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I Wanna Hold Your Hand: First Time Homebuyers

I Wanna Hold Your Hand: First Time Homebuyers

The Empowerment of Owning Your Own Home

Purchasing a home is one of the most powerful and terrifying events of a person’s life. It is a challenge, but once this challenge is met with strategic planning, knowledge and excitement it becomes an investment. One that will change your financial future and bring more return than you ever imagined. The first step is finding a real estate agent with integrity and experience. The perfect agent will be one who fosters trust, believes in buyer education and offers emotional support. Over time seasoned buyers come to view these agents as partners in locating and analyzing the best investments available.

Don’t Be Afraid of Cold Feet

A first time buyer should expect to feel an initial wave of buyer’s remorse. There is always a moment of panic or doubt right after the first offer is made. Don’t hesitate to ask your real estate agent questions and to communicate your fears. The agent is there to explain each step of the transaction and to interpret local and state laws. Remember that buying a home is a long-term investment. Most properties increase in value and if the purchase is planned well you will have more money in the end. Let the real estate agent know your plans for the future. Is there a chance you will rent the property later? Do you plan to live in the house for less than five years or more than ten? Think clearly and consider all the possibilities. If you are buying an older home be realistic. Prepare for repairs and hard work. Expect to make changes and improvements that will increase the return on your investment.

Building a Foundation For a Better Life

The benefits of ownership can change the financial profitability and personal outlook of one’s life. The power of purchasing property creates a refreshed sense of security and freedom. The tangible pay off of seeing your money in action creates confidence and pride. Renting takes only the present moment into account, buying allows you to invest in your own future. Unlike unpredictable rental fees, mortgage payments are stable or increase gradually. A mortgage payment increases your credit score and opens doors to other investment opportunities. A successful purchase allows you to personalize your living space, which gives you the motivation to stay on top of your investments. Take a look at your neighborhood and become more inspired, more proactive. Build the perfect atmosphere and home and look forward to an even more exciting return on your investment.

Tax Incentives Make Buying The Better Choice

Buying a home allows you to build equity and have huge tax breaks. Mortgage interest and annual local and state property taxes are deductible. Since the first few years of mortgage payments are mainly interest, and therefore deductible, the savings is amazing. Up to $100, 000 interest on home equity loans can also be deducted. Loans and interest on loans used to improve a home with the intention of renting can be deducted, as well as, mortgage interest on second homes if you rent them. Capital improvements made to increase the value of a home can be recorded and reduce the capital gains. To explore all of the tax advantages of purchasing and owning a home remember to consult a professional in your area. The joy and accomplishment of ownership are waiting for you!

Elaine VonCannon

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Who’s Reading Your Resume?

Who’s Reading Your Resume?

It seems that everyone is an expert when it comes to resume writing. If you show your resume to ten different people, you will get ten totally different opinions. What is a job seeker to do when there are so many conflicting ideas when it comes to resume etiquette? Who should you write the resume for? Computer software? The screener? The recruiter? The decision maker? The answer is yes to all four. Your resume needs to take into consideration the nuances of all potential readers, including computer software.

This is precisely the reason why most jobseekers are confused when it comes to writing their own resumes. Below is a rundown of all resume readers and how to appeal to them.

COMPUTER SCANNING SYSTEM

Most resumes today aren’t read by human eyes, but rather a scanning system. This is how it works: a clerk at the hiring organization receives resumes and his/her job is to scan them into the computer. When a position becomes available, the clerk goes into the computer system and keys in buzzwords. The resumes that are retrieved by the computer are the candidates that are called in for interviews.

How to appeal to computer software: Your resume should be keyword-rich. This will increase the chances your resume will be retrieved.

RECRUITERS

Recruiters search for candidates who meet specific requirements their client (the hiring organization) sets forth. Although the recruiter works for the hiring organization, the reality is that he or she wants to close the deal and will go to bat for you if you meet or exceed the requirements.

The advantage of teaming with a recruiter is that he or she will be able to provide you with insider information. In some cases, they will know specific interview questions you can expect. This type of information is invaluable.

How to appeal to recruiters: If a recruiter has a specific job in mind for you and makes resume recommendations, listen to and follow their suggestions. Once a recruiter is satisfied with your resume, he or she will submit it and act as your voice and job search partner.

SCREENERS

A screener is someone who doesn’t have a full understanding of the inner workings of the position. They work from a checklist of requirements that have been provided by the decision maker and the job description at hand. Screeners won’t have much room to negotiate and will only approve you to the next stage if you meet the criteria set by the hiring manager.

How to appeal to screeners: If you know you are going to deal with a screener, study job descriptions and draw parallels from your experience. You must connect all the dots for them since they don’t have a basis for making assumptions regarding your qualifications.

DECISION MAKERS

Decision makers have the most flexibility when it comes to experience and bending their own rules, because they are in control. This is the reason why most career professionals suggest you apply directly to decision makers.

How to appeal to decision makers: Base your resume on accomplishments. Decision makers want to see what you can bring to the table.

Resume writing is much more than being able to put sentences together, but it isn’t impossible to incorporate the needs of all readers. And by integrating the requirements of all the resume reviewers, you will make the resume stronger.

Linda Matias

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Are You Taking Care of Business?

Are You Taking Care of Business?

Too often, when we say we are “taking care of business”, we think about the paperwork, the accounting, the inventory, etc… the trivial things that are important to get done in order for our business to run smoothly and efficiently. While necessary, they are not the most important.

We need to change our thinking about what “taking care of business” means. We need to make sales in order to have a profitable business, and we know without our customers or consultants, we don’t have a business. They are our lifeblood, they are what keeps us moving forward, and meeting their needs should be our primary mission.

Without consultants or customers, there are no sales. Without sales, there is no revenue… without revenue, there is no business and we might as well go back and get a j.o.b. It is crucial that we take care of our customers and consultants. CRM (customer-relationship management) is a buzz-word in “big business”. Many large corporations have implemented systems and technology to supposedly create customer care. Some have been successful, many have not.

Most of these systems simply give the illusion of customer care, but have failed miserably in actually providing it.

How many times have you been through the “round robin” of “press 1 for this” and “press 2 for that”, only to spend an hour or more and never actually speak to a live person or get your problem solved? You hang up in the phone in frustration and vow never to spend money with XYZ Company again. This approach to customer care continues to baffle me as to why large companies believe this is effective. How can they possibly think that customer relationships can be created and nurtured by a recording?

Are those who make these decisions that far removed up the “corporate ladder” they can’t see this isn’t customer care at all and having the opposite effect?

Each and every one of our customers and consultants should be made to feel like they are our most important one. If we don’t take care of them, someone or some other company will. Small and home businesses have an incredible opportunity to take back customer care and relationships the way it is supposed to be. We are in an incredible position to “take care of business”.

Technology is wonderful. Without technology, there would be no internet and many of us would not be in business. However, there is no technology on this earth that can replace human connections. Technology will never replace our customers knowing that there is someone who truly cares about their needs.

So, how about you? Are you taking care of business?

Patty Gale

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The 5 Secrets to Getting Out of Debt Fast

The 5 Secrets to Getting Out of Debt Fast

As they stare down at a teetering pile of bills, so many consumers wonder how they racked up such a large debt. The answer boils down to simple mathematics.

“On a basic, fundamental level, the problem is created by spending more than you make,” says Brad Stroh, co-CEO of the San Mateo, California-based Freedom Financial Network, LLC, a company that specializes in debt resolution services.

The reasons for doing so, he notes, are varied:

• Spending addictions

• Lack of budgeting (mistaking the amount of money coming in and going out)

• Loss of income (reduced hours, layoffs, forced to leave the workforce)

• Increased costs (health-related expenses, fuel and other basic living expenses)

• A personal hardship (divorce, medical illness, loss of a loved one or other major changes in a person’s life)

You can, however, get out of debt—but it takes commitment. Here are 5 steps to accomplishing your goal.

1. Start Planning—and Saving

“The only way to guarantee solid financial footing is through proper planning—and that’s where most consumers go wrong,” Stroh says. “Proper planning means monthly budgeting of cash flow, combined with saving for long-term security.”

Stroh recommends saving at least 5% of your income to ensure long-term financial security.

“Of course, this percent will vary by age group and the individual’s financial goals and objectives,” he says. “Younger people can expect to spend their early years saving less of their income, paying off student loans and debts incurred during periods of lower income. Older individuals should be planning for retirement and saving a larger share of income.”

2. Seek Professional Help

If you are facing financial hardship, do not procrastinate when it comes to seeking professional advice.

“People often wait too long,” Stroh says. “If someone is living paycheck to paycheck, is behind on any revolving financial obligations (including credit cards), is using credit cards to pay for necessities, or is facing collection, he should consider getting immediate advice from a professional debt management firm or financial advisor.”

3. Stop Spending

If you continue to spend money, despite your ever-growing debt, you likely have a bona fide addiction that requires psychological intervention.

“Debt problems are frequently symptomatic of more fundamental personal issues, such as reticence to address difficult financial problems,” Stroh says. “Spending addictions can have many causes, including lack of personal confidence and fulfillment. Similar to many other addictions, a spending addiction can fill a void in an individual’s life—albeit with a fleeting source of satisfaction. People with spending addictions constantly strive for the ‘high’ that they receive from buying clothes, cars and other goods. This leads to a long-term problem when they cannot meet the consequent financial turmoil that comes when the bills arrive. For anyone who may think he has a serious spending addiction, we advise seeking professional counseling or therapy to resolve the fundamental sources of this addiction.”

4. Start Communicating

If you’re like many consumers with outstanding debts, the last person you think about speaking with is the creditor—the company you’ve been avoiding at all costs.

“Not contacting your debt creditors to discuss and develop a plan for paying, settling or reducing the principal amount and/or interest on the debt” is one of the worst mistakes you can make, says financial expert Ivan Gelfand, president and CEO of Pepper Pike, Ohio-based Ivan Gelfand, Inc., and author of “Your Money, Your Future” (to be published in April).

He also recommends contacting relatives or friends for temporary assistance in reducing debt and making payments, which will lower your outstanding debts’ interest rate.

5. Conquer Denial—Today!

Many consumers who recognize—and even accept the fact—that they have a spending addiction refuse to address their problems, according to Stroh.

“Budgeting is not fun,” he says, “but dealing with creditors is even less fun. Many people will therefore bury their heads in the sand, hoping their problems will go away. Unfortunately, outside of winning the lottery or getting a windfall inheritance from a long-lost uncle, budgeting and consulting with a professional counselor are the only ways to successfully resolve financial problems.”

Rob Sallay

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Understanding And Improving Your Credit Rating

Understanding And Improving Your Credit Rating

“No man’s credit is as good as his money.” E.W. Howe, American journalist, novelist 1853-1937

The American economy is based on credit. If you don’t have at least an average credit rating, you will find that getting approved for any type of loan, or credit card, will be very difficult - if not impossible. As the nation’s economy worsens, the money supply becomes tighter. A major factor looming on the horizon is the growth in the national debt. At this moment, the country’s deficit is approaching a staggering four trillion dollars! That means something like twenty cents out of every dollar spent by the Federal Government goes toward paying off interest on money borrowed!

You may be asking what does that have to do with you obtaining credit? Everything! There is only so much money to go around. A common misconception is any government running short of cash can simply crank out more by running the printing presses late into the night. Wrong! It doesn’t work that way. The government, just like a business or individual, has to go out and obtain funds whenever revenues from taxes and the sale of treasury notes fall short of expenses. That’s the easy part. Who wouldn’t loan money to Uncle Sam? The hard part is the taxpayer has to pay the money back! The bigger the deficit becomes, the more money the government borrows. That takes money away from the private sector. Of course, that hurts the overall economy, and makes less money available for individuals and businesses. It’s a vicious cycle that feeds on itself.

This is a short, but important report. lt contains valuable information. Read it carefully, and you will have a better understanding of how applicants are rated, and what you can do to improve your credit rating. The “Credit Scoring System” is a nothing more than a numbers game. Most creditors use something like it to rate applicants Like most games, the more “points” you score, the better you do. So get out a pencil and paper and we will take a closer look at a typical system:

The first factor you can’t do anything about: Your Age. Yes, you could lie, but don’t. With all the interlocking computer systems in use today, somebody, somewhere, probably has the true story. While it’s only one element, if a creditor catches you in a lie, even if it’s just about your age, they aren’t going to trust the rest of the information you provide either, and you will probably not get the loan.

Under 21? Score zero points. 24 to 64 years of age give yourself one point. Over 65? Zero points.

The next question is your marital status. Unmarried, sorry pal most creditor’s think you’re a higher risk, no points for you What’s that? You are married? Give yourself one point. Most creditors don’t care if you divorced. If you are, and not remarried give yourself zero points.

Next question: How many dependents: Unlike Uncle Sam who gives you bigger deductions as your family grow in size, creditors think differently. No dependents? Score zero. One to three dependents? Score one point. More than three dependents? Score zero. The thinking is, if you don’t have any dependents you have no attachments, you could skip town, not pay off that loan. You have up to three mouths to feed, chances are good you can’t pull up stakes and run away. More then three, you could get in debt over your head so you become a poorer risk again, but for a different reason.

Where do you live? In a trailer park, motor home, with parents, relatives, friends? Wrong answer. Same reasons as previous question. You could run, and not pay off the loan. You got to put down some roots. Score yourself zero points. Rent an apartment? Give yourself one point. Own a home with a big fat mortgage? Good for you. Score three big ones! Why? Somebody already checked you out pretty good for you to get that mortgage, so you’re probably a pretty good risk. Own your home free and clear? Even better. Give yourself four points. You already established you can take on a sizable debt and pay it off, so you get a bonus point.

Previous Residence? Zero to five years, some creditors only go to three years. Then score zero points. You move around too much! Over five years? Good. Score one point.

Years on Job? The longer the better. Less then one year at present employer? Sorry, no points for you! One to three years? Give yourself one point. Four to six years is worth two points. Over seven years at the same company score three points.

What kind of Job? Unskilled? You still get one point. At least you have a job! Skilled? Two points. Professional? Three points. The creditor decides the classification. Use common sense, when scoring yourself.

Monthly Income? Should be obvious, the more the better! Under $800 a month earns you one point. Up to $1,000 gives you two points. Pull down $1,500 gives you three points. Over $1,800 gets four points. This score can vary quite a bit with different creditors. Depends on part of the country you live in, type of job, many other factors.

How deep are you presently in debt? Nothing to $300 per month earns you two points. $301 to $500 gives you one point. Anything over $500 in most cases earns you no points.

Previous Credit History: Very important to all creditors. It’s your track record and is a good indicator of how you should pay off debt in the future. All creditors belong to at least one credit reporting agency. Information is shared. If you have a good credit history with the company you’re seeking the loan from, all the better. Of course they believe their own information more then somebody else’s. So if you paid off a loan with them with no problems, most give you four to five points. Good record with other creditors should earn you two to three points.

Other Information: Having a saving and or checking account with a balance over $500 helps, if it’s not something you just opened a few weeks ago. Should have been at least a couple years to do you any good. Most creditors give you a couple points. Phone in your name? gets you another two points.

OK now ad up your score. Remember the more points you score the better credit risk you are. Most creditors have a cut-off around eighteen points. Some will go as low as fifteen points, other higher then twenty. Again, it depends on availability of funds and built-in bias of the creditor that you applied to. If turned down try somebody else!

A few points away from the cut off? Well, you may be able to cheat a little. Not recommended, but if you’re only a couple points away you may get your employer to say you worked longer then you have, or that you earn a little more then you do. If you don’t rent or have a mortgage try an improve this situation to earn more points. Also consider building up your credit record by getting a secured loan. You will be usually issued a credit card as well. Not every bank provides this service, but a surprising number do. The only catch is of course you can’t touch the money in the account, and if you don’t pay off your credit card balance in full each month you will rack up quite a bit of interest charges on top of whatever you charge with the credit card. Secured loans are not based on credit history because you put up funds equal to the loan. It’s a safe deal for the bank and can help improve your credit rating. The catch is it takes time to build up your credit rating.

Another method is to open a regular savings account and deposit $200-$500. Leave it there 30 to 60 days, then get a loan on the account. Pay the loan off before the due date. Withdraw part or all of the money. Open another account at some other bank. Repeat the process over and over. Your local credit bureau will get good reports on you, and before you know it, your mail box will be stuffed with offers for free credit cards - no more secured accounts, and you should have an easier time of obtaining credit. If all else fails, try to get a smaller loan, or see if someone is willing to co-sign.

ReliefLoans.com

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5 Ways To Reduce Bill Payment Anxiety

5 Ways To Reduce Bill Payment Anxiety

One repeated source of financial stress and anxiety for many people is the monthly payment of their bills. A friend of mine refers to his monthly dilemma as having too much month at the end of his money. I also know couples that refer to bill paying days as “fight night” because of the tension and strain it can add to a relationship. As it turns out, most of the anxiety associated with paying your bills is primarily a result of being reactive instead of prepared for your incoming bills. Developing a process or system to organize and pay your bills can actually be pretty simple if you’re realistic about what you hope to accomplish and allow yourself the appropriate time to get comfortable using your new approach. Here are five ways to help you better manage your monthly bills:

1) “Location, Location. Location:”

Identify a specific place in the house where all financial related papers will be located. Ideally you’ll want to purchase a file box or cabinet, but if finances are tight and you’re just looking for a starting point, a kitchen drawer, folder, or shoebox will work for now. Remember, just as the rule goes in real estate, location is a critical factor so make sure you choose a location that is accessible and close to where you open your mail.

2) Use Your Scout Training:

Be prepared! The famous motto of the Boys and Girls Scouts of America is a great way to combat bill anxiety. Have return labels, stamps, envelopes, a letter opener, calculator, and any other bill paying essentials available and ready for use.

3) Practice Makes Perfect

Develop a daily routine for opening mail at or near the area you designated to store your financial papers and supplies. When you open your mail remove the clutter that often comes with your bills and just keep the bill and return envelope. Then group your bills based on due dates. After using your approach for a couple weeks, review your progress and make adjustments as necessary.

4) K.I.S.S.

You’re probably familiar with this acronym and for the purpose of better managing your bills, consider this simple twist – Keep It Simple %26 Specific. Establish regular days and times to pay your bills. Consider identifying 3 to 4 days per month that you can designate to sit down and pay your bills. Try the 5th, 15th, and 25th to start.

5) Extra Credit:

When you sit down to pay your bills, take a moment to review your records for any discrepancies or fraud. Develop a list of your regular bills that will allow you to record your payment amounts, payment date, payment type, and any follow up that may be necessary. After paying a bill, write on the invoice the date you wrote the check and the check number used. Also include account numbers on your check

It’s important to remember that developing methods to reduce financial stress and anxiety is simple and inexpensive way to feel better about your financial future. It’s a sign of financial maturity and a key ingredient in the quest for true financial success.

You can learn more about Robert Laura’s real life financial solutions and bill organizer at www.financialkarma.com

Robert S. Laura

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The advantages of consumer credit counseling

The advantages of consumer credit counseling

Many individuals have been helped by consumer credit counseling to take control of their finances and to eliminate debt. Consumer credit counseling can work for you by teaching money management skills which can help you throughout your lifetime.

Consumer credit counseling can help you better understand your credit situation. It can help you understand the costs associated with misusing a credit card and make you a more informed consumer.

Consumer credit counseling is especially useful for people suffering from huge debt burdens. They can benefit from consumer credit counseling as it can help them find a way out of their present financial crisis. If you have a weak credit history and low credit ratings, consumer credit counseling can show you ways to repair your credit.

By making an appointment with a credit counseling agent, you can get all of these advantages and find out what more the agent can do for you.

Many debt management companies provide consumer credit counseling agents to advise and help individuals find a way out of debt. Debt management agencies help you reduce and consolidate your loans by negotiating with your creditors. Their credit counselors are the ones that teach their clients better ways of avoiding debt in the future and to find ways to saving money to pay back their current debts.

When selecting a debt management company, be sure that they have qualified credit counseling personnel.

Their teams of expert and experienced credit counselors, who have wide knowledge in the finance field, can help the layperson better understand their credit situation and how to improve their financial standing.

The consumer credit counseling agent will first understand the situation you are in. Then they will formulate ways in which you can save more money, become debt free and start on your way towards financial freedom.

These are just some of the things consumer credit counseling services can do for you:

• They can teach you how to better manage your household expenses.
• They can help you deal with harassing collectors.
• They can teach you understand relevant financial issues surrounding your credit.
• They can advise you on how to reduce your debt burden.
• They can help you avoid situations where you may have to declare bankruptcy.

The counselors can work with you to create financial plans such as a savings and budget plan, and help you find ways to sticking to them. Comprehensive plans can lead you to better manage your cash inflows and outflows.

Taking some time for consumer credit counseling can help you get rid of your debt problems and start you on your way to a secure financial future.

Jakob Jelling

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Drop Ship Your Way to Wealth

Drop Ship Your Way to Wealth

Your customer sees a marvelous array of products on your website. After thoughtful consideration, she purchases the product she wants. Amazingly, you have never actually seen the product. That is because your supplier shipped the order directly to her.

1. Problems With Stocking Inventory

After deciding what products you will sell, you are immediately faced with many challenges.

First: “To stock my products, will I need to rent store or warehouse space? I was hoping to sell by Internet, mail order, or export, but I don`t have much storage space for inventory at home.”

Second: “Will the supplier even deal with me if I don`t have a retail location? I was counting on keeping my overhead down by operating from home.”

Third: “I know that many manufacturers and distributors have a minimum order, sometimes in the thousands of dollars. I don`t have that kind of money!”

Fourth: “Even if I did have the money, why should I tie it up in inventory? How do I know if the product will even sell?”

Fifth: “I guess I will have to add extra insurance coverage for my inventory. Maybe I better upgrade my security system while I`m at it.”

Sixth: “The shipping charges are going to kill me. First, I have to pay to get the goods here (freight-in). Then, I have to pay to ship the goods out to my customers (freight-out).”

Seventh: “If I expand and hire employees, how will I control the inventory? How will I know if my employees are stealing from me?”

Eighth: “How much time and money am I going to spend packaging and fulfilling orders?”

These problems can be reduced or eliminated by drop shipping.

2. Drop Shipping to the Rescue

Drop shipping is a method of selling products without stocking inventory yourself. You don`t need to stock inventory, because you only order an item when a customer requests it.

With drop shipping, when you make a sale you contact the manufacturer or authorized distributor and make arrangements to pay for the order at your wholesale cost. Your distributor then ships the product to the customer with your invoice and shipping label.

For example, let`s assume that you have just sold a product to a customer for $100.00 plus shipping charges of $15.00. Having received the customer`s payment, you now need to fax or otherwise send your order to your drop ship supplier. You will need to pay your supplier, by credit card or other means, your cost of $50.00 plus $15.00 shipping. This leaves you a $50.00 gross profit. Your supplier will now ship the product to your customer.

With this arrangement of not having to stock inventory yourself, there are many advantages.

You eliminate the high costs of holding inventory. There is no need for you to rent expensive storage space, finance high minimum orders, get stuck with goods that don`t sell, or pay other expenses associated with maintaining inventory.

Indirectly, you do pay inventory costs. Your drop ship supplier must maintain his inventory and pay all associated costs, including freight-in, storage space, insurance, accounting, shrinkage, and so on. To make a profit, he must pass these costs on to you.

The real advantage to this drop shipping arrangement lies in keeping your costs variable. Instead of being stuck with these expenses up front, whether you sell or not, you pay only when you make a sale.

3. Profit From Drop Shipping

Many legitimate drop ship suppliers may not require you to have a retail location, but they will want to see evidence that you are in business. They may require you to produce a resale license or retail sales tax permit.

To be sure, there are pitfalls to watch out for in drop shipping. For example, some suppliers claim to sell at wholesale prices but are actually selling closer to retail. Also, margins are very slim in some competitive areas, such as electronics. However, with proper research and information, you should be able to avoid these problems.

Whether from your home, retail store, directly from your website or through an online auction, you can arrange to sell an item before you purchase it. That way you have nothing invested in inventory and won`t get stuck with stock that won`t sell.

Rather than financing and stocking inventory yourself, consider drop shipping your way to wealth.

For more information about drop shipping, visit http://www.yenommarketinginc.com/dropship.html

J. Stephen Pope

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Stock Market Diversification

Stock Market Diversification

In one of my previous articles (Investing in the stock market -9 powerful tips), tip number one was:

1. Do not spread your money too thin.

My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual funds is 27 too many collecting load fees, management fees, commission fees, operating and advertising fees. Diversity is important, but just as important is over-diversification. Also, in my opinion, $200,000 should not be put into more than 12 stocks, let alone 27 different Mutual funds.

If I may, I would like to explain where I’m coming from by stating that tip.

On October 16, 1990 the Royal Swedish Academy of Sciences awarded 3 men each a third of the Nobel Peace Prize for their work in the theory of financial economics – Harry Markowitz, Merton Miller and William Sharpe.

Harry Markowitz’s work involved the theory of portfolio choice. (This in layman’s terms was the introduction of a diversified portfolio to help offset the uncertainty and risk of investing in the stock market. Harry Markowitz has been labeled the ‘Father of Diversification’.

William Sharpe used Markowitz’s model from an individual investment theory to a market analysis theory based on price formation for financial assets. This formulation is called Capital Asset Pricing Model (CAPM). From what I understand about this model is that it places a “beta value” on a share, the higher the beta value, the higher the risk. By knowing the ‘beta value’ of each stock in a portfolio, the portfolio can be adjusted to either involve more or less risk.

Merton Miller’s work involved dividends supplied by companies to a shareholder and its effect on stock market value and the effects of taxes. Miller’s theorems are used for theoretical and empirical analysis in corporate finance.

Markowitz received his award for an essay published in 1952, “Portfolio Selection” and for his book in 1959, Portfolio Selection: Efficient Diversification.

Harry Markowitz, in his Nobel lecture given in 1990 says: “an investor who knew the future returns of a security with certainty would invest in only one security, namely the one with the highest future return’.

Nowhere could I find that an investor should own 27 different mutual funds.

For more excerpts from the book ‘The Stockopoly Plan’ please visit http://www.thestockopolyplan.com

Charles M O’Melia

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Calling a Time Out on Sports and War Metaphors

Calling a Time Out on Sports and War Metaphors

Changing the rules in the middle of the game, moving the goalposts, two-minute drill, no harm/no foul, franchise player, lay up, knockout blow, on the ropes, quarterback, the best defense is a good offense, three-pointer, at the buzzer, brush back pitch, hole in one, skating to the puck, ground game, blocking and tackling. Lay siege, barrage, trench warfare, sniper, collateral damage, surgical strike, campaign, carpet bombing, shot across the bow, frontal attack, unconditional surrender, guerilla warfare.

How many of these terms or catch-phrases have you seen or heard or read in presentations, meetings, conference calls, management books, or on motivational posters in the company break room? Enough is enough in my view. Our business culture needs to move past these and similar terms that convey conflict, and assume a predominately male sensibility. We need to develop a new lexicon that is much more inclusive and much less hostile.

For decades, there has been a working assumption in business that sports—and even war—offers a language of common understanding and also a language that supports a business culture that values winning above all and sees it as a zero sum game—our gain is necessarily someone else’s loss.

While some sports and even martial metaphors have become so ingrained in our language that everyone understands them (who doesn’t know what a “time out” is?), so much of this language is obscure to those who aren’t sports fans or military history buffs. As more women, people of color, and gays and lesbians are assuming positions of leadership in the workplace, the language of business can and I believe will change to reflect a new, more diverse and inclusive workforce.

As important as increasing the inclusiveness of language is moving past the hostility of so much of the sports and especially military language used in the workplace.

How many of you have been told to read SunTzu’s “The Art of War” as a guide to business strategy? Or “Leadership Secrets of Attila the Hun”?

The truth is that business is not a zero sum game. Yes, it’s often very competitive, but success doesn’t always have to be measured by someone else’s failure. This kind of thinking is toxic, and it is ultimately not beneficial. When people are conditioned to view competitors as the enemy, they are closed off to new ways of thinking, including partnering with competitors where it makes sense, or viewing what they do as growing the pie for everyone, rather than preventing someone else from having a slice. In most fields, there is enough business for more than one competitor to thrive and taking a broader, less combative approach may serve you better in the long run.

So when you go to work tomorrow, try to notice how often these phrases come up, or whether you are using them yourself. And when it happens, ask a few simple, evaluative questions. Would your Latino co-worker or Asian-American supervisor, or lesbian CEO understand or relate to the term? Would any of them be offended by it?

Also ask whether the term frames issues in an overly competitive, us-versus-them manner. If so, ask whether the business is really served by having such a narrow, essentially hostile and defensive view of the marketplace.

Chances are, the test will lead you toward an understanding that business needs a new metaphoric foundation. It’s a different world today, and it can be a much better one. When we reframe our language to be more inclusive and collaborative in nature, I believe that we’ll all experience a higher level of success!

%26copy; 2005

Jim Jenkins

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