For People Who Live Their Work

It’s a tough week to be a celebrity!  Earlier this week we lost Ed McMahon, and today Farrah Fawcett lost her battle to cancer, and Michael Jackson went into a coma and died.  And if early but unconfirmed news reports are correct , actor Jeff Goldblum was killed while filming a movie in New Zealand!

Here’s a weird new application for your cell phone; use it to lose weight.  Now if you have an iPhone you can download a free ap called “Lose It”.  With Lose It you set a weight goal, then enter in everything you eat every day.  They data base is extensive, and includes most store-bought and restaurant food, as well as fresh food.  Lose It tracks your caloric and nutritional input against your goal, and allows you to review how you are doing.  It also allows you to input a wide variety of exercises to give you a total view of your progress.

For many years diet experts have agreed that tracking your food intake is a great way to stick to a diet, but writing down food and then looking up the caloric count is too time consuming.  Lose It automates it all, and I have found it to be a great way to track how I am doing.  It also gives you a different perspective on food.  When you understand how many calories are in that cookie it is a lot easier to give up dessert.

For those of you chasing a safe haven for your spare cash that at least gives you a little return – FDIC-insured online savings accounts continue to offer considerably better rates than the local bank, though rates have been going down lately. Here is a run-down of some of the better rates in the country as of yesterday:

Zion Bank – 1.92%
Capital One (use the Costco version and get the bonus) – 1.75%
ING – 1.65%
HSBC – 1.55%
Emigrant Savings – 1.55%

Zions is a new one on my list.  I just opened an account so don’t know about the ease of use yet. Etrade fell completely out of my list as the lowered their rate to .65. Also, consider the Charles Schwab Bank.  The brokerage giant also has a bank that offers good returns on savings – 1.75% – as well as a full suite of banking services.  This week they also made accounts available for family trusts.  I love Schwab’s website and their smooth integration to Quicken, so I found this to be great news.  They also have a decent credit card.

I’m pleased to welcome back The Bizzy Life’s resident financial expert, Ray Link, with some sage financial advice about what to do with your money right now.  Of course, this assumes you have some money right now.  Unfortunately for many people, their retirement funds have now collapsed to a point that the best approach towards investing their nest egg might only involve a 6 pack and a pole dance.  But if you aren’t in complete financial ruin, read on…..

And before I forget, my special congratulations to Ray Link for recently being named Oregon “CFO Of The Year”.   Unfortunately I missed the award ceremony, which included what I heard was some pretty facinating in-depth discussions on the new GAP rules, and a special performance by the LIBOR ballroom dancers (nobody parties like accountants!).  But seriously, Ray well deserves the honor, and I wish he had been at the financial helm of many of our big banks and car companies the last few years.  We might all have money to invest!

What to Do Now.

by Ray Link

About a year now I wrote an article entitled “Why Investing in Stocks Might be a Bad Idea” where I tracked the returns of stocks compared to a simple and safe money market fund for 10 years.  The results so surprised me I felt compelled to write my article. What I did not contemplate was the historic melt-down of most all markets to come about just a few months later wreaking havoc on most American’s savings and retirement dreams.  Many people have lost so much I hear stories of people not looking at their monthly statements, or worse selling out of stocks completely and “tossing in the towel” and placing all their assets in low interest money-market funds.  So the question is what to do now?

I actually like corrections and dislocations as it gives us an opportunity to buy things cheap and to sort out winners from losers. The vast wasteland brought on by the market collapse also created great opportunities. However those great bargains were in October last year so now we have to be realists in our return expectations. One of the keys to successful investing is to not panic and over-react to a situation.

My suggestions are based on investing retirement assets as these are tax-deferred and assumes you have a long term view and are willing to take some investment risk. Assets in taxable accounts require different strategies.

For starters I like the notion espoused by the late Sir John Templeton, founder of the Templeton group of funds, that your portfolio should have an equity (stocks) exposure of no greater than 100 minus your age. So if you are 55 like me, no more than 45% of your portfolio should be in stocks or equity mutual funds. I like stocks of companies with strong balance sheets, lots of cash and market leading positions and technology stocks with strong intellectual property (patents). Some examples include Cisco, Exxon, IBM, Research in Motion (makers of Blackberry devices), Costco, GlaxoSmithKline-Kline, Zimmer Holdings (makers of joint replacements), Abbott Labs, Home Depot and General Electric. Any portfolio should include at least 10 – 15 stocks with no more than 5% of your total portfolio in any one stock. I also like to use some of the ETFs such as the QQQs which track the Nasdaq, the SPYs which track the S&P 500 or similar securities to add some diversification without the high fees of mutual funds.

Next I like to keep the non-equity portion of my portfolio in relatively straight forward instruments such as 3-5 year certificates of deposits, government bonds and very high quality corporate bonds. An interesting way to “play the market” yet retain the safety of an FDIC insured CD is through “equity-linked” CDs.  These are available through Schwab and other brokers and usually give you some percentage of the return of an index such as the S&P 500 over a period of 3-5 years, but if the index is negative, you get 100% of your money back. Imagine how your portfolio would look today if you had these as opposed to equity mutual funds? Another equity-linked play using bonds is through bonds that are convertible into stocks. These are difficult to buy and have some additional risks so I suggest using a fund such as the Vanguard Convertible Bond Fund (ticker symbol VCVSX) which is 5 star-rated by Morningstar.

So how might a $100,000 IRA portfolio look for a 55 year old planning to not need any of this money for at least 5 years?

$30,000 in 10 different high quality stocks
$15,000 in at least 3 different ETFs such as QQQ, SPY and DIA
$25,000 in CDs ranging from 3-5 years with a yield of around 3%
$10,000 – $15,000 in several equity-linked CDs
$5,000 in a convertible bond fund
$10,000 in a combination of government and corporate bonds with a maturity of no greater than 5 years.

Before you do any investing it is always best to seek the advice of an investment professional as well as you accountant, do your homework and ask a lot of questions and regularly review your portfolio.  Please note that some of the stocks and funds listed above are investments that I currently own and that I am not a registered investment advisor.

Happy investing – it’s time to get serious again and re-work that portfolio!

Ray Link is a CPA and holds an MBA from Wharton. He is EVP/CFO of FEI Company (NASDAQ: FEIC), a world leader in tools for nanotechnology. He is on the Portland State University Business Advisory Council and on the Board of Directors and Audit Committee for Cascade Microtech (NASDAQ: CSCD).

More input from the recent New York advertising conference (see last blog entry for Part One)…

The most interesting panel I observed at the BMO Thought Leaders Conference was titled “The Agency of the Future”.  CEO’s from large agencies around the country – many of them divisions of the big public agencies – layed out their vision of how advertising agencies will begin to look in the very near future.  A few bullet points from the discussion:

• Accountability in advertising will continue to be the mantra.
• To this end, there will be an increased push towards “media-led creative”, allowing actual response rates to dictate creative approach as opposed to the much more difficult to measure “brand hunch”.  (Actually, they didn’t say “brand hunch”, it is a cute term I just made up, but you get the idea.)
• This will neccessitate a change in the typical creative structure, that now usually includes a creative and art director and perhaps a writer, to include an analyst that will interpret advertising results to be implemented into creative.
• Tracking technologies will increase (see next point).

After this discussion, the next panel was called “The Race for The Digital Media Hub”, which in many ways was an extension to the “agency of the future” discussion.  Participants in this panel, many from digital agencies, discussed how the agency of the future will have a centralized tracking system that will be used to optimize all media channels.  As part of this process, and as mentioned in the earlier panel, this would involve greater interaction between creative and media, and really a fundamental shift in how agencies manage business.  The interactive-based crowd embraced this idea, but I suspect getting brand agencies to warmly greet the concept would be a little more difficult. The panelists also all agreed that performance-based media buying will become much more common, and is already common in almost every digital agency.

All this was facinating, but also a bit surreal, as the panel members seemed unaware that the agency structure and the “agency of the future” as they described already exists.  They are called Direct Response Agencies, and the good ones are media-centered and have sophisticated tracking systems to manage advertising based on performance.  Essentially everything the panelists thought would happen sometime in the future already happens right now, they just don’t seem to know it.

I felt like I worked for Toyota and was attending a conference called “the car of the future” in which participants described the “magical hybrid auto that someday will run on gas and electricity” while being totally oblivious to something called a Prius.

Ah, but I guess I should not take it personally.  Direct response agencies seldom gets the respect they deserve, but I have a feeling that is all turning around.  It feels good to be an “agency of the future” as opposed to one clinging to the past.

I’m going to digress from my usual whining about cell phones, politicians, banks, airlines, and assorted Weasels, and pass along some interesting information aimed at my friends in the advertising business.  If you have no interest in advertising, I suggest you peruse some back issues of the blog.  “How to Hire A Butler” is quite popular. If you are interested in advertising, read on….

Last week I was on a panel in New York at the BMO Capital Markets Thought Leaders conference on advertising.  There were many advertising big wigs much smarter than me pontificating on the future of the industry, and I thought I would pass along some of the more interesting thinking I heard.  First a few compelling statistics that came out:

• General Advertising is in the biggest decline since the Great Depression.
• Over the last three years advertising revenue has declined by $25 billion dollars.

Of course everyone in advertising is quite familiar with the fragmentation of media.  This business got a lot more complicated when three major networks and a few huge newspapers and magazines turned into hundreds of thousands of cable networks, streaming sites, blogs, online newsletters, and other media outlets.  But one speaker spoke of a media outlet I had not considered – the mega-retailer.  An interesting stat:

• In 1970 the most popular show on television was “All In The Family”, which drew 70% of household viewers.
• Last year the most popular show on television was “American Idol”, which drew 17%.
• Every week three time three times more people visit a WalMart store than watch American Idol.

So is the right strategy to drop advertising on American Idol and buy more space in WalMart?  Well, not necessarily, but this does speak to the transformative power of the mega retailer.  As media channels expanded at dizzying speeds, the retail market collapsed in many ways.  Hundreds of thousands of retailers were replaced huge “big boxers”, so the game was changing on multiple levels.

In-store marketing has taken a major role in the advertising world.  Consumer used to be “advertising driven” in their product choices, but now they often made decisions “in-store”.  Interesting switch.

In my next entry I will reveal the thought leaders vision on “the agency of the future”.  This was the most interesting part of the conference!

The other day the local NPR station had a debate about pending legislation in Oregon to make using a cell phone by the driver illegal while moving.  Even though I have often used my cell phone while driving, I applaud this legislation and am happy to give up the practice.  It’s not safe, and none of us should do it.  I did an informal poll the last few days of all “near misses” with automobiles, both while I was walking and driving, and virtually all were with drivers so consumed by their conversations that they forgot they were hurtling down the road in two tons of steel.  I think all of us either verbally or mentally yells “hang up and drive” at least once a day.

You would think that this basic legal nod to public safety would be embraced by almost everyone, but much to my suprise many people called to complain about the idea, reasoning that it was stripping them of their rights.  “Let them take away our right to talk on a cell phone, and the next thing you know they will pass a law against eating while driving”, shouted one caller.  Hmmm, thanks for the good idea.  I think there should be a law against having dinner while operating a motor vehicle.  I don’t want to be rear-ended at eighty miles per hour because some glutton was putting gravy on his turkey while wishing his Mom “Happy Thanksgiving” on his cell phone.

I’m a big advocate of personal freedom and keeping the government out of our lives, but if I have to pay for the right to yell at my friends while operating a motor vehicle with horrible disfigurement and death in a car accident, I’m willing to wait until I get home to make the call.  Talking on a cell phone while driving is a bad idea, and here are a few other things you should not do while driving:

• Bowl
• Arm wrestle
• Have sex (well, maybe Clinton-style, but even that is not a good idea)
• Play Wii on the auto’s DVD system
• Garden
• Sleep
• Work on your blog

Unfortunately there are a lot of people out on the job market now, and as one who has hired a lot of people over the years, here is one very simple tip; dress for success.  Unless you are wearing a tux and tails to an interview, it is hard to be overdressed.  Dressing professionally demonstrates courtesy to your prospective employer or client.

I am in the advertising business, where many would translate business attire as “a darker shade of tee shirt”.  Perhaps I am a traditionalist, but regardless of the position someone applies for, when someone interviews with me I expect them to be in real business attire, which for men includes a jacket and tie.

A couple years ago a fresh college graduate showed up for an interview in shorts and polo shirt, explaining he came to the interview from a game.  I politely refused to interview him, explaining we weren’t playing around at the company.

In my book Warriors, Workers, Whiners & Weasels I profile the legendary entrepreneur Jay Call, founder of Flying J.  Jay told me that during an interview he would closely examine the applicant’s shoes to make sure they were shined, as he found people that took pride in their shoes also took pride in their work.  Jay also liked to follow applicants to the parking lot to take a look at their cars, as he found people that kept clean cars also took pride in their work.  He didn’t care if your car or shoes were old, he just cared about how you kept them up.

I certainly don’t go to those lengths, but I must admit the concept makes a bit of sense.  And if I were in the job market right now, I would do everything I could to tip the scales in my favor.

When I was very young and the United States was deep in the Cold War, Americans were led to believe that we would probably all perish in a horrible nucleur exchange with the Soviet Union.  Ideology was more important than life, so practice your tuck and rolls and get ready.

As the world situation calmed down a bit and we all began to feel a little optimistic, along came Aids.  Initially the press told us this would be the big one.  I can remember commentators telling us that half the world would be dead within a decade. 

While Aids is certainly a scourge, when it didn’t kill most of us we needed another boogie man.  The new century became a good candidate.  When the clock hits 12:01 am in the year 2000 get ready for a global meltdown.  Computers will crash, governments will fail, stoplights will quit working, the doors to the the grocery will somehow be locked forever.  Even I ran out and bought a generator and stocked up on food. 

When the switch to the new century proved to be a non-event, the terrorist attacks of 9/11 gave our government and the press the opportunity to really scare us again.  Wild-eyed, crazy bands of Arabs were going to blow up our airplanes and shopping malls, and mail us all poison.  Nine years later we have blindly accepted this as fact, and allowed our lives to be altered with silly and demeaning security that robs us of our rights.

But now we have a litany of catastrophies to choose from that may mean the end of mankind.  If the terrrorists don’t kill us, The Swine Flu might.  Get ready to starve in the streets in our massive global financial breakdown. And no matter what, we won’t escape global warming.

I don’t know about you, but I am tired of living under a constant cloud of impending doom.  What is it about mankind that makes us embrace the bad while negating the good; our Death Wish?  Many of the above were and are situations that require the right action, but the real lesson of man is that we overcome and thrive.  We have beat global conflicts, diseases, financial meltdowns, and catastrophic environmental conditions in the past, and I think our record will continue. 

One of the lessons of Obama is the luxurious feeling of optimism.  For the first time in years, people have started to feel a little optimistic.  Proud to be humans and Americans. Optimism spurs progress. If you feel confident there will be a future, then you work to make it better.

But unfortunately optimism doesn’t sell much advertising.  Our press loves doomsday scenarios.  It glues people to the screen and gets them to buy papers, so our media is filled with angry and misinformed commentators predicting the worst.  They are “little boys that cry wolf”, but with no price to pay.  When one disaster fails to materialize, they just find another.

I plan to ignore them.  Certainly I will take the proper precautions that anyone should take, but life is better if you concentrate on all the wonderful things around us, instead of focusing on the worst that could happen.

I wish I could say that Frank Sinatra taught me how to sing, proper Rat Pack etiquette, the ideal way to mix martinnis, or the fine art of partying with starletts until the sun comes up.

But I did learn one interesting little tip from him that bizzy people might appreciate.  According to one report I read, Sinatra had six homes, and he had every house keyed alike so he only needed to carry one key with him at all times.  While this approach might lessen security a bit, it is really convenient.  I hate carrying keys.   Inevitably people acquire keys that they carry around but forget what they unlock.  It is frustrating; staring at that little piece of metal that you are tempted to throw away, but fear that someday you will really need. Keys are heavy and make a nicely cut suit look lumpy. Something I am sure Sinatra knew, as he always made a suit look great.

I don’t have six homes, but I do have more than one, and I recently took Sinatra’s advice and had them keyed alike.  Next time we have a locksmith in the office I intend to also key my office the same way.  My key ring is shrinking and at some point I look forward to owning a single key.  Opening doors Sinatra-style.