Archives For February 2010

I just found out that Harvey Mackay has just published a new book titled, Use Your Head to Get Your Foot in the Door: Job Search Secrets No One Else Will Tell You*. I love the title. If his other books are any indication, I’m sure his new book is a great one. While looking at his book on Amazon, I found the following posted by one of his reviewers. It’s Mackay’s advice for preparing for a job interview. I thought it was worth sharing:

Timing and Advance Planning

1. Scheduling–Try for the time of day you shine best.
2. Get a good night’s rest the day before.
3. Try to work out in the morning. It will help improve your alertness and relax you.
4. Create a contact sheet for each company with names, phone numbers, e-mail addresses.
5. If a recruiter is involved, have a pre-meeting huddle about positioning for the interview.
6. Review your own videos of your simulated interviews.
7. If any forms are needed, complete them neatly in advance.

Apparel and Appearance

8. Shine shoes, check fingernails.
9. Get a haircut and styling, comb.
10. Choose a suit with shirt and tie or blouse.
11. Coordinate accessories (including watch, umbrella if necessary, etc.).

Reading and Research

12. Read recent articles on the prospective company.
13. Research company Web site for their latest news and press releases.
14. Know the company’s most recent annual and quarterly sales and profits.
15. Google people you’ll be meeting for background on them.
16. Know how to pronounce names of people you will meet.
17. If possible, learn the names of the receptionist and administrative assistants.
18. If this is a second interview, review notes of past meetings.
19. Scroll through the day’s business news so you have something to talk about.
20. Create a list of good questions you will ask the interviewer.
21. Check e-mails just before leaving for any last-minute rescheduling.

Take Withs

22. Portable phone (turn off before interview) – Who calls them a “portable phone?”
23. Portfolio or business case
24. Résumé copies (at least two)
25. Business cards
26. Blank paper or notebook and pens
27. Breath mints or spray
28. Your personal calendar if a follow-up meeting is discussed

Getting There

29. Plan on being punctual and intend to arrive several minutes early.
30. Check weather report in case you need to plan on extra time.
31. Google map and either pre-drive or investigate road congestion.
32. Investigate parking practices.
33. Identify the correct building entrance.
34. Anticipate going through security and having to wear a visitor badge.

If Meeting Over a Meal

35. Eat something like a power bar or piece of fruit beforehand.
36. If possible, know the menu in advance.

Just Before Showtime

37. Do a once-over in the mirror for hair and clothing.
38. Pay attention to your posture.
39. Have a reasonable idea of appropriate, positive opening comments.
40. Put on a warm, relaxed smile.
41. Prepare for a dry, firm handshake.

Plan Follow-up Pre-Interview

42. Anticipate beforehand how and where you will debrief yourself.
43. Have stationery and postage ready for handwritten thank-you notes.
44. If a recruiter is involved, know how to reach this person after the interview for a debriefing.

Good advice. Looks like I might have to check out the book.

*Affiliate Link

Okay, for those you who like graphics (do any of you like graphics or am I just doing this for my own gratification?), here is a decade-by-decade look at the S&P 500 Total Return Index and the CPI.

I began each decade with the S&P 500 TR Index, the CPI, and the S&P 500 TR Index Real Return (minus the CPI), all indexed at 100. I then used monthly returns to perform the calculations. To get the real return for the S&P, I simply took each month’s return for the index and subtracted the CPI.

Table - S&P TR, S&P TR RR, and CPI (1960 - 1969)

The decade of the 70s saw the CPI compound at 7.33% per year while the S&P only returned 5.96% per year. Hard to build wealth that way.

Table - S&P TR, S&P TR RR, and CPI (1970 - 1979)

Table - S&P TR, S&P TR RR, and CPI (1980 - 1989)

Table - S&P TR, S&P TR RR, and CPI (1990 - 1999)

As bad as the 70s were, the first decade of the 2000s was worse. While the CPI was compounding at reasonable 2.56% per year, the S&P was losing .95% per year. Just think…those numbers even INCLUDE 2009’s stellar performance!

Table - S&P TR, S&P TR RR, and CPI (2000 - 2009)

Bottom line: Inflation matters. Even small inflation numbers can have a significant impact on long-term returns and purchasing power.

Back to Health Care…

February 23, 2010

I was reading in today’s WSJ about how Obama is pressing on with a full scale health care plan. One of the articles I read offered this explanation for why the president is against scaling back the bill:

The president explored a scaled-back approach and asked his staff to examine areas of broad political agreement, according to congressional aides involved in the process. The exercise quickly pointed to a practical problem: You could not make incremental changes that were politically popular without pursuing the whole package.

For instance, Republicans and Democrats agree they should prevent insurers from denying coverage based on pre-existing conditions. But without a mandate requiring healthy people to buy coverage, insurers would wind up with a slew of sick customers without healthy ones to balance them out. That would likely lead to either soaring premiums or a bankrupt industry.

It’s not clear whether or not health insurance providers will be able to charge more for those those with pre-existing conditions. Based on what they are talking about, I would think that would not be the case.

Personally, I think their secret goal is to either bankrupt the health insurance industry (or make it so hard to make money that they’ll leave the industry) in order to pave the way for government intervention. Think about it. A graphic in the newspaper stated that the Obama plan would create a new federal body that would have the power to block insurers from raising rates.

There’s one other thing I don’t like about this plan but I’ll have to address it later. Right now I have to run.

UPDATE: You can the President’s Proposal here (PDF). The bullet point on reining in waste, fraud, and abuse is laughable. What government program isn’t a racket?

Taking a look at the S&P 500 Index adjusted for inflation.

After putting together last week’s posts comparing the S&P 500 Index with the Unemployment Rate, I decided to take a look at the S&P 500 Total Return Index along with the Consumer Price Index from 1960 through 2009.

Here’s the S&P 500 TR Index from 1960 – 2009:

NOTE: When putting these graphics together, I indexed the S&P 500 Index and began with a value of 100 in 1960.

S&P TR Index (1960 - 2009)

Not too bad, huh? Sure it was pretty volatile over the years but for the most part it had an awesome run.

Now, here’s the same index adjusted for the CPI:

NOTE: This graph was also indexed to begin with a base rate of 100 in 1960. To compute the returns, I took the total return for the S&P 500 Index and subtracted the CPI for that month.

S&P TR Index (1960 - 2009) minus CPI

Again, it doesn’t look too bad. It looks just like the previous chart, does it?

Now, here’s where it gets interesting…

Here’s what you get when you combine the two charts into one:

S&P TR Index & S&P TR Index minus Inflation

Pretty dramatic difference, isn’t it?

On an indexed basis, the ending value in 2009 of the S&P 500 TR Index (with a starting value of 100 at the beginning of 1960) was 9191.65. When you adjust that for inflation, the ending value is 1245.41. In other words, inflation ate up over 86% of the S&P 500’s return [1 – (1245.41 &#247 9191.65) = .8645 or 86.45%].

From 1960 through 2009, the S&P 500 TR Index compounded at 9.46% per year. The CPI compounded at 4.06% per year. The S&P 500 TR Index adjusted for inflation compounded at 5.17% per year. Inflation makes a huge difference.

ETFs and Tracking Error

February 19, 2010

There was an interesting article in today’s WSJ about a recent report issued by Morgan Stanley on how the tracking error between exchange-traded funds and their prospective indexes increased last year:

Last year, 54 ETFs showed tracking errors of more than three percentage points, up from just four funds the prior year. And a handful of the 54 missed by more than 10 percentage points.

Nearly all exchange-traded funds, which are baskets of securities that trade all day like stocks, are designed to track indexes. So investors expect returns to closely mimic those of market gauges like Standard & Poor’s 500-stock index or the Barclays Capital (formerly Lehman) U.S. Aggregate Bond Index.

The article also mentions that the average tracking error for ETFs was 1.25% in 2009—over twice the .52% average in 2008.

For those of you who don’t know, tracking error is the difference in returns (both positive and negative) between an investment vehicle and the index it tracks. Sometimes the investment outperforms the index but it’s much more common for the investment to underperform due to fund expenses. The difference in performance can also come from how the ETF is set up. According to the article, if the ETF buys every stock in the index, then its trading costs can be higher. If it buys fewer stocks in order to just represent the index, then it can become more vulnerable to tracking error.

The article doesn’t mention how many ETFs were studied and I can’t find a copy of the report. If anyone finds a link to the report, please send it my way. I’d like to check it out.

Cuisinart Fully Automatic Grind & BrewThermal

Okay, I have had my Cuisinart Fully Automatic Burr Grind and Brew Coffeemaker for a little over seven months. For the most part it works okay. But, lately it’s been acting up in the following ways:

• Some mornings I’ll get it all set up, pour in the water, push the “On” button and the little disc that sits on top of the coffee filter that directs the brewing process will just spin around. I can hear clicking going on but it won’t stop spinning. So, I have to turn it off, open and shut the door that contains the filter contraption, and push “On” again. Most of the time it will work fine after that.

• Other mornings, it will get through the grinding process and go on to the brewing process. Then part way through brewing, it start beeping and the disc will start spinning, allowing water to drip on the counter. So, I have to turn it off, open and shut the filter door, turn off the grinder (so it doesn’t grind more coffee), and turn the coffeemaker back on again. This usually solves that problem.

The main issue I have with these problems is that they make the Cuisinart Fully Automatic Burr Grind and Brew Coffeemaker unreliable and they require me to stand there while the coffeemaker is brewing in order to make sure it doesn’t malfunction and make a mess.

I’m going to contact Cuisinart today to see if they can send me a new machine. I have always had good luck with most of their other products so hopefully they’ll help me out.

This Comment Made Me Laugh…

February 17, 2010

This comment by Kirk (NOT Kirk Kinder) was left on my Student Loan From Hell post:

This whole dialogue is accomplishing nothing. There needs to be some meaningful dialogue with legislators to remove the inability to file chapter 7 bankruptcy on student loans. Why is it possible to remove all other debt and still be burdened with student loans? We are becoming prisoners in our own country and homes to our government. I have a similar loan amount and a similar story as the Dr. Same outrageous collection fees and all. What will it take to get these off of my back so I can get on with my life. Would you like my first born child? Or perhaps you would like to put my wife in debtors prison? Or how about a real bail out for the American people who pay taxes instead of for the mega wealthy and Wall street fat cats and their lobbyists. Even the Bible teaches forgiveness of debts. No god left in this godless country. Pay up or die.

Just think…this guy is a COLLEGE GRADUATE!

I’m not sure if Kirk is serious or not. I’m going to assume he is. In that case, where do I start?

First off, I think there’s a very good reason why student loans aren’t released in bankruptcy. When you file for bankruptcy, you often lose assets. With a student loan, what are you going to lose? Give the degree back? Allowing student loans to be forgiven or dismissed in a bankruptcy filing would only PROMOTE more stupidity.

Second, Kirk AGREED to take the money. Surely he knew there were consequences and that EVENTUALLY the lender would want their money back. I’m pretty sure all the details were spelled out in the loan papers.

Third, notice how Kirk doesn’t offer himself up for debtor’s prison? Perhaps not debtor’s prison but I would be open to some sort of program where those who no longer wanted to pay their school loans could join the Army and work off their obligations.

Fourth, the bailouts for the banks had to be paid back.

Fifth, the Bible also teaches using WISDOM in making decisions.

Basically, Kirk believes that a college education should be free.