given the economy thrives on the inefficiency, it's probably best not to. 561. wonkers2 - 3/19/2001 6:55:44 PM "Happiness" isn't the right word anyway. It is important that all employees feel they are being compensated fairly, first compared to others in their department or work group, and second compared to others in their labor market. Beyond fair compensation, they should be respected as individuals and appreciated for their ideas for improving the work processes in which they are involved. Ever hear of W. Edwards Deming? The above is Deming 101. Perhaps it doesn't apply in Silicon Valley but it still does in Detroit. We learned our lessons the hard way (and you will, too). First from the UAW, then from Toyota, Honda, et al. 562. wonkers2 - 3/19/2001 6:59:48 PM Sorry, I posted before your last one. No matter you are putting out more of the same B.S. Just where did the 80-20 rule come from. I bet it didn't come from Schwab. It sure didn't come from anywhere I ever worked or from any successful corporation or organization I have heard of. 563. CalGal - 3/19/2001 7:03:54 PM is important that all employees feel they are being compensated fairly, first compared to others in their department or work group, and second compared to others in their labor market. 564. CalGal - 3/19/2001 7:05:02 PM I bet it didn't come from Schwab. 565. wonkers2 - 3/19/2001 7:33:30 PM I don't doubt that Schwab had an appraisal system. That's not what I was referring to, as you well know. I was referring to your insane statement that keeping only 20 percent of employees "happy" was the way to run an organization. Was your "80-20" rule Schwab's policy? If so, I'm selling my stock. 566. wonkers2 - 3/19/2001 7:40:05 PM Have you heard of the Japanese term "kaizen?" You get kaizen (continual, step-by-step, improvement in the process through teamwork) from the entire organization, from the janitor to the chairman from 100%, not 20% of employees. It applies in Silicon Valley, Detroit, Japan, China and in every organization and culture. 567. wonkers2 - 3/19/2001 8:04:04 PM Cal, I just read your posts above, more carefully and I can't believe you are serious and not just baiting me in order to get a discussion going. If you are serious, we come from different planets. If most techies think like you, it's no wonder the NASDAQ has crashed. 568. pogie - 3/19/2001 8:07:24 PM If that's such a handy way to go, why is japan going belly up presently? 569. wonkers2 - 3/19/2001 8:18:43 PM Japan has plenty of problems mostly related to bad government and poor education policies. Kaizen isn't one of them. Toyota cars are still setting the world quality standard, and Detroit and Europe are still trying to catch up. 570. wonkers2 - 3/19/2001 8:20:35 PM Besides, Japan is far from going belly up. Japan's economy is second largest, to the U.S., and 10? times that of China. 571. CalGal - 3/20/2001 2:56:49 AM I was referring to your insane statement that keeping only 20 percent of employees "happy" was the way to run an organization. Was your "80-20" rule Schwab's policy? 572. wonkers2 - 3/20/2001 7:04:50 AM There is no such thing as the 80-20 rule. You made it up out of your own cynicism. An organization where 20 percent of the people do the work is a sick puppy. 573. Erin R. - 3/20/2001 9:42:22 AM At my previous company, we helped small manufacturing companies with a process called "Kaizen blitz," which was taking an individual manufacturing cell and brainstorming ways to improve the efficiency of the cell. Productivity gains were astronomical. Cutting set-up times from say, 3 days to 6 hours wasn't unusual. 574. pogie - 3/20/2001 9:56:30 AM (really should drag ase in, heheh) 575. CalGal - 3/20/2001 10:44:05 AM There is no such thing as the 80-20 rule. 576. CalGal - 3/20/2001 10:58:43 AM Erin, 577. Åse - 3/20/2001 11:05:28 AM Pogie - think you are referring to social loafing. Classical social psychology. 578. CalGal - 3/20/2001 11:12:23 AM Exactly. It's everywhere. Hell, it's in elementary schools, where the slower kids coast off the brighter kids in those team projects. 579. Erin R. - 3/20/2001 11:15:42 AM Oh...I'm jealous! I won't be in the Bay Area until God knows when! 580. CalGal - 3/20/2001 12:34:40 PM Time article on Japan--I think this is the one you were referring to. 581. Erin R. - 3/20/2001 12:38:20 PM Yep. 582. Erin R. - 3/20/2001 2:10:12 PM Yoo hoo! CalGal! 583. Erin R. - 3/20/2001 2:25:20 PM .5 cut in interest rates. 584. wonkers2 - 3/20/2001 2:29:01 PM Cal, You arent't being serious. Your responses indicate you aren't reading my posts. And your 80-20 rule is pure bullshit. End of conversation. 585. Fielding - 3/20/2001 2:29:14 PM What has happened to Alan Greenspan? 586. CalGal - 3/20/2001 2:31:17 PM So is the news out yet? I think Pellegrini's analysis in Time is correct--it would be a mistake for Greenspan to chop the interest rates more than half a point. Now, there may be some reasoning that I haven't seen, but if he's only doing it to make the market happy, that's worrisome. 587. Fielding - 3/20/2001 2:32:42 PM Why do you think Pellegrini's analysis is correct? What do you know about interest rate policy? 588. CalGal - 3/20/2001 2:32:48 PM Wow, crosspost. Remind me to refresh. 589. Erin R. - 3/20/2001 2:32:54 PM I couldn't find the Pellegrini article. I did a search of the Time site. 590. Erin R. - 3/20/2001 2:34:47 PM I have heard of the 80-20 rule as it applies to marketing and sales: 20 percent of your customers will generate 80 of your sales, and vice-versa. 591. CalGal - 3/20/2001 2:34:59 PM What do you know about interest rate policy? 592. wonkers2 - 3/20/2001 2:36:50 PM No. I have never heard of the 80-20 rule. There is no such rule. I have heard of Pareto but nothing he said is remotely related to any alleged 80-20 rule. It is absurd on its face. 593. CalGal - 3/20/2001 2:40:54 PM I have never heard of the 80-20 rule. 594. CalGal - 3/20/2001 2:41:56 PM Erin mentions one of its common uses. But hell, go to any manager--one who doesn't talk like a Covey propaganda machine--and ask him about the 80-20 rule. 595. wonkers2 - 3/20/2001 2:43:41 PM I have no interest in so called 80-20 rules, and I have no desire to continue being a foil for the propagation of your ignorance and cynicism. 596. CalGal - 3/20/2001 2:51:21 PM Wonkers, 597. wonkers2 - 3/20/2001 3:05:26 PM Cal, please give me a source of your imaginary 80-20 rule. In any organization where a significant number of employees aren't doing their share the management should be fired because the reasons no doubt are among the following: employees don't have the equipment or information needed to do their job; they haven't been trained to do their jobs; supervision is inadequate; the organization isn't organized properly to eliminate waste and idle time; the equipment is broken down and employees are waiting for it to be repaired; employees have been alienated by unfair policies and dumb management. Once the above problems and others in a similar vein have been taken care of, it may be time to start blaming employees and get rid of any slackers. 598. CalGal - 3/20/2001 3:12:14 PM Wonkers, 599. CalGal - 3/20/2001 3:13:25 PM In any organization where a significant number of employees aren't doing their share the management should be fired 600. wonkers2 - 3/20/2001 4:19:10 PM Vilfredo Pareto. The Italian-born Swiss professor of economics was often called the ideological precursor of fascism. By using a certain logarithmic chart called the "Pareto chart," he found that the "upper tail" of the income data of many different countries and many different times fel along straight lines of almost the same slopes. He came to believe this to be a fundamental natural law. According to Pareto's Law, there is an inevitable tendency for income to be distributed in the same way--regardless of social and political institutions and regardless of taxation. In the past 50 years, more careful studies have cast doubt on the universality of Pareto's Law, and upon its inevitability. 601. wonkers2 - 3/20/2001 4:21:08 PM Cal, the air is leaking out of your baloon. I suggest you stick to posting on something you actually have some knowledge of. This is a ridiculous discussion. 602. wonkers2 - 3/20/2001 4:27:55 PM The Dow closed down 238 to 9720. 603. CalGal - 3/20/2001 5:17:38 PM Wonkers, 604. wonkers2 - 3/20/2001 6:43:41 PM Cal, You are making a fool of yourself. There is no 80-20 rule. Juran is a crackpot. Pareto is a fascist. You are a techie elitist. 605. CalGal - 3/20/2001 6:59:08 PM Wonkers, 606. wonkers2 - 3/20/2001 7:14:42 PM Cal the world always needs another crackpot how to manage book. Here's an outline for yours: 607. CalGal - 3/20/2001 7:28:22 PM Actually, most of those are entirely apt. A few were taken out of context, but for the most part, I think it's a good start. 608. CalGal - 3/20/2001 7:29:15 PM But I haven't noticed you actually responding. You're just insulting to no purpose. 609. wonkers2 - 3/21/2001 9:12:42 AM Cal, I have given reasons for what I have posted. Your posts are no more than assertions, the management equivalent of pronouncements by the Taliban. You have asserted the existence of an imaginary "80/20" rule but offered no evidence of its existence or meaning, let alone of its validity. In contrast, the propositions I have put forward on teamwork are supported by decades of solid academic research and practical validation. They are supported by eminent scholars like Emile Durkheim, Elton Mayo, William Foote Whyte, George Homans, Fritz Roethlisberger, Abraham Maslow, W. Edwards Deming and a host of others. Have you ever read or even heard of the Hawthorne Study? 610. CalGal - 3/21/2001 12:09:18 PM You have asserted the existence of an imaginary "80/20" rule but offered no evidence of its existence or meaning, let alone of its validity. 611. CalGal - 3/21/2001 12:12:54 PM Oh, and yes I know of the Hawthorne study and the Halo Effect. 612. wonkers2 - 3/21/2001 1:13:35 PM "Oh, Lord, I'm not saying the 80-20 rule is valid." 613. wonkers2 - 3/21/2001 1:16:24 PM I read the Google links. None of them remotely say anything like you have maintained in your previous absurdly ridiculous posts. 614. wonkers2 - 3/21/2001 1:28:07 PM Pareto is an obscure and mostly discredited economist. Be that as it may he wasn't dumb enough to say "Everybody knows that 80% of the work is done by 20% of the employees." Pareto's observations had to do with the distribution of wealth and land. What it meant was that the 20 percent who had the land did little or no work while the 80 percent who were their peons did 98 percent of the work. Some consultants in the U.S. have misapplied Pareto's income distribution curves to justify top heavy corporate compensation structures. No one, other than Cal Gal has ever said "Everybody knows that 20 percent of the employees do 80% of the work." 615. CalGal - 3/21/2001 1:33:14 PM Wonkers, 616. CalGal - 3/21/2001 1:34:20 PM My comments about motivation and management apply in all workplaces, union and non-union, high and low tech. 617. CalGal - 3/21/2001 1:39:46 PM None of them remotely say anything like you have maintained in your previous absurdly ridiculous posts. 618. wonkers2 - 3/21/2001 4:03:24 PM GE is successful. I'm not familiar with their policies, but I'm sure they use appraisals. [This has nothing to do with your 80-20 formula which you have yet to define or explain coherently other than asserting "Everybody knows that 20% of the employees do 80% of the work."] Now you're changing the subject to GE. 619. wonkers2 - 3/21/2001 4:10:51 PM Schwab is down to 15 /12. What do you think? I remember when it was around 60. 620. wonkers2 - 3/21/2001 4:11:23 PM Sorry, 15 1/2. 621. CalGal - 3/21/2001 4:24:12 PM This has nothing to do with your 80-20 formula which you have yet to define or explain coherently other than asserting "Everybody knows that 20% of the employees do 80% of the work." 622. CalGal - 3/21/2001 4:25:41 PM Your experience leads you to conclude that efforts to motivate and treat employees fairly aren't worth the trouble. 623. wonkers2 - 3/21/2001 6:04:21 PM 80 percent, by your estimate aren't very good. This is an incredible statement. We couldn't be farther apart on this topic. There is no way we could possibly reconcile our differences. At least we seem to have similar tastes in movies, once in a while! 624. CalGal - 3/21/2001 6:09:45 PM 80 percent, by your estimate aren't very good. 625. wonkers2 - 3/21/2001 6:12:17 PM By the way, please explain, for my edification, exactly what the "common phrase" means. Or at least what you mean by it. Your description of it has not been coherent. Perhaps its one of those magical elixirs, like Hadacol, that cure everything from sciatica and lumbago to hemorrhoids. 626. CalGal - 3/21/2001 6:16:43 PM Wonkers, 627. wonkers2 - 3/21/2001 6:23:23 PM You still haven't explained 80-20 other than your obviously flippant comment that 20 percent do 80 percent of the work. Pareto did posit an immutable law of income distribution around the world which a few consultants tried to apply to compensation in corporations. But the concept has no place in any academically respectable theory of compensation that I am aware of. 628. CalGal - 3/21/2001 6:27:57 PM Wonkers, 629. wonkers2 - 3/21/2001 6:51:36 PM I still don't grasp the concept. I never heard of it, and you still haven't shed much light on it. 630. CalGal - 3/21/2001 7:00:47 PM You profess not to like unions. 631. wonkers2 - 3/21/2001 7:03:03 PM I re-read your Google links. It was as I thought. The concept has no meaning or it has a litany of meanings, none of which correspond to your description of it when you originally brought it up. [But, as has been observed by others, you present a slippery hard-to-pin down target, changing your tune as you go along!] 80/20 is no more than a slogan. Several of the links referred to software packages, another to an 80/20 organization dedicated to equal opportunity for Asian Americans and so forth. I could find nothing that advocated ignoring or mistreating or lying to 80 percent of the workforce. 632. Slackjaw - 3/21/2001 7:06:10 PM god knows why this topic generates so much heat around here but I had a similarly productive exchange on the topic with Pelle in the slow thread some months back. 633. CalGal - 3/21/2001 7:08:28 PM 80/20 is no more than a slogan. 634. wonkers2 - 3/21/2001 7:13:06 PM There you go changing your tune again. 635. CalGal - 3/21/2001 7:13:07 PM There is a cottage industry in economic arguing that seemingly inefficient arrangements are actually optimal, due to things like incomplete information. 636. CalGal - 3/21/2001 7:15:11 PM Wonkers. I really am not changing my tune. You misunderstood my casual application of the 80-20 rule as a serious assertion. 637. wonkers2 - 3/21/2001 7:22:27 PM The principles I'm talking about apply to all human groups, from the assembly line to the board room or the jury room, as in 12 Angry Men. 638. CalGal - 3/21/2001 7:25:19 PM Wonkers, 639. Åse - 3/21/2001 7:32:38 PM I also read somewhere in one of those myriad books that I can never recall the title or author of that there's a vulnerability to the very efficient systems. Something goes wrong, there's no slack or give to cushion the problem, and like dominoes, the system can fall apart. 640. CalGal - 3/21/2001 7:38:23 PM This might only be tangentially related, but I've had conversations with more than one manager who gets angry when I tell them that they are better off providing a consistent lower level of service than an inconsistent level that sometimes far exceeds the norm. 641. CalGal - 3/21/2001 7:39:41 PM Now, that is a planned inefficiency, rather than an unplanned one. I don't think most organizations intend to be as inefficient as they are. But I think it works out similarly. 642. Åse - 3/21/2001 7:44:50 PM Interesting... 643. CalGal - 3/21/2001 7:57:11 PM No, it's not the overwhelming part. It's not that kind of customer service. That would be social psych and I'm sure there are studies on that. 644. Jon Ferguson - 3/21/2001 7:58:47 PM CalGal's boss 645. CalGal - 3/21/2001 8:02:53 PM Jon, 646. wonkers2 - 3/21/2001 8:26:39 PM Cal, "To the best of your knowledge," as if you are knowledgeable on the subject. What a bullshitter you are! The studies apply to human beings working in groups. All kinds of groups, as I said from the assembly line to the board room. 647. CalGal - 3/21/2001 8:36:46 PM The studies apply to human beings working in groups. 648. pogie - 3/21/2001 8:59:37 PM People are not all the same, and even groups of them vary. It is puzzling that anyone would want to collapse everything into one set of phenomena/behaviour or even assume such to ever be the case. 649. wonkers2 - 3/21/2001 11:08:45 PM Cal, Days would have to be 240 hours on for you to "keep current" on all the things you pretend to keep current on. And for the amount of time you spend here in the Mote, you must be an 80 percenter. 650. CalGal - 3/22/2001 12:31:37 PM Wonkers, 651. wonkers2 - 3/22/2001 3:44:29 PM It's not foolish to assume the basic psychology of all humans from one culture is the same. [The work group studies might not apply to the Yanomami in Brazil.] 652. CalGal - 3/22/2001 3:53:08 PM But most of the people studied are from the same American/ Western culture. 653. wonkers2 - 3/22/2001 6:16:21 PM You are the one who brought up the so-called 80-20 rule, not me. You still have yet to explain what it means, if it even has a definable meaning. 654. CalGal - 3/22/2001 6:43:23 PM I gave you a link on it. Didn't you see it? I have said FIFTY times that my statement is a common, cynical application of the 80-20 rule. It is not THE 80-20 rule, and had I realized what an ignoramus you were on common corpspeak I never would have used it. 655. wonkers2 - 3/22/2001 7:43:00 PM Well, as I said before, the link you provided on the alleged 80-20 rule wasn't very helpful. And you keep referring to it but you've never defined it. I still don't know what it is. 656. CalGal - 3/22/2001 7:43:41 PM See, this is why I think Charles Schwab is a terrific company. On the same day that Procter & Gamble announce layoffs after days of denying same, 657. wonkers2 - 3/23/2001 12:02:22 PM I agree. I bought a bit more yesterday at $14.65. 658. CalGal - 3/23/2001 1:26:20 PM Stupid question: 659. wonkers2 - 3/23/2001 5:14:11 PM Beats me. Remember I'm a motivation person! 660. PelleNilsson - 3/26/2001 9:19:50 AM The Internal Rate of Return is often used to measure the profitability of projects. You start up with an investment cost and then you have annual O%M costs. As you pick up customers your annual revenues will increase. Assume that you tabulate costs and revenues over, say, a 10-year period and calculate the net cash flow for each year. The IRR is the discount rate at which the net present value (NPV) of the total cash flow is zero. Excel has an IRR function. 661. Erin R. - 3/28/2001 9:42:16 AM Let's get this topic back on track with my long-promised review of The Richest Man in Babylon. 662. Erin R. - 3/28/2001 9:47:31 AM Additionally, there are the laws of money. I think I posted the Eight Cures for an Lean Purse some time back. There are also the Five Laws of Gold: 663. Erin R. - 3/28/2001 9:49:35 AM I recommend this book to anyone who needs a basic primer on how money works. It is an excellent starting point for people who don't know where to begin, although it doesn't have many specifics on investment vehicles that most of us know. 664. CalGal - 3/28/2001 1:21:28 PM Interesting. What did you think of The Millionaire Next Door? 665. Erin R. - 3/28/2001 1:24:46 PM I think with any investment book that focus on changing mindset--as The Millionaire Next Door does--you will find some examples relevant to your life, and other not. The real point is that one should live within one's means, and invest the rest. 666. CalGal - 3/28/2001 1:36:30 PM Nothing wrong with frugality, but he made it a moral issue, which always bugs me. 667. Erin R. - 3/28/2001 1:41:32 PM I think he mentioned something about only having a couple of children, or no children, that I found a bit obnoxious. 668. CalGal - 3/28/2001 1:52:12 PM Oh, and then they never get divorced--like the act of being married itself is a key attribute to becoming a millionaire. No, it's not getting divorced from those same penny pinching coupon clipping wives that protects assets. Marriage itself has little to do with it. 669. Erin R. - 3/28/2001 2:03:28 PM Well, he did give examples of divorced people, and people with lots of kids. 670. CalGal - 3/28/2001 2:08:10 PM But if you note, most of the millionaires had wives that didn't work. They ran the budget and clipped coupons. 671. Erin R. - 3/28/2001 2:14:02 PM That was a huge oversight, in my opinion. Even clipping coupons and budgeting don't take so much time that the wife doesn't have any to find at least a part-time job. 672. wonkers2 - 3/29/2001 9:13:39 PM A BIT OF ADVICE FOR JOB CHANGERS 673. wonkers2 - 3/30/2001 7:23:57 AM BUSINESS WEEK'S TOP S & P 500 COMPANIES FOR 2000 674. thoughtful - 3/30/2001 2:32:35 PM In case anyone's interested, we had a discussion on books around stock investing, models and such. The discussion could just have easily fit in this thread. Check it out if you're interested. 675. thoughtful - 3/30/2001 2:33:19 PM Sheesh -- I shoulda told you were -- in the slow thread. Man, the girl needs some ginko! 676. thoughtful - 3/30/2001 2:33:41 PM told you *where*. More than ginko! 677. CalGal - 3/31/2001 2:27:48 PM Which country provides best job/life balance for women? 678. JudithAtHome - 3/31/2001 2:49:35 PM When did Canada move to Europe? ;-) 679. CalGal - 3/31/2001 2:52:43 PM Oh, Canada's a European country. They just moved over here for the cheaper rent. 680. pogie - 3/31/2001 4:45:49 PM One of the implications of that article to me is that if a woman wants to get to the upper ranks, she might be better off in a place without an extensive protective blanket of social services. As in, extensive social services kind of create an environment where superachieving is less likely to flourish. Then again, since there will never be lots and lots of superachievers, perhaps it's worth it in the places with that blanket. 681. wonkers2 - 3/31/2001 4:54:38 PM In Europe everybody gets 6 weeks' vacation. That's the one thing that comes to mind that they have that's truly better. None of this 2 weeks the first year, 3 weeks after 5 years, etc. A lot of European plants just shut down for 6 weeks during the summer and send everybody on vacation. Not very efficient use of capital equipment, but there's something to be said for it. Also, they have quite a few holidays on Fridays and Mondays in order to provide 3-day weekends or to provide a "bridge" between a Thursday or Tuesday holiday in order to provide a 4-day weekend. The European mindset is different. 682. CalGal - 3/31/2001 5:10:26 PM Pogie, 683. pogie - 3/31/2001 5:11:08 PM Yes, but that mindset definitely doesn't lend itself to superachieving on a CEO kind of level. But like I said, there logically can never be tons of those kinds of people, so maybe the potential loss of some superachievers due to environmental factors is totally worth it from a cost/benefit view. Unless one wants to take the tack that CEO types provide so much benefit in their superachieving that one should retain some elements of an environment that is better suited to their development/appearance in the workforce in order to have as many of them as is possible. 684. pogie - 3/31/2001 5:13:00 PM oy, x-post to wonkers. 685. wonkers2 - 3/31/2001 6:53:46 PM Europe's economies suffer from over-regulation, no question about it. But individuals' desire or need for vacation doesn't correlate particularly well with how long they happen to have worked for a particular company. With job hopping becoming more common our model is becoming less appealing to a lot of people who would like to have more time off. 686. wonkers2 - 3/31/2001 9:09:17 PM WORKER DEAD AT DESK FOR 5 DAYS 687. CalGal - 3/31/2001 10:10:08 PM That reminds me of the TV commercial, where the wife comes in every night to change her dead husband's clothes so he can keep collecting a paycheck. 688. Jon Ferguson - 3/31/2001 10:37:31 PM 686 sounds like urban legend (i.e., bullshit) to me. 689. wonkers2 - 4/1/2001 9:50:03 AM Cal, Because it's required by law in most European countries. 690. wonkers2 - 4/1/2001 9:54:39 AM They probably don't do a lot of hiring just before the annual vacation shut down. Maybe we should consult alistaire or Pelle. I'm not an expert on Europe. 691. wonkers2 - 4/1/2001 11:23:05 AM LEAVING SHAREHOLDERS IN THE DUST--Executives Sold Stock While the Sun Shone 692. CalGal - 4/1/2001 11:26:21 AM They probably don't do a lot of hiring just before the annual vacation shut down. 693. wonkers2 - 4/1/2001 11:32:00 AM more--Some Didn't Sell 694. wonkers2 - 4/1/2001 8:04:10 PM POWER OF COMPOUND RETURNS 695. wonkers2 - 4/1/2001 8:13:17 PM PERFORMANCE OF EQUITY MUTUAL FUNDS 696. wonkers2 - 4/1/2001 8:21:56 PM The underperformance of (managed) equity mutual funds did not begin in the 1970s. In 1970, Becker Securities Corporation startled Wall Street by compiling the track record of managers of corporate pension funds. Becker showed that the median performance of these managers lagged behind the S & P 500 by one percentage point, and that only one quarter of them were able to outperform the market. This study followed on the heels of academic articles, particularly by William Sharpe and Michael Jensen, which also confirmed the under performance of equity mutual funds. 697. vonKreedon - 4/3/2001 9:06:14 AM Going through some old emails I found the following, sent to me a year ago! We thought it was bad then! Ha! Wed sing hallelujah to have it so bad! 698. PsychProf - 4/3/2001 3:25:25 PM Damn Dow. 699. thoughtful - 4/3/2001 3:44:23 PM thanks von k...much enjoyed...certainly more than the stock performance today....who was it who said earnings didn't matter? 700. wonkers2 - 4/3/2001 4:09:58 PM The carnage accelerates on Wall Street. The Dow is down nearly 300 and Nasdaq around 110. And the breadth of the decline is stunning. Every stock and bond index and nearly all stocks are down. 701. wonkers2 - 4/3/2001 9:11:04 PM THE BARGAIN BIN--Now is the time to take the long view, which makes tech blue chips discreetly attractive Daniel Kadlec in Time 4-9 702. Jon Ferguson - 4/3/2001 9:26:26 PM Hmmm. Looked like I mistimed Nortel a tad. Going to have to average out my losses. 703. DanDillon - 4/3/2001 9:48:52 PM As many of you know, I resigned from teaching effective at the end of this school year. So I spent most of my spring break sending out resumes, some two dozen and counting. Happy luck, I have an interview on Thursday with the company I most want to work for. (Sort of the equivalent of getting accepted to your "reach school" just a few weeks after applying, convinced you'd never get in.) So keep your fingers crossed. After all, isn't most of landing a job being in the right place at the right time? Sure, I'll say all the right things in the interview, too.... 704. Erin R. - 4/3/2001 9:52:16 PM What kind of work are you looking for? 705. CalGal - 4/3/2001 10:10:36 PM Excellent, Dan! It's not all luck, you know. You've stayed focused on your goal, even while teaching. 706. DanDillon - 4/3/2001 10:16:06 PM ErinR, 707. CalGal - 4/3/2001 10:24:46 PM Ha, that's a good one too. 708. Erin R. - 4/3/2001 10:29:57 PM Interesting. I recently transitioned from MarCom/PR to marketing. 709. DanDillon - 4/3/2001 11:01:05 PM Erin R., 710. Erin R. - 4/3/2001 11:06:57 PM MarCom is focused on producing materials that present an organization to its market. PR is focused on presenting the organization to the media and public. 711. wonkers2 - 4/4/2001 8:42:44 AM Good luck, Dan! 712. wonkers2 - 4/4/2001 5:51:45 PM The market tried but failed to rally Wednesday after Tuesday's rout. 713. arkymalarky - 4/4/2001 9:57:54 PM Good luck, Dan. Has your decision to change jobs affected your teaching this year? 714. DanDillon - 4/4/2001 10:22:50 PM arky, 715. thoughtful - 4/5/2001 4:02:19 PM Good luck Dan. 716. wonkers2 - 4/5/2001 4:49:37 PM Oracle went up $1.08 today and Larry Ellison's net worth increased $1.2 billion. 717. wonkers2 - 4/5/2001 4:55:31 PM TECH RALLY 718. wonkers2 - 4/5/2001 4:58:29 PM EMC.......+17.81% 719. Dusty - 4/5/2001 5:11:26 PM von K 720. arkymalarky - 4/5/2001 6:26:57 PM Dan, 721. thoughtful - 4/6/2001 10:13:20 AM Came across a web site full of basics and nice calculators if anyone is interested in learning about personal finances. Check out Consumer Financial Literacy. 722. DanDillon - 4/6/2001 11:28:03 AM arky, 723. CalGal - 4/6/2001 11:42:07 AM Wow, that happened to my post? Repeating: 724. DanDillon - 4/6/2001 11:55:40 AM The intial interview went very well. I'll find out if I have a follow-up in a week or so. I suspect I will. I didn't ask how many people they planned to talk to, but they're hiring for two openings. I think my chances are good. The position pays a great deal more than I'd expected. I also found out that there's a lot of travel involved initially. 725. CalGal - 4/6/2001 12:07:40 PM If they say "initially", don't count on it ending. But if it pays well (congrats!), and they're willing to let you start after school ends, it's probably worth taking it. Once you have a start on your resume, you can leave if the travel becomes onerous. 726. pogie - 4/6/2001 2:38:11 PM Does anyone think programming in general would be pretty screwed if this guy's for real? 727. CalGal - 4/6/2001 2:43:26 PM Even if he's for real, it won't work. People who are natural programmers will be able to tell the system what to do, people who aren't will have a terrible time. After a while, people like me will be consultants in "real language" programming. 728. CalGal - 4/6/2001 2:43:42 PM So hell, I'm all for it! 729. LimeGirl - 4/6/2001 3:22:41 PM Plus, it seems like in general, the farther away you program from the hardware, the slower your program is. Although I'm sure that this will improve as time goes on. 730. CalGal - 4/6/2001 4:33:29 PM Yes. I have said before now that I can't figure out why no one has thought to study the phenomenal success of some liberal arts majors in programming and other tech fields. I think it makes the case for aptitude, not training, as the differentiator. 731. wonkers2 - 4/7/2001 12:48:26 PM The preface to Benjamin Graham's magnum opus, "Security Analysis," contains the following quote from Horace's "Ars Poetica": "Many shall be restored that now are fallen and many shall fall that are now in honor." It does not say when. 732. wonkers2 - 4/8/2001 12:23:51 PM MUTUAL FUND SCOREBOARD 733. wonkers2 - 4/8/2001 12:41:43 PM ---------------------Exp.Ratio--Turnover--5-yr Ret 734. CalGal - 4/8/2001 3:37:23 PM This piece would be funny if it weren't so true. 735. CalGal - 4/11/2001 3:41:41 PM Question: 736. CalGal - 4/11/2001 4:31:15 PM Well, the phone just rang and it was the other job. The guy got my resume and called me that soon. So that one's looking good. The only downside is that they want me to relocate to Kansas City for the contract--uh, no. But I may have to travel there periodically, which is bearable. 737. Åse - 4/12/2001 12:48:47 AM Well, I finally finally finally got off my application to the post doc in Geneva that I want so badly. I agonized over it for weeks. E-mailed it along with the CV yesterday. 738. CalGal - 4/12/2001 12:53:28 AM Good luck. I know you'll do well. Also, enjoy the interview. It's a bunch of time dedicated to...you! What's not to like? 739. Åse - 4/12/2001 12:58:02 AM Hey, that's a good way to think about it! That's why I like giving talks so much, now that I'm rid of the stage fright. 740. CalGal - 4/12/2001 1:05:44 AM Not only is it time dedicated to you, it's time dedicated to your favorite subject. You love talking about and studying emotion, and here's a guy who wants to know all about what you have to say. 741. CalGal - 4/12/2001 1:43:56 AM Hey. It just occurred to me that PMI on a rental property is deductible. 742. Laura C - 4/12/2001 10:16:36 AM Good luck, Ase! 743. CalGal - 4/12/2001 10:38:22 AM . This seems unduly risky to me unless there's reason to believe the job market will be much better in the fall. 744. Erin R. - 4/12/2001 10:48:05 AM I think it's a bad idea to take extended vacations in this economic environment, where is still so much uncertainty. 745. Laura C - 4/12/2001 11:02:09 AM Thanks, that's what I thought. 746. CalGal - 4/12/2001 11:08:17 AM Wow. Denial in action. 747. Laura C - 4/12/2001 11:24:04 AM No, see, she got tired of the law after four years because it's boring and you have to work too hard. So her backup plan is either to take some finance classes or get a genetics degree (her last science class was in high school). Or else if Mr Wonderful gets a job, she'll get married and that'll buy her a few more years. 748. CalGal - 4/12/2001 11:31:20 AM I actually find it comforting to think that it will catch up with her. In my experience, many of the people who act like irresponsible idiots never have to worry because some divine act of Providence always occurs on their behalf. We tortoises have to work hard because Providence always ignores us if we don't. 749. Åse - 4/12/2001 11:37:18 AM AAAAACK 750. CalGal - 4/12/2001 11:39:18 AM Oh, my god. That's horrible. I'm sorry, Ase. I think he will laugh about it, but it still sucks to have to wait so much longer. 751. Laura C - 4/12/2001 11:47:15 AM Okay, CalGal, you got me. I am much more exasperated than concerned, and I have a sinking suspicion she's going to end up marrying Mr Wonderful (the only boyfriend of hers I've ever flat-out hated) rather than growing up and deciding what she wants to do and sticking with it for more than ten minutes. So she will get away with it yet again. 752. Åse - 4/12/2001 11:58:16 AM Well, he emailed right after the calling window I had provided - but it is getting late there. I have already mailed the correct (now verified and double verified) number to him (also, it actually appears on my CV that I sent as an attachment - hmm), and I emailed my absconded advisor. (That's Paula - see, I was so discombobulated I assumed everybody knew that she's my absconded advisor). 753. Laura C - 4/12/2001 12:01:57 PM The flower shop part of it is funny, anyway. 754. CalGal - 4/12/2001 2:30:19 PM Well, in the continuing saga, I haven't heard on the one contract--they're probably still pretending to be in sticker shock on the price. But the other one, that's local, I have an interview with the CEO tomorrow at 2 or 3. 755. rubberducky - 4/13/2001 9:10:38 AM well, i was on a short-term contract. 756. CalGal - 4/13/2001 11:10:50 AM Arggggh. Sorry about that, Ducky. Please don't take these comments as criticisms, but rather "for the next time". 757. CalGal - 4/13/2001 11:11:55 AM When you talk to your manager, my advice is to start by acknowledging that you should have told him/her immediately that things weren't right. (unless you already did and haven't mentioned it) Explain what you think happened and make it very clear that there were no tools in place, etc. I sincerely doubt you'll get the contract back becasue clients are very big into saving face, but if you cover it with your employer you'll be fine. 758. CalGal - 4/13/2001 11:14:02 AM When you talk to your manager, my advice is to start by acknowledging that you should have told him/her immediately that things weren't right. (unless you already did and haven't mentioned it) Explain what you think happened and make it very clear that there were no tools in place, etc. I sincerely doubt you'll get the contract back becasue clients are very big into saving face, but if you cover it with your employer you'll be fine. 759. CalGal - 4/13/2001 11:14:29 AM And that goes double. 760. Erin R. - 4/13/2001 11:21:30 AM I have a temp in today to do some data entry, but she can't log onto the "temp" computer--the password is not working. And our internal help desk is not calling me back. 761. CalGal - 4/13/2001 11:23:39 AM Yeah, if you hire temps or contract workers, it's best to get them everything they need before they start because it's expensive. 762. rubberducky - 4/13/2001 11:24:58 AM i did leave that out - i.e., i mentioned on Tuesday to my boss and let him communicate that to the client that i had concerns about meeting the 2 week deadline. they seemed fine with it and were thankful to know it on the front end. 763. Erin R. - 4/13/2001 11:27:54 AM She does have everything she needs, or so I was told. The "temp" password isn't working for her today, even though I know it was working yesterday. 764. CalGal - 4/13/2001 11:32:19 AM Wow, I was just going to suggest that you test the stuff before she gets there, but you'd done that, too. Frustrating. 765. Erin R. - 4/13/2001 11:34:16 AM Good luck! But it doesn't sound like you need it. 766. rubberducky - 4/13/2001 11:34:49 AM cool beans, CG. good luck! 767. Erin R. - 4/13/2001 11:51:21 AM Well, she just came to my office again and said she would be back on Monday. Help desk has not called me back and boss is not in (on West Coast) yet. 768. CalGal - 4/13/2001 12:09:30 PM Thanks! 769. rubberducky - 4/13/2001 12:12:12 PM those things and what was an unbelievably tight job market 770. Erin R. - 4/13/2001 12:27:19 PM I'm now spending a couple of hours figuring out my expenses. I'm thinking of getting a seperate checking account for expenses only. 771. CalGal - 4/13/2001 12:27:43 PM Well, a tight job market was true in 96 and 97, but the delays were long. Whereas things are moving rapidly right now in a slow market. That's why I wondered about technology. 772. CalGal - 4/13/2001 12:28:18 PM Erin, 773. Erin R. - 4/13/2001 12:35:17 PM I have an AmEx with my company's name on it that is used only for business travel and in one case, a dire emergency involving Huggies at K-Mart. :^) 774. LimeGirl - 4/16/2001 11:04:42 PM So it looks like Thursday shall be my day to interview for a summer internship. I just found out today, and am horribly nervous already! While I am perfectly happy to not have an internship this summer, because I can go to school and knock out some extra credits so that my last year will be easier, and also have some extra time with the girls, I would not be happy at all about not nailing this interview and being offered an internship. Which I would accept, of course. The learning experience would be very good. 775. CalGal - 4/16/2001 11:18:35 PM But that's great! I thought you wanted an internship? Or was it that you wanted part-time work? I think an internship would be optimal, if you can get it, because work experience might be the "men from the boys" differentiator in a tougher market. I wouldn't consider it a dealbreaker either way. But it will also help with your confidence. 776. LimeGirl - 4/17/2001 4:02:27 AM Well, since I hadn't heard anything about any sort of internship, I was sort of making alternate plans in my head about what I was going to do this summer, and part of it is being lazy, because without an internship, I don't have to worry about childcare. But I really do want an internship, just feeling very nervous about it all! 777. CalGal - 4/17/2001 4:18:48 AM Good lord, what are we both doing up? 778. Dusty - 4/17/2001 7:48:50 AM Good Luck Limegirl 779. LimeGirl - 4/17/2001 12:06:18 PM Thanks, Dusty! 780. Indiana Jones - 4/18/2001 11:24:38 AM Stocks are hopping after the Fed cut the interest rates. 781. Indiana Jones - 4/18/2001 1:40:57 PM One stock not participating in the rally: SALN. Down another 28%, although in light trading. 782. Indiana Jones - 4/18/2001 1:44:29 PM AMZN (Amazon) was at $12 earlier in the week and traded as high as $18.16 today. I hope they're turning things around there. 783. PsychProf - 4/18/2001 1:45:19 PM Indy...I did, and my boys did. We bought, however, ar 40. 784. Indiana Jones - 4/18/2001 1:57:17 PM PP: It's around 31 1/2 right now. You may be back in the black before you know it. 785. CalGal - 4/18/2001 2:00:52 PM I dunno, I wouldn't buy into Amazon. Online sales are flat, and I think they've got a lot of losses to go. 786. Dusty - 4/18/2001 2:05:04 PM Indiana Jones 787. Indiana Jones - 4/18/2001 2:14:15 PM Cal: I'm not buying Amazon (stock) either. But I love buying merchandise from them, and now that I've relocated to a pretty rural locale, I plan to do even more of my purchases online. I hate shopping and malls and traffic and all that crap. But the idea that I can see something on my computer, hit a mouse button, and a truck brings it to my house--now that's more like it. 788. Indiana Jones - 4/18/2001 2:14:21 PM It's a win-win-win: 789. CalGal - 4/18/2001 2:22:44 PM I love Amazon, too. I'll be sorry to see it disappear. 790. Indiana Jones - 4/18/2001 2:22:44 PM Then here's the next step: 791. CalGal - 4/18/2001 2:23:30 PM Actually, Amway does that last bit now. Or Quixstar does, which is linked to Amway. 792. Dusty - 4/18/2001 2:25:34 PM Someone just bought some Salon at $.36. 793. Indiana Jones - 4/18/2001 2:26:32 PM Cal: Amazon has the clout, expertise, and name recognition. Someone else could possibly do it, but Amazon is the most well known ecommerce site around. 794. CalGal - 4/18/2001 2:31:16 PM But Webvan going under--and Webvan is a good service, too--shows that there's a problem with online shopping for certain things. Like toilet paper. 795. Indiana Jones - 4/18/2001 2:31:51 PM Dusty: I show the bid as .30 and ask as .36, but the last trade as .26. Only 3,100 shares have traded today. 796. Indiana Jones - 4/18/2001 2:33:40 PM Cal: IMO Salon is already bankrupt. It's not around as a money-making venture anymore. 797. Dusty - 4/18/2001 2:55:18 PM Indiana Jones 798. Dusty - 4/18/2001 2:57:23 PM Indiana Jones 799. CalGal - 4/18/2001 3:01:18 PM They only have money for a few months, if that. It depends on how many premium members they get. I just don't think that many people will sign up for it--I don't see how it will be any different from Slate. 800. Dusty - 4/18/2001 3:07:19 PM I agree. I wonder what went through their minds when the idea was proposed. 801. Indiana Jones - 4/18/2001 3:07:43 PM Dusty: Just my opinion. I worked at a similar venture a few years back and they have all the earmarks--right down to the way they're selling Salon "gear." The ads I see are still predominantly for Salon and the Well (which they also own, but charge a membership for). Plus, I don't see how that business model (purely Web text content with ads) is going to generate much longterm money. 802. Indiana Jones - 4/18/2001 3:09:02 PM That is, they might stay open because someone doesn't care about losing money or working real hard just to tread water. Like a JFK jr. 803. LimeGirl - 4/18/2001 7:39:08 PM I am so sad about WebVan. I love ordering groceries online. 804. CalGal - 4/18/2001 9:54:10 PM Don't show nerves or eagerness. Have fun, be relaxed but confident. 805. Dusty - 4/19/2001 8:09:10 AM LimeGirl 806. Laura C - 4/19/2001 10:06:59 AM Bummer, CG. What about the other contract? 807. CalGal - 4/19/2001 1:40:28 PM Bummer, CG. What about the other contract? 808. CalGal - 4/19/2001 1:42:23 PM But publishers downplay their direct operations because it makes bookstores very, very unhappy when consumers buy around them. 809. Laura C - 4/19/2001 1:56:46 PM Excellent news on the contract! 810. CalGal - 4/19/2001 2:04:19 PM Wow, there is already a market for everything. But Amazon centralizes things. Do you think that someone would figure out another way to centralize if Amazon disappeared? 811. Erin R. - 4/19/2001 2:13:28 PM I need to get networked. I've been putting it off, and I've been at my new job for almost 6 months. So I'm going to be pretty aggressive about it this spring and summer. 812. CalGal - 4/19/2001 2:15:46 PM Do you belong to any organizations? 813. thoughtful - 4/19/2001 3:35:28 PM Question for the financial wizzes around here. True or false. Stock buyback programs raise the stock price over the long term and is just a way of returning value to the shareowners that doesn't incur tax liability as dividends do. 814. Erin R. - 4/19/2001 5:09:21 PM I don't belong to any software-related organizations, so I need to find some. 815. Åse - 4/19/2001 6:52:23 PM I think my Geneva interview went well. There's two other serious candidates, and they'll be meeting next week or so. 816. CalGal - 4/19/2001 6:58:31 PM Age limit? You've got to be kidding me. Wouldn't you then have a lawsuit? 817. Åse - 4/19/2001 11:49:42 PM Congrats on the contract. And, yes, come and visit. We could try to lure Jamie into an F2F too. 818. pogie - 4/19/2001 11:53:53 PM How would one attempt superspecialising in the current market? I am getting pretty decent with the major database and web programming software/languages, but don't have corporate type experience. What I'd like to do is put together stuff like what toad is for oracle, except individually tailored to assorted smaller companies. Is there even a market for going in and setting up stuff like that for small or midsize companies? Agencies want corporate experience, and I've only got noncorporate experience presently, but would like to take the experience and somehow use it to make more money. And with so many smaller companies, it seems like one should be able to swoop in, set up a self-sustaining (more or less) system that is better than their current one and then scamper off to the next company. Or should I break down and try my luck with the evil agencies? 819. Dusty - 4/20/2001 7:58:12 AM thoughtful 820. Erin R. - 4/20/2001 12:24:40 PM Just heard some news about our budget for next year: more money, much more accountability. 821. CalGal - 4/20/2001 2:05:59 PM Pogie, 822. ElliottRW - 4/20/2001 3:08:40 PM In the 18 months ending March 31, 2001, one of my 401k's has lost a third of its value. Egad. 823. CalGal - 4/20/2001 3:15:48 PM Mine has lost a lot from its high--about 25%. Depressing, I know. But I also started buying last year, so that stock will be recovering fairly quickly. 824. CalGal - 4/20/2001 3:16:05 PM Lime, if you're out there--how did it go? 825. LimeGirl - 4/20/2001 6:58:31 PM I think it went well. He asked me about some programs I'd written, what kinds of problems I had with them and how I dealt with them. Then he gave me a programming problem, which I felt like took me forever, but I did get it! Then we talked for a little bit about what interning there is like, and I think that it'd be a good experience for me there. It felt like he had very little to go on to actually make a decision, I guess that could be either a bad thing or a good thing. 826. pogie - 4/20/2001 8:32:51 PM Cal, my only job experience is for educational institutions, and headhunters have all been, 'go to a small company for a few months, and then we'll place you with large companies, because educational/government stuff doesn't count as much as working for a for-profit outfit, even a small one'. What gets done a fair amount where i work now is a student comes in and sets up a self-supporting framework for running a given department and every few years a new one comes in and does a new configuration, rinse repeat. I pretty much want to do that, which is freelance I guess. I'd like to set up systems like that for a couple of years and if people actually pay me for that, then figure out how to sell them, but for now I'm mainly interested in figuring out how to get in and set up self-supporting systems in the first place. 827. CalGal - 4/20/2001 9:43:49 PM Pogie, 828. CalGal - 4/20/2001 9:45:23 PM Lime, 829. pogie - 4/20/2001 10:07:56 PM I was looking for them to place me, not going for specific stuff. It was recruiter chicks from the larger techie-type agencies telling me that. Although at my current work I am a 1099, so I figured if I was offering swoop in and fixit services, that wouldn't be ultra difficult to 1099 (once I found someone to buy them, heh) and would save me dealing with headhunters at all. 830. CalGal - 4/20/2001 10:14:17 PM Well, I would go for specific stuff. I certainly wouldn't listen to what low-level know nothings say about what corporations want. 831. pogie - 4/20/2001 10:34:17 PM Most of what's on dice is agency offers for the stuff I do (i.e. almost nothing specific). I have noticed that the few actual companies offering stuff at least claim to be ok with independent contracting, so I could try putting together tailored proposals for those places, using my current work projects as examples of what I could improve for them (due to paranoia, or numerous snapshot backups, it would be pretty simple to demonstrate before/after improvements on the code and websites here that I was responsible for). Worst that could happen at this point is my boss give me still more money or some other place hires me to do some other sort of work, pretty much. 832. CalGal - 4/20/2001 10:43:36 PM Well, it doesn't matter if it is an offer through an agency if it is an actual contract, as opposed to a "We need programmers!" lure. If a recruiter has a real contract that they are advertising for in DICE, I can't believe they wouldn't accept your resume if it meets the qualifications. You'll rarely see a contract listing demanding corporate experience purely for the sake of it. 833. pogie - 4/20/2001 10:57:45 PM It can't hurt to do both, send out some proposals and apply for those other positions with an updated resume. I had planned to start looking in the next week or so on the premise I could find something new or in addition to my current work by august or so. Hopefully one approach or another will score something. 834. Indiana Jones - 4/21/2001 11:57:43 AM In the 18 months ending March 31, 2001, one of my 401k's has lost a third of its value. Egad. 835. thoughtful - 4/23/2001 9:35:55 AM Dusty, you know me. I'm more of an informal type, but am interested in any academic conclusions that may have been reached. Of course, there's enough financial types who believe this is true and that's why there are so many companies engaging in stock buyback. But for me as a shareholder who has watched the value of stocks tank with the overall market it would seem that a stock buyback is no guarantee that prices will stay up and is at best a poor and much riskier substitute for actual "cash in hand" dividend payouts -- even though they are taxed. 836. Indiana Jones - 4/23/2001 9:53:07 AM IMO a stock buyback depends (as always) on the company. In general, if it's big company in a slow growth industry doing the buyback, that may be the best alternative for the use of the money. Whether you as an individual investor ought to be investing in that company is another matter. I think a stock buyback usually makes more sense than diversification into an area in which such a company has no expertise. (Part of Cisco's recent problems--I'm guessing--have come from the buying frenzy of other companies they went on when replete with cash.) 837. thoughtful - 4/23/2001 1:42:49 PM IJ, please explain. 838. Frankster - 4/23/2001 5:24:53 PM Okay, nothing about payouts or dividends, but what should I do ( Is this the right thread for this ?) ? 839. Frankster - 4/23/2001 5:26:30 PM Okay, working with that as a backdrop, here's my quandary: 840. Frankster - 4/23/2001 5:28:02 PM The biggest reason I have for reporting her would be her work -- it overlaps or comes directly into contact with mine. It's a money issue and now I know I can't trust her. I'll never be able to trust her. What if there is a shortage, who will they look to first ? The cynic in me says yours truly. 841. CalGal - 4/23/2001 5:35:52 PM I think you need to put exactly what happened in writing, in the form of a log. I think you need to then go see your manager and tell him that you would understand how screwy this is, given your recent history, but that this is what you saw and that in order to protect both the company and yourself you thought this was the best thing to do. That you suggest not taking your word for it, but rather see if he can observe the behavior on his own. You can also tell him that you don't really care what he does and will accept his judgment no matter what. 842. Frankster - 4/23/2001 5:47:25 PM I think you should also consider finding a new job. 843. CalGal - 4/23/2001 5:53:27 PM Frank, 844. Frankster - 4/23/2001 9:48:08 PM Cal, 845. Indiana Jones - 4/23/2001 10:21:37 PM thoughtful: 846. Indiana Jones - 4/23/2001 10:28:37 PM 3. They want to send the latter, but it probably also means the former. But I'd still prefer it to diversification or dividends (at this point in my life--when I'm older, ask me again). 847. Indiana Jones - 4/23/2001 10:33:05 PM Frankster: I think Cal's advice in 841 is excellent and I can't offer better. 848. Indiana Jones - 4/23/2001 10:34:45 PM BTW, Cal, I'm impressed. 849. Indiana Jones - 4/24/2001 8:18:23 AM thoughtful: After sleeping on it, I realize my #2 above is fairly muddled. To try to clarify: 850. Indiana Jones - 4/24/2001 8:43:37 AM Crap. That was stupid. A split wouldn't affect P/E, just P/S. I think I'll quit now. 851. Indiana Jones - 4/24/2001 8:45:43 AM Directly affect--stock prices usually go up as a result of announced splits for psychological reasons. 852. thoughtful - 4/24/2001 8:50:01 AM IJ. Thanks for trying to answer my questions. 853. Indiana Jones - 4/24/2001 8:58:30 AM a stock split has absolutely no impact on a stock's value. 854. Indiana Jones - 4/24/2001 8:59:43 AM s.b. "It's less important now than pre-online trading..." 855. Indiana Jones - 4/24/2001 9:10:29 AM Diversification is not an element in the equation because it suggests that management still believes it can add more value by retaining and investing the money... 856. Indiana Jones - 4/24/2001 9:19:04 AM The size of the stock buyback in my view is irrelevant to the price of the stock... 857. Indiana Jones - 4/24/2001 9:37:40 AM Finally, the personal choice of buying stocks that generate dividends vs. future growth is not relevant to the argument either...as the shareowner always has the option of diversifying his/her own portfolio to meet their income/tax avoidance/risk vs. security goals. 858. thoughtful - 4/24/2001 12:02:47 PM IJ, Management (the board) in using a stock buyback s.b. concerned with E/S or just price, not directly P/E. If they are worried about P/E, they have the more direct route of a split or a reverse split. ff. 859. Indiana Jones - 4/24/2001 12:18:02 PM thoughtful: It's not strictly irrational (see 853). 860. thoughtful - 4/24/2001 12:19:17 PM For one, I fail to see why you think a stock's price is unaffected by whether a given buyer wants it in his or her portfolio considering all factors. The market for that stock is made up of such buyers. 861. Indiana Jones - 4/24/2001 1:02:31 PM thoughtful: I had another long-winded post but my browser crashed and I don't feel like retyping it. 862. thoughtful - 4/27/2001 3:28:41 PM Jeremy Siegel seems to buy into the stock buyback as having raised long-term stock prices and P/Es. See here. 863. wonkers2 - 4/28/2001 11:31:49 PM Good link. Investors who want dividends can buy bonds or common stock in utilities or other regular dividend payers. Siegel makes sense to me, assuming the company has un-needed cash and not too much debt. But management should first explain clearly to their current stockholders what they are contemplating doing and why they are contemplating doing it. Leaking it first to Wall Street insiders and their clients is unfair to current stockholders who, had they known of the buy-back, might not have sold their stock or might have waited until after the announcement of the buy-back to sell. In other words, both the buyer and the seller of the stock should be aware of the buy-back before the purchase and sale. 864. Frankster - 4/29/2001 5:15:30 PM Cal, 865. CalGal - 5/1/2001 6:57:07 PM Well, I was right to be worried about that gig that delayed. First they delayed to the 30th, then to the 7th. Then, yesterday, I get a call from them saying that "we" need to get the mandatory drug test and the background check done before I start. 866. LimeGirl - 5/1/2001 7:03:18 PM That is idiotic. Every place I've worked that does a drug test hands you the form the day they offer you the job, and insist that you contribute your sample within 24 hours, so you can't clean out your system, I guess. 867. CalGal - 5/1/2001 7:35:09 PM He told me that no one had come and complained about me being a bitch, and that was what counted. 868. concerned - 5/7/2001 9:48:36 AM Here's a question about stocks. I have a certificate for x number of shares for a company which I used to work at. 869. CalGal - 5/7/2001 10:16:35 AM My guess is that the lockout applies, but it depends on how your contract is worded. You have a "certificate"? 870. Indiana Jones - 5/7/2001 9:20:08 PM As Cal says, I think it all depends on your lockout contract. Unless specifically mentioned within the contract, the fact that you no longer work there should be irrelevant to the lockout. 871. concerned - 5/7/2001 11:26:04 PM Re. 869, 870 - 872. CalGal - 5/7/2001 11:47:26 PM If it's a standard certificate for actual shares, then I don't see why you would be bound from selling. So you've paid taxes on the stocks already? I'm not sure how the taxes work when you have actual stock, as opposed to options. 873. concerned - 5/8/2001 12:00:47 AM If I sold, I would probably have to claim capital gains, but I'm not completely sure if they would be long term capital gains, although I've had this certificate for over a year now. 874. CalGal - 5/8/2001 12:03:35 AM But the stock itself (the transfer) has to be paid for, doesn't it? So even if you don't sell the stock, wouldn't you have to pay for the fact that you have it? 875. concerned - 5/8/2001 12:19:10 AM Cal Gal - 876. wonkers2 - 5/8/2001 8:00:00 PM Concerned, I don't see why you couldn't sell it to another employee of the company or to a private individual for an agreed upon price.?? Unless there is some restriction on the transfer of ownership lurking around somewhere. 877. Indiana Jones - 5/8/2001 9:27:24 PM concerned: This seems contradictory... 878. concerned - 5/8/2001 10:54:11 PM Re. 876 - 879. wonkers2 - 5/8/2001 10:59:54 PM If there has been no public offering and the stock isn't trading, how would you determine the value of the certificate? That's why I suggested you might be able to sell it to an individual. Stock certificates aren't ordinarily redeemable by the company [unless the company chooses to buy the shares back]. They are worth only what somebody is willing to pay for them. [Only bonds are redeemable by the company.] You have to find a suck, a buyer, that is. 880. concerned - 5/8/2001 11:06:43 PM The reason I think it might work if I did this is that the shares I received are common stock. It seems to me possible that unless I was uniquely identified as the seller to the acting 'securities official' in the company whose stock was being sold that there may not be any other mechanism preventing me from redeeming this certificate before the lockout period ended. If this is wrong, I am interested in specific reasons why. 881. concerned - 5/8/2001 11:08:09 PM Re. 879 - 882. wonkers2 - 5/8/2001 11:11:48 PM Okay, I have no experience with lockouts. I used to get options which had no lockout. We could either exercise them through Salomon Bros. and buy the shares or cash them in immediately, less withholding tax. They expired, as I recall, after 10 years. 883. concerned - 5/8/2001 11:30:11 PM One place I worked at had a plan like that also. What is interesting is that I held onto a couple of those certificates for about five years, and even though the shares had split twice, they had also fallen in value to about a fifth afterwards, so I actually got a bit less out of them than I invested. 884. Indiana Jones - 5/9/2001 8:24:45 AM concerned: If you attempt to sell the securities without making it known to the buyer that you cannot legally sell them, you'll be committing fraud. If you do let the buyer know, I think you'll be hard-pressed to find, as wonkers (almost) says, a sucker. 885. concerned - 5/11/2001 12:21:40 AM I have free and clear ownership of these shares. That is not in question, nor should it be inferred in any way that I am not the sole owner of the shares. 886. Laura C - 5/14/2001 1:29:56 PM Erin et al, feel like helping me with a negotiation? 887. Erin R. - 5/14/2001 1:32:49 PM What exactly do you want? What do you think will make the job tolerable? 888. Laura C - 5/14/2001 1:35:21 PM Oh, and I want to stay with this company for several reasons. It's the rare company in this industry that is very, very unlikely to be acquired. Underlying financials and stability are excellent. We are aggressively paid for what we do. I have smart bosses who believe in me and are pushing me to develop and succeed. I can spend hours every day online and still be on the fast track. 889. Laura C - 5/14/2001 1:40:03 PM Cross-post, Erin. I want a short commute, which will not be physically possible if I stay where I am. Damn company's been in the city for 193 years, I buy an apartment that's an easy commute and bam, they move. 890. Dusty - 5/14/2001 1:45:57 PM Laura C 891. Erin R. - 5/14/2001 2:09:14 PM I would ask for more telecommuting time *and* ask for adjusted work hours. 892. Laura C - 5/14/2001 2:54:59 PM Dusty, my wording was just ambiguous. I geared myself up to make a big case for one day at home plus a later start time, and got told not to worry about it, that those things would be no problem. I will get those things and should think about what else I want in addition. 893. Erin R. - 5/14/2001 3:18:33 PM Hm...is a promotion a possibility? How would this make your current situation easier? 894. Laura C - 5/14/2001 4:08:28 PM Well, a promotion is a strong possibility for the future. It wouldn't improve the commute but it would make it more worthwhile. 895. Erin R. - 5/14/2001 4:18:40 PM I think the laptop is something you should definitely pursue. I could not do my job without one. 896. CalGal - 5/14/2001 9:47:13 PM Laura, 897. wonkers2 - 5/15/2001 12:14:21 PM CHARLES SCHWAB ON RETIREMENT 898. wonkers2 - 5/15/2001 12:16:02 PM Charles Schwab and John Bogle are, in my opinion, two of the best sources of advice for ordinary folks. Johnathan Clements whose column appears every week or so in the Wall Street Journal is also quite good. 899. Erin R. - 5/16/2001 10:30:55 AM My company announced a 15 percent layoff today. We'll know who's affected within a few weeks. I just started about six months ago, but my department just got a huge budget increase, so we'll see... 900. Ms. No - 5/16/2001 3:31:09 PM Best of luck to you Erin. 901. wonkers2 - 5/16/2001 5:56:10 PM Just out of curiosity, what brought about his untimely demise? 902. wonkers2 - 5/16/2001 6:20:47 PM Stock buybacks: My impression is that stock buybacks usually have, at least, a positive short term effect on the price of the company's stock when they are announced, especially if the number of shares is a significant percentage of the total. 903. Ms. No - 5/16/2001 6:24:04 PM wonkers2, 904. wonkers2 - 5/16/2001 7:11:33 PM debt-equity ration = debt-equity ratio. 905. wonkers2 - 5/16/2001 10:11:30 PM Another motivation for stock buy-backs for some companies is trying to become less of an attractive takeover target. Companies with undervalued stock prices and lots of cash are tempting takerover targets for the Kirk Kerkorians of the world. 906. Indiana Jones - 5/17/2001 11:13:10 AM Seems to me the long term effect would depend on the strength of the company's balance sheet i.e. the amount of un-needed (presumably) cash and the amount of debt. 907. rubberducky - 5/18/2001 12:26:57 PM the writer of this article makes a somewhat sloppy case (ex: talking about what people 'deserve to make') against stock options as bonuses, but i agree with the overall conclusion. 908. CalGal - 5/18/2001 3:54:31 PM Ducky, 909. CalGal - 5/19/2001 9:40:36 PM NY Times Piece on Amazon Profitability Analysis 910. rubberducky - 5/22/2001 10:03:10 AM CG: 911. rubberducky - 5/24/2001 11:13:40 AM ok, i'm a little irritated. 912. Laura C - 5/24/2001 11:24:08 AM That does seem odd. Is there someone you can ask about the details of the submission? 913. rubberducky - 5/24/2001 11:31:18 AM i could dig and find out, but there are several different client managers here. i suppose it'd be a simple thing of finding out who is the client manager for Company X, but i haven't yet. 914. CalGal - 5/24/2001 3:04:22 PM It is completely out of line for them to submit you without telling you about it. There is also nothing wrong with them submitting you at two places. This sounds very fishy. Are you still looking for other gigs on your own? 915. Ms. No - 5/24/2001 4:22:24 PM Ducks, 916. Indiana Jones - 5/24/2001 4:29:09 PM ducky: If you're looking for work, I know a guy named Murrell who's looking for a webmaster. 917. Erin R. - 5/24/2001 5:46:17 PM Just wanted to report back on my re-fi: we closed today, consolidating the rest of our retail debt with the equity in our condo, for a payment that equals a bit under $200 more than the previous payment. In another couple of months, we should be able to re-fi again, if the rates keep dropping, which they may. Even if they don't, I still feel good about the re-fi. It's a relief to be able to pay off and cancel all those damned credit cards! 918. CalGal - 5/24/2001 6:05:14 PM Christin, 919. Ms. No - 5/24/2001 6:17:47 PM CG, 920. CalGal - 5/24/2001 6:28:54 PM Oh, I thought you wanted to know how to do it yourself. That's not a question you need to ask Ducky, it's a question you ask a junior GUI programmer or a web administrator. If all you had to go on was his post, you could tell by the word "backend". 921. PsychProf - 5/25/2001 11:25:53 AM 922. LimeGirl - 5/25/2001 11:39:57 AM Heh. One thing that made me decide that I definitely didn't want a journalism major was when I read what they make out of school, and I realized that I had made that much before I quit work to go back to school!! 923. rubberducky - 5/25/2001 11:45:56 AM ok, i made a little boo-boo. i was asked about the position in an off handed way so that i didn't remember it. 924. rubberducky - 5/25/2001 11:48:29 AM CG: 925. labwabbit - 5/28/2001 2:15:42 PM Comprehending Engineers - Take One 926. labwabbit - 5/28/2001 2:16:10 PM Comprehending Engineers-Take Four 927. labwabbit - 5/28/2001 2:16:21 PM Comprehending Engineers-Take Seven 928. racehorse - 6/1/2001 5:10:03 PM Reposted from MWT: 929. thoughtful - 6/1/2001 5:16:29 PM thank you labw...being married to an engineer, I can appreciate those! 930. thoughtful - 6/1/2001 5:19:39 PM On the difference between a mathematician and an engineer. Given a room with a stove and a pot of water on a table. The problem is to heat the water. The engineer picks up the pot, puts it on the stove and turns up the flame. The mathematician picks up the pot, puts it on the stove and turns up the flame. Next you give them the room with a stove and the pot of water on the floor next to the table. The engineer picks the pot up off the floor, puts it on the stove and turns up the flame. The mathematician picks the pot up off the floor, puts it on the table and says, "Now I have a problem I have solved before." 931. CalGal - 6/1/2001 5:24:40 PM Wow. Serious cluster fuck all round. 932. racehorse - 6/1/2001 5:36:24 PM I sent her an e-mail explaining my position, and that in the future, I would not assume that teamwork would be involved in solving common problems: in this case, how best to create and format the budget, what numbers to use. I would be more aggressive about being "in the know" and so on. 934. racehorse - 6/1/2001 5:59:53 PM You're right; I felt the urge to slap, because I had been slapped, and I'm not good at turning the other cheek. 936. racehorse - 6/6/2001 2:01:57 AM Well, as I mentioned in another thread, I did get laid off. 937. CalGal - 6/6/2001 9:36:14 AM Race, 938. racehorse - 6/6/2001 2:37:36 PM Nope, don't have time to mourn. I've sent out 200 resumes already today. Would like to do 400. 939. debby - 6/8/2001 12:44:29 PM sniffle. In a "softening" economy when you throw your resume on monster and no one is calling to enquire about your availability, and the lottery fantasies are becoming intrusive how does one keep from screaming obscenities at ones boss and storming off in a snit? 940. CalGal - 6/8/2001 12:54:55 PM Debby! Good to see you. 941. debby - 6/8/2001 1:10:59 PM Definitely the boss. I adored this job until he started. And the sucky thing is I love the company and would rather not leave but - there are very exciting things going on - but I do not suffer dickheads easily and it is interfering with my quality of life and turning me into a creaming shrew at home...oh and because of the exciting things going on there is a hiring freeze so no reqs are being approved so nothing is being posted that I could transfer to. 942. debby - 6/8/2001 1:12:00 PM Oh god, I meant SCREAMING shrew, jesus... 943. Adrianne - 6/8/2001 1:13:47 PM Debby (patpatpat) 944. Adrianne - 6/8/2001 1:16:27 PM 945. CalGal - 6/8/2001 1:18:03 PM Deb, 946. CalGal - 6/8/2001 1:18:39 PM Oh, and the creaming thing was very funny. 947. CalGal - 6/8/2001 1:20:22 PM BTW, don't get me wrong. Looking for new jobs is also a good thing to do, even if you like your boss. I'm just saying if you like everything else and your career is thriving, quitting because of the boss can be overkill until you've tried everything else. 948. Adrianne - 6/8/2001 1:23:54 PM 949. debby - 6/8/2001 1:28:13 PM focus more on how you can cope with the fact that you can't stand him, 950. CalGal - 6/8/2001 1:44:16 PM Ad, 951. debby - 6/8/2001 1:50:45 PM first and foremost he fucked me out of half my vacation time by scurrying down to HR to get "clarification" on personal days instead of asking other managers in the dept how it is typically handled, which is in and of itself a death penalty offense in my opinion. And then the fact that he is a rigid ex MP who is focusing on establishing power and control rather than kicking back and letting us get on with our jobs. Oh, and funniest of all - while alientating the staff he is also insisting on "team building" extracurricular activities. Aargh. Oh, and he whispers constantly and has tried to freeze me out of and take credit for a project I finished single handedly before he arrived. 952. CalGal - 6/8/2001 2:02:49 PM 1. What are the specifics of personal time policy that he used to screw you? 953. debby - 6/8/2001 2:21:02 PM Official HR policy is that our **10** personal days are basically for life and death emergencies only. Informal dept policy previous to his "clarification" was that they were ours to do whatever the hell we wanted with, and since this verrry old company gives only 2 weeks vacation most of us just used the ten days as extra vacation time. When I asked him why he had gone to HR rather than asking other managers, or god forbid his own boss, he sincerely explained that "if anything happened" he "wouldn't be covered." I was physically restraining myself from screaming obscenities at that point so I didn't point out that he is no longer in the MPs and in the private sector managers are rarelyy court martialed for liberal personal day policies. Then he pored back over the records and decided the 5 days off I had taken prior to his arrival counted as vacation days, not personal days, leaving me with exactly 5 days off to enjoy the summer with, not what I had been planningon at all. 954. debby - 6/8/2001 2:23:33 PM (cont'd) 955. CalGal - 6/8/2001 2:30:29 PM Debby, 956. debby - 6/8/2001 2:36:13 PM If your manager at the time signed the timesheets in which you took personal days, the timesheet information can't be changed 957. CalGal - 6/8/2001 2:48:05 PM On his control: 958. CalGal - 6/8/2001 2:50:45 PM On the timesheets--I don't think it matters whether the timesheet actually exists or not. You were paid for the time, it is in the past, and it was another manager's approval. I would still go to HR and complain on the grounds I mentioned. I'm assuming the other manager isn't around? 959. CalGal - 6/8/2001 2:53:27 PM You're handling the whispering and the credit stealing exactly right. 960. debby - 6/8/2001 2:59:35 PM Exactly. I did say "was there some reason you didn't mention this to me?" and his reply was that it just happened and he didn't have time. I did manage to end run him on that one, the person in the other dept is higher on the food chain than he is and I went over and bonded with him over the project and the upshot is I am now the only one with access to that server to make updates etc and new fun software has been installed on my machine to work on it and I now have an excuse for training etc. I am trying to keep the open hostility down so this doesn't blow up. 961. wabbit - 6/8/2001 4:02:38 PM repost of 933-calgal 962. wabbit - 6/8/2001 4:04:24 PM and 935-calgal 963. sakonige - 6/8/2001 5:19:25 PM If a new manager is trying to create faults in her performance, it sounds to me like Debby's job is already screwed. 964. CalGal - 6/8/2001 7:33:14 PM Sakonige, 965. jexster - 6/11/2001 12:52:35 PM Did I Say That?!?!??!? 966. jexster - 6/11/2001 1:29:08 PM Better late than never, I woke up to what Deb and I have long said and am trying to get out of the biz. Much more fun getting my Masters in Public Policy. 967. debby - 6/11/2001 4:51:02 PM Hey Calgal you out there??? I'm having a bitch of a time making my resume look right with dice, I tried plain text and I tried html and it keeps putting weird line breaks in and skipping lines! 968. CalGal - 6/11/2001 4:56:46 PM Ack, I've never filed my resume on DICE, just put a link out there. Let me look--what URL did you take off the main page? 969. CalGal - 6/11/2001 5:01:29 PM Oh, are you using ResumesOnline? Okay, give me a (non-identifiable) to test out and see what you're seeing. 970. debby - 6/11/2001 5:22:24 PM Hey - email me at dchaisso@hotmail.com and I'll send you the link - thanks 971. LimeGirl - 6/12/2001 1:17:30 PM I thought of you, CalGal, last night at work. 972. racehorse - 6/12/2001 1:36:49 PM Thanks for posting that article, Cal. My husband wants me to consider the public or not-for-profit sectors (yuck!) because they are more secure. 973. CalGal - 6/12/2001 1:52:44 PM Lime, 974. racehorse - 6/12/2001 1:59:25 PM He believes the non-profit sector is *more* secure and in some ways, it is. But it offers less opportunity and almost always, less $$. 975. Shannon - 6/12/2001 1:59:57 PM Hey race, I was wondering about you today. How is the hunt going? 976. Jennifer A. - 6/12/2001 2:00:36 PM As long as you live near an IKEA. 977. CalGal - 6/12/2001 2:03:45 PM I am good at assembling furniture. I just never get around to opening the box. 978. racehorse - 6/12/2001 2:04:11 PM We're taking a break for a couple of days. I don't have any serious bites yet, but we only sent resumes for a few days. 979. CalGal - 6/12/2001 2:40:12 PM What does that mean? (adjust the impression pattern) 980. racehorse - 6/12/2001 3:34:37 PM We're sending out a cover letter directing folks to my web site. I'll send it to you if you'd like to see it. 981. racehorse - 6/12/2001 3:41:19 PM Sorry, didn't answer your question, did I? 982. Laura C - 6/12/2001 7:08:24 PM Good luck, racehorse. You jobhunt more systematically and effectively than anyone I know. 983. jexster - 6/14/2001 12:18:33 PM Congress is now investigating why there were so few sell orders from financial services companies who were ditching stocks right and left before the Bush Crash 2001. 984. Ms. No - 6/15/2001 3:19:51 PM Am I just a heartless bitch or does this strike anyone else as a bit whiny? I mean, what kind of moronic money-management skills do you have to have to go from making $100,000 a year to being homeless and broke in less than six months? 985. CalGal - 6/15/2001 5:03:58 PM No, 986. Ms. No - 6/15/2001 5:23:25 PM Maybe I just have no pride, but when I was out of work I did a three month stint at a Burger King to keep a roof over my head. 987. Ms. No - 6/15/2001 5:25:28 PM Oh, btw, thanks for the heartless bitch confirmation. Some underling actually smiled at me today and I thought maybe I was losing my touch. 988. CalGal - 6/15/2001 5:32:57 PM It is worth remembering, though, that working at Burger King would go a long way towards covering your expenses, where it would do nothing for your boss. 989. Ms. No - 6/15/2001 5:47:58 PM CG,
I have no position in the market, and suspect there are many laggards like me.
You know, I see lots of financial analysts (as opposed to brokerage analysts) recommending that people buy. I wonder how many people who haven't seriously traded before will enter the market?
Timing the market usually doesn't work because you have two decisions (guesses?) either one of which may be wrong: (1) when to get out and (2) when to get back in. Skeptics were saying, based on historical price measurements, that the market was over-priced from around 1993 on. They were wrong for six years and those who followed their advice missed out on the biggest bull market in memory. Many gave up and got back into the market and were burned by the NASDAQ crash last year. These people are respected investment gurus.
Market timing is an especially poor tactic in taxable accounts where you have to give the IRS its cut every time you sell. Also, transaction costs take their toll. Market timers like options players and day traders tend to be unsuccessful.
1. Start thy purse to fattening.
2. Control thy expenditures.
3. Make thy gold multiply.
4. Guard thy treasures from loss.
5. Make thy dwelling a profitable investment.
6. Insure a future income.
7. Increase thy ability to earn.
I plan on finishing the book on the plane to Houston. I will post more later, maybe this evening as I'm feasting on room service.
Abby Joseph Cohen, chidf investment strategist at Goldman, Sachs and an influential market analyst closely identified with the 1990s bull market, issued the third upbeat recommendation this week. She joined David Bowers of Merrill Lynch and Jay Pelosky of Morgan Stanley Dean Witter in advising clients to buy stocks.
SCHMALTZ SAYS MAYBE?
"You want to believe you have seen the worst, but anybody's predictions are a leap of faith," said Dick Schmaltz, director of investment at J. &W. Seligman Inc., which oversees $34 billion. "On the one side, operating fundamentals continue to deterioriate. On the other side, the market has been correcting now for almost a year."
NYT 3-4
In a note to clients yesterday, Ms. Cohen raised the equity allocation in Goldman's model portfolio to 70 percent from 65 percent, and reduced the cash position to zero from 5 percent. She left the fixed income portion alone.
30% bonds or bond mutual funds
The way to find out is to ask the adviser whether they are fee only or whether they are representing or receiving commissions from the investments they recommend.
Some fee only advisers charge an hourly fee or a fee for a plan. Others charge a yearly percentage of your assets under their management. A typical fee is one percent, or less for larger amounts of money. This can be okay for people who want to turn their investments over to somebody else and not worry about them. But taking one percent off the top every year significantly reduces your long run return compared to a Vanguard no load index fund that charges under .2 percent per year.
Moreover, the one percent that goes to the adviser is in addition to the fees you are paying the the mutual funds or the commissions you are paying the brokers.
My guy is affiliated with Linco Private Ledger; I think I put in the link earlier (www.lpl.com).
But I think if you check the Newsweek or Time piece I linked in earlier they have another site for financial planners.
Wonkers is right--an adviser can charge on a fee basis or on a yearly percentage. My retirement and some of my mutual fund purchases are handled this way--but I figure that gives him a huge incentive to keep my costs down. But you have to have a portfolio of some amount to do that.
He had worked through American Express before then, and even using their limited number of mutual funds, he quadrupled my portfolio, which is why I qualified for his program when he left Amex to have more freedom in what he could offer.
That's why I don't see any harm in going to Amex or someplace like that--even though they do limit what the broker can offer--if you have a chunk of money that isn't big enough to get the big boys to care about but you're too nervous to handle yourself.
It is not a question of being "bothered"; it is a decision that one needs help. I wonder that people will bitch about spending a couple hundred dollars on estate planning or a will or a family trust and look for ways to do so themselves on the cheap when they can easily afford it, or manage their own financial investments based on the hearsay of friends and acquaintances or advice culled from investment letters.
What do the advertisements say, "Just X dollars per trade", which I suppose is appealing to someone who is racing to outguess the daily market returns or can't bear to take a hit in his investments.
My financial planner started out making cold calls with Amex--it's how he ended up with me, actually. So they do start out as junior nobodies, but that doesn't mean they aren't helpful. The juniors are often supervised.
12 years later he is as I described in Message # 310, we've done very well by him, and I wonder what those other parents have done?
Yes, commissions work for people with larger accounts.
He is also loyal--he didn't offload me when he began limiting his new accounts to 250K, but at the same time he used that opportunity to lecture me on my lack of savings initiative. It was a very influential lecture.
No problem.
And you deserved the lecture on fiscal responsibility, didn't you? I, too, was shook up to know I had good income and a very uncertain future which prompted SAVINGS & LONG-TERM INVESTMENTS.
We are at this stage now - have a chunk of savings to turn over, besides the Netstock account I finally set up. A planner who coldcalled my husband is working on a proposal for us; I'm just not sure how you tell an adequate advisor from a really good one. Any hints?
As I said to Erin earlier, though, I don't want to beat myself up too badly. It was my own approach to debt reduction that finally helped me out, and I do have one house, am about to buy another and have a solid retirement portfolio. But I still feel as if I'm making up for lost time.
I have a question: Japanese Finance Minister Sees 'Catastrophic Situation'
Japan's financial problems continue. I am curious about how this affects the US economically, but am also wondering in what ways it would affect the stock market. How would a financial manager of a large portfolio protect against fallout from this--if at all?
I am not looking to make my own purchases; I'm just curious to know what parameters are used in mid-term financial planning.
Let me be very clear. I needed help in investments and that's why I sought help.
Let me be very clear. I needed help in investments and that's why I sought help.
Scott was far more responsible than I was. I had a check for $25,000 sitting on my desk--it had been there for six months. My big move was going to be opening an IRA and letting it collect 2% interest. Erik called me, I was sick but said, "Hey. Can you take this check for me and do better than 2%?"
That said, I had also gone to a financial planner a while before who had put together a plan, charged me a fortune, and I didn't like the results. It was too much money for boilerplate, so I paid the bill but didn't use her. This was Amex, which I figured was safe enough, and he didn't charge me any money but was open about the fact that he could only use Amex funds (at that time--Scott says that it has changed). It was a real relief to get it off my hands.
Now that I am also doing my own investing as well, Erik is helpful, too. I can periodically show him my statements and he'll tell me what is doing well and what I should reconsider. (as in my Netstock account)
I know I wouldn't, which is why I felt more comfortable turning it over to someone else. I think there is a lot more than just maximized returns to consider.
My "colleagues" and myself were once described by our senior as "the best hired guns in the industry"; new management comes on board and wants to change. After six months they understand, and they'll pay. If this has been my experience why would I deny professional advice in my finances from persons directly responsible for results?
American Express performs a valuable function of getting people to save and invest more than they might otherwise do, and they charge a significant, perhaps a fair, price for doing this. This is beneficial. I have not compared all of these "for profit" funds with Vanguard's Index 500 fund, however, I would venture a guess that the Index 500 has beaten most of them, on an AFTER-TAX basis over the past 20 years or so. The Wilshire 5000 funds are close to the Index 500 ones, perhaps a little lower. Both of them beat 80 percent or more of the managed funds in most years and certainly over the long run. (not last year, however).
Almost by definition, most managed funds can't beat the average because of commissions, managemnt fees, transaction costs and taxes.
I don't have any illusions about convincing you or Cal because I have a good friend who has been using American Express for several years and is very comfortable with what they have done for him. I have plied him with all the above arguments and given him clippings, etc., to no avail. And he is a bright guy. Chaque un a son gout!
I'm not with Amex anymore; I followed my financial planner.
Interestingly enough, I just emailed my financial planner asking him about this very question. Here is my email and his response.
Me: Hey, who do I recommend if someone is looking for a financial adviser and either isn't in California or doesn't meet your portfolio requirements?
Him:I would have them check the CFP website for their location. Also, not surprisingly, I might have them contact an American Express office in their area, especially if they are looking to do comprehensive planning. Still a bit stifling, but overall prob. the best place to do planning. Erin, A Roth IRA compounds tax free from the time the money is invested until you take it out at age 59 1/2 or later. And, best of all, in contrast to a regular IRA, you pay NO TAXES WHEN YOU TAKE THE MONEY OUT.
wonkers2, I've read all of your posts with interest, and you do have good advice for people. The post I linked is also literally correct, but I am slightly concerned that someone might get the wrong impression. The emphasis on the last phrase might lead people to think it is better than the original IRA.
It isn't.
Frankly, I've stopped contributing to my IRA, so I've stopped keeping track of the eligibility rules. I don't know whether there are any people who have a choice between the original IRA and the Roth IRA. But the original one was a better deal. This is not to say that people shouldn't do a Roth IRA, it has significant tax advantages over simply putting the money in a mutual fund.
I do know that wealthy people sometimes use term life insurance for estate [tax] planning purposes. Exactly how that works I'm not sure.
Roughly speaking, here goes:
As most people now realize, the US has an estate tax. While there are proposals to eliminate it (I'd bat against), it does exist at the moment.
Suppose you expect to have an estate that will be large enough to require estate taxes. First, be happy. Second, take steps so that you don't have to pay any more taxes than you are legally required to.
Whole life can be part of such a plan.
If you only plan to leave an estate to a spouse, a simple whole life policy should work. If you want to leave your estate to others, (such as children), you may need to put the policy in a trust. I haven't done this, but my boss has.
I hope this doesn't come across as if I were a whole life salesperson. I'm not a big fan of it for me, but there are advantages for estate planning purposes, and I suspect some in here are fortunate enough to have to worry about that.
I had not known why it was used for estate planning until now, thanks. Is term life insurance payoffs considered part of the estate?
Yes, the tax treatment of term is the same. Which raises the obvious question, why not purchase the lower cost term?
A "problem" if you can call it that, occurs if you live too long. The annual rates for term coverage rise steeply with age. You might also fall into ill health. While you can buy term with a guaranteed renewable option, these options typically have a time limit in them. If the point of the insurance is for estate planning, you might not be able to buy it precisely when you need it.
The fact that one might move from a low tax bracket to a larger one later does complicate the analysis, but I don't think it changes my answer. A boss at a previous job made a similar claim about some other choice, which involved taking the tax deduction now, or later. His belief was that the tax rates were going to go up, and they might go up enough to offset the gain. I showed him that marginal tax rates would have to get into the 70 or 80% range for his math to make sense.
I think the same applies here. We could walk through an example if you like.
You mentioned that you can't get money out of an IRA. Can you get money out of a Roth IRA? That would factor into the consideration, although i think you'll agree with me that it is a liquidity consideration, rather than a straight financial difference.
Addendum.
I suppose it is obvious that if a person is in the zero per cent tax bracket, it makes more sense to do a Roth than a traditional IRA, but how many people in that bracket can spare enough money to make it worthwhile to set it up?
Seems to me that a Roth would clearly be preferable for someone with low earnings e.g. a college student who earned $3000 on a summer job and who may owe no taxes at all. They don't need the $2,000 tax deduction, and the Roth compounds, tax-free the same as a regular IRA but with the major added advantage of completely tax-free withdrawals after age 59 1/2. (I believe withdrawals are permitted for downpayments on homes and a few other purposes even before age 59 1/2). I don't see any downside compared either to a regular IRA or a taxable mutual fund investment. Am I missing something? A Roth seems to me like finding money on the sidewalk.
I've never seen the arithmetic on Roth versus regular IRA for someone earning, say $75,000. Are you saying that a regular IRA is preferable? I am not prepared to argue this with you. This may well be correct.???
The overall advice is that people should use IRAs/Roth IRAs if they are eligible.
If someone really plans to max out their IRA, and wants to know whether the traditional or Roth is a better deal, then we start with a good situation, and we can figure out the best option.
The most important principle is spending what's left after savings, not vice versa. And pay those credit card balances off in full every month.
But I think it makes sense for everyone who's eligible for an IRA to max it out every year. I believe Vanguard and other websites have Roth calculators that will help you decide whether to convert your regular IRAs to Roth IRAs or whether to contribute your $2000 each year to a Roth or to a regular IRA. I haven't been eligible for either since the Roth IRA statute was passed, so I haven't pursued the matter.
I haven't been on-line reliably since last week. I apologize for not posting my review of The Richest Man in Babylon. I was travelling for business and over the weekend, for personal business. I'll try to post a complete review later this week.
We drove up to Minnesota to visit with friends and family. The family were my BIL and SIL--my husband's brother and his wife. My MIL died two years ago and left a will disinheriting my husband and his sister, both of whom had been out of contact with the family for many years. The BIL we visited and another brother, who lives in Atlanta, inherited the parents assets, including a small farm.
(cont'd)
The house, which was old to begin with, is now in a state of terrible disrepair. It is also filthy--they have three cats, a dog, a parrot and a rabbit. The rabbit lives in the dining room in a hutch. The parrot lives in the bedroom in a cage. The cats live all over the house and outside, and there are litter boxes all over the house. The pristine sitting room my MIL reserved for visiting priests and other esteemed guests now serves as a TV room and is also filthy. Crumbs and dirt cover all surfaces; the place doesn't look like it's been cleaned for about six months. The BIL's excuse is that he lacks the money to keep the place up, especially since he and his wife don't know if they will be living there.
My husband had relinquished all rights to the property. At the time, I thought it was a bad move. Now I think if BIL sold the place, he couldn't get half what the place was worth two years ago.
An abject lesson in how not to plan your estate.
(more in the next post)
It was a memorable stay for this reporter, who was raised by Yellow Dog Democrats, for many reasons, not the least of which was this man's constant railing against the government, which he says "takes" half our income in taxes. If the government didn't take our money in taxes, he asserted, then people would save more money and social programs wouldn't be necessary, women would stay at home with their children, and families could take care of their own.
I pointed out that most people do not take advantage of pre-tax savings and investment programs that would significantly reduce their tax burden. I would love to see some statistics on people who have access to 401(k) plans and the like, and IRA plans, who don't take advantage of them.
It was a lively conversation, to say the least.
I feared that my collections would not be appreciated, and so I have very patiently and occasionally brought my only child's attention to one piece or another. It will be hers to sell if need be, but she's got to know the value of it, and how it was gained.
My point is that the estate should have had a more impartial executor.
That's an interesting point. I guess the guy would feel angry that he would have to lock his money away to keep the government from getting it--but you'd think he'd still see the value in locking it up.
I bought the Millionaire book over the weekend. Thanks for mentioning it again; I've been meaning to buy it for a while.
He invests in CDs that pay 6 percent. He's afraid of the stock market. He kept bringing up a brother who fits the profile in Millionaire of a high-income, high-consuming person--he earns about $200K, takes expensive vacations four times a year, and while he's closing in on 60, has saved less than six figures, which he unfortunately invested in the Nasdaq last year.
And I have to wonder about the guy's brother--did he think his old age would never come? Now it's staring him in the face and he's ignoring it.
But my husband was the same way for a long, long time. He wishes he had listened to someone who told him years ago to invest in index funds. But he found Jesus when the baby was born. As soon as our refi is done, we're going to be investing aggressively.
Vanguard certainly has good index funds and low fees and the SP index has certainly outpaced many growth funds over the years. I question tying a fund managers hands to an index ... there are many funds that have outpaced growth indeces for the long term.
I own two Van Waggoner funds which performed spectacularly on the upside for about three years or so. Year-to-date one of them is down 50 percent (Emerging Growth)plus however much it dropped today. I hate to look!
The cool thing about an index such as the NASD or SP500 is that, in reality, the long-term downside is really no worse than bond funds or even govt insured money markets!
If the SP500 (500 largest capitalized companies) go into the sewer, they certainly won't be able to pay their bonds and the dollar won't be worth the paper it's printed on.
I'm not against index funds, but an index is not be the best growth avenue for everyone and there are funds out there that have kicked the SP500's butt for years.
Inertia, unfortunately, is my middle name when it comes to moving money around. That is partly why I have it scattered in a lot of places.
Try American Century wrt performance.
..managers come and managers go
I see dead eye-to-eye with you here. American Century is team managed to deal with this issue. Again, I'm not against index funds, but thought I should table the fact that there are funds/fund families that compare very favorably.
That said, we should still have plenty to play with after even after we max out the 401(k). I don't think most of that will be in the S&P 500.
Were you in the market 11/87?
Schwab in 10/87? That place had to have been cheerful. I was tinkering w/ precious metals at that time ... there hasn't been an opportunity in metals since (not for us ameteurs anyway).
We're getting one proposal (from the cold-caller) today and another (from a friend's planner) tomorrow. Trying to hash out the balance between supplemental retirement savings and shorter-term needs, like moving from our coop to a house in 3 years or so.
The last big company I worked for used Putnam, but had limited fund choices at the time (3 years ago). I still have holdings in New Opportunities.
And, That is just Part of the Gory Story
1) Index funds track very well
2) Good customer service
3) Low cost (an over-rated strength since the cheapest doesn't necessarily make you the most money).
Vanguard's weaknesses:
1) Lousy growth fund performance
Good thread, btw.
Does the term "butterfly" have any meaning to anyone here?
Real Estate scares me. Ya got's to know yer business, whatever it is.
I've been following Japan's story recently, mainly because I am curious what sort of impact their continuing castrophes have on our economy.
It's not uncommon in the US for houses to be worth less than is owed on them. It has even happened in California from time to time, although not as often as Denver and DC/Virginia.
And, even though there apparently is a bit of softening in NYC values, it is hard to detect from reading the papers and talking to friends who are in the market.
Add "never" in after "almost".
. I am of the school that that indeed means real trouble for us, and still wonder how the trigger/ripple effect didn't cause more trouble for us, say about four years ago.
See, that's what I am curious about. I thought we had a trade deficit and that part of this deficit is made up with Japanese money, or something? But I never see the US economy mentioned much in reports on the Japanese economy.
The clause is basically a restrictive covenant that says that the condo association has the right of first refusal for people wishing to purchase a unit. FHA, VA and also many conventional lenders will not make mortgages on properties with first right of refusal--they consider it discriminatory. FHA alone makes 50 percent of loans in our area; the percentage is even higher among likely buyers.
So we had a condo association meeting to discuss this. There was much back and forth about keeping the rabble out of our development. Basically, if the association keeps this in the bylaws, it has to set up a review process that is equal for all potential buyers. And if they refuse to let someone buy, the association has to come up with the money or financing to purchase the unit. And how would we pay for a unit that we didn't want anyone else to buy? A special assessment!
BTW, 95 percent of the owners are African-American. Why they would even consider keeping the clause--one that would have prevented them from buying wherever they please 20-30 years ago--is beyond me.
Our attorney is working with the association attorney to amend bylaws. It's going to be a huge headache, and we can't refi until it's cleared up.
Homeowner associations make me nuts, although they are getting more and more unavoidable. Condos are several steps worse than that. Good luck.
Come to think of it, it is time for a drink.
Ciao.
I love the fact that our housing costs are so low now--less than 25 percent of household net--but these owners are getting on my last nerves with this BS.
Scam the bastards. This will only work if you have a close friend or relative that you KNOW you can trust who also qualifies for VA/FHA. Get an inflated offer from them, get a cosigner that you're backing, have the new "buyers" come in smelling like sheepherders when they meet with the homeowners association, force the homeowners association to buy your home at this inflated price, split the winnings with your scamming friends/relatives, take an expensive vacation in the South Pacific, return home two months later, get per-qualified for a mortgage ... by now the homeowners will be choking on the assessment, offer to buy your place back at a slightly deflated price on quick turnaround to "help them out" .... include a clause that excludes you from special assesments for five years.
I wouldn't mind a good scam but at this point, I just want my freakin' refi!
Interesting that sharp daily turns in the market, whether up or down, bring out the same Pavlovian response.
The moral of the story: look for restrictive covenants/first rights of refusal in your condo bylaws *before* buying and plan according.
Microsoft...............-48.6%
Intel...................-53.8
Cisco Systems...........-72.4
Qualcomm................-64.7
Oracle..................-62.8
JDS Uniphase............-83.4
Amgen...................+ 2.9
Sun Microsystems........-63.8
VoiceStream Wireless....-24.4
Veritas Software........-68.0
NASDAQ Composite........-61.9 (decline from high)
I am happy to say I quit procrastinating and opened up a money market account yesterday, moving most of my savings into it.
Oh, that might seem nitpicky but that was what I hadn't put together. So you are saying that everyone could be holding onto their Intel stock but one person tried to sell 3 shares and couldn't do it for more than 30% of the previous price and whammo! everyone lost all that money?
I do understand that many people still have their money in the stocks and that it is just worth less. But it seems to me that sales are also driving the decline, and that's what I was wondering.
The Bear Roars Back for a Run on Wall Street
I'm still wondering if I should put some money in a bond fund as a temporary (1-2 year) measure.
Stretching the truth a bit to the so-called expert analysts of Wall Street is one thing, doing it in a quarterly or annual report to the SEC is quite another.
So you are saying that everyone could be holding onto their Intel stock but one person tried to sell 3 shares and couldn't do it for more than 30% of the previous price and whammo! everyone lost all that money?
Yes.
If an individual or an institution sells a security, they put the money somewhere. Typically in a huge sell-off, fund managers will put the money in short-term cash vehicles which 1) gets the money out of the market, 2) gives them cash to take advantage of bargains (which there will certainly be during a panic).
So, let's say 20% of large stock funds' assets are in cash vehicles ..... The market will bounce back when this cash is put back into the market ... if all of this money is put into bonds, then the money for a market rebound has to come from somewhere else. Also, remember the huge influx of cash going into funds every day through 401(k)s.
But Oracle won the database wars--even five years ago Sybase and Informix were viable, now Oracle is about all you can find in corporate shops. I think SQL Server and whatever the Linux offering is (My SQL?) are the only other viable databases out there, and neither has established they can handle the big stuff. So Oracle has a solid market share, and their growth should be pretty consistent.
I think that's what we're going to do with the house fund. Planner #1's whizbang plan was heavily based on a complicated insurance product we don't need (no kids, sufficient insurance through work) and a 5% commission to him for the privilege, so he's out.
We'll see what Planner #2 comes up with, but unless it's very impressive I think we'll put the short-term savings in a CD, the house money in a bond fund, and buy and hold a couple of index funds for the long haul.
Thanks for all the planner advice last week - it helped me say "no, this isn't right, we can do better ourselves."
I had someone try to sell me that complicated insurance product, too.
The thing to look for in a financial planner is someone who will help you plan financially. I know, that sounds novel. But don't forget to ask questions about insurance--do you have enough, what about disability insurance, and so on. Also, ask if he has a vehicle for you to put money in month by month.
The Money Magazine issue with Buffett on the cover (it's still in the stores, just saw it yesterday) mentioned two excellent bond funds. I'll see if I can dig it up.
Technically, with Microsoft at about 53, if someone sold 3 shares at 30, and no one else traded, the shareholders of Microsoft would all be poorer, by an aggregate of many billions.
Is it something to worry about? No. There are millions of investors who think that Microsoft is worth about $53 a share. While the majority of them don't have a clue as to a reasonable valuation, a few do (and that's enough). If my hypothetical sale took place, many of these people would see a "market" price of $30, and would place an order. Orders would get filled until the price returned to the neighborhood of $53.
What if no one bought? This could only happen if the knowledgeable people had suddenly changed their mind about the value of Microsoft (say, due to a lawsuit.) In which case, lots of people would have lost money, but they lost money because the company is worth less than before.
As a related aside, I was watching the trading of Conseco very closely for awhile (when I say closely, I mean every trade on every exchange, minute-by-minute.) Some days, some joker would sell a 100 shares after hours for about 5% above the market price. This price would be used on everyone's closing statement, even though it was due to a single trade. This went on for a few days, then stopped. I never heard what happened, but I think someone was trying to manipulate the price.
No kidding. I was concerned, and I'm still concerned that you think the amount of the reduction in stock value can be used to estimate the amount of money moved. It can't, at least not without some very sophisticated econometric models, and even with that, I doubt it.
If an individual or an institution sells a security, they put the money somewhere.
I may have misunderstood you.
If a company has one million shares outstanding each trading at $100, then the stock drops to $60, do you think you can calculate how much money has moved into other securities (including cash)?
The answer is that you cannot, but I was concerned that you thought the answer might be $40,000,000.
So you are saying that everyone could be holding onto their Intel stock but one person tried to sell 3 shares and couldn't do it for more than 30% of the previous price and whammo! everyone lost all that money?
Yes.
Remember that trades are being made by traders and if some poor soul screws up and puts in a sell order at 30 for a stock trading at 53, it won't be sold at 30.
When I traded actively, it was not unusual for me to have a stock or option sell higher than what my limit was. Sure makes for a pleasant surprise.
bonds have more downside than stocks (in the same company)
Can you elaborate? I don't know what you mean by "more downside".
If you mean potential downside, they have identical potential downsides—100%.
Remember that trades are being made by traders and if some poor soul screws up and puts in a sell order at 30 for a stock trading at 53, it won't be sold at 30.
The hypothetical wasn't a market sell order. While the scenario CG outlined is extremely unlikely, I read it as a thought experiment to discuss what would happen.
On a related note, for those that do not know, if there is extreme uncertainty about the price of a stock, due to an impending major announcement, the exchanges can and do suspend trading, precisely to avoid the type of situation outlined by CG.
I'm looking at the market as a whole. I'm looking at stock prices in increments. Who the hell knows what the cash value of Intel is - I know that if a penny stock goes to $50/share in 6 months it doesn't mean the company could sell out for $50/share, it just means that's what it's trading at.
I'll repeat a fact. If there is a major selloff (causing prices to go down), then there are resulting proceeds from that selloff .... look what people are doing in this thread! ... they are scared, pulling their money out of the market, going to money markets, and bond funds.
The amount of cash that funds have is an important piece of information.
If the house purchase decision is within five years (you mentioned three), keeping the money out of stocks is wise.
Can you tell me more about the complicated insurance product? I'm just curious what people are pushing these days.
The amount of cash that funds have is an important piece of information.
No kidding. cash holdings are high at the moment.
I'm still interested in your reaction to Message # 429
The details on the insurance product are at my husband's office. I'll try to post them tomorrow.
Dusty,
Only more downside because shareholders are paid before bondholders.
Dusty,
I understand why you think I might have gone off my rocker. Cash holdings being high right now is very predictable - that's where the bulk of the selloff proceeds are. I'm not trying to calculate exactly what the proceeds are and am not trying to figure out what Microsoft is really worth.
What I'm looking for is much more simple. Fund managers sold a lot yesterday and are holding cash. Unless the institutions choose to move the money overseas, to bond funds, or use it to start a new country, this cash is the seed for a market upturn.
Dusty, you can rest easily. This is certainly not what I think. So, since we agree, what are we going to argue about next?
I have a close friend who has made a fortune (independently) over the last 20 years. He is, of course, always looking at ways to save on commissions. He called a discount broker once and asked if he could sell a butterfly with a net ... the young lady responded, "Is this some kind of joke?".
Only more downside because shareholders are paid before bondholders.
But they aren't. Bondholders have first call, stockholders have a residual bond interest and principal is repaid.
Dusty, you can rest easily. This is certainly not what I think.
OK. I saw your reference to the amount of the stock market drop, and worried that you might be reading too much into it. You've reassured me. (As much as anything, I was bringing it up as a point of discussion, because I have seen people who think that when they say the market has lost 4 trillion, they think it must have gone somewhere.)
But if you want something to argue about, we can talk more about the pecking order of bondholders and stockholders:)
We may be miscommunicating. If you know what a butterfly option is, and I trust you do, you must know that bondholders get their money before stockholders. So I'm confused about what you meant.
Absolutely. I'm trying to think of exceptions, but none come to mind. There can be different tiers of debt, some senior to others, but that doesn't change the order for bond and stock.
I suppose there's probably been some bankruptcy where the bondholders agreed to less than 100 cents on the dolalr, and it was successful enough to leave something for the shareholders, but that doesn't change the general principle.
As an investor in corporate debt securities, you are a creditor of the issuing company. You must be paid any principal and interest due before stockholders receive any dividends. Because corporate debt securities rank ahead of common stock, they are called senior securities.
From Merrill Lynch
I used to love trading options, figured out a decent strategy, made some money ... I'm not sure, but I think it was my substitute for sex while I was married.
But, that would be rare. Very rare.
Take as a truism, that bonds virtually always have payment rights superior to those of common stock. Preferred could be a different story.
It all depends on the company and the mix of stock/bond capitalization it has and how whacky it might have become due to marketing strategies.
Forgive me, seadate, but that marriage sounds like it was pretty grim.
And I left a LOT of money behind. I somehow felt that I was infallible wrt financial and career decisions, so I didn't drive a hard bargain in the divorce. I was never so alone, wealthy ($$), and poor (in spirit).
sorry, I misunderstood .. Too Much Info.
I also think an important aspect of our financial success -- if I can call it that -- is the fact that both hubby and I are happy to live "cheaply." We don't have the latest/greatest/biggest/designer anything and we feel no need to. If we want something, we will spend the money for it, but only after making sure we got a decent deal on it. We don't shop impulsively. We also have no debt. Our house is modest, especially given the area, but it's plenty for us and it's all paid for. We have a few cars -- all paid for -- but one is 13 years old, another bought used and so on. Our credit card use is paid for every month, and I avoid services that add "invisible" costs on a monthly basis which can really add up, like total phone, like premium cable TV and so on.
Studies have shown that there are people who are savers and others who are spendthrifts at all levels of income. Some of it seems to be personality, some of it seems to be learned or not learned. (For example, savings rates are significantly higher among those who lived through the Depression than those who didn't.) Another study asked people with net worths of $3-4 million if they felt they were rich and they said no. When asked what it would take to feel rich, the majority said $5 million. It's all a matter of point of view.
I'm somewhat embarrassed to relate that I always find good gifts at very fair value when travelling. Most of the Christmas, birthday and special occasion gifts we present are always unusual yet particular to the recipient and bought fairly reasonably. For a good friend's birthday I had found a rock crystal chop in Taiwan and had her name translated by me into Chinese carved onto it. The piece was unusual, of very, very good quality, and yet the cost about US$20.00.
Enough to say the gift was more than appreciated but she failed to reciprocate in kind - to her embarrassment. And that's because she is cheap, which I can accept but do believe it shames the person.
I also think frugality no excuse for lack of style.
I think frugality can be very overrated. Have you all read the conversation on happiness, depression and the correlations with wealth in the Slow thread? I mentioned there that welfare moms, to name one group, would be much better off if they were driven to acquire material goods--even if they ended up with more credit card debt.
I have been using the tactic of, "do you know how much a pizza will cost our son in college savings, compounded over 16 years???"
But he's much better at budgeting. He keeps me honest about overspending my small weekly allowance; he saves his allowance to buy software toys. I keep him honest by reminding him of our long-range goals.
I don't apologize for frugality, but I hate cheap.
One thing my husband does not skimp on, no matter how budget-conscious he is. In doing the laundry, I noticed that my son has 15-20 outfits, all in the same size range. My husband bought all but three of them.
PLs "One Up on Wall Street"?
How to Make Money In the Stock Market:
"Buy a stock, when it goes up, sell it. If it doesn't go up, don't buy it."
I also bought at another Crown yesterday, "Eight Steps to Seven Figures : The Investment Strategies of Everyday Millionaires and How You Can Become Wealthy Too" by Charles B. Carlson.
There is a lot of information out there. I'm still trying to finish up "The Richest Man in Babylon" but my primary income stream interferes. I've only got about 30 pp. left, but I don't seem to have time these past couple of days to read./
In the tradition of the megabestseller The Millionaire Next Door, Eight Steps to Seven Figures brings together in-depth interviews with over two hundred everyday people whose investments have made them millionaires. But while The Millionaire Next Door describes its subjects' lifestyles and spending habits, Eight Steps to Seven Figures focuses squarely on the investing strategies and principles that ordinary people have used to achieve the magic million-dollar mark.
Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they choose as part of their investment mix. In the course of the book, readers learn how to determine how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free. Among the lessons he outlines and elaborates on:
(cont'd)
"Know Where You Are Going"--Determine your investment time frame, financial goals, and risk "comfort" level to put together a successful wealth-building strategy.
"Play to Your Strengths"--Everyone has different personality strengths, investment advantages, and specialized knowledge that they bring to the table; recognize and exploit them in achieving your financial goals.
One of the best things about Carlson's book is that it recognizes and allows for readers who may not have the resources to follow all eight rules. It offers reassurance and hope that there is more than one way to achieve the seven-figure pinnacle. Even people who started investing later in life, and can't fully harness the power of time, can find here the guidance they need to become wealthy.
Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it, Eight Steps to Seven Figures is an absolute must for today's investors.
Bestselling author and chartered financial analyst (CFA) Charles Carlson reveals the keys used by the newly wealthy to reap extraordinary dividends, including a discussion of the specific stocks, bonds, and other financial vehicles they chose as part of their investment mix. In the course of the book, readers learn how much time they need to spend researching and watching over their portfolios, when to buy, and equally important, when to sell. From hundreds of accounts of those Carlson calls "Main Street millionaires," he distills eight specific investment rules anyone can follow to become financially worry-free.
(cont'd)
Filled with the insights and investment advice that hundreds of everyday people have followed to become rich, and buttressed with countless you-are-there stories of how these millionaires did it, EIGHT STEPS TO SEVEN FIGURES is an absolute must for today's investors.
Another book I'm reading that is high-level finances is When Genius Failed. Great book thus far.
I have "The Warren Buffett Way" on tape and listen to it when I commute. I wish I could find more investment books on tape.
I don't read as much fiction as I used to, and I'd say my book count, which used to be extremely high, is now closer to average. I have a lot of books in the house that I haven't read, which never used to be true.
Your comments on finances Message # 470 largely mirrored my own. But what really hit home was your comment on how different family members can be Message # 474. True on both sides of my family.
I have a brother who started his own business, but got into financial difficulty and asked for some help. I told him I wouldn't simply lend him some money, I'd want to sit down with him, and have him make a budget and a plan, partly to figure out whether his business could even be saved.
The first thing we went over were his credit card bills. So I, knowingly, said the first thing to do was to pay off those bills, because of the high rate of interest. However, when the night was over, we agreed that those were almost last on the list. Very depressing.
Some on my wife's side do ok, but others let money burn a hole in their pocket. They have almost no savings, and little sense for investing. Ironically, one brother-in-law did some work for us, and then wouldn't let us pay him, even after we practically begged. he finally admitted that we were his "savings" plan. If we paid him, he would spend it, and this way, he couldn't touch it.
I'm a big fan of Bogle. I missed that show, but sounds like good advice. I bought some more tech today, not sure he would advise going that far, but I'm not selling (except for tax purposes.)
Other than my spur of the moment tech fund decision, my main investment decisions consist of moving a modest amount of money out of a bond fund and into S&P 500 and Total Stock market funds once a quarter.
I also bought a foreign stock (technically, April 1), but that is motivated by tax considerations.
All the companies, except for Amazon, are profitable, fast growing, and have no debt and lots of cash.
Playing It Cheap
For people who don't have a lot of extra cash to spare each month, this covers low minimum mutual funds and what to look for.
Or I may use this as a compromise point to max out my 401(k) from my bonus checks. Currently, I'm only at 3 percent, with a match from my employer.
The man has no restraint when it comes to the kid!
Question: is anyone at risk, or worried, about layoffs? The numbers are staggering: Motorola 7000, Heinz 1900, Cisco 8000, Intel some big thousand.
I'm going to insist on at least maxing out on the 401(k) this year, before any expenditures. It's possible we'll move up in tax brackets this year. We need that deduction.
Speaking of which, I'm thinking of investing in Home Depot. I've followed the company's process for a couple of years, just out of my own interest in how businesses run.
Opinions?
The company is well run, and they just hired a new CEO, one of three guys up for the GE CEO position recently. I've followed this guy's track record--he focuses on making fast things faster. And he seems to groom successors.
How do you decide Nortel is worth double its price?
I'll be back to say I told you so in 6 months.
That's my thinking. It should do well in cautious economy times, as well as during boom times. And it's a well-run company that still has a lot of productivity and efficiency to squeeze out of its operations.
Which reminds me--I was in a testing center the other day with Spawn, and read an old Fortune magazine article on the GE's CEO selection process. Excellent article, if you can get your hands on it. I'll see if I can find it.
I think Jon's right about Nortel. HD is a good company and Laura's right about the fact that a lot of people will be doing it themselves in the future.
At one of the startup companies I worked at five years ago, I was strongly encouraged to purchase my options early to avoid getting hit with a short-term capital gains bill when I cashed them in. I opted against it--and since I left the company, it was no matter.
But if you get stock options as part of your compensation, read up on this and be careful if anyone tells you to buy. It is a fine idea if you are sure beyond all doubt that the company's stock is going to rise.
Hope it pans out for you, Jon.
The other guy went to 3M, but for some reason, the company doesn't excite me much.
I may start using my scanner to just scan in articles I like and then toss them. Thereby preserving my packrat comfort levels and a less cluttered apartment.
This would be why I work for the government :-)
Actually, there look to be some pretty big reorganizations for us. The state just hired a new CIO, and much consolidation and/or privatization could be on the horizon. Too soon to tell yet how it will all play out.
I totally agree about investments being too depressing to monitor. I'm thinking I won't even open my deferred comp statement when it comes. Only half joking there.
Wouldn't be the end of the world if it was outsourced, anyway. Typically when they outsource entire sections, the contracting firm hires most of the old employees, or at least most of the ones who want to be hired. And those who want to stay with the state can usually get jobs elsewhere. Hubby and I are just going to sit back and see what happens. Not much to be done about it, anyway.
I'm on a conference call, and half the people are dialing in from home. You can hear kids playing in the background, and people heating up things in the microwave.
Sunday NYT [excerpt]
Say you have a capital loss in a security you really like--you paid $10, and it's down to $6.
He (Laurence I. Foster of Richard A. Eisner, a N.Y. accounting firm) and most personal financial specialists would recommend a strategy known as "doubling up." That is when you buy an equal number of shares at $6, wait at least 31 days (anthing less would be a "wash sale," on which losses are disallowed) and sell the more expensive shares. "On 100 shares, you have a $400 loss you can claim on your tax return" for this year, assuming the price remains at $6 for the 31 day holding period, Mr. Foster said.
This strategy is most often used in the fourth quarter, but if an investor believes the market--and his holding--are only temporarily depressed, then it may be better to act now than to wait.
A growing number of companies are turning to grading systems, also known as forced rankings or distributions, as a way of making sure managers evaluate employees honestly and make clearer distinctions among them. At companies that do not compare employees with one another this way, nearly every employee can come away feeling above average, like the children of Lake Wobegon. But under the grading system, managers are forced to identify some people as low performers.
This is so odd. Surely ratings and rankings aren't new. Charles Schwab was using them back in the 80s, and I'm sure they weren't unique.
But the techniques, which some employees label with terms like "rank and yank," have come under sharp criticism. While they appear to offer an objective way to judge employees, they can be vulnerable to bias, Mr. Thomas said. Managers may stereotype employees when evaluating them on vague criteria like career potential — deciding that older workers, for example, may have a harder time keeping up with new technology.
This is hysterical. Um, like all review systems aren't subjective?
The reason this particular one scares the general victims groups is because this one, unlike the other review methods, allow direct comparison, which gives companies more coverage in layoffs.
But I still don't understand why the fuss all of a sudden. It's been around forever.
Forced distribution appraisals are almost guaranteed to piss off two-thirds of the people in the group. Some believe that periodic discussions covering performance and progress toward career goals without numerical ratings are more effective in motivating employees.
The reason I think it's a bad idea is because it punishes the people of a manager who has built an excellent team. All low performers aren't equal.
And yes, it does "really matter which method is used." The more the rating aspects of appraisals are highlighted versus lower key communications about long term goals as well as recent performance, and the greater the stakes (merit raises, promotions, layoffs) attached to the ratings, the more destructive the effects of the system are likely to be.
I meant the current celebration of teamwork as somehow superior to individual contribution. As a general rule, I'd take a bunch of strong individualists with a desire to achieve. They'll work as needed to get the job done--including in teams, if needed. But any management style that pushes teamwork over individual work is flawed, imo.
Well, let me qualify that. It would be flawed in any work environment except those where individual contribution is irrelevant by definition.
Manufacturing or other jobs were output is the only thing that matters might do better to grade the group as a whole--especially in a union shop, where they're already used to thinking collectively (lips curl in slight distaste).
The more the rating aspects of appraisals are highlighted versus lower key communications about long term goals as well as recent performance, and the greater the stakes (merit raises, promotions, layoffs) attached to the ratings, the more destructive the effects of the system are likely to be.
But then we're debating about what "matters". I strongly dispute that the method of assessing employees matters to the success of a company. Now, it may have much to do with a company's management retention rate--I could see managers quitting over onerous procedures. But the fact is that merit raises, promotions, and layoffs are going to happen anyway, and there will always be people who are unhappy about the results. So employee discontent is largely irrelevant. Management discontent would not be.
The importance of individual contributions versus teamwork varies widely from organization to organizaion and field to field. But it is quite important in most organizations. Ill-conceived and badly administered appraisal and compensation systems can significantly damage morale and success of the organization. Employee discontent is not irrelevant. That is a crazy thing to say. Discontented employees withhold their full effort, they are disloyal and some even steal from their employer.
One is by Wharton professor and finance book writer, Jeremy Siegel. He says big cap tech stocks like Cisco, Oracle, AOL, Nortel, Sun, EMC, JDS Uniphase, Qualcomm, Yahoo are still over-priced even though their average PE ratio is down from 162.6 a year ago to 36.0 currently. He says their growth rates don't justify their current prices.
The other article is entitled "Tips for Analyzing Money Market Funds." Look at PURPOSE (use as a checking account or more like a savings account?), FEES (The average money-market fund costs half a percentage point. Lower cost funds provide two benefits. First, fees eat into returns and second, funds charging higher fees invest in more aggressive, risker to match competitors' returns; RISK (some invest only in Tier 1 investmentsl; others invest up to the allowed 5% in Tier 2 investments.
Sure, but you can't control employee discontent, despite your claims. Employees at even the "best" companies can become discontented. So it doesn't make sense to do things on the grounds that some employees might be unhappy. It's one of those things that sounds nice, but in reality, a large corporation is rarely going to fail because some of their employees are cranky and dissatisfied.
Besides, if discontented employees withhold their full effort, fire their asses. Any discontented employee worth a moment's thought finds another job. The notion of employees as disgruntled cranky children is offputting, although I dare say it is accurate enough at lower-level jobs. Still, those employees have very low power as it is, and overall their satisfaction with the review process are pretty low on the list of "do we give a damn" elements for the corporation that hires them.
What matters isn't whether all the employees are happy. What matters is whether or not the good employees are happy, and the review process primarily affects those who aren't particularly good. (Which is why you'll note my one stated concern was for a department that only had excellent staff.)
Most corporations really don't have to care about the happiness of more than 20-40% of their employees--and the ones they'll care about won't be the ones bitching and moaning about the review process.
Just curious what you base such a ridiculous statement on?? I would never hire you to manage people in my company!
Besides, why on earth should a corporation give a damn about people who, if they aren't made happy, will steal or work less than their best?
As for my attitude, I am stating nothing that most high tech people either would agree with, or would be considered a bleeder for not agreeing with.
High tech people are, generally, far more cognizant of corporate honcho mentality than the average corporate worker is. That's why we can explain corporations so well. We know how they think.
High tech people put their pants on the same as everybody else--one leg at a time. You aren't s special breed of human although you may think you are.
Well, not really. It's important that you be protected against lawsuits, it's important that you get decent press, and it's important that you keep valuable people happy.
As for the rest, you're probably in a union place. I specifically pulled out unions as a) collectivist and b) primarily rote workers with little impetus for individuality. However, they also have the jobs that are easy to measure, making rating and ranking a simple matter.
On the other hand, union people don't often quit, which means that you can abuse them pretty regularly and they won't go anywhere.
You're joking? As I mentioned, Schwab did ratings and rankings back in the 80s--that's how they decided bonuses, and it is the means by which they laid people off.
Schwab was never a team oriented place--at least not while I was there.
Your'e in over your head a bit on this subject. You have found the right niche as a consultant, but not on personnel or management!
No, the "80/20" rule is the common one: 80% of the work is done by 20% of the employees. I also didn't say that keeping only 20% of the employees "happy" is the way to run an organization. I said, "Most corporations really don't have to care about the happiness of more than 20-40% of their employees". Now, that's entirely different from running a poll to find out what percentage of the employees are happy. They just need to make sure their high performers are happy. Other than that, they care, of course, but the commitment is a lot lower. There is a huge amount of infrastructure put in place by law, obviously, and because of the good press it generates. But don't believe for a second that corporations really give much of a damn about the majority of their employees. And that's a good thing, especially if you think that the useless employees are going to get cranky and steal. Hell, fire them.
If most techies think like you, it's no wonder the NASDAQ has crashed.
Don't be an ass. The NASDAQ crashed because rich MBAs gave a ton of money to newly minted MBAs with a business plan. Not because of techies.
Have you heard of the Japanese term "kaizen?"
Pogie is quite right. Japan is falling apart, and their god-awful employment regime is one thing that will hopefully die permanently. US does employment better than any other country in the world; it is an insult to mention any other companies' ideas in comparison. Particularly Japan's.
Okay, that's a mild overstatement. But only a mild one. It is certainly a joke to try and claim that Japan is better than we are.
Last I heard, Jim Clark is a techie. So is Larry Ellison, et al, et al. The problem is a lack of MBAs with solid business experience.
I didn't claim that "Japan is better than we are." Japan has plenty of problems but is better than we are in producing quality products BECAUSE they pay attention to the things you dismiss as unimportant such as the teachings of Deming which are diametrically opposed to your cynical rantings.
Japan's manufacturing processes were far superior to ours for many, many years. So much so that the federal government set up a network of manufacturing centers--modeled after the farm extension bureaus that gardeners and farmers can still access today--across the country. My former employer was one of these centers.
Time magazine's current issue has a good article on what's wrong with Japan's economy, and why it's unlikely to happen here. Unfortunately, I can't seem to find it in the on-line edition. The gist of the article was that Japan's woes stem from a crash in it's real estate sector and it's weak banks. Our woes are primarily focused on the tech sector, and our banking sector remains strong.
based on the little i know about groups, it is a general rule that x amount of people are going to perform at a low percent of their capability. some of this is freeriding. which is to say that something like the 80/20 rule is a decent heuristic to keep in mind. not that one can't up productivity of everyone in an organization, just that groups pretty much tend to have coasters, even in best case scenarios.
hahahahahaha. Um, Wonkers, you need to get out more.
The 80-20 rule is the Pareto something or other. It's applied to many things, but it's by no means uncommon to apply it to work.
So is Larry Ellison, et al, et al.
The NASDAQ crash is not due to the fact that Larry Ellison's company owns the entire database market. The NASDAQ crash is due to many things, but it is not due to the actions of any of the tech companies with a product to sell.
Japan has plenty of problems but is better than we are in producing quality products BECAUSE they pay attention to the things you dismiss as unimportant such as the teachings of Deming which are diametrically opposed to your cynical rantings.
That would be manufacturing. The Japanese do seem to have us beaten in certain manufacturing places. Of course, that's where things are unionized to screw things up. (g)
Seriously, there are many reasons why American manufacturing will never be the equal of other countries, and it has relatively little to do with how we treat the workers.
But I'm not talking about manufacturing or high tech per se when I say that the US does employment right.
The Japan piece will be available next week--Time only puts half of their articles online in the first week.
Bear Market Guru
Let's all hope this guy isn't right.
I don't know if it has been quantified as a particular ratio (but, having been out in the "real world" before running and hiding in academia - where you experience it in "group work").
That's why anyone with sense should be very, very skeptical when their corporation decides to go with "group bonuses", or any other nonsensical notion that rewards group progress, unless they are in a union or some other job where seniority is the primary method of advancement.
Pogie--could you email me at the_calgal@yahoo.com? I'm trying to get an SF group together for lunch and wanted to see if you were interested.
Wonkers--I'm completely serious. Are you saying that you have never heard the 80-20 rule? You may not believe in it, but are you saying that you've never heard anyone refer to it?
Not more than anyone else. Hence my "now, there may be some reasoning I haven't seen".
Pellegrini's piece made sense. There have already been plenty of cuts, and a half point would be a pretty substantial cut normally. If there were some compelling justification other than the market's demands, then I haven't seen it. That doesn't mean it doesn't exist.
It's the Pareto Principle, or something. It is applied to many things. The management and staffing use of it, cynically, is as I described. If you haven't heard of it, then you aren't paying much attention.
To find the general definition, find any search engine and search on 80-20.
What on earth are you talking about? The 80-20 rule is very common and even if you disagree with the particular application I mentioned, you shouldn't pretend that the 80-20 rule doesn't exist or isn't commonly used as a demonstration.
In fact, I'd say the 80-20 rule in staffing and output is used extensively in corporate management. They want to keep their top people extremely happy--treating everyone equally is usually considered a bad idea.
Vilfredo Pareto is an obscure quantitative sociologist who allegedly influenced Mussolini. Quite appropriate to be your guru.
Get a grip, dude. I'm not declaring the 80-20 rule to be the source and font of all wisdom in the universe. I'm not even saying that it's necessarily right. But your ignorance of its common usage is rather telling.
It's called the Pareto principle, but Pareto himself actually applied it to income distribution. It has been much criticized as a rule for income distribution, but I don't know much about that. Slack probably does.
I don't know who first took the Pareto observation and converted it to the Pareto principle, and from there to the 80-20 rule. I would imagine it was a corporate consultant, probably in quality management. I'll look it up and see what I can find.
But this is silly. Inefficiency is the norm of corporations. I suspect, as we said before, that we thrive on it. Slack and I talked about this too, somewhere else. I wonder if it was the slow thread.
"Economics," Paul A. Samuelson, McGraw Hill 1951
NASDAQ closed down 94 to 1857.
Greenspan painted himself into a corner along with several other people.
Um. Did you read my post above? I've already said as much about Pareto.
J. M. Juran
I was right. It was quality management where it started.
In 1937, Juran conceptualized the Pareto principle, which millions of managers rely on to help separate the "vital few" from the "useful many" in their activities.
Now, pay attention. I made no assertion about the value of the principle--although I think it functionally is quite useful as a guideline. What I said was that it was incredibly common as a reference point in corporations--usually referred to as the "80-20" rule, as regards to sales effort, organization, staffing, workload, productivity. Your ignorance of it is astonishing.
Seriously, get a grip. There most certainly is an "80-20 rule" expression; it's used all the time. Did you do a search on it?
You're right, I'm a techie elitist. For good reason. It pays well and we set the terms with our employers--and we don't have to quit work to do it.
I don't think it matters what (appraisal) system is used.
Teamwork is over-rated.
Managers either will know who the useful people or they won't.
All low performers aren't equal.
Any management style that pushes teamwork over individual work is flawed.
Employee discontent is irrelevant.
You can't control employee discontent.
Besides if discontented employees withhold their full effort, fire their asses.
What matters isn't whether all the employees are happy. What matters is whether or not the GOOD employees are happy.
Most corporations really don't have to care about the happiness of more than 20-40 % of their employees.
Everyone knows that 80% of the work is done by 20% of the employees.
HIGH TECH PEOPLE ARE, GENERALLY, FAR MORE COGNIZANT OF CORPORATE HONCHO MENTALITY THAN THE AVERAGE CORPORATE WORKER IS. THAT'S WHY WE CAN EXPLAIN CORPORATIONS SO WELL. WE KNOW HOW THEY THINK. (Give us ordinary mortals a break!)
It's important that you keep valuable people happy.
On the other hand, union people don't often quit, which means that you can abuse them pretty regularly. (Yeah, but once in a while they strike.)
No, the "80/20 rule" is the common one: 80% of the work is done by 20% of the employees.
They (corporations) just need to make sure their high performers are happy.
It's the Pareto Principle. It is applied to many things. (Like Preparation H?)
Now pay attention. I made no assertion about the value of the principle.
[At last we know who's been supplying the ideas for Dilbert.]
As I've said a few times, if you aren't even aware of the usage of the term "80-20 rule", then you're very far off the curve.
"80-20" results from Google
In contrast, the propositions I have put forward on teamwork are supported by decades of solid academic research and practical validation.
Lord, will you please focus. I am not saying the 80-20 rule is valid. I am saying that the usage is common. Anyone who has never heard of it probably can't hear anything--presumably because the ears get wedged flat when the head got stuck up the ass.
As for the rest--have you managed to ignore the many posts I've made exempting low-skill, low pay workers from my maxims?
I long ago quit debating anything serious with you, Wonkers. There's nothing here to discuss from the point that I said something about the 80-20 rule and you said indignantly that I'd made it up. Sorry, but anyone that clueless about basic corporatespeak isn't worth discussing things with. Anything you imagine you are "rebutting" is filtered out because you aren't tracking.
So read the links, understand that 80-20 is a common buzzword (nothing more), and drop it. You're clearly pro-union, and I can't bear serious discussion with anyone who promotes collectivism in the work place for anything other than those who haven't the ability to do any better.
"Everyone knows that 80% of the work is done by 20% of the employees."
I rest my case.
"You are clearly pro union."
I haven't mentioned unions. You brought them up. Pareto was dead before the union movement hardly got started in the United States. My comments about motivation and management apply in all workplaces, union and non-union, high and low tech.
I rest my case.
You haven't read a single link, have you? It wasn't Pareto who came up with the Pareto principle, which showed up in 1937. It also has nothing to do with unions and I've never said it does. Quite the contrary.
You said: There is no such thing as the 80-20 rule.
Turns out there is. Now, note what I said in Message # 598 and Message # 603. See where I specifically acknowledge that it's not provable or even functionally valid? I think it's quite useful as a guideline, but I have never asserted it as an absolute.
Except, of course, in that first statement you quoted. There's just one problem. I assumed, foolishly, that everyone knew the 80-20 rule and knew that I was speaking rhetorically. The notion of an ignoramus who would first deny the existence of the phrase and then be incapable of understanding that it's a corporate buzzword that I was using casually had not occurred to me.
But you're wrong. Even the Hawthorne study can only be used in environments where employees want to be taken care of. The problem with a lot of labor studies is that they focus on groups where collective output is all that matters. However, I have already excluded them from my statement.
You wish to apply the findings from grunt workers and sheep to people who would rather be measured on their own individual output, knowing they'll be better off that way. As of yet, there is no data supporting that assumption--and I doubt there ever will be.
I have talked to many corporate managers who say, bluntly, that if they have a choice between maximum productivity from their grunt workers and low performers and maximizing output from their stars, they will always go with the latter. This is by no means uncommon. Now, you may think they are wrong--but it demonstrates their values and thinking. Certainly, this line of reasoning has only gained in popularity over the past 10-15 years.
I don't think any one model works. I think in grunt work, the paternalistic daddy approach, paying employees less but making them feel valued--basically snowing them--is perfectly fine, if it makes them happy. In corporate shops, the variance between the stars and the slobs is perceived to be too great to spend much time worrying about the productivity of the slobs.
I hardly think you could claim that GE is a failure, but GE firmly believes that rating and ranking is an effective way to get rid of the deadwood. They aren't alone.
Sure they do. They say that the 80-20 rule can be applied in many situations. Which is what I said. They say that there is such a buzzword as the 80-20 rule. Also what I said. They don't say that it is valid. But then, neither did I.
No one, other than Cal Gal has ever said "Everybody knows that 20 percent of the employees do 80% of the work."
Actually, it's said all of the time. With the same level of seriousness--meaning it is a rough rule of thumb that many people cynically rely on. Look, there's another thing I've said before.
Pareto is an obscure and mostly discredited economist.
I said as much. I have said, some 20 times, that he did not come up with the 80-20 rule. I have said, once, who actually did come up with it. I then said, several times, that it originated as a way of identifying ways not to waste effort--not as a way of measuring valuable employees.
See, you're not tracking.
So I'll make it simple for you. Accept the fact that your ignorance is causing problems. I didn't realize you'd never heard of the 80-20 rule and so casually referred to a concept that most informed folk would understand and catch my meaning.
Focus on this, instead:
I am saying only that corporations that benefit from motivating indivduals, rather than groups, will never much care about the majority of their workers. They will provide benefits and services but their unhappiness is low on the list of things they are concerned about--focusing instead on providing incentive and motivation to their top performers. I support this line of thinking and approve of it in any instance where there is likely to be a high variance in output. This excludes, by definition, assembly lines and most manufacturing jobs.
Very well, there are many reasons for GE's success. Maybe the company succeeds despite, rather than because of emphasis on individual rewards, if in fact it does rely heavily on individual rewards. [In the 50s its sales force was nailed for "corporate pimping," but no one's recommending it.] Lots of companies do this, especially for execs, and some emphasize group or team or even company-wide incentives such as profit sharing for all employees. Most use a combination of the two with policies tailored for different groups.
However, there is body of research, going back many years but widely ignored by managers, which shows that people respond as members of groups as well as individuals and that much can be gained by taking this fact into account. Crude or poorly applied appeals to individual motivation can wreak havoc on an organization. But ignoring individual contributions is also a mistake.
We are coming from very different vantage points. I studied at the undergrad and grad level in two universities known for their expertise in the field; continued to read widely on it for 35 years during my career in industry and government; and have consulted and taught on organization and employee motivation. Your experience leads you to conclude that efforts to motivate and treat employees fairly aren't worth the trouble. I strongly disagree, both on practical and moral grounds.
Nobody else seems to be interested in this discussion, and I'm finding it tiresome. It might be easier to reach a meeting of the minds in person than in this forum. The 2000 word limit is annoying, for discussions or even movie reviews.
I have explained it several times. The confusion occurred because of your ignorance of the buzzword. Had you understood that it's a common phrase, you wouldn't have overreacted.
Maybe the company succeeds despite, rather than because of emphasis on individual rewards, if in fact it does rely heavily on individual rewards.
How do you know? GE is one of the most phenomenally successful companies in history. Isn't it just possible that their ruthless rating and ranking method, which culls out the slow performers regularly, is part of their success?
I can't think of too many successful companies that really gave a damn about their employees, off the top of my head. Even back in the early days IBM? The only thing they guaranteed was full employment--and as anyone who worked there during those years can tell you, "full employment" just meant no layoffs. It didn't mean you couldn't get canned by a manager who decided you were pretty worthless. AT&T sure wasn't known for its warm fuzzies.
However, there is body of research, going back many years but widely ignored by managers, which shows that people respond as members of groups as well as individuals and that much can be gained by taking this fact into account.
I know that, and have never denied it. But what hasn't been done is research proving that this method works with professionals and other individuals who are motivated by a desire to advance, not get a paycheck. Sales staff and line workers have different motivations. Most research is done on the rank and file workers of manufacturing or other work where output can be measured in widgets per hour.
No. I believe that it is more productive to reward individual achievement than focus on overall employee happiness (in companies that don't rely on group performance). In any large organization, a large percentage of employees could leave or stay without it mattering a whit to their manager, much less the corporation's bottom line. So employee morale isn't all that important except to the extent that it affects the top employees ability to perform--or hurts the company's press coverage.
I strongly disagree, both on practical and moral grounds.
It's not a company's job to be moral. It's irresponsible to be so if it isn't legally required or have some benefit (even if it's just good press).
Many employees aren't very good. But purely by being hired they get one of the biggest tax freebies that exists--the benefits package. So anything else is gravy. If it benefits the bottom line to care about all employees happiness, fine. But it is simply incorrect to say that companies will always benefit from treating all their workers the same. It depends on the worker, it depends on the cost of treatment, and it depends on the delta between their most productive and least productive workers.
One piece of advice. Stay out of jobs in organizations where you have to work directly with or manage others. Your attitude is cynical and poisonous.
Stop. Please. Quit obsessing over the 80-20 rule. I said "many", not 80%.
But it's not that all employees that aren't worth fussing over are bad. It's just that they aren't worth spending more money over to make them happy. Many people in a company are entirely interchangeable. You know that.
Stay out of jobs in organizations where you have to work directly with or manage others. Your attitude is cynical and poisonous.
Wonkers, I have spent my entire working career in corporate America. I have also probably worked and seen life at more big companies than most. This is not offered as proof that I'm correct. But it adds weight to two observations: 1) there are a lot of people who would find my opinions quite unexceptional and 2) given that I have thrived in organizations where I work directly with (and occasionally manage) others, your premise is--again--incorrect.
Okay. Suppose I said, "Pigs will fly before we get single payer healthcare."
You become outraged. Pigs can't fly. That's ludicrous. Please provide proof that pigs are capable of flying. Immediately.
That is roughly analogous to what happened. You didn't recognize a very common idiom in the corporate world.
1. It has very little to do with Pareto. Someone read his work and applied his premise to effort and results, rather than income. That's all. It was named after him, but has nothing to do with him.
2. The 80-20 rule, or Pareto Principle, is very well-known throughout corporate America, and is quite respected, particularly in quality management. It has nothing to do with Pareto, other than someone got the idea after reading his work. I gave you a link explaining that and apparently you didn't read it.
3. I have never made any claim that the 80-20 rule is used in any academically responsible theory of compensation. For one thing, I wasn't talking about compensation. I was talking about company motivation and employee satisfaction. I was also using the term loosely, figuring (wrongly) that you knew about the 80-20 rule and would grasp the concept.
A final point: You profess not to like unions. If you read your history books you'll see that a major contributor to their success was managers who held ideas similar to the ones you have expressed on morality, fairness, honesty and consideration for the legitimate needs of their employees.
Well, a lot of it is personal. Unions and their grasping desire to grab onto both high tech and high-end temp workers do a good job of annoying me and, often, a fair attempt at causing harm. All to lead me into their folds, when I'd rather slit my wrist than join a union.
Unions at this point in history desperately need numbers, and they need a big win. They've focused on high tech as a result and I resent being a target of their efforts. I loathe collectivism in employment with a passion that really can only be understood by those in high tech.
But it's not really true that I dislike unions. I think unions are the single best method of labor representation for the interchangeable worker. It's just that unions resent that lowly status and are always trying to broaden their base. That's when I loathe them.
I also find the fact that in many states a person could be forced into a union if they wanted to stay at a particular job to be particularly horrifying.
If you read your history books you'll see that a major contributor to their success was managers who held ideas similar to the ones you have expressed on morality, fairness, honesty and consideration for the legitimate needs of their employees.
That's untrue. Managers during those times treated all employees badly, because they were basically interchangeable. Which is the best place for unions to take hold. I don't believe in treating any employees badly. I just don't much care if the ones that aren't critical aren't happy and move on.
Cal, we did talk about efficiency in corporations. Doubtless there's a lot of inefficiency there. There is a cottage industry in economic arguing that seemingly inefficient arrangements are actually optimal, due to things like incomplete information.
But I don't think it can be that workers known to contribute nothing are kept on board anyway. The company could jettison them, and by definition neither the corporation nor society at large would suffer any loss, because the lost employees weren't contributing anything.
Yes, Wonkers. Or a "buzzword". Go back and see how many times I've told you that now.
I have also said many many times that it is used in many areas. You're just now playing catch up. Suggestion: go back and reread all my posts now. They will make a lot more sense and you'll see how many times I have said all of this and you just were incapable of followoing.
I could find nothing that advocated ignoring or mistreating or lying to 80 percent of the workforce.
Don't be an ass. That's dishonest. I've never said any such thing--not about lying, mistreating, or ignoring. Only that in shops where individual contribution is important, overall employee happiness is not as valuable as key contributor happiness.
Yes, but what does it mean? Or what does it mean to you? Or what do you mean when you use it? You haven't made that clear at all other than "80 percent of the work is done by 20 percent of the people."
That make sense. Interesting.
But I don't think it can be that workers known to contribute nothing are kept on board anyway.
Oh, of course not. The key word, though, is known. It's not like anyone knows which of the 80 is getting the other 20 done. (g) I agree that workers known to be useless would usually be canned. Although anyone in corporate America can tell you of exceptions. Hell, I'm listening to a guy snoring in his office right this moment. People bang on the door to wake him up so it won't look bad to visitors. (granted, he has apnea. But still.)
Also, the cost of replacing a worker who isn't great but isn't awful with another worker who will be much the same is greater than the inconvenience. It's not like the manager will be guaranteed a fabulous replacement. What do you call that when you accept the known because the risk of the unknown is greater?
I have already stated exactly what I meant. Try the last paragraph of Message # 617.
But you can't make that statement. You might feel they apply, but to the best of my knowledge all studies done on employees have been done on low-status workers.
It is highly effective when things work, but there's no "graceful degradation" if anything goes wrong.
Which I guess is related to the inefficient/optimal idea.
And makes me think of neural nets.
Seems very plausible, just from seat-of-the-pants thinking about dynamical systems.
This is a common problem in customer service, where Joe Knows Everything. So if you get Joe on the phone, you get answers to questions you didn't even know you had.
But if you get Jack, he just started and all he knows how to do is send you the right files, take your name and number, and get someone to call back.
Which is really all that Joe is supposed to do, too.
It's hard for managers to realize that Joe is a real problem.
There has to be something in Social Psych that addresses that (because I sort of apply that principle to teaching - to not let on that I'm a total wuss). And, Social Psych researches everything.
And, really, a lot of times it is better to not give overwhelming info.
(Wonder if I read this in the persuasion/attitude change literature). People also tune out.
But this is simpler. It violates the basic premise of customer support: consistent service. The customers are getting unequal treatment in two ways: Joe is giving one customer far more information than he is supposed to, which shortchanges the other. He is also spending far more time with that customer than he would be if he were just taking the name and number, which means that he is also shortchanging the customers in the queue who could be handled in much less time if he weren't going overboard on service.
Then, on the intangible level, he is creating a false expectation on the part of the customer, who will then be miffed the next time that Jack answers the phone and does what should be done, rather than what Joe does. The customer may start even asking for Joe--which some managers view as even more proof of Joe's great job.
It's not a huge example, but it's a case of consistent inefficiency (callbacks) being preferable to inconsistent efficiency.
Because some day, Joe will leave. And all of a sudden the great metrics fall apart, customer sat drops in the toilet. Or, from your post: "there's a vulnerability to the very efficient systems. Something goes wrong, there's no slack or give to cushion the problem, and like dominoes, the system can fall apart. "
Uh, CalGal, would you mind logging off the Mote for a few minutes and doing a bit of work today?
CalGal
Listen you puling little fuck, this organization is FAR better off if it allows me to consistently provide a LOWER level of service than if you require me to inconsistently provide a level of service that exceeds my norm.
CalGal's boss
Oh, you're right, sorry. I didn't really think of it that way.
CalGal
Now Fred over there is really fucking things up. He keeps doing work on this project, meeting deadlines, and making me look bad. And that's bad for morale, really bad. It creates unrealistic expectations and is destroying synergy. Get rid of him.
CalGal's boss (walking over to Fred)
Uh Fred, you're fired.
Alas. Although that's reasonably funny, it misses the entire point. I'm a technie, not a customer service rep. I profit by providing excellence, not consistency.
The research doesn't divide people into sheep and goats as you do.
No, I think they intend to. But that's not the same thing at all. And while I don't consider my knowledge of worker studies extensive, I stay reasonably current on it.
Besides, any guy who has spent time in corporation that had never even heard of the 80-20 rule (applied in any sense) has no business telling other people they're ignorant.
The research doesn't divide people into sheep and goats as you do.
Precisely. The research should, I think, make that kind of distinction.
Now, now. Don't be catty. I'm discussing, you're being rude because you don't like my opinions.
Pogie is correct. It is foolish to assume that all workers are the same. They aren't.
All employees aren't identical. But most of the people studied are from the same American/ Western culture. And, although the studies originated in factory workplaces, plenty of research has documented the conclusions at all levels.
An oversimplified conclusion: most people are influenced by peer pressure in their work group which leads to the establishing of norms which influence behavior in the group, whether it be a group of assemblers or the board of directors. [The ones who refuse to conform in important respects become "isolates" and are sanctioned in various ways by the group.] Norms differ from group to group. Norms for factory workers differ from department to department and are different in many respects from those of executives.
Norms can be consistent with or opposed to the objectives of the organization. It's worthwhile for management to take this fact into account in its treatment of employees and try to encourage the development of norms supportive of the organization's goals. [Not a simple or easy task but very worthwhile if it can be done.]
Efforts to develop positive norms or a company ethic or focus which is common to all employees at all levels is important. Jack Welch of GE has been quite successful in doing this as was Lee Iacocca for a time at Chrysler. The chairman of Johnson & Johnson whose name escapes me was quite successful as was Sec. of the Treas O'Neill at Alcoa. Each had his own approach. But the goal of all was to establish an ethic of quality production, teamwork, performance and loyalty to the company's goals. They didn't get their by applying an 80-20 slogan.
This approach has many ramifications, at all levels of organizations, which lead to very different conclusions from the ones you have expressed.
But you surely aren't arguing that all people are the same, have the same motivations, just because they come from the same country?
And, although the studies originated in factory workplaces, plenty of research has documented the conclusions at all levels.
Cite? Demonstrate that a sales office, for example, gets better sales if all the commissions go into a pool and get divided evenly. Demonstrate that paying secretaries and lawyers the same percentage of the bonus pool increases billable productivity. Demonstrate that lawyer productivity is higher when all secretaries are treated the same, not giving special rank to the best secretaries. And so on.
Jack Welch of GE has been quite successful in doing this as was Lee Iacocca for a time at Chrysler.
Jack Welch and Lee Iacocca are both strong believers in rewarding performance of the individual, not performance of the group. Welch certainly believes in weeding out the weak of a group and firing them, replacing them with others that have to prove themselves individually.
Please stop referring to the 80-20 rule. The issue is whether or not Welch believes that it is important to reward valuable performers and put fear into the weak ones. I certainly don't oppose trying to break the 80-20 rule. But one can break it by assuming that all employees are valuable and produce the same, or one can break it by ruthlessly weeding out the ones that aren't very good and trying to find better--even if the search is endless. Welch has always been very much in support of the notion that you can identify weak performers and get rid of them.
"I certainly don't oppose trying to bread the 80-20 rule. But one can break it by assuming that all employees are valuable and produce the same [I never said anything remotely like that.], or one can break by ruthlessly weeding out the ones that aren't very good and trying to find better, even if the search is endless. [I never said anything indicating that I was opposed to weeding out non-performers or that all employees produce the same. Those were your words.]
I'm still trying to find out what the 80-20 rule is and where it came from!
Today Schwab announced a layoff of 13% of its workforce. Why don't you clue them in on the 80-20 rule so they can get rid of another 67%? Why stop at 13%?
I never said anything indicating that I was opposed to weeding out non-performers or that all employees produce the same. Those were your words
Then all we're disagreeing about is how many workers don't perform much at all or how big the delta is between the best and the worst.
Take it as a given that at any point in time, X % of employees are star producers who produce the A% of desired results, Y% of employees are barely average producers who together produce B%of results, and the rest of employees are pretty worthless who drag things down.
You are saying it is important to focus on the happiness of all employees. I say that treatment of employees varies based on the values of Y-X and B-A, which is the delta between the best and average employees and their output.
If the values are minimal, then it means that there isn't much difference between the best and worst employee. This is going to be common in manufacturing and manual labor. Your approach will work fine, then.
If the difference between the two numbers is very large, then my position is that corporations are quite right to focus on the happiness of their X people. Y happiness only pays to the extent that the cost can be justified in comparison to their minimal output.
Nothing I have said should be interpreted to mean that all employees are the same, or that they all should be treated identically. But without consistent, explainable policies, carefully and objectively administered, it's easy to carry individual treatment too far and create a lot of problems. If you don't have consistent, well thought out policies you'll have every manager going off in a different direction and you'll end up with a bunch of big differences in individual treatment on salaries, bonuses, attendance, leaves of absence, etc, that will be unexplainable. Measuring the contribution of management and technical people is subjective. Individual rewards, within limits, are okay, but they are overrated as motivators and they tend to detract from teamwork rather than encourage it. I'm not saying that individual appraisals and compensation make teamwork impossible. But they can be overdone and become a demotivator if the emphasis on them is too heavy.Individuals usually rate their own performance higher than their boss or others do. The appraisal process is probably the most hated experience of managers and appraisees alike, in my experience. Managers don't enjoy doing it and employees hate being subjected to it. That alone should cause one to wonder about the usefullness of the process.
Schwab Plans to Cut 3,400 Jobs
The past two years represented ``a euphoria-led trading level that just isn't going to return,'' said Schwab President David Pottruck during a conference call.
Charles Schwab, the company's chairman and founder, was almost apologetic for allowing the brokerage to be swept up in the frenzy. As its trading volumes soared, the brokerage added 6,000 new jobs last year, increasing its staff by 30 percent to about 26,000 full-time workers.
``We have come through a highly speculative technology bubble,'' Schwab said. ``Maybe I should have been a little more emphatic in understanding that this was a temporary phenomenon.''
Even as its business suffered, Schwab had tried to avoid the layoffs by slashing management salaries, reducing bonuses and encouraging workers to take unpaid days off.
I like that. "We fucked up, we feel bad about it, we're not going to pussyfoot around, it's time to cut."
What is Internal Rate of Return (or Annualized Rate of Return)? How does it differ from Total Percentage Return?
Maybe NPV is also obscure? Suppose you put $100 in the bank at 5% interest. In one year it will be $105, in two years $110, in three years $116 and so on. So $100 has a future value of $116 in three years. In the same way a future amount has a present value which depends on the interest rate (or discount rate) and how far in the future it will appear.
This book tells the tale of a former slave in Babylon, a wealthy ancient city, and how he wins his freedom and pays his debts. It is told through a series of parables and stories.
For example, a man owes debts and is sold into slavery. He escapes, returns to his homeland, and agrees to pay his creditors 20 percent of his earnings to repay the debts. 10 percent of his earnings go for savings, 70 percent for living expenses.
1. Gold cometh gladly and increasing quantity to any man who will put by not less than one-tenth of his earningsd to create an estate for his future and that of his family.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of wise men in its handling.
4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or whice are not approved by those skilled in its keep.
5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
I found his morality about penny pinching millionaires to be extremely off-putting. But the basic premise between building net worth versus increasing one's income was well stated and very informative. I'm giving it to Spawn to read and bought a copy for my brother on his birthday.
Personally, I hate wasting money. I hate having nothing of value for the money I spend, so I tend to be frugal.
But it was also the tone, how the millionaires were described. They all lived with the same wife, their wives clipped coupons still and never wanted anything nice and gosh, wasn't that wonderful of them?
I mean, if being a millionaire means that I won't be going to France for the summer or getting a BMW convertible when it is eminently affordable, then by golly, I won't be a millionaire.
So the notion that these people are still penny pinching nut jobs when rich enough to splurge once in a while--and that this is a morally righteous way to be--I found very unpleasant.
But what I did find useful was realizing the pressures involved in consumption, particularly for upper income professionals. Once you've got a ton of debt, hell, what difference does a little more make? So it helped shape some thinking I've been doing anyway--put off buying a new car for a while, do what I can to avoid overbuying on a condo or home, and so on.
But. It seemed that along with the coupon clipping, not having children was presented as a way to free up more money for investment purposes.
If both husband and wife are working, then divorcing should not make a difference in terms of investing for the long run.
Did I mention another book I picked up, "Eight Steps to Seven Figures?" It's a companion piece to "The Millionaire Next Door."
You might want to pick it up. If you have a Crown Books close to you, you can probably get it for 5-10 bucks. Not that you're frugal or anything!
Here's a bit of advice for job changers. Resist the temptation to cash in your 401k plan, even if it's only a few hundred or a few thousand dollars. Roll it over into an IRA. Everyone these days says plan on two or three or more jobs rather than a lifetime career with Generous Motors or Ma Bell who still offer defined benefit pension plans. So, your 401k may turn out to be your only ticket to comfort in retirement. To make this possible you should not withdraw funds from your 401k, or even borrow against it unless absolutely necessary. And if you don't have a 401k plan, put $2,000 into an IRA every January and forget its there until you're ready to retire. [Put the money in in January rather than later in the year because the compounding effect over many years of only a few months gained by making the deposit in January mounts up significantly.)
1.(23) Tyco Inter.
2.(372) Anadarko Pet.
3.(-) Calpine
4.(-) Dynegy
5.(22) Applied Mat'ls
6.(76) Providian Fin.
7.(245) Occidental Pet.
8.(209) Apache
9.(294) Kerr McGee
10.(4) Oracle
11.(102) Lehman Bros.
12.(5) EMC
13.(82) AES
14.(-) Forest Labs
15.(-) FleetBoston Fin.
16.(188) Micron Tech
17.(29) Xilinx
18.(188) Amerada Hess
19.(250) Duke Energy
20.(89) ADC Telecomm.
21.(42 Capital One Fin.
22.(255) Phillips Pet.
23.(63) Analog Dev.
24.(-) EOG Res.
24.(164) Cardinal Hlth
25.(104) Verizon Comm.
27.(280) Alza
28.(51) Citigroup
29.(12) Sun Micro
30.(48) Merck
31.(330) El Paso Nat. Gas
32.(-) Altera
33.(81) Marsh & McLennan
34.(62) Household Internatn'l
35.(222) Chevron
36.(83) SBC Comm.
37.(-) Mercury Inter.
38.(33) AOL Time Warner
39.(158) Wash. Mutual
40.(40) General Dynamics
41.(201) Comcast
42.(7) Morgan Stanley Dean Witter
43.(17) TellLabs
44.(150) Exxon Mobil
45.(72) Scientific Atlanta
46.(161) U.S. Bancorp
47.(68) Paychex
48.(78) Merrill Lynch
49.(73) Bed Bath & Beyond
50.(41) Texas Inst.
[Last year's rank in parenthesis. (-) = not ranked.]
Observations:
1. Rankings vary widely year-to-year.
2. Few tech stocks this year. Last year lots of tech stocks. Microsoft has been at or near the top for several years. This year it didn't make the cut.
3. Lots of oil and gas stocks this year. Last year they didn't make the cut.
4. List based on LAST YEAR'S performance. Next year's is anybody's guess.
5. The performance of individual industries varies from year to year, and the performance of individual companies varies even more widely. These variations are hard or impossible to predict.
If you're a woman who wants to rise to the top, what country would be the best for you to work in? Where are employers most supportive about work/life balance?
You have three choices: The United States, Canada or the United Kingdom. The latter includes Britain, Scotland, Wales and Ireland.
The countries were studied by Catalyst, a nonprofit research organization based in New York that is known for its work to advance women in business, and by Opportunity Now, a London-based coalition of leading employees in the United Kingdom.
The reason the two organizations did the research was to uncover what barriers prevent top-ranking female executives -- those within three levels of reporting to the CEO -- from advancing beyond the glass ceiling. The survey of 2,466 female business executives covered a variety of important career issues.
And the winner is.....Tada! The United States.
See, I told you those wussy socialist European countries didn't have anything to offer.
You know, I wonder about that. It seems to me that a cocoon of social services might cause you to lose the edge. That's a chicken and egg question, I guess.
Wonkers,
Nothing "truly better" about it. Just your preference.
Given a choice between the employment and business flexibility that we have here and the high unemployment and stifling of opportunity that is common in Europe, I know which one I'd take.
Bosses of a publishing firm are trying to work out why no one noticed that one of their employees had been sitting dead at his desk for FIVE DAYS before anyone asked if he was feeling okay. George Turklebaum, 51, who had been employed as a proof-reader at a New York firm for 30 years, had a heart attack in the open-plan office he shared with 23 other workers. he quietly passed away on Monday, but nobody noticed until Saturday morning when an office cleaner asked why he was still working during the weekend. His boss Elliott Wachiaski said: "George was always the first guy in each morning and the last to leave at night, so no one found it unusual that he was in the same position all that time and didn't say anything. He was always absorbed in his work and kept much to himself." A post mortem examination revealed that he had been dead for five days after suffering a coronary. Ironically, George was proofreading manuscripts of medical textbooks when he died.
Birmingham Sunday Mercury January 7, 2001
With job hopping becoming more common our model is becoming less appealing to a lot of people who would like to have more time off.
But why should a company give more time to an employee, especially given that they won't have put in all that much time, and might leave again when they find a better job?
Jon, Could be. Someone emailed it to me.
David Rickey had done it before, and he was about to do it again.
"You know Maria, I am very bullish about the company," Mr. Rickey, the CEO of Applied Micro Circuits, told Maria Bartiromo, CNBC's answer to Julia Roberts, during an interview on March 2. The company had recently warned that its earnings would fall short of its projections, and its stock had falen 67 percent in six weeks. But when Ms. Bartiromo reminded Mr. Rickey of a dare he made to investors a year earlier, he quickly made it a second time.
"I dare you not to own my stock," he said. "I'm kind of a gutsy guy, and I have a lot of confidence in what we're doing."
What Mr. Rickey did not say was that he had already come close to accepting his won dare. Between July 2000, when Applied Micro Circuits' stock was trading at $100, and March 2, when it was trading at $29, Mr. Rickey had sold 800,000shares in the company, or more that 90 percent of his stake. Since 1999, he had sold more than 99 percent of his stock, making $170 million in the process, according to SEC filings.
In an inversion of the notion that corporate managers should align their interests with shareholders', Mr. Rickey and many tech executives unloaded many shares during 2000--as other investors were taking a beating--and thus became some of the year's most lavishly rewarded managers.
David Leonhardt in the NYT 4-1-01 (excerpt)
No, it was a rhetorical question. You were saying that these days, people are unlikely to stay at a company for a long time, so wouldn't get a lot of vacation--therefore our "model" is unappealing to them.
But that's no reason to change the model. If people are at a company for less time, it's even less reason for companies to offer more vacation.
By contrast, at dot-com start-ups, including those that have gone bankrupt, most executives sold a small portion of their shares, according to pay consultants and proxy analyses conducted for Money & Business. At some companies, share prices had already fallen sharply beyond the time the lockup period after the initial public offering ended, alowing insiders to sell. At otheres, executives decided that selling their stock suggested pessimism.
"If your're a CEO when the market is in flux, it sends all sorts of wrong messages about your long-term belief in the company," said Robert . Wribel, the former head of ASK JEEVES, who still works for the company. At the end of 1999, Mr. Wrubel's holdings were worth about $180 million. He has since sold about $1.2 million of stock, but his remaining holdings have shriveled to $500,000.
"My wife has looked at me and said, 'What were you, nuts?'" Mr. Wrubel said. "I just thought it was not ethically appropriate for me to take advantage of the situation." He has stopped thinking about a bigger home and has decided that raising three children in a medium-sized house "is better for family dynamics."
Still, Mr. Wrubel appears to have done better than some peers. Julia Wainwright, the CEO of Pets.com, was once worth $10.2 million, but she never sold a single share in the company, according to a study by SCA Consulting. (Pets.com is in liquidation.)
Fees of 2 or 3 percent a year might seem small for investors who are gunning for 20 or 30 percent annual market returns. Furthermore, such fees appear insignificant compared to the year-to-year volatility of the market. But annual fees are extremly detrimental to long-term wealth accumulation. One thousand dollars invested at a compound return of 11 percent per year, the average nominal return on stocks since World War II, will accumulate over 30 years to $23,000. A 1 percent annual fee will reduce the final accumulation by almost one third. with a 3 percent annual fee, the accumulation amounts to just over $10,000, less than half the market return. lFor a young investor aged 25, ONE extra percentage point rreturn on one's investment will enable her to retire TWO years earlier, without sacrificing her standard of living eithe while working or during retirement.
Page 294
Jeremy J. Siegel
Stocks for the Long Run
Richard Irwin 1994
Unfortunately, the record of such managed funds is not very good. From 1970 through 1992, the average equity mutual fund returned 10.8 percent annually while the return on the stock market was 12.0 percent. During this 20-year period, there were only seven years when more mutual funds beat the market than fell short. l Five of those years occurred from 1977 through 1982, when, as we saw in Chapter 5, small stocks spectacularly outperformed large stocks. Equity funds generally do better when small stocks do well, as many mutual funds seek to outperform the averages by overweighing smaller issues. During the last 10 years, only in 1990 did the average equity mutual fund outperform the market as measured by the Wilshire 5000 Index.
As poor as the above data make (managed) mutual funds look, they actually overstate the performance of the average equity fund. First, mutual fund returns ignore the sales and redemption fees that most of the funds impose. Secondly, these surveys suffer from what is called a SURVIVORSHIP BIAS: Mutual funds that did poorly were terminated and were not included in the survey. The strongest funds survived, making the overall record look even better than it was. It has been estimated that this bias adds nearly one percentage point to the returns on all equity funds.
more
Siegel, pp 285-6
Comment: Siegel's book is one of the best for ordinary investors. It's not technical and is easy to understand. Siegel is a professor of finance at The Wharton School, University of Pennsylvania.
'Humble Pie'
(to the tune of american pie)
A long, long week ago
I can still remember how the market used to make me smile
What I'd do when I had the chance
Is get myself a cash advance
And add another tech stock to the pile
But Alan Greenspan made me shiver
With every speech that he delivered
Bad news on the rate front
Still I'd take one more punt
I can't remember if I cried
When I heard about the CPI
I lost my fortune and my pride
The day the Nasdaq died
So bye-bye to my piece of the pie
Now I'm gettin' calls for margin
'Cause my cash account's dry
It's just two weeks from a new all-time high
And now we're right back where we were in July
We're right back where we were in July
Did you buy stocks you never heard of?
QCOM at 150 or above?
'Cause George Gilder told you so
Now do you believe in Home Depot?
Can Wal-Mart save your portfolio?
And can you teach me what's a P/E ratio?
Well, I know that you were leveraged, too,
So you can't just take a long-term view
Your broker shut you down
No more margin could be found
I never worried on the whole way up
Buying dot-coms from the back of a pickup truck
But Friday I ran out of luck
It was the day the Naaaa-sdaq died
I started singin'
Bye-bye to my piece of the pie
Now I'm gettin' calls for margin
'Cause my cash account's dry
It's just two weeks from a new all-time high
And now we're right back where we were in July
Yeah we're right back where we were in July.
VALUE METER
...........Dec PE....Mar PE....5-yr Grow...PEG
JDS Uni....74........30........40%.........75
Cisco......61....... 26........27%.........96
EMC........83........34........30%........1.13
Nokia......51........31........25%........1.24
Verizon....58........15........12%........1.25
Oracle.....61........34........25.........1.36
The PEG is the price:earnings ratio divided by the estimated growth rate.
Nortel (NT), extraordinary buy at today's close of $12.88
See you in 6 months.
Remember not to sell yourself short, and when they ask you about your weak points, sigh heavily and say, "Well, I have a tendency to take on too much work. "
MarCom, P.R. That sorta thing. Why?
CG,
Nice one! My all-time favorite weakness is that I'm a bit of a perfectionist and I won't quit until a job's done right.
I realize it's not all luck. But that is one ingredient.
I think timing is an ingredient, which is a variety of luck.
My contract just ended and the thing that's worrying me a bit is what price to set. I've always priced myself a bit low, because it's easier to get contracts that way. In the past year, my price has gone up 10-15/hour because demand is so high. So do I keep it at that rate, play it by ear, or what? I hate underselling myself if I don't need to, and I'm reasonably flush right now so I can wait for the right gig. At the same time, who knows how much worse the market is going to get?
What are the fundamental differences between the fields?
CG,
Milk 'em for all they're worth.
MarCom managers will usually work on things like brochures, white papers, things of that nature. PR managers work closely with the press as a tool to communicate with the public. Both typically involve lots of writing, though the type of writing is very different.
God no. I have far more professional integrity than that. Thanks for the good luck wishes. You too, wonk.
Charles Schwab...+15.03%
Intel............+13.26
Gateway..........+11.94
Applied Materials+11.74
Microsoft.........+9.27
Cisco.............+9.13
Amazon............+8.57
Thanks for the Humble Pie - delightful!
I didnt mean worse, of corse, bt different. I didnt think yod do less, bt maybe it wold have a different feel to it.
Keyboard went screwy. Headin to tech thread for hel.
Also a website on Stock Market Performance with summary articles from various pubs.
There's no real "different feel to it." The main distraction has been my students who come up to me and express disappointment about my decision to leave. I will miss many of them, but that's why e-mail was invented.
Headin to tech thread for hel.
I'm sure someone there'll be happy to give you hel.
How did the interview go?
I have a meeting this afternoon with a headhunter who says she has a gig. I hope it's not just that she's one of those who needs face to face contact.
Of course, I forget that you might like travel.
And definitely what CG said. I was trying to help a friend of mine with introductory programming a couple of quarters ago, and she just had fits trying to understand even the basic building blocks of the program, and no clue about how to put those blocks in order to make it do what she wanted it to do. I don't think real language stuff would have helped her much.
This is not to say that all liberal arts majors can code. But I don't think that engineering or math is doing the job as a selector.
Today's NYTimes financial pages provide mutual fund investors the opportunity to check three key performance factors for their funds:
1. Expense ratio--this is a key factor in long term mutual fund performance. These ratios vary widely, from .15% in several of Vanguard's Index funds to more than 2% in a number of managed funds. Significant differences in annual expense ratios make a great difference in returns over 5-10-20 year periods.
[Expense ratio is the percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees (marketing)and administrative fees. Brokerage charges and sales charges are NOT included.]
2. Turnover ratio--This represents the percentage of the fund's assets that are bought and sold in the previous year. This figure is especially significant in taxable (non-IRA or 401k)accounts because trading generates capital gains (hopefully) that are taxable at the end of the year. This means that a taxable account with high turnover is not tax efficient, which, like a high expense ratio, is a drain on the long term return on your investment. Secondly, high turnover means high brokerage costs.
3. 5-year % return--includes reinvested dividends, if any. Does NOT include or adjust for sales charges, redemption charges or taxes. 5-year or longer periods are a better index of fund performance than are shorter periods, especially for 401k plans, IRAs or other retirement accounts, because performance for shorter periods tends to be highly variable. The same funds rarely appear on the list of top funds for the previous year.
Vanguard Index 500-----.18%-----6%-------14.1%
Vanguard Health Care---.39%----27%-------24.5%
Fidelity Magellan*------.74%----28%-------22.1%
Fidelity Contra*-------1.15%----72%-------18.9%
Fidelity Sel. Biotech*--.62%---177%-------13.6%
VanWag MidCapGrowth*1.95%--589%____-5.9%
*Load Fund (sales commission charged)
Note: The 5-year average annual % return figures are NOT adjusted for sales commissions or taxes. Generally, the lower the turnover, the greater the tax efficiency.
How To Fire Someone Without Getting Sued
If you aren't self-employed and aren't covered by employer insurance, can you deduct your health insurance? Tax Cut is saying that I can only deduct half of them due to self-employment, but they imply it's because I was employed and covered. But I wasn't employed and covered.
If it is only half, then that's just absurd.
Update on my contract hunt: I have a phone interview today at three and on another contract my resume is being submitted by a recruiter who has an exclusive contract for the position--and I'm the only resume being submitted. So assuming neither company decides to cancel the contract, it looks like I should be working again pretty soon.
That's a relief, because usually there are easily 8-15 contracts "live" when I'm looking. This time there were about four. Spoke to a few other headhunters who say that in other areas it's even worse. So if I land in two weeks total downtime, that's awesome. Otherwise, it might get a bit bleak. Keep your fingers crossed.
Today, in the morning, I have an e-mail from the director of the lab, who is also one of the real players in Emotion research, that he's happy that I have applied, since my absconded advisor has already told him she'd encouraged me. And, he wants to talk to me as soon as possible - so we're having a telephone interview tomorrow morning ninish or so!
Wish me luck. I'm both exhilarated and ready to run away and hide (curses for being shy).
I would love this position. An entire lab devoted to emotion! Here there's me, the absconded advisor (so she's not here anymore) and one guy that does mood. I have pulled some people into doing work on emotion, which is great, but I'm the expert. Just the thought of having lots of people to talk to about it!
IT also means I have to resurrect my French, because I would teach (that will be interesting).
Please wish me luck.
It would be great to have something resembling a real job after having been a student for so long (not that I think academia really is the real world - which is why I went into it in the first place - heh).
But I'll cross my fingers, too.
What's worse, I don't think my accountant in years past took it. I was right to fire his ass.
I wonder if it's worth refiling the past two years? Eh.
CG, it sounds like you're in great shape. I know you take gigs all over the country, but how bad is the Bay Area employment picture right now?
Two friends both got laid off last week and have decided not to even start looking until the fall - they have a couple of vacations already scheduled and then want to spend the summer backpacking in Borneo, or something. This seems unduly risky to me unless there's reason to believe the job market will be much better in the fall.
Yes, I get hives just thinking about it. To use up your funds in a labor market like this just makes me very nervous.
I try not to take gigs all over the country, certainly not if they want me there constantly. In fact, I've been spoiled in the past year because all of my gigs were not only local to the Bay Area, they were local to the South Bay. But I've braced myself for a longer commute. (and then one of the contracts tempts my resolve by being in Mountain View, just 10 minutes away)
The Bay Area employment picture is not desperate, but demand has slowed so much it's almost funny, if you like laughing at scary movies. It's one reason why I'm a bit spooked that both of these gigs have materialized and moved through the process so quickly. It will be very disappointing if they both fall through.
But I'm a pessimist by nature, and I remind myself that even if they fall through I have plenty of resources.
I have a friend who is a senior level manager who has been out of work for 6 months, despite actively searching. He's very good, too. But senior level managers with track records in building organizations are just not in high demand right now.
I know how foul it is to be laid off, but I feel like smacking her into the middle of next week when she explains that she can't job hunt till September because "oh, we're going to NYC for a few days and then we have reservations at French Laundry and then it really is a wonderful time to see Asia."
Yesterday she was complaining that she had to do a resume before she could collect unemployment. She has limited resources, limited work experience (outside the law, and she can't practice in CA) and it is not at all clear to me what she'll do if the job market stays tough.
A frightening number of my friends just don't seem to comprehend that the dotcom boom was not a typical economic period.
I'm assuming the limited friend is living in California? If she's looking to waste some time, why not study (or whatever one does) for the bar in California? If she has trouble getting a job when she comes back, that's going to be one of the things she'll think about, but by then she might not have the resources to do anything about it.
She utterly exasperates me because while she is brilliant, she's spent the last decade getting degrees, racking up student loans, then deciding she doesn't want to do whatever it is she got the degree for. She flakes out as soon as it gets tough or boring. One of these days it's going to catch up with her and (because I am the diligent, plodding tortoise to her free-spirited hare) I'm worrying this may be the time.
Your concern on her behalf is sweet. Await the day when you start hoping against hope that she'll finally get fucked over by life.
Phew.
</bitter voice of experience>
I wouldn't worry too much about her. You probably have other dotcom friends more open to reason. She'll probably land on her feet. And if she doesn't, it's only fair. (g)
I made a typo in my phone number! I can't believe it. He ended up with a message from a flowershop!
I added an extra 2! (This really does require exclamation marks, I feel mortified!)
Now it is easter, and I won't get the call until Tuesday.
I've also e-mailed my mortification to Paula who knows him.
I hope he has a sense of humor.
Perhaps that will take the nervousness out of it though.
Aaaack.
See what I mean, Laura? Providence fucks over the diligent and the worthy (even if it's only temporary), not the space cadets like your buddy.
Ase, how totally frustrating. Why does this sort of thing only happen just before a long weekend? Is there any chance he'll get the right number and call you today?
Anyway, a possible positive for me is that this will probably completely kill my nervousness and apprehension. Things like this tends to change my mental set and rather than being uptight, I just get eager to proceed, which is probably good.
Won't be able to do this before tuesday, but I'm fine with it now.
I have to take it with a sense of humor.
Dan, how did the interview go?
turned out 'short' went from 2 weeks to 4 days.
i started this Monday and was under-whelmed to find a clunky old PC with a 15 inch monitor running Win95 with zero development tools on it. they decided a week ago today that i'd start this week. sigh.
so, of course, there was nada prep work done.
anyway, the job basically is to take an XSL document and format a XML doc with it. ok, well, i can do that. when i get there i find a XSL doc with roughly 4500 lines of code.
one doc.
4500 lines.
ick
ok, i can still do it. after a day or so, i approach the developer i am working with and ask questions as to what i am looking at. well, now that i mention it, this piece here isn't working right and yeah, there are some incomplete sections i need to do.
oh, well, now you tell me TWO days into this two week gig.
idiots
so, it takes most of Wed to do that and now i'm ready to test. that'll happen Thursday, i think.
wrong
it takes them most of the day to find a developer who can (a) use their own in-house web site to produce the data i need to test with and (b) get me the new damned XML doc.
i get it late in the afternoon. do a little bit of work on it and leave around 5.
driving in this morning, i get a call on the cell saying i'm not needed - i'm not making enough progress.
i am livid.
i'm gonna talk to my boss today and see what's what. it just irritates me when this happens. i hope they don't think my employer or i look bad but who the hell knows.
what a wasted week.
Through practice, I have made a point of telling clients and recruiters (in writing, through email) that I need certain things in place when I get there--and give a list. A login id (very important in big companies), connectivity to the tools and data I need, a workspace, and so on.
If any of it isn't in place, I send a note right off to the recruiter, saying that I hope it will be all right and that they'll move quickly, but that this will affect my productivity. I also tell the client manager the same thing.
I can't tell from your writeup if you just sat down, gritted your teeth, and started to try and be productive like a good sport, but if you did, know for the future that this can be the wrong approach. Better to go right to the manager and say, "Look, I want you to be spending your dollars well here, and I have the following concerns. I've spoken to [the developer] and he's very busy, but it appears that there's more to this than was presented to me. I need some instruction on priorities so that I can give you realistic target dates."
Most people are worried they'll be perceived as whiners, but while this is a possibility with the most idiotic of clients, it is far more likely that the manager will appreciate being told this.
It's possible that the developer complained that you were coming to him for questions all the time, and gave the impression that you were a useless person who couldn't work independently. This is by no means uncommon. I realize it must gall you to hear that. But that's why you never want your only contact to be a co-worker if things aren't going well. You have to go beyond that.
I'm being charged for her to do nothing.
I would mention this to your manager and ask for an escalation.
all they said as a result was to let them know if i thought the 2 weeks was unattainable and i said i would.
i talked to my boss a little bit ago today and he said that they told him they were going to reallocate their own internal people to get it done so that the learning curve i was experiencing wasn't an issue. they said it wasn't a bad reflection on me or the consulting company.
as for the non-prep work, it was done in a couple hours, so i didn’t say much to them seeing as how it wasn’t even a single business day between getting the gig and showing up.
oh well.
back to the bench. while talking to the boss, i inquired about their thoughts on my still warming the bench and they again said that they are not concerned, there are several on the bench and that i'll be placed shortly.
i dunno. i dont think she's lying to me, and hate to cut and run. i'll get plenty of notice, so they say, should the need arise to find another job.
Ducky,
Oh, good. You covered yourself. I wouldn't consider it a wasted week--you produced revenue and that resets your bench clock.
I'd be checking for work constantly so that if they do surprise you by laying you off, you're in "good to go" mode.
BTW, on my own situation, I have an interview today at 11 (rescheduled) and one on Monday at the other place. Barring disaster, I should be placed pretty quickly.
i have a couple of recruiters that i am keeping on a string, so hopefully, something will materialize.
So, we'll try this again next week.
I'm beginning to actually believe in both of them, rather than waiting for them to disappear.
It is really fascinating to me how the hiring process for contractors has sped up in the past two-three years. Back in 1997 and earlier, it was by no means uncommon for contracts to take several weeks to set up. The recruiter would tell me that they'd hear from the client "later in the week". Now it is often the same day, or they will be very specific--the client is back in the office on Wednesday, I'll be submitting it that day and we should hear back instantly.
This has been true for a couple years now. I wonder if it's email and cell proliferation?
I am reminded what a pain it is to dress for an interview in Silicon Valley. You can't dress up too much or the casual shops think you're weird, but woe betide the person who shows up at a more formal shop in jeans and a teeshirt.
Oh, I highly recommend a separate account. Do you also have a separate card?
A seperate account would help with tracking the inflow and outgo of expense monies.
I'm going to make my husband help me practice. It's his company I'm interviewing with, and he says he's a hostile interviewer, so hopefully if I can practice to his questions, the real interview will be okay!
What sort of job is it?
Update on my two contracts: barring a disaster, I will probably get both.
I'm not sure about what sort of job it is, beyond being an internship. It's at a large software company, so there are lots of possibilities. I really want something where I'm going to get a lot of hands-on practical experience.
I hope the interview goes well. If you can avoid anything at all, make it anxiety. Not only is it unnecessary, it's counterproductive.
I think a software company would be a great place to do an internship. How's the pay?
I was just getting home from work -- not sure if it being tax day made it busier or if it was just random luck, but we had a ton of work!
I think the pay is fairly decent -- enough to cover childcare, which would be the biggest requirement.
Bummer. After soaking all my available cash into "real estate" I wasn't able to take advantage of this rally.
My three picks are up 9.5%, 11.8%, and 18.3% today alone.
PP, I hope you hung onto INTC. It's the 18.3% riser.
Selling at 26 cents/share.
Hope Dusty didn't buy.
No, I didn't, although I'm still thinking about it. Someone has a bid in at $.30 though, and no one is selling. I put in a bid at.30, but it didn't get filled.
Here's what I think Amazon ought to do (and I think they're already doing it a little): contract with as many retail outlets--online and not--to either provide a Web space or link to an existing one via a database to make Amazon the "ecommerce" portal. That is, I go to Amazon, put in whatever item it is I want, and they pull up all these sites where I can get it, prices, etc. through the Amazon interface.
That is I don't have to leave Amazon to buy it. They handle the actual go-between purchase so I never have to enter credit card data or shipping address stuff again. All I do is point and click.
Amazon: Gets a cut of every transaction. Gets market share/dominance. Collects knowledge about consumers like you wouldn't believe. Uses that to build incredible customer profiles and personalize site out the whazoo.
Other retailer: No need to do own Web site, access to a marketing level they couldn't achieve otherwise.
Consumer: One-stop shopping. Limit vulnerability as far as credit cards etc. to one "super-secure" site. Convenience, convenience, convenience.
But I wonder why publishers don't sell all their books online directly anyway. They could all get together to provide the search mechanism and then who would need Amazon?
What you describe is what indie booksellers do with Amazon. I've bought a few first editions that way. But after the first purchase, I deal directly with them.
All products that pass through Amazon are barcoded. Once a customer spends X number of dollars with Amazon, Amazon ships them a barcoder reader device (wireless?) for their PC. When the device is passed across an Amazon barcode, it automatically pops up a new order message to be sent to Amazon with editable fields as far as delivery date desired and quantity, what have you.
The customer makes desired changes--if any--hits enter, and that's it. New bulk supply of toilet paper on the way.
See, if I had bought at .30 I'd be up 20% in less than a day :)
I wonder how long Salon will last?
(Real-time quote.)
I was starting to wonder; I see I misread it. I saw a trade at 2:26 PM for three hundred shares, but it was yesterday.
I noticed ads on TV for Salon yesterday; I had never seen a TV ad before.
After a long hiatus, they have banner ads again.
Why do you say they are bankrupt?
"So here's the plan for our salvation. We charge our readers $30.00 for access."
"Umm, didn't Slate try that?"
"Yes, they did."
"And how did it work out."
"It failed miserably."
"So why will it be different for Salon?"
Triumphantly, "We don't plan to give away umbrellas."
And I don't mean in the sense that they'll have to close their doors anytime soon, but I don't think they're going to make anyone rich.
I don't like Amazon solely because they want to charge me shipping and sales tax. I'll pay one or the other, but not both!
Any last-minute interview tips? I am increasingly nervous!! It has been a very long time since I've had to interview for anything serious.
Well, my worries were correct. One of the contracts wanted me but is convinced they can find someone less expensive. They can't--I'm actually pretty low-end on this sort of programmer, since I can afford it (no overhead)
I am wondering if they're hoping to contact me directly and cut out the recruiter.
It's my public speaking advice, but I think it applies to interviews: don't worry that you might be nervous. It won't show as much as you feel it.
But I wonder why publishers don't sell all their books online directly anyway. They could all get together to provide the search mechanism and then who would need Amazon?
You can order directly from most publishers, by toll-free number or website, if you're particularly determined. (Of course, you'd have to know who publishes the book you want). But publishers downplay their direct operations because it makes bookstores very, very unhappy when consumers buy around them.
For the last 12 hours I have been utterly convinced that the other contract will fall through, since they both looked so solid and I knew that only a fluke could undo them. So once I had one fluke, I was convinced there would be two. So I have been looking for other jobs, giving the second one up as lost.
I am so weird about things like that. But I am so right about it most of the time that it is good practice to trust my instincts.
But then every so often something happens to remind me that flukes and bizarre happenstance are not facts and can't be treated that way.
The other agency called an hour ago. I got the second contract and will probably start Monday.
I can imagine it does. But that is useful to know. When a book is out of print, is it worth calling the publisher to see if they have copies, then?
Sure, the publisher may have a couple but not enough to ship out to stores - or a kindhearted employee can refer you to the author or whoever got the last copies when it went OP.
For ordinary OP stuff, I like abebooks.com, and you can always check Amazon's UK site in case a British edition is still in print. But if you're desperate, most publishers have incredibly nice customer service reps. Nobody's in this industry to maximize their income, after all.
And thanks! I've been very nervous because the market is so lean right now.
A couple of things though: I have to finalize my committee to get my PhD - which I'll do tomorrow. I've had an informal committee for 2 years (administration -not my strong suit). But, I have to have a formal one for x number of months before I can defend... They like me to have my PhD within 1 month of starting which is before november 1st (Research wise I can do it - I'm close to finished. Administrative wise - it'll be tight).
Second - they have an age-limit on this particular position. The director doesn't know what it is - he requested that I ammend my CV with my birth-date, citizenship and marital status (this brings back memories of rule-boundedness in europe). I wrote back and asked if 41 is too old (42 in a month and a half). Gaaaak. Age limitations is something universities will have to give up with people having second careers and late switches.
Well, at least I think they have to, because I want this job, dammit, and 41 isn't old for a new PhD.
Oh well, if they have stupid age limitations, they'll miss out on me, and I'll just ask to hang out here another year and do some more research! (I'm returning to normal now).
Good luck. I'm pulling for you.
BTW, this contract I just got puts me in KC quite often, and I am thinking of going to Indy to visit GJ and , if you're interested, you.
I doubt that an american citizen would have much legal pull with a Swiss university. If it were here, yes, I'd check out the legal route (conflict avoidant as I am), simply because age limits is something that would need to change according to how people have changed the way they lead their lives today.
One of the new professors (just finished her second year - half of which she was on maternity leave) is just a year younger than me - a couple of years ahead career wise. And, another professor who just got tenure must be in his early 50's (or he just looks very old, but there's no way he is less than 5 years older than me). Also, several grad students are in their 30's and will finish in their mid to late thirties (I'm still the oldest). So, age limits on anything in academia for new PhD's just doesn't reflect the demographic any longer.
Excellent question, and interesting timing. Just yesterday, we were discussing two companies with capital issues—one is over-capitalized, the other undercapitalized. We want to propose doing capital studies to help them think through their alternatives. One company pays a dividend and is in the middle of a stock buy-back program.
I will use this situation as an excuse to talk through your question.
As an aside, this sounds like a problem that some doctoral candidate would have jumped on at some time. Are you interested in formal, academic analyses, or is this a more informal question?
We've already formed some preliminary observations, but let me run it by some more people before I tell you what we concluded.
Should be interesting...
You have a different definition of "specialization" than I do. I'm considered a specialist, but it doesn't involve industry or company size experience, but rather product and process knowledge. In fact, language or database is rarely a specialization.
I don't think agencies generally care what sort of experience you have. What sort of questions are you getting?
there even a market for going in and setting up stuff like that for small or midsize companies?
There can be, but marketing is always a bitch. Do you want to be an entrepreneur, or a free-lancer?
I also put a fair amount in my sep ira this year, figuring that it's a good time to inject some new income. I usually only put $2K a year in, since I focused more on getting rid of debt and building up my non-retirement investments.
I'm supposed to hear within 3 weeks, which feels like a long time, but I suppose is fairly standard. I'm checking my e-mail compulsively!
Are you going to headhunters looking for them to place you, or are you applying for specific positions? I can't see a recruiter being that picky, or even that knowledgeable to tell you things like that. Large corporations, especially those looking for contractors, don't generally give a damn where your work experience is.
He gave you a programming problem? Wow. He didn't just talk tech with you?
The problem with offering swoop in and fixit is marketing, as I said. I suppose you could offer a website. That's not an area I'm familiar with.
Have you tried DICE, looking for specific gigs that you qualify for?
It's simply not true that most of what is on DICE is lures. There are some lures, but the majority are for actual contracted positions.
I wish. Somewhat on the road to recovery, but from an on-paper financial outlook, the six months preceding March 31, 2001 were horrible.
Beyond that is the more theoretical side of the question which suggests that the value of the stock reflects future earnings and not any short-term boost that might be experienced as a result of a major buy. So in the long run it should have no effect on the price of the stock. The fact that the number of shares outstanding is being reduced should have no effect as in P/Es (price per share/earnings per share) the # of shares cancels out.
Further is the reasoning that a company should return the cash that it feels it can't invest at a greater return than the shareholder can. So in a sense, the buyback is suggesting that a company is "reaching the end of its investment rope" so to speak, which might suggest that future earnings may suffer and the stock price should actually fall.
There are a number of ways to approach this issue, and I'm just wondering if there's any consensus on the theoretical and/or empirical or at least what the latest thinking is.
As far as P/E, most stock buybacks with which I'm familiar have been too small to affect P/E very much. Instead, I think they are more often of the signal-sending nature.
In general, I subscribe to the idea about dividends that they represent even more of a "reaching the end of the rope" as far as investment opportunities go.
1. Why buyback vs. diversification? The real question is buyback vs. dividends. Diversification, like any other investment, is a management decision to use the money. I'm talking about once the decision has been made to return it to the shareowner.
2. Is it that the buyback is too small to impact the P/E or is it that the P/E is unaffected as it it unrelated to the buyback.
3. What signal do you see the buy back as sending? That they've reached the end of their rope or that they feel their stock is underpriced?
4. Why do you see dividend payouts as being more "end of rope" than a stock buyback?
Last September I was suspended from my job for three-and-a-half weeks without pay pending investigation of my breach of company policy. Although I felt my "methods" were more efficient, expedient, and safer, they weren't without risk, and unfortunately for me, that risk came calling one day in the form of misplaced funds. It was an accident waiting to happen, and one day it did.
The worst part of that whole episode was not being put through the emotional ringer for what I had done -- I can't fault my company or any company for wanting to get to the truth of the matter at hand particularly when it involves the loss of money -- the worst part was when the lead investigator tried to pin all of the store's losses on my lap. It was one of the worst periods of my life, as not only was my job in the balance, but the fact that I would lose it over something I could never do nor prove one way or another. Everything seemed to point the finger at me. I still don't know what main factor played a role in my re-instatement, but I was allowed to return to my position if I agreed to go to "therapy" .They felt that therapy might determine whether it had more to do with a memory problem. I have found it very hard to shake those implications and accusations, and still carry the incident with me every waking day.
Continued...
Within the last few nights, I witnessed an employee commit theft. There's no doubt about what I saw. The person's behavior was very peculiar at the time, so I followed through only to have my worst suspicions confirmed. She took them.
I lost sleep over this last night. It isn't only demoralizing that an adult who someone works with, and has trusted in, is flawed with corrupted morals and/or ethics, but that I now view this person in a totally different light. It is going to be hard for me to look her in the eye anymore without thinking about it -- very hard. I believe she also realizes I might have witnessed the act in question, so my guess is that she is going to be very uncomfortable working around me also. This is not good.
Should I tell the manager, call their 1-800 "Ethics" hotline, or do nothing at all ( Would they believe it coming from someone such as me, given what I was being charged with only seven months ago ?). I was never given an official apology by the company, so for all I know, I'm probably still a suspect in their eyes.
In reporting her, I would stay consistent with my principles and values, and I feel not doing so makes me an unwilling accomplice to her act by default. In my years with this company I have saved the company thousands by following through on peculiar or suspicious behavior of the general public. The thought of turning the other cheek just because she is an employee just doesn't sit too well with me at the moment.
Several months back, I witnessed another employee steal from the company, but the angst I felt over her was different in that she didn't work in my department, but more importantly, she quit a week or two later after I saw her commit the act. I didn't have to ponder it at lenght anymore.
Continued...
On the flipside, I have been put through the investigative ringer and let me tell y'all, it is no fun. It's not just losing your job, but your reputation and integrity -- which I happen to value far more. Would she take it as hard as I did, and could she handle it ? One panic attack is one too many, even for one that is culpable. Should I even worry about this aspect ?
She also has a large family and has a high paying position. Say the company did take my word for it and began to track her every movement at some point, only to have the worst in her come to light one day and eventually terminated over it. What would that not only do to her income, but also her family ? Should that be my concern ?
Well, that's the truncated version. Any thoughts ??? Thanks.
Speaking of work, I better head off to it in a few. :(
You can't call the Ethics hotline for the same reason that you can't leave it alone--once they have reason to suspect, they will suspect you.
I think you should also consider finding a new job.
LOL! I'm trying.
The place has something like 20 surveilance(sp?) cameras to do such thing, Cal.
I'm piecing together the letter as we speak. Whether I'll eventually turn it in is another matter all in itself. I've thought of calling the 800 number to see what that's all about. I've never heard of anyone actually using it.
The real test will be when I come face to face with her again. That's really going to be a lot of "fun".
You're right. I can't leave it alone.
... Life's a bitch at times I tell ya. I didn't expect my vehicle to hit me with a $420.00 maintenance bill upon returning from France, and now this ?!
Given that it's about money, you need to do something to make sure it is known. If you leave and then they find it gone, they may decide to pin it on you and if the amount is big enough it could involve the cops. So make sure you report it soon. Keep any hint of blame or condemnation out of the report. Totally factual. Allow for the fact that you may have misunderstood (even if it's not possible).
It's always about money. :(
I think I will report it. I can't go on as if nothing happened. I assume most of my friends are wondering what the hell it is I'm doing, and I can just hear them, You still give a damn after they suspended you and ran your reputation into the mud !? If a company did that to me, I could care less about how they are being ripped off.
They might have a point, but for the most part the company has treated me great throughout the years, and it wouldn't be fair to the majority of the employees who work for it in a variety of facets to allow one asshole -- the lead investigator who tried to work me into his flawed "model" -- to ruin it for them. I will not allow his overzealousness to reflect on the others who aren't like him.
... If he offered me a $50,000 check to forget the whole thing, I would rip it in his face and ask instead for a company wide memo with an apology, thereby clearing my name to any doubters that might exist out there.
Well, I don't know if I give a damn as much as having her behavior continue, and then having it possibly fall on me or others in the company that have done nothing to merit it. I don't need that shit. Call it a pre-emptive strike so to speak
Also, thank you, Deev ( It was on a night when the Deev happen to be here late one evening ) and Arky for your words one night last September when the three of you came through for me in the Cafe with words of comfort and advice. You don't know what that meant to me.
I think what I'll do is type out what I witnessed without mentioning her name at first. I'll let the chips fall where they may after that. This, hopefully, will mitigate some of what I am going through at the moment by simply getting it off my chest.
Thank you responding. :-)
1. I think the three are gradiations of the same state you described as "end of rope." That is, management is acting in each situation like they can no longer find lucrative ways of plowing the money back into the existing business, so they either throw the money back to shareholders in the form of dividends, buy into a new venue (that they don't necessarily have the expertise for), or just reduce the outstanding number of shares. To use an example, if an old-time railroad buys back shares, buys a coal-mining operation, or pays dividends, they all to me mean management has decided that laying more track just isn't as profit-likely.
2. At one time I owned MCL (Moore). They decided on a buyback of shares, but the shares represented less than one percent of those outstanding. IIRC IBM did a similar buyback when their stock was beaten down. So it seems to me that by reducing the number of shares at most one percent you're not going to influence P/E very much, regardless of what earnings or the price of the stock does as a result because the denominator of both the P component and of the E component changed only by one percent. (Of course if neither is affected at all, then mathematically, as you said, the effect is nil.)
OTOH, I don't think management in general directly cares--or at least ought to--about P/E, just earnings per share.
The more I think about it, I don't see how a share buyback would ever (except under fishy or extreme conditions) be much more than one percent. For example and assuming my math is correct, CISCO would have to expend about $2.5 billion to buy back just two percent of its shares. The company's current cash on hand is $4.3 billion, but that's after an extremely lucrative year, and that's with the price knocked way down. Last year, they couldn't have bought back even one percent of their shares by spending all their available cash.
4. Because of tax consequences, mostly. Plus I'm suspicious when a company pays too high a dividend because you generally can't sustain that (whereas buybacks are usually one-time deals and permanent). That is, if the company raises the dividend and the price of the stock goes up, it'll likely go down should the dividend ever decrease. So management must continue to pay it out from then on for me (stockholder) to continue to benefit. But once outstanding shares are reduced, they are out of circulation for good.
Again, I will probably like dividend-paying stocks more as I grow older and want the security. But for now I look at it like why take the risk of a stock if you want a guaranteed payment? Put your money in something that draws a fixed rate, like a CD.
(But management still shouldn't worry about P/E, just E/S.)
Perhaps Dusty or someone else will weigh in. The answers you've given don't make much sense to me. For example, the bullet above in #849....a stock split has absolutely no impact on a stock's value. It is irrelevant to me the shareowner if I own 100 shares at $10 each or 200 shares at $5 each -- I still own $1,000 of company stock.
Diversification is not an element in the equation because it suggests that management still believes it can add more value by retaining and investing the money than returning it to the shareowner. Just because they choose to do it in a new line of business is irrelevant. It's really a question of how you return the money to the shareowner.
The size of the stock buyback in my view is irrelevant to the price of the stock as the P/E does cancel out the number of shares...but even if it didn't, if the effect is as small as you say then they should return the funds in a dividend as the buyback will have no effect on stock price so returns nothing to the shareowner.
Finally, the personal choice of buying stocks that generate dividends vs. future growth is not relevant to the argument either (end of msg #846) as the shareowner always has the option of diversifying his/her own portfolio to meet their income/tax avoidance/risk vs. security goals.
I'm really trying to understand if there are valid theoretical and empirical underpinnings to the proposition that stock buybacks raise stock prices.
X-posted I assume. An announced split does have psychological value and makes a stock more affordable. By expanding the market (i.e., pool of people who can buy the stock), you do increase demand, which tends to increase price. If there was no point to a split, companies wouldn't do it.
It's less important than pre-online trading, but brokers used to not like dealing with "odd lots," meaning they wanted multiples of 100 shares. If the price of a stock is $250/share, even 100 shares represents a substantial investment. Split the stock a couple of times, and that's no longer the case.
Even now, ETrade, for example, will let you specify how much you're willing to pay only if you buy more than 100 shares of a stock. Otherwise, you have to make an offer at market price.
I disagree. When you choose to invest in a company, one of the main considerations is the degree of faith you have in the current management team within a given industry--as well as any other advantages the company has within that industry. Diversification sometimes works, oftentimes it doesn't because it almost inevitably means that company and hence that management team is having to look for ways to increase shareholder value that aren't part of their previous track record.
Moreover, look at it this way: Why would it be preferable for you to buy stock in McDonald's and then have McDonald's buy stock in UPS (i.e., purchase all or part of the company) rather than your buying the UPS stock yourself? Answer: if some kind of synergistic element is involved between the two companies, maybe, but otherwise I think diversification is too often a tossing about to find places to put built-up cash.
Look within the software industry at all the companies that bought other companies within the same industry even and the results. Many are out of business and most of the products they bought wound up being worthless to them. WordPerfect comes to mind, as a lemon that more than one company "diversified" into.
It's irrelevant to P/E because mathematically it cancels out unless Price or Earnings experience some secondary effect from it. (Price usually gets at least some bump out of an announced stock buyback.) But I don't see P/E as a concern for managment outside of their natural concern of the earnings component. The market controls price and indeed the SEC would probably have unkind words for a company that manipulated its price; all management can try to control is earnings.
The size of the buyback doesn't directly matter vis a vis price only because buybacks as I've stated are invariably small. This is easily demonstrated by considering the reverse situation: were a company to announce it was issuing double the amount of previously outstanding shares (not a split, new shares), you'd better believe it would affect the price of the stock.
Well, all this confuses me on a couple of grounds. For one, I fail to see why you think a stock's price is unaffected by whether a given buyer wants it in his or her portfolio considering all factors. The market for that stock is made up of such buyers.
I'm really trying to understand if there are valid theoretical and empirical underpinnings to the proposition that stock buybacks raise stock prices.
But how is this, if your position is...
The size of the stock buyback in my view is irrelevant to the price of the stock
? It would seem to me you've already answered your own question, given your belief above. If the size of the buyback doesn't matter, then the buyback itself cannot matter because I assume you'd agree that were a company to buy back a single share of its stock the price wouldn't be affected.
Yes there is a psychological--though irrational-- and potentially a market effect from a stock split, but it certainly won't impact the P/E. And not all companies do splits....price Berkshire Hathaway recently?
Re Diversification not being an element of the equation....I'm not disagreeing that a management's choice to diversify may or may not affect your wish to buy/hold/sell the stock. That should be a consideration. However, it is irrelevant to the question I'm asking which is a very specific one...do stock buybacks actually return value to shareholders by raising the long-run stock price?
And not all companies do splits....price Berkshire Hathaway recently?
No, but I think they used to be in the five digits per share range. However, Warren Buffett isn't looking for your average investor and says so. They keep the price high because they want people who already have money and will stay invested for a long time. Not day traders.
Again, I'm asking a very specific question. There are investors who are, let's say retired, who are looking for stable dividend income -- one reason why AT&T was for so many years the most widely held stock....and there are investors, let's say younger ones with higher earnings who prefer stocks that don't pay dividends due to the tax treatment of dividends. Whether a firm pays or doesn't pay dividends may impact a buyer's decision. I'm not arguing that.
But that doesn't answer the question in that who owns the stock is irrelevant...I want to know if the long-run value of a stock is raised by a stock buyback program. And your answer ignores the theoretical underpinning that a stock's fundamental value is the discounted cash flow from future dividends...not who owns it.
The answers you keep giving me are all about whether decisions would affect your desire to own a particular stock. I'm not disagreeing with the elements that go into a stockholders decision. I'm asking a different question.
It would seem to me you've already answered your own question, given your belief above.
Yes, I have revealed my own bias about stock buyback programs. I spoke more specifically of my concerns in #835 That's why I'm asking the question...is there theoretical and/or empirical evidence that suggests I'm wrong or right in my supposition.
My conclusion is, however, that if "research and theory" were somehow to conclude that stock buybacks were more often a bad decision than good, then research and theory would either be wrong or most corporate boards are idiots about understanding the value of their own company.
In which case, we'd be better off keeping our money out of the market entirely.
My point goes, I guess, not so much to the theory of buy-backs, but to inequities in the dissemination of information. This has improved in recent years, especially under SEC Chairman Arthur Levitt, but still leaves a lot of small shareholders "at the end of the food chain." An article in yesterday's NYT said the SEC has been investigating investment banks' unpublicized requirements to buy more stock at specified prices after IPOs imposed on investors who receive initial IPO shares. The price smells of manipulation of IPO stock prices.
I'll have to get back to you on that one, either here or through e-mail. Right now I have to get back to work. I'm late.
See ya.
Now, they've known about this for several weeks, right? Did they get it started? No. Now they are saying that they might have to delay based on the drug test and background check.
It is a sign of how worried about the market I am that I just pointed out how idiotic they were not to have done this sooner. Because as a general rule, I don't do drug tests, much less background checks. But I bit back several more sarcastic and final rejoinders, and just kept looking for more gigs. I ain't tossing this one out unless I have another clear offer.
But this is pretty outrageous, and not at all the norm for my line of work.
Fortunately, that day I also received a call from my last client, who is back from India and wants me to come back. I told him to hurry up on the funding and I'll tell the others to fuck off.
I had my review at work last night. At the part where my boss said I scored highly in "getting along with co-workers" I burst out laughing. He told me that no one had come and complained about me being a bitch, and that was what counted. I don't even know the names of half the people who work there anymore, and many of the people whose names I do know annoy the heck out of me. Then I got to complain about the lead in the department to him, and he agreed with me, so that was nice.
Everyone should be so enlightened. Congrats on the good review.
Every place I've worked that does a drug test hands you the form the day they offer you the job
It's a bit different with contractors, but the difference is that they really aren't supposed to ask you about it. I don't think there's any legality issues one way or the other, but if I were an employee of another company, as opposed to a temp, it would never come up.
I can refuse--and I have before. But usually it's when I'm already on site and accepted the job without knowing of the requirement, so I told them it was too late to bring it up. That's essentially what is true here, too--but given a slower job market I'm not going to be as hardass until I have the next gig tied down.
However, they have not IPO'ed yet, and there is supposed to be a one year lockout on this certificate.
What would happen If I tried to redeem this certificate after the IPO but within the lockout period?
As I mentioned, I am no longer an employee of this company.
Thanks for the responses, but what I was wondering was, if the certificate is a good negotiable instrument (which it should be), would it be redeemed at the face value if I attempted to redeem it after the IPO when this stock is publicly traded, or would some automatic check kick in preventing redemption?
This could be a factor for either or both the below:
1) I need the money
2) The stock surges soon after IPO, and I have reason to believe it will fall thereafter.
CalGal -
This is a standard certificate, as far as I can see, signed by the president of the company, assigning me a certain number of shares of 'capital stock'. On the back, there is language about the Securities Act of 1933, saying that the shares have not been registered under that act (presumably because the company is still pre-IPO) but nothing else.
Apparently not, since the certificate currently has no face value, since the company is not yet listed on any exchange.
I was wondering was, if the certificate is a good negotiable instrument (which it should be), would it be redeemed at the face value if I attempted to redeem it after the IPO
vs.
since the certificate currently has no face value, since the company is not yet listed on any exchange.
Once the IPO occurs, I don't think you can trade it until the lockup period is over. Who would buy stock from you of dubious legality when plenty of legitimate stock will be available on the market? Before the IPO, who would buy it never knowing what the stock will be worth on the market? Perhaps someone would pay you a fraction of its worth hoping to make out in the long run by taking a risk now, but stocks are so regulated I don't see how you'd get away with it.
If you're covered by this lockup, I assume it's a substantial number of shares. Could you negotiate with the company to buy it back? Otherwise, it sounds to me like you just have to hold onto it and hope they have the IPO eventually.
If we're talking about substantial money, maybe you should check with a securities lawyer.
That's a possibility.
Re. 877 -
My question specifically concerns whether, if I ignored the lockup period and attempted to redeem the certificate before that period ended, whether there is any reason that I wouldn't succeed in practice.
Not that I necessarily plan to ignore the lockout period, of course. But, if the stock surges after IPO as some do, I would be tempted, since there usually seems to be a corrective action afterwards.
Wrt the number of shares involved, suffice it to say that the total amounts to not too far from 10,000 shares, and is expected to IPO in the teens.
Wonkers -
If I redeemed the certificate before the lockout period ended, it would be when the stocks are publicly traded, so they would have a market value.
I haven't seen your actual lockout agreement, but it sounds to me as though you are trying to sell something you don't have free and clear title to.
If nobody knows what might occur if I do try to sell the certificate before the lockout expires, that's fine. It's perfectly legal for me to do so, btw.
Next year my company is moving out of the city to a smaller, quasi-urban area. This will double my commute to 2 hours in each direction, and they won't be easy hours. The company will possibly institute some policies (like a bus from our current, easy-to-reach location) that will help somewhat. It still won't be pretty. Many employees are unhappy about this move, and we will lose key staff.
My managers are highly motivated to retain me, and know that this move is problematic. I had planned to demand a day of telecommuting, plus a flexible start time. But in my annual review this week, I got a signal that this would be granted easily, and I should think of other things that would make this move tolerable for me.
I can't telecommute more than one day because I run too many meetings. While the company will probably cover increased commuting costs, overall I'm less interested in money than in time. I don't want relocation assistance; I don't want to move there.
I am pleased that my bottom line is more than acceptable; now, what else can I ask for? Shortened workday? Technology?
And are you willing to walk if you don't get it?
However, while I would like to stay here, my level and skills make it relatively easy for me to move, if I have to. And they know that. I have a little time to come up with my wishlist, so I'd like to make it a good one.
So basically I want to minimize the pain. I want as short a workday as I can get away with and still be on the fast track. I can always claim to be doing work on the train.
I will leave if the commute becomes intolerable. I do not function well with insufficient free time. But I have a sweet deal here and I'd like to preserve it.
I'm puzzled.
Did you intend to inclusde a "not" in this sentence:
But in my annual review this week, I got a signal that this would be granted easily, and I should think of other things that would make this move tolerable for me.
If you leave earlier in the morning, is the trip shorter? You may want to build your case for early arrival/early departure.
Erin, I am thinking I may ask for telecommuting, adjusted work hours and a laptop. I'm going to try out the commute and find the least painful version - but train plus subway plus 1.5 mile walk is never going to be easy.
We start at 8:30 am. I would have to leave the house at 6:30 just to get there by then, so I doubt I could go much earlier.
The other option would be to ask for a promotion.
I can't ask for one right now - I just wrangled one 18 months ago and even if I had another job offer, I don't think I could pull it off at the moment. What I could do is ask for telecommuting, flexible work hours, laptop/work-at-home technology, and a developmental plan that explicitly puts me on track to move up on a definite timeline. We are big on developmental plans, here.
You ask good questions.
Rather than working at home one day a week, how about working at home most mornings and not going into work until noon--or going in early and then take off at 2?
I see no reason why a professional has to work an 8 hour day in the office these days. You can dial in, make calls and so on in the morning--and is there a work-related reason that you can't run meetings remotely? I have been on any number of conference calls with people in all different locations.
In any event, I think a shorter day--which could possibly make the commute shorter as well--might be something to shoot for. You could also get a day home as well, if possible, but at least look at the tradeoffs. I think the laptop is a given, as well as a cellphone--or coverage of some of your existing costs of each.
Mutual Funds: You have a love hate relationship with inflation, don't you?
Schwab: You know, govt policy condones inflation for good reasons. People feel better if they get paid more each year. But does income increase over and above the inflation rate? Most times, not. So inflation is a robber in the night, chipping away at purchasing power.
MF: So most retirement savers aren't as far along as they think they are?
Schwab: In your first 10 yrs of retirement, your money loses 1/3 of its purchasing power. What cost $1000 of monthly income then costs $1,300 or so. In 20 yrs you lose some 60% of your purchasing power.
MF: In your book, you lay out some ambitious goals for retirment savers. For every $1000 of monthly income, people need $230,000 when they retire, assuming a portfolio of 80% stocks, 15% bonds, and 5% cash. For an annual income of $75,000, you'd need a $1.4 million nest egg.
Schwab: That number allows for some inflation.
MF: But you also base it on some pessimistic assumptions about the market--basically that the market will have one of its worst periods ever.
Schwab: If you were so unlucky as to have retired in 1970 at the beginning of a down market, you'd have lost an enormous amount. We don't know what's going to unfold, do we? That $230,000 is the sure-fire number. It'll incorporate 99% certainty that you'll make it through any environment with your investments, adjust for inflation for the rest of your life and have something left over at the end that you can give away.
MF: And you think most investors should buy funds, not stocks.
Schwab: When I talk about stocks, I mean the "class" called stocks. For that, you need 500 to 1,000 companies--an index fund or a few actively managed funds that aren't too similar.
Charles Schwab's new book is "You're 50--Now What?"
Mutual Funds May 2001
My original boss --the guy who hired me, my buddy---got fired yesterday afternoon. I didn't even find out about it until ten minutes ago although we've been expecting it for some time now.
Seems to me the long term effect would depend on the strength of the company's balance sheet i.e. the amount of un-needed (presumably) cash and the amount of debt. The debt-equity ratio should be commensurate with the forseeable risks faced by the company and with industry norms. Beyond that, there is no point in hoarding unused cash. It may as well be returned to the shareholders, either in cash dividends (which are taxable) or by endeavoring to increase the price of the company's stock through a buy-back. With a buy-back the company is saying that we have more cash on hand than we need or can make good use of and and we can safely reduce the equity component of our balance sheet by buying back shares and retiring them. This increases the ratio of debt, if there is any, and the earings per outstanding share and share price. It seems to me that it would not change the book value per share of the company. The effect on the price of a share and the PE ratio is speculative but tends to be positive.? The key to the long term effect on share price is the validity of the company's assessment of its future need for cash and the correctness of its assessment of the appropriate debt-equity ration. ????
It wasn't a complete surprise. We've been expecting it for some time now. The only real shock is that they waited this long. It's still kind of sad, though. Nice guy.
wonkers: Agreed. I presume that before a company executes a buyback it has a lot of excess cash that it needs to find a use for (besides having a stock price it considers undervalued).
I think your answer is likely in the same category with mine regarding what thoughtful was looking for with her question. As I understand it, she wants empirical research that indicates whether buybacks or dividend payouts are in the long run more beneficial to a company's prospects.
As far as 905, I'm not sure that a buyback would be the most effective means of achieving that goal. Assuming the price does go up as a result of the buyback, you still have decreased the number of outstanding shares that a takeover purchase would require.
A technique I've seen for doing what you're describing is giving the board authority to issue more stock in a second public offering. I can't remember exactly how this worked, but IPIX is the company that I'm thinking of. They made it where anyone owning shares more than 30 days before the offering would have the number of their shares commensurately increased (like a split), but those purchasing shares in the last 30 days before the new issuance would not.
Therefore, any newly acquired (30 days or less) shares would represent a smaller percentage of the company than those held for more than 30 days.
When they announced this plan, I assumed its utility was in making a quick takeover disadvantageous, given that IPIX was trading for about 25 cents a share and thus a tempting target.
gimme cash and not a gamble if you want to reward me.
I have turned down stock options before. I've never regretted it.
How are things on the contracting front?
Pretty interesting. I suspect that we'll soon only be seeing bestsellers with 24 hour turnaround.
still on the bench, but there is hope that'll i'll get placed. a fellow consultant is taking with the client he is working with to get me on board to do the web front end to the database work he is doing for them.
looks to be about a 3-4 month deal starting July 1, so we'll see.
i was talking to one of the client managers here at the consulting company for whom i am on the bench just a while ago. we are chatting about this opportunity he might have for a client of his. total site redesign, navigation, backend, the entire package and was looking to submit me for the task.
excellent, i say. i love to do that type of work. it's very rewarding and creative.
ok, he says, great. we'll see how the submission we've made for you at Company X (a different client) goes
um, ok i say. please let me know. shake hands - leave.
i knew nothing about this other submission, when they made it, or even if it is something i can do much less if i want to do it.
now, they can't even give me a heads up that they are submitting me to a client? that seems stupid. i don't expect them to ask permission, but doesn't it seem logical that they'd at least mention this fact to me or am i off-base?
i'm not sure if i should continue do dig or just let it go for now until i know i am selected.
Consulting companies can often play weird games based on their own internal priorities. For example, the one gig that I interviewed for and was turned down. Had I not had the email address of the client, I never would have known that the consulting company had suddenly and radically upped the price for me.
But why? you might ask. Didn't they want me to get the job? After all, it's more money for them.
Unless you know that the consulting company had just had a huge contract cancelled with five people benched. Benched employees represent a constant outflow, and it was more important that they be hired than me, who represented no cost to them. All of the five were not local, but travel costs are easy enough--just tell the consultant they won't get that many trips home and put them in a cheap motel and the company could cover the costs themselves, and still make a profit. The consultants have little grounds to complain, because layoffs are constant.
All of it would have worked except the client got pissed off and told them to go fuck themselves.
The point of this long story, Ducky, is that there may be employees who are also benched who cost more money, or who are "more valuable" in terms of skillset or nice looking resume, or whatever. Nonsense like submitting you without telling you about it, or not submitting you for something that you're ideal for, are warning signs. They may mean nothing in this case, but be alert.
Can you edit raw code in a UNIX environment?
What do you mean? You can edit files in Unix, so you can edit code. All code is in a file of some sort or another. Do you mean on the fly?
Yes, on the fly, but one of our webmasters was remarking that there is call for people who can actually edit code in adition to using applications like DreamWeaver and FrontPage. The advent of those types of programs has made it a lot easier for far more people to enter the webhosting and web designing field, but often there's a need to go a bit deeper into the programming than that and many people are at a total loss.
COLLEGE, DEGREE, AND COMPENSATION: 2000
i got an e-mail from one of the client managers saying, basically, here's a set of skills and the duration of the contract - on a 1-5 scale, where are you. note that i wasn't told where so i just assumed it was a skills type question for a possible submission.
i find this out when i talked to the guy who recruited me to the consulting company (who is now the head of recruiting) and he gave me the heads up. anyway, i said i was more interested in the offer i mentioned in Message # 911 so he said he'd try and get that pushed through.
i still have some people out there who are looking for me, but i am hoping i don't have to leave my current employer.
Indy:
i considered that, actually. but i don't have the bandwidth right now if i get placed. could be a good way to make some extra dough, however.
Ms No:
nah, i'm not much of a UNIX geek - more of a MS shop geek.
************************************
Two engineering students were walking across campus when one said, "Where did you get such a great bike?"
The second engineer replied, "Well, I was walking
along yesterday minding my own business when a
beautiful woman rode up on this bike. She threw the bike to the ground,took off all her clothes and said, "Take what you want." "I took the bike."
"The second engineer nodded approvingly, "Good choice; the clothes probably wouldn't have fit."
************************************
Comprehending Engineers- Take Two
To the optimist, the glass is half full. To the
pessimist, the glass is half empty. To the engineer, the glass is twice as big as it needs to be.
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Comprehending Engineers-Take Three
A pastor, a doctor and an engineer were waiting one morning for a particularly slow group of golfers. The engineer fumed, "What's with these guys? We must have been waiting for 15 minutes!" The doctor chimed in, "I don't know, but I've never seen such ineptitude!" The pastor said, "Hey, here comes the greens keeper.
Let's have a word with him." [dramatic pause] "Hi
George. Say, what's with that group ahead of us?
They're rather slow, aren't they?" The greens keeper replied, "Oh, yes, that's a group of blind
firefighters. They lost their sight saving
our clubhouse from a fire last year, so we always let them play for free anytime." The group was silent for a moment. The pastor said, "That's so sad. I think I will say a special prayer for them tonight." The doctor said, "Good idea. And I'm going to contact my ophthalmologist buddy and see if there's anything he can do for them." The engineer said, "Why can't these guys play at night?"
************************************
There was an engineer who had an exceptional gift for fixing all things mechanical. After serving his company loyally for over 30 years, he happily
retired. Several years later the company contacted him regarding a seemingly impossible problem they were having with one of their multimillion dollar machines.
They had tried everything and everyone else to get the machine to work but to no avail. In desperation, they called on the retired engineer engineer reluctantly took the challenge. He spent a day studying the huge machine. At the end of the day, he marked a small "x" in chalk on a particular component of the machine and stated, "This is where your problem is".
The part was replaced and the machine worked
perfectly again. The company received a bill for
$50,000 from the engineer for his service. They
demanded an itemized accounting of his charges.
The engineer responded briefly: One chalk mark $1
Knowing where to put it $49,999. It was paid in full and the engineer retired again in peace.
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Comprehending Engineers-Take Five
What is the difference between Mechanical Engineers and Civil Engineers?
Mechanical Engineers build weapons, Civil Engineers build targets.
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Comprehending Engineers-Take Six
Three engineering students were gathered together
discussing the possible designers of the human body.
One said, "It was a mechanical engineer. Just look at all the joints." Another said, "No, it was an electrical engineer. The nervous system has many thousands of electrical connections." The last said, "Actually it was a civil engineer.
Who else would run a toxic waste pipeline through a recreational area?"
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"Normal people ... believe that if it ain't broke,
don't fix it.
Engineers believe that if it ain't broke, it doesn't have enough features yet."
----- Scott Adams, The Dilbert Principle
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Comprehending Engineers-Take Eight
An architect, an artist and an engineer were
discussing whether it was better to spend time with the wife or a mistress. The architect said he
enjoyed time with his wife, building a solid
foundation for an enduring relationship. The artist said he enjoyed time with his mistress,
because of the passion and mystery he found there. The engineer said, "I like both." "Both?" Engineer: "Yeah.
If you have a wife and a mistress, they will each
assume you are spending time with the other woman, and you can go to the lab and get some work done."
************************************
Comprehending Engineers - Take Nine
An engineer was crossing a road one day when a frog called out to him and said, "If you kiss me, I'll turn into a beautiful princess".He bent over, picked up the frog and put it in his pocket. The frog spoke up again and said, "If you kiss me and turn me back into a beautiful princess,I will stay with you for one week." The engineer took the frog out of his pocket, smiled at it and returned it to the pocket.
The frog then cried out, "If you kiss me and turn me back into a princess, I'll stay with you and do ANYTHING you want." Again the engineer took the frog out, smiled at it and put it back into his pocket.
Finally, the frog asked, "What is the matter? I've
told you I'm a beautiful princess, that I'll
stay with you for a week and do anything you want. Why won't you kiss me?" The engineer said, "Look I'm an engineer. I don't have time for a girlfriend, but a talking frog, now that's cool."
A co-worker cut me out of a meeting over the marketing budget, after she and I talked about the issues and agreed that it would be a good idea to have the meeting with another person who knew more about some of the numbers.
So she had the meeting with the numbers woman and my counterpart in another area of the country, and I called her on it, and cc: my manager.
So this gal fires off an e-mail saying that we never had the conversation and she did not appreciate me saying that I was excluded from the meeting.
But if I mentioned to her that we should have the meeting, and she agreed, then goes off and has the meeting without me, isn't that exclusionary? By keeping me out of the meeting, I wound up days behind on the calculations I needed to be doing. And I was castigated by my boss in front of the group for being behind.
She also took the opportunity to mention that bringing such a matter up "in public, in front of your manager" was counterproductive. For my part, I simply wanted to express my thoughts on the matter and ask to be included in future meetings.
So now in our budget meetings, she very subtly gives me the cold shoulder and is oh-so-slightly condescending.
Fun.
One, your boss had no business castigating you in front of the group.
Two, the co-worker had no business holding that meeting without you.
Three, when someone cuts you out like that, no matter how pissed you are it is good to get all your ducks in a row first--and to make yourself look good in bringing it up.
I would say the first priority is to mend fences with your manager. Have you told her about this problem privately?
My counterpart denies the conversation ever took place, which is why I put it in writing. She claims it was an off-the-cuff conference call, but if it was off-the-cuff, then why not call me in the same off-the-cuff manner and let me know the meeting was taking place? We've conferenced in additional people before.
This is the same woman (my counterpart) who has spread gossip about my boss and another manager, who is also her rival.
I agree that my boss's remarks should have been saved for a 1:1 meeting. She hasn't brought up the e-mail, and I don't intend to bring it up. It was more a notice of how I expect professionals to treat one another, and basically saying that I won't have those same expectations anymore.
What really pissed me off was that it was obvious in the meeting that my colleagues had worked on this seperately, and with others, and were thus way ahead of me. Whereas, I thought the meeting where I was castigated was precisely to hash out those details they had so obviously discussed without me.
I do think my manager was stressed; I haven't otherwise noticed any difference in how she is treating me now.
I can't believe you're coaching me on the velvet touch in business!
I've been furiously sending resumes, and had one informal phone chat this afternoon for a business development position.
Stupid question: how best to handle being laid off in an interview? My husband says to not bring it up, but I think that seems rather silly. Our biggest competitor is laying off 10 percent of its workforce, my company laid off 15 percent. I feel awful about it, but I'm not ashamed or anything.
I mentioned this in the Cafe too, but I just read an article in the WSJ about how companies are really cutting back on severance packages and I thought of you.
I would just look knowingly resigned and say, "They had a cutback, I hadn't been there that long, [fill in the blank with any other business reason]. Whaddayagunna do?"
It goes without saying that there is no blame, no "they had it in for me", no "senior people who weren't as good as me used their influence to stay on" and so on. Just a "sigh, shit happens" attitude.
Then go on to say how you remember all the good stuff, too. Wasn't this your first foray out of nonprofit? "It was an invaluable learning experience in for profit PR [or whatever]." "I had a great time, the people were neat, I made some excellent contacts." And so on.
Good to see you're moving forward so quickly, although I figured you would. Some people take too long in the grief cycle.
It was an invaluable experience. I'm certain many people out of the 400 laid off were laid off for performance issues. The executives just didn't want to bother with going through the internally developed process for firing.
By taking all that energy and looking for jobs. Although it's not very comforting, I know. Can you do more than toss your resume on Monster? Have you looked for specific jobs and applied for them? Have you checked out DICE?
Is it the job, the boss, or the money making you miserable?
If it helps, you're at a better place than I would be, were I looking for a job. I don't have the foggiest notion how to put together a resume to BEGIN looking for a job - at least you've posted one on a job-search site. I'd like to do that for some freelance work, but I don't know how to begin, dumbass that I am.
Oh, and I know the "screaming obscenities" feeling well, although I want to scream at my subordinates or coworkers more than my boss. Him, I can intimidate by referring to my breastpump.
"I do not suffer dickheads easily....turning me into a creaming shrew".....
(CREAMING WITH LAUGHTER!)
Hmm. I have a general rule that says you never take or quit a job because of the manager. If the manager is hurting your career, that's a different story. But for now, if you like everything else, I would focus more on how you can cope with the fact that you can't stand him, and see if there's anything you can do to drive him nuts.
Ad,
Freelance as in moonlighting, or freelance fulltime? What is it you do again? (sorry for not remembering.)
It's only when the boss is hurting your career (or putting you at risk to be fired for some reason other than throttling him) that it's definitely time to leave.
CalGal, I'm an editor. I'd like to add to my moonlighting clients in view of eventually doing that full time (my boss retires soon and he's the reason I stay here, pretty much).
I currently have clients in fiction, but mostly I do the hairy stuff, like graduate-level text books in, believe it or not, physics and economics (no, I know nothing about either subject and yes, you can copy edit and proof while being completely ignorant on the subjects). Proofing and copy editing, the more mindless, the better.
Yeah, I guess thats my question, I never did get the hang of any of those type of skills other than screaming FUCK YOU I QUIT, which I must admit is starting to get tedious.
and see if there's anything you can do to drive him nuts.
Heh, I was talking to my little brother ranting about a) the boss situation and b)the fact that I left a bag of crackers in my desk drawer and found - eek - a hole CHEWED in it. Then I said that the worst thing is that I am there alone for a few hours every evening and didn't want to meet any of the little hole chewers face to whiskers and my brother pointed out that those hours along would probably present me with an excellent opportunity to plant crackers in my bosses' drawer...
I did think you were an editor. Phew. How did you get your current clients? And are your rates in line, or too low?
Debby,
Well, if you did meet any of the little hole chewers, you could smack it dead and put that in the boss' drawer.
What drives you nuts about him?
2. How does he try to establish control? Coming around and asking you what you're up to all the time, meetings, or what?
3. The activities are outside normal work hours?
4. He whispers to other people, or to you?
5. Ick. Do you have ways to stop that from happening?
He establishes control by instituting new forms to fill out, taking our access away from various reports and databases that we had always had free access to, and instituting ridiculous policies that basically say we have to notify him in writing before we do many of the things we always used to do as a matter of course, stupid things like sending out notifications etc. He also told us with a straight face that we should not talk to any of the people in any of the other IT groups, if we needed to discuss anything with them we should tell him, he will tell their manager, they will reply to their manager, their manager will tell him, he will tell us. Everyone has ignored that one so far.
Yes the activities are outside of normal work hours and so far I have pleaded schedule conflicts.
He whispers to other people. Like the day he asked someone from another dept to work on my project without mentioning it to me then went around and whispered the results to everyone but me. When he got to the cube next to mine I just stood up and said "Oh, is that the xxx? Let me see it..."
And when he presented my projcet to his boss and her counterpart I had to innocently wander over while they were heartily congratulating HIM and say "Oh, I'm so glad you like what *I* did..."
If your manager at the time signed the timesheets in which you took personal days, the timesheet information can't be changed. I would take that up with HR immediately. Vacation is cash, and managers aren't allowed to lightly fuck with that. If they don't give you an immediate response, tell them that you are planning on going to the state labor board, and that you will mention that the department has been violating the stated policy for years now.
In the shortterm, while you are hopefully winning that one, I would create a list of invented relatives who will tragically be dying over the next year. I would also do my very best to ensure that they die at a time that he, not you, considers to be critical. Of course, you have to go out of town to be with the family at the funeral. None of your relatives are local.
That will get your five days back in any combination you need.
No such luck, things were a lot more informal before his arrival it was scribbled somewhere which days I had been out but no official time sheets regrading whether it was personal or vacation time, he took the precaution of having an HR rep officially declare them vacation time.
I think you and the rest of the staff are doing exactly the wrong thing. You are sitting there thinking, "How can I do this job with all the paperwork?" (well, with a few unprintables)
But what you really might want to consider is wondering, "How can I make this bastard see what a lousy idea this is?"
Because once you look at it that way, the answer becomes a lot simpler. You inundate the motherfucker with paper. Fill out a separate form for every database access, report, whatever, you need to see. Put it on his desk, and then send him an email saying you've done so, and that projects x,y, and z are awaiting this next step and are on hold til then--and move on to something else.
Need something from someone in IT? Send him an email. Don't "discuss" it with him in person, because you won't have documentation. Write it all down, and the next time he asks you a status on it, say, "Oh, there's an email requesting that you talk to manager A about staffperson Z and I'm stalled until then."
Of course, you weekly send him status reports in which you explain what projects are on hold because of lack of access.
One of two things happen--he either thrives on this, does rapid turnaround and you make him very, very happy. Or he realizes that maybe some changes are needed. Either one does the job. It also gives you documentation in case you need it in proof of delays.
If this doesn't work, you do the dead relatives bit. Either way, you're getting the time. But I seriously would call the state to ask if that is kosher if HR doesn't give you the right response.
But this:
Like the day he asked someone from another dept to work on my project without mentioning it to me then went around and whispered the results to everyone but me.
worries me, because then you're getting into "boss actively bad for the career" area. Did you ask him why he did that?
Oh, and the reason I want to talk to people in other groups is to make allies and transfer. Now instead of discussing specific cases I chit chat and discuss general situations.
Race,
I don't know how dealings are in your industry, but here's how I would have handled it.
We'll call the bitch Z.
Z,
Hey, I just heard that you met with X and Y on the Hoohaw issue. Didn't we say that we were going to meet on that together in our discussion on [fill in date]. I've been holding off meeting with them because of that discussion. I don't know how this wire crossing occurred, but since I really got hosed on this one, I'm going to document our meetings in email after the fact to ensure we have the same understanding of things.
In the meantime, could you let me know how that meeting went?
An email like this allows her to save face, but your promise to document in the future also slaps and puts on notice. It gives your manager the information she needs as well.
In general, try not to get huffy and pointed in work related dispute with a co-worker, no matter how justified. And particularly not with women co-workers. Document, and either be extremely pleasant while you're demonstrating how they fucked up, or go on the aggressive and rip their fucking head off. But try to avoid anything in between.
As for your manager, once the layoffs have been announced (but not before), I'd go to her and tell her that you really didn't appreciate what happened. Accept some small part of the responsibility (something like, "I should not have relied on someone else in something this critical, and I apologize" will be a nice backhanded slam at coworker), but say that you'd really rather she call you in privately if she has a problem with your performance.
It is also possible that your manager is feeling stressed because of the layoffs and blew up when she otherwise might have behaved.
The thing to remember, if possible, is that the manager is always the one to impress. A manager will almost always be more impressed with a subordinate who politely documents a misunderstanding and seeks to avoid a reoccurrence than he or she will be with someone who is pissed off at a backstabbing bitch of a co-worker. No matter how justified.
So you're not turning the other cheek. You're impressing the manager.
If you haven't responded to the co-worker yet, then I would respond with something like the email I suggest. "Gosh, Z, I'm sorry for growling at you. I must have misunderstood. In the future, I'll document our conversations and that should avoid any confusion. Could you give me any information you acquired at the meeting?" and so on. Copy the manager.
And then do it. Document every single thing you say to her, and vice versa. Better yet, avoid meetings where it's just the two of you, and do it via email.
As for my advice on "the velvet touch"--I rarely have the need for this sort of diplomacy, which is too bad, since I'm naturally good at it. My work issues involve impatience with people who are either obtuse or passive aggressive, usually. It's easier as a consultant, though.
But keep in mind that it's much easier to assess a situation like yours from the outside than react properly when it happens to you.
It reminds me of a situation I ended up in when a new management structure was installed over the top of me in a company I had been employed by for about two years. The new management arrived with a hidden agenda to terminate one third of the staff. The approach was a similar strategy of tightening increasingly irrational requirements, such as mandated overtime, daily status reporting, and required "volunteer" activites designed to identify team players.
If she doesn't like the manager, the feeling is probably mutual, and there is probably not much she can do about it. Her job perfomance will be considered unsatisfactory no matter what evidence she documents to the contrary.
Of course, my experience was in a software shop with about 800 employees. Other work enviornments may have more stable management infrastructure that employees can rely on in disputes. My experience showed me it is ultimately impossible to satisfy the job requirements a manager who dislikes you.
The woman I was working for finally went as far as falsifying project estimates and completion dates on status reports, and whispering to colleges in the ladies room that I had threatened to physically assault her.
I agree that this is always a risk with a manager, that's what I meant about putting the career at risk. I can't tell yet if Debby is at risk, but it's certainly a concern.
Debby,
I think the bonding is a great idea, but I would still flood him with paper. (g)
And to you, and to racehorse, I offer the following article: Tech employment keeps growing
Despite the massive layoffs and many high-profile bankruptcies, high-tech employment actually increased 4.6 percent in 2000, with manufacturing adding 18,000 jobs and computer software and services adding 145,900 new jobs, according to a report released Wednesday by the American Electronics Association.
"I left the practice because I could no longer tolerate the emphasis on adversarial relationships and competition both on behalf of clients and within firms. The clients and their priorities seemed to get lost in all the games lawyers play. In short, I left because I did not want to be around lawyers anymore (at least most of them)…” CUA Lawyer Spring 2001
At least 100 times. But the quote in the Catholic U Alumni mag is from Deborah Laurence ‘87
This was brought home in spades when, I agreed to help a friend and his partner with a recalitrant tenant in a commerical lease dispute.
The other side retained a 400 lawyer national firm that I used to work for and with whom I have had a 20 year professional relationship.
On this side, me, my computer and a legal support staff consisting of Sonny, my cat.
Bluffing my way through thus far, I have finally been able to coax a settlement proposal from the defendants (opposing firm nothing if not professional) but boy I really don't like this shit. Didn't quite appreciate just how much until now.
There is a very unpleasant woman whom I have to work with. But lately, I've been working in an area where I have no direct contact with her. Yesterday, I began working in a different area, where all the work that I finish there goes to her.
My usual mode of operation is to do several banks at once, then take them over to her. The guy who works in the sorter room brings the work to me and puts it on a cart that's right behind my desk. She decides that she's unhappy with the way I don't bring things over one at a time to her, so instead of talking to me about it and asking me to bring stuff more frequently, she takes my cart away.
I feel silly describing this all, because it's about a stupid cart, but anyhow. I noticed she'd moved it after a while, and so I went over and asked her if there was a reason that it was moved. She said that since I wasn't going to bring stuff over one at a time, I was going to have to go over there to get it.
I was highly irritated at this point, and couldn't think of anything to say, so I went back to my desk and thought about it. Then I remembered the conversation about trying to make someone miserable at work, so I focused my efforts into how I could make her miserable! I decided that the best way would be to go talk about it with my boss, because she prides herself on being perfect, and this was most definitely not an example of perfect behavior.
My boss was understanding, especially as I made a point to say that I didn't mind changing some habits to make things run more smoothly, but that I wasn't going to put up with childish games. Then he went and got my cart back.
But now, I have some good responses in mind for next time she pulls something like this. It makes me so mad when I just get irritated but can't think of anything to say!
But, I like tech and I want to make money at what I do.
Wow, good call on talking to the boss. "I'm having a problem with conflicting work habits and am not sure how to work it out. Maybe you can help?" So much better than getting into a snit fight with her, and as you say, you've embarrassed her while doing something entirely legitimate in taking it to your boss!
I have not lived in vain.
Race,
How is the hunt going? Tell your husband that there is no such thing as security, really.
The hunt will resume tomorrow or the next day. We are doing some home improvements and assembling IKEA furniture for the baby's room. My husband hates assembling furniture, I'm a whiz at it.
I could run a small business assembling furniture.
The only IKEA is in Emeryville, I think, which is too far to go for furniture.
I think you'd be good at any small business, race, and probably make it big in the long run.
As far as not for profit being more secure--eh. Everyone has to have cuts sometime. I think it's best to count on cutbacks and rely on your ability to get a job and get paid enough that the occasional shock won't matter.
We have tracking software for my web site--based on information about peak viewing hours, we're going to adjust our impression pattern.
Did you get the severance situation worked out?
Severance should be resolved this week or next.
We have an html-format cover letter that is sent out to anyone posting a job with the key words "marketing" "public relations" "PR" or "communication." Each sent cover letter is an impression--it's just a marketing technique.
We were averaging a couple hundred a day, but will be able to push that number up pretty easily. We'll probably start sending them in afternoon and evening shifts, leaving the morning to the previous day's responses.
The software tells us peak hours for page views, and which pages are visited. It was only $60 or so, and it's tax deductible.
DUH!
I can understand the depression and the blow to one's pride to have to take a lower paying job with no prestige, but this just smacks of "poor me". If you want to work you will. If you have no skills other than how to rig up a computer network then you planned badly for your life and you need to get a move on now.
Jaysus.
You're a heartless bitch, of course. Here's another hearttugging tale about a poor graphic artist who was lured to the dark side.
The job market is slower, but the common element (assuming these people are really out on the streets) is probably lack of resources. Which is what I would advise everyone to be packing away right now--enough money to go a good long time without work.
I'm particularly irked because my former boss was recently fired----less than six weeks ago----and they're already struggling for money. They have no savings, bad credit and continue to spend money as if they're making it.
This is a guy who's been making $150K for the last five years with bi-annual bonuses of $10K. The company has paid for all of their internet connections----4 ISDN lines and more than half of their computer equipment (not that the company knows this).
I don't have any sympathy for anyone who just won't get a job but continues to moan and groan and say "poor me" as if somebody else made these choices for them. Like somebody owes him a certain standard of living or prestige.
Hell, I'm just jealous that I can't command that kind of money. You can bet your bippy I'd have something to show for it.
The Millionaire Next Door--which, for all its moralizing, is still worth checking out--makes a decent case that high income professionals are prone to focusing far more on income than on net worth.
He's got about $2000 in bills more than me a month---that includes his rent.
My advice is to get a cheaper apartment, trade the gas-guzzling Suburban and Jaguar in for Toyotas or Hondas, tell your gir