“I don’t want my entire life to be defined by what I do”, they often comment. “It’s important that I spend time with my family…. doing the things outside of work will fulfill me”.

“Mmmm, yes”, I smile. “Work life balance. I’ve heard of that. But boy did you apply for the wrong job”.

Certainly I don’t discount the importance of a life outside of your job.  And there are many professions that offer a balanced existance.  But if I query my friends and business associates that have had really successful careers, the will almost without exception say that the concept of work life balance did not occur to them for at least the first twenty years of their work life.   I’ve been working hard for the last thirty years, and am now just seriously considering the concept.

There are no free rides to success.  There is a direct correlation between how hard you work and how successful you become.  That’s why it is so important to find work you love, as unfortunately successful people tend to spend more time working than with the people they love. A career is often like a savings account.  If you put maximum effort into the crucial first part of your career, you are often lucky enough at the end to actually enjoy some work  life balance.

1. Amex Savings – 1.85%.  This is one of my favorite accounts.  A great interest rate, easy to set up, nice site to navigate, from a well-known name.
2. Everbank – 1.77%.  This is a new account for me.  It was a bit time consuming to set up, but the site is quite professional and was easy to use once it was set up.
3. Ally Bank – 1.7%.  The old GMAC Bank has a fresh coat of paint.  Nice, very easy to use site, a good rate (check their CD rates too), and professional to deal with.
4. Capital One – 1.6%.  Join this through Costco’s site for the bonus and interest bonus.  A great site, easy to use, with a good Quicken download.
5. WT Bank – 1.51%.  Another new one for me.  It was a bit difficult to set up, but once done is a OK site to use and navigate.

Those are the top five, and if you need even more choices that offer slightly lower rates take a look at FNBO, Zion, HSBC, and Emigrant.  Set up your online transfers and move money for safety and return.

So of course I decided to take advantage of both talents, and while sipping his booze, I asked his opinion on the next moves for the market. Unfortunately he was not upbeat. Dennis feels that the market could linger in its current range for awhile, perhaps even rise to the 10,000 mark, but ultimately we should expect it to fall again, this time to about 7500. There is just no compelling development or earnings to justify a more optimistic position.

Dennis is more upbeat about China. He explained that the Chinese economy has grown to the point that they can now service their own untapped market, end essentially shift their diminishing export capacity to instead sell to their now more affluent Chinese population. This all makes sense to me, and I’ve personally been shifting money into China over the last few months. I’ve had good luck with the Mathews China Fund (MCHFX).

Once again my caveat where investments are concerned. The market is illogical, often insane, partially controlled by Charlatans and outright crooks, and anyone who says they can accurately predict it is a lying Weasel. Don’t blame me or Dr. O’Donnell if you sell out your portfolio and the market goes to 13,000, or the Chinese market implodes due to tainted cat food and computer viruses. Caution, patience, diversification, and common sense all make for a solid portfolio.

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).

But most of the time that is not the case.  While there are many exceptions, most people did not get to be the boss by ignoring the little things. While the boss may choose not to directly address the fairly minor good and bad actions of employees, there is a very good chance that they do notice almost everything, and these observations may ultimately be very positive or negative to your career.  A few things that I (and most bosses) consistently notice :

• When you come to work.  I have a big window in my office that looks out over the building entrance.  Often while I am on phone calls I watch as employees enter the building.  I know who is consistently late.  I also know who leaves for extended coffee breaks and long lunches, and who leaves early.  On a positive note I know who shows up on time and puts in the hours.
• Your writing and communication skills.  I notice if you write intelligent and concise emails and letters as opposed to rambling diatribes.  I notice if you have a personality and the confidence to greet me and your co-workers.  I really notice if you have charisma – as it is one of the most difficult attributes to find in business.
• Your interest level in the business.  I notice if you are a student of the business; someone who takes the extra time and effort to really learn how the company operates.  And I especially notice if after really learning the business you have thoughts and ideas about how to improve things. I notice good ideas.
• Enthusiasm.  I notice and really appreciate it if you have it.
• If you are a whiner.  Whiners easily stand out. If you focus on problems without solutions you make an impact on me – and not a positive one.
• Ambition.  I like ambitious people, especially if they are willing to do the work to achieve their ambitions.

And that is just a partial list.  Sometimes I notice silly, yet in some way very significant things. A month ago I watched as two employees walked by a sack of garbage that was in front of the building entrance.  A third employee returning from lunch stopped to pick up the garbage and discard it.  My immediate reaction was that either the first two did not respect the company or they were incredibly lazy.

My big point is that your boss probably notices the little things too, and the little things can often have a big impact on your career.

Online banks offer a fairly easy solution that will keep your money insured with reasonable rates, yet fairly accessible and easy to manage.  The concept is fairly simple.  You open up an account at an online bank, the account is linked to your checking or savings account at your current bank, and you go online to transfer money between those accounts.  The online banks have savings accounts that are currently paying around 2.5 – 2.75% – a rate many times higher than most traditional banks and money markets.  Most also offer CDs that are paying around 3% for a one year term – also much higher than most banks – and also FDIC insured.

If you have a lot of money to park just stay below the $250,000 FDIC level at each bank, and open more accounts at different banks.  Here are a few banks to consider:

• Emigrant Direct – www.emigrantdirect.com. A New York-based bank intially founded by Irish immigrants, they are currently paying 2.4% on their savings account, and 3% on a one year CD.  The site is very basic and not fancy, but the service works well once you understand how to operate it.
• HSBC – www.hsbcdirect.com. The online division of a much larger international bank, they are currently paying 2.6% on their savings account, and 2.75% on a one year CD.  A much nicer site, but I found it difficult to use when I signed up, with frequent crashes. 
• Etrade – go to www.etrade.com and click on the banking section.  The bank division of the online broker, they are paying 3.01% on their savings acccount.  They offer CDs, but the rates are not competitive.  A nice site, and I found it the easiest to use.
• Ing Direct – www.ingdirect.com. The “big orange” bank – they market heavily and you might run into a promo that pays a $25 or $50 bonus to open an account.  They currently have one running on many Netflix envelopes.  A nice site with many options, but I found it the most difficult of the above to sign up on.  In fact, for two weeks I have been trying to work with them but am still having difficulties. However, it gets good reviews from other friends that have had accounts for a long time.

The beauty of using the online banks is that if you are willing to watch their rates you can really optimize your returns while keeping your money safe.  If one is paying less, simply transfer to the highest paying account.  While not a long-term investment strategy, it’s one way to weather the current financial storm.

But then I look at the massive amounts of money we have given to companies that don’t really produce anything.  What’s your favorite AIG or Citigroup product?  Has the money the government gave to your local bank really pumped up the economy, or are they just sitting on the capital?  I have good friends that own car dealerships that would be devastated by the loss of our car companies.

So it’s a difficult dilema.

But in any case, there might be a source of funding out there we are overlooking.  In 2008 the US gave out $26 billion in foreign aid – 70% more than when Bush came into office (not including the enormous war expenses).  If we were to drop foreign aid back to the pre-Bush days (in fact – is there some way to revert everything to the pre-Bush days?), we would free up over $18 billion dollars.

A certain level of foreign aid is a necessity. I’m certainly in favor of building schools, and providing food and education, but a lot of the money goes for weapons.  We gave Israel $2.4 billion last year for weapons, and starting next year we plan to give them $30 billion over the next thirty years.  $30 billion would be enough to fulfill the car companies demands.

We gave Egypt $1.3 billion for weapons last year, and we gave the Jordanian government $163 million “just because we like them”.

Proponents of giving the money away point out the fact that American companies make a lot of the weapons, so some of the money comes back to us.  But I would rather be selling Israel Tesla electric cars than bombs, and if we built a few more schools to educate our potential enemies, perhaps we wouldn’t need so many jets to kill them.  Wouldn’t it be great to be in the business of exporting healthy technologies rather than sophisticated ways to kill people?

CEO                         Company                     Compensation

Larry Ellison                Oracle                               $193 million

Frederic Poses             Trane                                $127 million

Aubrey McClendon      Chesapeake Energy           $117 million

Angelo Mozilo             Countrywide Finance         $103 million

Howard Schultz           Starbucks                            $99 million

Nabeel Gareeb             MEMC Electronic                  $80 million

Daniel Amos               Aflac                                     $75 million

In fact, the highest paid 25 CEOs in the country all made in excess of $46 million each.  These are phenomonal numbers.  I am the CEO of a private company  – considerably smaller than any of these individuals run (though last year I am pleased to announce we were more profitable last year than several of the companies on the list of the 25 highest paid CEOs).  I founded the company, but now have investors, and those investors deserve a decent return on their money.  Accordingly I work on a reasonable base salary, and a bonus based on profitability and growth.  No profitability – no bonus.  Seems like a reasonable deal to me.

While there are certainly great companies and great CEOs on the highest paid list (and many founders that created those great companies) – many actually were at the helm of shrinking companies with little or no profit – yet they made massive amounts of money – hence the great public concern of overpaid CEOs.  Average pay exceeding forty six million dollars a year is an incredible statistic, and shareholders have every reason to be irate. I am a believer in the power and importance of the entrepreneur, and compensation based on performance. CEOs that take home tens of millions per year while driving stockholder value into the ground should be thrown out.

Of course, there are exceptions –  ”community companies” that operate efficiently, but they are almost always small, frequently family-run organizations that have made the choice for a variety of different reasons.  A high performance company must operate like a company.

In a community, everyone has their say.  Decisions are made by consensus, and the community leaders are dependent on the community members to maintain their status, so they are careful to be inclusive and not offend anyone.  Community members are typically only ejected from the community for really heinous behaviour.  Community leaders will often choose not to make the tough choices for fear of alienating the community. 

A successful business almost never operates this way.  Decisions in a business are made by Warriors or teams of Warriors and trusted advisors, and are based on what is best for the business, not what would make them the most popular with the employees.  Managing by consensus or by popularity contest does not work in a business.  Certainly a successful business should have an industry-appropriate culture that fosters talent, and encourages success and innovation, but maintaining that kind of culture also requires tough standards. Good managers understand that they can’t be friends with everyone in their department, and holding people to standards (and firing those that can’t perform) is their duty as the manager.  Otherwise they foster mediocrity, which threatens the entire company.

Communities are great places to live, but I would not want to work there.

A 777 point drop in the market is painful – perhaps devastating if you are close to retirement.  But if you have a longer horizon, and have money to invest, this is a great time to go shopping.  There is a huge sale going on right now.  Great companies trading at deep discounts for no real reason.  For those with decade or two before retirement, this will be a blip in most people’s financial memory, and the smart money will have prospered.  Take advantage of this limited-time sale.