CEO Stuff

Enhancing Relationships

2007-04-16T04:20:00.000-07:00

"TRUST" is a very important factor for all relationships. When trust is

broken, it is the end of the relationship. Lack of trust leads to

suspicion, suspicion generates anger, anger causes enmity and enmity

may result in separation.

A telephone operator told me that one day she received a phone call.

She answered, "Public Utilities Board." There was silence. She

repeated, "PUB." There was still no answer. When she was going to

cut off the line, she Heard a lady's voice, "Oh, so this is PUB.

Sorry, I got the number from my Husband's pocket but I do not know whose

number it is."

Without mutual trust, just imagine what will happen to the couple if

the telephone operator answered with just "hello" instead of "PUB".

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NO POINTING FINGERS

A man asked his father-in-law, "Many people praised you for a

successful marriage. Could you please share with me our secret?" The

father-in-law answered in a smile, "Never criticise your wife for her shortcomings or

when she does something wrong. Always bear in mind that because of her

shortcomings and weaknesses, she could not find a better husband than

you."

We all look forward to being loved and respected. Many people are

afraid of losing face. Generally, when a person makes a mistake, he

would look around to find a scapegoat to point the finger at. This is

the start of a war. We should always remember that when we point one

finger at a person, the other four fingers are pointing at ourselves.

If we forgive the others, others will ignore our mistake too.

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CREATING PERFECT RELATIONSHIPS?

A person visited the government matchmaker for marriage, SDU, and

requested "I am looking for a spouse. Please help me to find a suitable

one." The SDU officer said, "Your requirements, please." "Oh, good

looking, polite, humorous , sporty, knowledgeable, good in singing

and dancing. Willing to accompany me the whole day at home during my

leisure hour, if I don't go out. Telling me interesting stories when

I need companion for conversation and be silent when I want to

rest." The officer listened carefully and replied, "I understand you

need television."

There is a saying that a perfect match can only be found between a

blind wife and a deaf husband, because the blind wife cannot see the

faults of the husband and the deaf husband cannot hear the nagging of

the wife. Many couples are blind and deaf at the courting stage and

dream of perpetual perfect relationship. Unfortunately, when the

excitement of love wears off, they wake up and discover that

marriage is not a bed of roses. The nightmare begins.

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NO OVERPOWERING

Many relationships fail because one party tries to overpower another,

or demands too much. People in love tend to think that love will conquer

all and their spouses will change the bad habits after marriage.

Actually, this is not the case. There is a Chinese saying which carries

the meaning that "It is easier to reshape a mountain or a river than

a person's character."

It is not easy to change. Thus, having high expectation on changing the

spouse character will cause disappointment and unpleasantness.

It would be less painful to change ourselves and lower our

expectations..

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RIGHT SPEECH

There is a Chinese saying which carries the meaning that "A speech will

either prosper or ruin a nation." Many relationships break off

because of wrong speech. When a couple is too close with each other,

we always forget mutual respect and courtesy. We may say anything without

considering if it would hurt the other party.

A friend and her millionaire husband visited their construction

site. A worker who wore a helmet saw her and shouted,"Hi, Emily!

Remember me? We used to date in the secondary school." On the way

home, her millionaire husband teased her, "Luckily you married me.

Otherwise you will be the wife of a construction worker." She

answered ,"You should appreciate that you married me. Otherwise, he

will be the millionaire and not you."

Frequently exchanging these remarks plants the seed for a bad

relationship. It's like a broken egg - cannot be reversed.

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PERSONAL PERCEPTION

Different people have different perception. One man's meat could be

another man's poison. A couple bought a donkey from the market. On

the way home,a boy commented, "Very stupid. Why neither of them ride

on the donkey?"Upon hearing that, the husband let the wife ride on

the donkey. He walked besides them. Later, an old man saw it and

commented, "The husband is the head of family. How can the wife ride

on the donkey while the husband is on foot?" Hearing this, the wife

quickly got down and let the husband ride on the donkey.

Further on the way home, they met an old Lady. She commented, "How

can the man ride on the donkey but let the wife walk. He is no

gentleman."

The husband thus quickly asked the wife to join him on the donkey.

Then, they met a young man. He commented, "Poor donkey, how can you

hold up the weight of two persons. They are cruel to you." Hearing

that, the husband and wife immediately climbed down from the donkey

and carried it on their shoulders.

It seems to be the only choice left. Later, on a narrow bridge, the

donkey was frightened and struggled. They lost their balance and fell

into the river. You can never have everyone praise you, nor will

everyone condemn you. Never in the past, not at present, and never will

be in the future.

Thus, do not be too bothered by others words if our conscience is

clear..

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BE PATIENT

This is a true story which happened in the States. A man came out of

his home to admire his new truck. To his puzzlement, his three-year-old

son was happily hammering dents into the shiny paint of the truck.

The man ran to his son, knocked him away, hammered the little boy's hands

into pulp as punishment. When the father calmed down, he rushed his son

to the hospital.

Although the doctor tried desperately to save the crushed bones, he

finally had to amputate the fingers from both the boy's hands. When the

boy woke up from the surgery & saw his bandaged stubs, he innocently

said, " Daddy,I'm sorry about your truck." Then he asked, "but when are

my fingers going to grow back?" The father went home & committed

suicide.

Think about this story the next time someone steps on your feet or u

wish to take revenge. Think first before u lose your patience with

someone u love. Trucks can be repaired.. Broken bones & hurt feelings

often can't. Too often we fail to recognise the difference between

the person and the performance. We forget that forgiveness is

greater than revenge.

People make mistakes. We are allowed to make mistakes. But the

actions we take while in a rage will haunt us forever.

Today's People Management FUNDAS

2007-04-11T06:28:00.000-07:00

1."We will do it" means "You will do it"

2."You have done a great job" means "More work to be given to you"

3."We are working on it" means "We have not yet started working on the
same"

4."Tomorrow first thing in the morning" means "Its not getting done
"At least not tomorrow!"

5."After discussion we will decide-I am very open to views" means "I
have already decided, I will tell you what to do"

6."There was a slight miscommunication" means "We had actually lied"

7."Lets call a meeting and discuss" means "I have no time now, will
talk later"

8."We can always do it" means "We actually cannot do the same on time"

9."We are on the right track but there needs to be a slight extension
of the deadline" means "The project is screwed up, we cannot deliver
on time."

10."We had slight differences of opinion "means "We had actually
fought"

11."Make a list of the work that you do and let's see how I can help
you" means "Anyway you have to find a way out no help from me"

12."You should have told me earlier" means "Well even if you told me
earlier that would have made hardly any difference!"

13."We need to find out the real reason" means "Well I will tell you
where your fault is"

14."Well Family is important; your leave is always granted. Just
ensure that the work is not affected," means, "Well you know..."

15."We are a team," means, "I am not the only one to be blamed"

16."That's actually a good question" means "I do not know anything
about it"

17."All the Best" means "You are in trouble"

Points managers ought to keep in mind

2006-07-07T03:15:00.000-07:00

1. Forgetting (some of) our Past: Getting stuck in your legacy and looking too much into the rear view mirror. Managers who live in their past are competed out of existence.

2. Between the Past and future: How to implement your future business with the capabilities you have today? How can firms ready themselves to bust their competition and emerge as winners?

3. Back to the Future: Design options to have an edge over your future competitors. Managers ought to canabalize their products and markets and create their own business for the future, often with competitors, customers and suppliers.

MANAGING ONESELF by Peter F. Drucker

2006-06-25T09:04:00.000-07:00

Success in the knowledge economy comes to those who know themselves—their strengths, their values, and how they best perform.

History’s great achievers—a Napoleon, a da Vinci, a Mozart—have always managed themselves. That, in large measure, is what makes them great achievers. But they are rare exceptions, so unusual both in their talents and their accomplishments as to be considered outside the boundaries of ordinary human existence. Now most of us, even those of us with modest endowments, will have to learn to manage ourselves. We will have to learn to develop ourselves. We will have to place ourselves where we can make the greatest contribution. And we will have to stay mentally alert and engaged during a 50-year working life, which means knowing how and when to change the work we do.

a) What Are My Strengths?

b) How Do I Perform?

c) Am I a reader or a listener?

d) How do I learn?

e) What Are My Values?

f) Where Do I Belong?

g) What Should I Contribute?

Successful careers are not planned. They develop when people are prepared for opportunities because they know their strengths, their method of work, and their values. Knowing where one belongs can transform an ordinary person—hard-working and competent but otherwise mediocre—into an outstanding performer.

The challenges of managing oneself may seem obvious, if not elementary. And the answers may seem self–evident to the point of appearing naive. But managing oneself requires new and unprecedented things from the individual, and especially from the knowledge worker. In effect, managing oneself demands that each knowledge worker think and behave like a chief executive officer. Further, the shift from manual workers who do as they are told to knowledge workers who have to manage themselves profoundly challenges social structure. Every existing society, even the most individualistic one, takes two things for granted, if only subconsciously: that organisations outlive workers, and that most people stay put.
But today the opposite is true. Knowledge workers outlive organisations, and. they are mobile. The need to manage oneself is therefore creating a revolution in human affairs.

Peter F. Drucker is the Marie Rankin Clarke Professor of Social Science and Management at Claremont Graduate University in Claremont, California. This article is an excerpt from his forthcoming book Management Challenges for the 21st Century (HarperCollins, May 1999).

2005-06-17T09:20:00.000-07:00

ATTENTION: finance and investment professionals, and business students

The International Research Association
announces the $13,750,000 Scholarship Program for candidates
with an undergraduate or graduate-level business degree, and current university students.
You may bypass the first two Levels of the LIFA exam and sit directly for the Final Level III exam.
Level III registration and enrollment is FREE.

Click to enroll ->>> http://www.the-ira.org/scholarship/waiver.php?ct=16&r=46295

(CFA and LIFA exam comparison table is below)

LIFA Exam vs. CFA Exam
The LIFA Litmus Test: Do our policies serve the candidate's interest or our interest?

	LIFA Exam	CFA Exam
How much are the registration and enrollment fees?	FREE (No Required Textbooks)	$1,120.00 plus Required Textbooks and/or Self-Contained Volumes. Total cost for 3 levels can exceed $6,000 if you fail the exams.	Basic exam registration and enrollment fees should not be expensive. Furthermore, fees should not be collected to pay huge salaries of bureaucrats who then also require candidates to buy textbooks or self-contained volumes from them. We believe that no candidate should be prohibited from taking an exam because of excessive costs and fees. The International Research Association is very sensitive to this problem, maintaining budgetary constraints with minimal bureaucracy.
May I bypass the first two exams and sit for the third through your Waiver Program?	Yes	No (discontinued)	The CFA Program offered a waiver program previously, but it is discontinued. The LIFA Exam Waiver Program is available, allowing candidates to bypass the first two exams, saving candidates valuable years. You may sit for the Level III LIFA exam now, not 2 to 5 years from now. We believe that no candidate with sufficient knowledge to pass the LIFA exam should be prohibited from taking an exam because of arbitrary time delays between exams.
Are my exams graded by an independent, third party?	Yes, Thomson-Prometric	No	Like the CPA exam, the leading designation for accountants in the United States, all LIFA exams are graded by an independent body, ensuring complete objectivity. There is no chance of grading bias because of human interpretation or judgments. The LIFA exams are graded by Thomson-Prometric, utilizing a secure electronic exam tabulation system. The LIFA Program offers exams 200+ days each year, at thousands of secure locations worldwide. Prometric exam centers provide test-takers with a consistent, quiet, and comfortable testing environment. A poor testing environment should never be allowed to impact your exam performance.
How many days a year may I choose to sit for an exam?	270+	2
How many locations may I choose from to take the exam?	3,500+	174
If I fail an exam, how long must I wait to retake that exam again?	Any Level: 45 days	Level 1: 6 months Level 2: 1 year Level 3: 1 year	If LIFA candidates are ready to sit for an exam, they are allowed to set their own exam schedules.
When I pass an exam, how soon can I take the next Level?	Any Level: 15 days	6 months to 1 year
If I fail an exam, must I retake the entire exam, including the sections I passed?	No	Yes, you must take the entire exam again, even the subjects you passed.	Like the CPA exam, once a LIFA candidate has displayed a mastery of a given subject, that candidate does not have to retake that subject.
Am I required or strongly encouraged to buy additional products or services from you for exam preparation?	No	Yes	The International Research Association believes there are inherent conflicts when a testing administrator requires purchase of additional products and services for its own exam that many candidates do not need and/or cannot afford. Accordingly, the International Research Association does not offer any exam prep material. We invite you to confirm any of this information.

If interested, click on the link below to enroll:
http://www.the-ira.org/scholarship/waiver.php?ct=16&r=46295

Tips for the CEO Candidate

2005-06-15T00:24:00.000-07:00

Think you're ready to step up to the top job? Get in line—there's plenty of competition. Here's advice for ascension from top recruiter Gerry Roche, of the executive search firm Heidrick & Struggles.

You've been laying the groundwork for years—acquiring a broad array of skills and proving your executive mettle at multiple levels in your company. You've got your eye on a top job, and you know that's where you belong.

But you're also fully aware that competition for the C suite is stiff—and that readiness, enthusiasm, and an admirable track record aren't enough to guarantee anyone a senior leadership position. So how do you improve your chances? Gerry Roche, senior chairman of Chicago-based executive search firm Heidrick & Struggles, offers potent guidelines that often are overlooked by leaders bent on occupying a top rung on the corporate ladder.

1. Balance what they seek with what you need

Executives eyeing a corner office can boost their chances of success by understanding and accommodating the way in which many organizations select their most senior managers—however flawed that process may be.

Just like "succession committees often assume that the president and COO positions are the best routes to CEO," Roche says, many firms promote all their senior executives up a relatively straight ladder. There is a glitch in this type of thinking, he says, because "the talent and training required to be an effective CEO aren't necessarily the same as those needed in the presidential or chief operating officer roles."

A good CEO is the captain of the ship, Roche notes. "His or her major responsibility should be to establish a compelling vision and set direction for the whole organization. The fundamental job is planning, whereas the president and COO jobs center on doing. These are opposite talents."
Yet many succession committees still favor the president and COO routes to the corporate helm, perhaps owing to traditional assumptions about how managers and executives should pay their dues as they wend their way to the top of their organization. Aspiring senior leaders, Roche maintains, have little choice but to accommodate these realities while also systematically building the expertise they'll need to excel as chief executives.

How does one achieve this delicate balance? "Make sure your work history contains a combination of line and staff responsibilities that provide you with experience at both the conceptual and action levels," Roche says. "Run a major business sector, with a tour in corporate planning, finance, or mergers and acquisitions to round out your experience."
Roche explains, "There are two conspicuous promotions that characterize any successful business career." The first is to take on responsibility for getting work done through others. "If you're in sales, move from selling to managing salespeople; if you're an auditor, work toward the chief auditor role." The second promotion is from a functional role to a general management role. "Get into a position where all the vital elements of the business report to you: production and manufacturing, product development, marketing, sales, finance, and staff. It's better to run a profit center—even if it's relatively small—than to stay in a functional silo."

2. Take charge of your own professional development

You can't always count on your firm to provide assignments that will give you the ideal mix of experiences. Instead, Roche says, "you have to take the initiative in your own professional development. Tell your boss that you've got more talent than your current job absorbs. Ask for opportunities to manage a new division or take on additional product or industry experience."
Of course, conversations about professional development can seem delicate if your boss is in the role you seek or also has his eye on it. But in Roche's view, "you have to live with that paradox. It's fatal if you don't send the message that you're interested in moving up. But it can also be dangerous from a competitive standpoint if you do express interest—and your boss views you as a threat."
There are two conspicuous promotions that characterize any successful business career.
— Gerry Roche, Heidrick & Struggles
You should also strongly shape your annual reviews so that development opportunities occupy center stage. "Insist on an annual review that has meaning, meat, and substance," Roche says. "Ask your boss, 'What do I have to do to get ahead? What are my shortcomings, and how can I address them? How can I build further on my strengths?' Your boss should suggest specific kinds of training or particular stretch assignments that will help you fill gaps in your skills and make you more promotable."

Roche acknowledges that effective reviews are difficult to do, especially because many people find it painful and awkward to talk about weaknesses. But the "healthy friction" that such conversations generate is vital for any executive's development. Adds Roche: "If you don't get the honest feedback and ideas for taking action that you need in your annual reviews, move on to another company. You don't want a boss who glosses over your areas for development."

3. Excel in your current job

Even with the right background and development plan, "too many aspiring leaders spend way too much time and energy campaigning for their next job when they should be knocking the ball out of the park with their current job," Roche says.
Politicking and posturing may be an unavoidable part of the game plan, but you also need a solid element to your candidacy—and that element has to be stellar performance in your current role.
Roche cautions executives against letting the lure of a top position distract them from delivering top-notch performance here and now. "Even if you're working in a division that's not currently on the succession committee's radar screen," he says, "you can still improve your chances of joining the C suite by doing a great job with what you've got."

"Consider Jack Welch in his earlier days at General Electric," Roche says. "He took GE's plastics division—which was not the most popular part of the company's portfolio—and made it a strong performer. He inherited a nag, and he turned it into a thoroughbred."

4. Know when it's time to campaign elsewhere

In some firms, there are enough obstacles to the top that an aspiring leader has little choice but to look outside—to companies that offer brighter hopes of advancement. The pyramid structure that typifies most American corporations creates an unavoidable bottleneck. "It's hard to get to the top, and no corporation can absorb all the individuals who are striving to get there," Roche notes.
The key is to recognize—and act on—signs that it's time to move on. If the current leadership has more than a decade left in the workforce, "that's one clear signal that you've got a long wait ahead of you," Roche says. "Another sign is that you're in charge of a division whose budget is getting cut or that is not a part of the company's overall growth strategy.
"You have to ask yourself which divisions are the 'hottest'—which are getting the most R&D dollars. And if the market that your division sells to is drying up, you may want to think about looking outside."
Though you may feel disloyal leaving your company for greener pastures, a savvy boss will understand and support you in this effort. Roche cites the time he recruited Larry Bossidy—the "number-two guy in position to lead GE"—to take the helm at Allied Signal. When Roche phoned then-CEO Jack Welch to apologize about "stealing" Bossidy, Welch replied that "half of my face is crying; the other half is smiling. Larry is good enough to run any company in the world, and deserves to."

5. Don't rely solely on recruiters

Skilled executive recruiters, Roche says, can provide a much-needed boost to an aspiring senior leader because "they know who all the number-two people are out there." But seasoned business leaders seeking an opening in the top ranks don't necessarily have to rely on recruiters to get there. "All high-level, high-performing executives know each other," Roche says.
To find opportunities, he adds, "draw on that network. Attend industry forums and other gatherings where your peers gather. Write a column for a business publication that will get your name out there. Do whatever it takes to make sure you're visible and authoritative externally."

Courtesy - Lauren Keller Johnson - Harvard Management Update

BE PREPARED...

2005-05-31T22:13:00.000-07:00

Once Tom, Dick and Harry were going in an auto. They met with an accident and all three of them die.

Yama DharmaRaj was waiting for this moment. He asks Tom and Dick to go to HEAVEN. But, for Harry, Yama had already decided that he should be sent to HELL.

Harry is not at all happy with this decision. He asks Yama as to why this discrimination is being made. All three of them served the public. Similarly, took bribes, misused public post etc. He felt that there should be a formal test or a concrete way to decide this, and should not be just based on opinion.

Yama agrees to this and asks all three of them to appear for English test. Tom is asked to spell "INDIA" and he does it correctly. Dick is asked to spell "ENGLAND" and he too passes. It is Harry's turn and he is asked to spell "CZECHOSLOVAKIA".

Harry protests that he doesn't know English. It is not fair that he is given a tough question and thus forced to fail.

Yama agrees to conduct a written test in Hindi (to give another chance assuming that Harry should at least feel that Hindi is ideal).

Tom is asked to write "KUTTA BOLA BHOW BHOW". He writes it easily and passes.
Dick is asked to write "BILLY BOLI MYAUN MYAUN". He too passes.
Harry is asked to write "BANDAR BOLA GURRRRRR....." Tough one. He Fails.

Harry is not happy. Being a history student, he preferred only to be tested in History.

Yama says this is the last chance and he would not take any more tests. Tom is
asked: "When did India get Independence?". He replied "1947" and passed.

Dick is asked "How many people died in it?". He gets nervous. Yama asked him
to choose from 100,000 or 200,000 or 300,000 (clue). Dick catches it and says
200,000 and passes.

It's Harry's turn now. Yama asks him to give the Name and Address of each of the
200,000 who died. Harry accepts defeat and agrees to go to HELL.

MORAL: IF YOUR MANAGEMENT IS DETERMINED TO SCREW YOU, ANTICIPATE IT AND BE PREPARED TO ACCEPT IT. THERE IS NO ESCAPE.

Impact of Job Change

2005-05-31T03:56:00.000-07:00

A taxi passenger tapped the driver on the shoulder to ask him a
question. The driver screamed, lost control of the car, nearly hit a
bus, went up on the footpath, and stopped centimeters from a shop
window.
For a second everything went quiet in the cab, then the driver
said:
"Look mate, don't ever do that again. You scared the daylights out of
me!"
The passenger apologized and said,
"I didn't realize that a little tap would scare you so much."
"Sorry, it's not really your fault. Today is my first day as a cab
driver.", the driver replied. "I've been driving a van carrying dead
bodies for the last 25 years."

Maintaining Relationships

2005-05-18T22:41:00.000-07:00

People often wonder why some people have such great friends and manage to keep them...If you manage to apply the following in your life, the same couldworkfor you:

In ancient Greece, Socrates was reputed to hold knowledge in highesteem. One day an acquaintance met the great philosopher and said, "Do youknow what I just heard about your friend?" "Hold on a minute," Socrates replied. "Before telling me anything I'd like you to pass a little test. It's called the Triple Filter test." "Triple filter?" "That's right," Socrates continued."Before you talk to me about my friend, it might be a good idea to take a moment and filter what you're going to say. That's why I call it the triple filtertest. The first filter is Truth. Have you made absolutely sure that whatyou are about to tell me is true?" "No," the man said, actually I just heard about it and..." "All right," said Socrates. "So you don't really know if it's trueor not. Now let's try the second filter, the filter of Goodness. Is what youare about to tell me about my friend something good?" No, on the contrary..." "

So,

"Socrates continued, "You want to tell me something bad about him, butyou're not certain it's true. You may still pass the test though, because there's onefilter left: the filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?" "No, not really." "Well," concluded

Socrates, "if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?"

This is why Socrates was a great philosopher ; was held in such high esteem. If we are able to protect our friends and those we love in this manner, we cannot be influenced by outsiders in having bad notions about them.

The difference between "sitting" late and "working" late

2005-03-25T00:20:00.000-08:00

It's half past 8 in the office but the lights are still on..PCs still runnning, coffee machines still buzzing..and whose at work..Most of them??

Take a closer look.. All or most specimens are 20-something male species of the human race..look closer..again all or most of them are bachelors..and why are they sitting late?

Working hard? No way!! Any guesses??

lets ask one of them..Here's what he says.."Arey yaar, whatz there 2 do after goin home..idhar to net hein, AC hein, phone hein, khaana hein, coffee hein.. to jam ke khaao, jam ke piyo(burps), jam se chatting/phone karo aur thak jaane par ghar jaao...aur boss bhi kush that i am working late...(burps) aur khaane ka paisa bhi bachtaa hein."

This is the scene in most software companies and other off-shore offices. Bachelors "time-passing" during late hours in the office just bcoz they say they've nothing else to do..Now what r the consequences.. read on..."working"(for the record only) late hours soon becomes part of the company culture. With bosses more than eager to provide support to those "working" late in the form of taxi vouchers, food vouchers and of course good feedback,(oh, he's a hardworker..goes home only to change..!!) they arent helping things too..To hell with bosses who dont understand the difference between "sitting" late and "working" late!! Very soon, the managers start expecting all employees to put in extra working hours.

My dear Bachelor bhaais let me tell you, life changes when u get married and start having a family..office is no longer a prioroty, family is..and thats when the problem starts.bcoz u start having commitments at home too. For your boss, the earlier "hardworking" guy suddenly seems to become a "early leaver" even if u leave an hour after regular time..after doing the same amount of work, People leaving on time after doing ther taks for the day are labelled as work-shirkers..Girls who thankfully always leave on time are labelled as "not up to it". All the while, the bachelors pat their own backs and carry on "working" not realising that they r spoiling the work culture at their own place and never realise that they wuld have to regret at one point of time.

So bhaai log, what's the moral of the story.??

Very clear, LEAVE ON TIME!!

Never put in extra time unless really needed. Dont stay back un-necessarily and spoil your company work culture which will in turn cause inconvenience to you and your colleagues. There are hundred other things to do in the evening.. Learn music..Learn a foreign language..Try go-karting... Get a girl friend, take her around town. And for heaven's sake net cafe rates have dropped to an all-time low(plus, no fire-walls) and try cooking for a change.

Take a tip from the Smirnoff ad: "Life's calling, where are you??"

This message is dedicated to all those colleagues who stay back in office for everything other than work.

DCA: It Gets You in at the Bottom

2005-03-24T22:00:00.000-08:00

Today we're going to let you in on a hot tip for surviving a sinking stock market.

Industry players and pundits try to convince us that they can tell when the market will hit bottom. Knowing who to believe is just as difficult as it is for them to actually pick the bottom! What's an investor to do? In this article, we’ll explain a little-known technique that will help protect you in a falling market and let you ignore the futile attempts of those who think they can predict the market's behavior. There is only one proven investment technique that, regardless of economic conditions, can consistently get investors in at the bottom. Read on to find out what it is, and why it is important.

What Is the Bottom?

When a security or market sinks to its lowest price level in a given time period, it means they have hit bottom. Whenever the markets plummet, people get excited about getting in, but they want to do so only after securities have bottomed out - when price levels begin a steady rise after hitting bottom. Since everyone wants to know when that will happen, CEOs, media types and analysts all try to forecast the upturn, which signifies that the bottom has indeed been established. Because no one wants to be the last to call the bottom in case price levels tank further, we are bombarded with confidence-building words from every level of industry, including the industry watchers, that prices are unlikely to continue their downward trend.

Much of this commotion comes from the "buying on the dip" mentality left over from the previous bull market in the 1990s when many made a lot of money buying cheap at every dip and riding the recovery. On the other hand, investors in a bear market feel "things can't possibly get any worse" and that "logically" the market can only climb up.

The Game

Calling the bottom has become such a worldwide pastime - it would make veteran investors like Warren Buffett, John Bogle and Peter Lynch chuckle (read more about these great investors here) - you'd think there was a cash prize for predicting it. To illustrate, here are a handful of past bottom calls as well as the figures that followed.
- Boston Globe, Aug 12, 2000 - "…at these undervalued prices…we're not selling any stock at these prices". (On Monday, Aug 14, the S&P 500 closed at 1491. Four years later on Aug 12 2004, the S&P fell a further 29% to close at 1063.)
- Wired Magazine, Dec 4, 2000 - "Fred Siegel, president of investment management firm Siegel Group, believes that it is unlikely that the Nasdaq will drop more than another 200 points." (The Nasdaq fell over 1,000 points shortly after Siegel made his prediction.)
- Forbes, Aug 8, 2001 - Intel CEO Craig Barrett said "the computer industry has bottomed out". (In less than a month the Philadelphia Semiconductors Index fell another 20%.)
- Market guru and former hedge fund manager Jim Cramer of TheStreet.com said it best in Jan 2001: "I get paid to call bottoms. I don't see one yet, but in my 18 years of trading I've never called one exactly right yet. I don't see why this time will be any different."

The Way In

The truth of the matter is that if hedge fund managers, mutual fund managers, private investment managers, market gurus, CEOs and analysts can't pick the bottom, neither can we. But don't despair, there is a means to protect yourself in the long run from the effects of a bear market as well as ensure your injection of capital into the market when it is extremely close to the bottom.

The technique is called dollar-cost averaging (DCA), and it is one of the simplest and most useful investing techniques around. DCA is simply putting a set amount of money each month into an investment such as a stock, index fund or mutual fund. Most banks will even set up a monthly automatic-withdrawals service. DCA is also ideal for the investor who doesn't have that big lump sum at the start but can invest small amounts on a regular basis.

Why DCA Is So Effective?

The markets, even though they have bad days or even bad years, tend to go up over time - during the past century, U.S. equities markets appreciated each year by a near 11% average. When you invest a set amount of your money each month, you buy fewer shares when the market is high and more shares when it's low. For example, your fixed investment might buy 10 shares when the price is low and only five shares when the price is higher. DCA therefore lessens the risk of investing a large amount in a single investment at the wrong time (i.e. at an inflated price), and in a falling market, the average cost per share becomes smaller and smaller. This lessening average cost per share will help you gain better overall profits as the market increases over the long term.

Example

Let's suppose that you just got a bonus and now have $10,000 to invest. Instead of investing the lump sum into a mutual fund or stock, you decide to use dollar-cost averaging and spread the investment out over several months by investing $2,000 a month for the next five months. This averages the price over five months, so some months you may buy fewer shares, each at a higher price, and some months you may buy more shares, each at a lower price.

If the market is lower this month, you may lose money on the shares you bought last month, but this month you receive more shares, which, in the future, will help offset any losses. With DCA, you are able to take advantage of any low during these five months, guaranteeing you to invest at the very bottom because when it comes, you are simply doing what you do every month.

Once the market turns around, which it is likely to do in the long term, you'll be ahead. The best part is you didn't have to do any predicting! If you were to try to forecast the bottom, you could miss it altogether and risk putting your entire $10,000 in at a bad time.

What About Timing?

Many people ask, "Isn't it more profitable to buy as much as you can when the market is at its lowest and sell everything when it is at its highest?" Of course it is, but any professional investor will tell you that you pretty much need supernatural powers to get a correct prediction. No one knows when the bottoms and tops will happen exactly, and no one can stop surprises from happening. This is why so many professionals preach dollar-cost averaging as an optimal strategy regardless of what the market is doing: DCA smoothes out the bumps of the market over the long term.

Conclusion

Next time you hear of a forecasted bottom, you can be confident that he or she is no more insightful than you no matter who the individual is. No person can predict market behavior. But you can be rest assured that if you use dollar-cost averaging, you are being prudent. DCA not only offers protection from market swings but also helps you can take advantage of the ever-elusive market bottom.

When Fear and Greed Take Over

2005-01-07T20:27:00.000-08:00

There is an old saying on Wall Street that the market is driven by just two emotions: fear and greed. Although this is an oversimplication, it can often be true. Succumbing to these emotions can have a profound and detrimental effect on investors’ portfolios and the stock market.

In the investing world, one often hears about the juxtaposition between value investing and growth investing and although understanding these two strategies is fundamental to building a personal investment strategy, it is as important to understand the influence of fear and greed on the financial markets.

There are countless books and various courses devoted to this topic. Here our goal is to demonstrate what happens when an investor gets overwhelmed by one or both of these emotions.

Greed’s Influence

So often investors get caught up in greed ("excessive desire"). After all, most of us have a desire to acquire as much wealth as possible in the shortest amount of time. The Internet boom of the late 1990s is a perfect example. At the time it seemed all an advisor had to do was simply pitch any investment with a ".com" at the end of it, and investors leaped at the opportunity. Buying activity in Internet-related stocks, many just start-ups, reached a fever pitch. Investors got greedy, fueling further greed and leading to securities being grossly overpriced, which created a bubble. It burst in mid-2000 and kept leading indices depressed through 2001. For more on the dotcom bubble and other market crashes, see Greatest Market Crashes.

This get-rich-quick mentality makes it hard to maintain gains and keep to a strict investment plan over the long term, especially amid such a frenzy, or as Federal Reserve Chairman Alan Greenspan put it, the "irrational exuberance" of the overall market. It’s times like these when it is crucial to maintain an even keel and stick to the basic fundamentals of investing, such as maintaining a long-term horizon, dollar-cost averaging and avoiding getting swept up in the latest craze.

A Lesson From "The Oracle Of Omaha" It would be remiss to discuss the topic of not getting caught up in the latest craze without mentioning a very successful investor who stuck to his strategy and profited greatly. Warren Buffett showed us just how important and beneficial it is to stick to a plan in times like the dotcom boom. Buffett was once heavily criticizeed for refusing to invest in high-flying tech stocks. But once the tech bubble burst, his critics were silenced. Buffett stuck with what he was comfortable with: his long-term plan. By avoiding the dominant market emotion of the time, greed, he was able to avoid the losses felt by those hit by the bust.

Fear's Influence

Just as the market can become overwhelmed with greed, the same can happen with fear ("an unpleasant, often strong emotion, of anticipation or awareness of danger"). When stocks suffer large losses for a sustained period, the overall market can become more fearful of sustaining further losses. But being too fearful can be just as costly as being too greedy. Just as greed dominated the market during the dotcom boom, the same can be said of the prevalence of fear following its bust. In a bid to stem their losses, investors quickly moved out of the equity (stock) markets in search of less risky buys. Money poured into money market securities, stable value funds and principal-protected funds--all low-risk and low-return securities. In fact 2002 saw the largest amount of outflows, about US$40 billion, from the equity markets since 1988, a year after one of the worst stock market crashes in history, and a record $140 billion flowed into the bond market.

This mass exodus out of the stock market shows a complete disregard for a long-term investing plan based on fundamentals. Investors threw their plans out the window because they were scared, overrun by a fear of sustaining further losses. Granted, losing a large portion of your equity portfolio’s worth is a tough pill to swallow, but even harder to digest is the thought that the new instruments that initially received the inflows have very little chance of ever rebuilding that wealth. Just as scrapping your investment plan to hop on the latest get-rich-quick investment can tear a large hole in your portfolio, so too can getting swept up in the prevailing fear of the overall market by switching to low-risk, low-return investments.

The Importance of Comfort Level All of this talk of fear and greed relates to the volatility inherent in the stock market. When investors lose their comfort level due to losses or market instability, they become vulnerable to these emotions, often resulting in very costly mistakes.

Avoid getting swept up in the dominant market sentiment of the day, which can be driven by a mentality of fear and/or greed, and stick to the basic fundamentals of investing. It is also important to choose a suitable asset-allocation mix. For example, if you are an extremely risk-averse person, you are likely to be more susceptible to being overrun by the fear dominating the market and therefore your exposure to equity securities should not be as great as those who can tolerate more risk.

Buffet was once quoted as saying, “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” For more on asset allocation, look at Asset Allocation Strategies and Five Things to Know about Asset Allocation.
Easier Said Than Done Keep in mind this isn’t as easy as it sounds. There’s a fine line between controlling your emotions and being just plain stubborn. Remember also to re-evaluate your investment strategy and allow yourself to be flexible to a point, and remain rational when making decisions to change your plan of action.

Conclusion

You are the final decision-maker for your portfolio and thus responsible for any gains or losses in your investments. Sticking to sound investment decisions while controlling your emotions, whether it be greed or fear, and not blindly following market sentiment is crucial to successful investing and maintaining your long-term strategy. But beware: never wavering from an investment strategy during times of high emotions in the market can also spell disaster. It’s a balancing act that requires you to keep your wits about you.

How Human Behavior Drives Investment Activity

2004-10-25T05:22:00.000-07:00

Understanding human behavior is crucial for investors, according to Alliance Capital Management CEO Lewis A. Sanders, who talked about behavioral finance and its role in pricing anomalies and forecasting bias during a presentation last month at Wharton.

"Capital markets themselves are derivative of the biases and preferences people bring to decision-making," Sanders told his audience, adding that insights into behavioral finance hold true across fixed-income, debt or equity markets and national boundaries.

"People are people wherever you find them."

Sanders, who spoke as part of part of Wharton's Musser-Shoemaker Lecture series, has spent a career in investment research, starting as an analyst at Sanford C. Bernstein & Co., Inc. in 1968. He rose to become chairman of the firm, which merged in 2000 with Alliance, one of the world's largest investment managers. In 2003, he was named chief executive of Alliance, which has $480 billion under managementand 6.9 million mutual fund accounts.

At the moment, he said, markets are relatively calm and not generating
big price anomalies. "The world is not in a very provocative state, but something will come along. Maybe it will be oil. Maybe it will be currency. Who knows, maybe it will be broadband. I can think of any number of developments." He disputed conventional wisdom which says that superior information gives investors a leg up in making better decisions. "Everybody has the information. But are people reacting to it rationally?"

Asset prices are driven by three main human preferences, according to Sanders. The first is what he called "the overwhelming affection for things that are, or appear to be, certain." For example, he said, most household wealth is in assets that have low, or no, volatility, at the expense of earning higher returns. Another trait that plays on markets is people's tendency to ignore probability if a large payoff is at stake. "It's going for the gold. Probability is essentially irrelevant," said Sanders, who likens the behavior to lottery ticket sales that increase as the jackpot rises, even though the likelihood
of winning diminishes. "In the capital markets this is a profound phenomenon because it fuels most bubbles."

Another strong trait that plays out in markets is loss aversion. "In people's minds, losses loom larger than gains," said Sanders. "People just don't like losing money. The only thing they dislike more are money managers who lose it for them." In effect, Sanders argued, sellers fearful of losing money will wind up undercutting the price of their assets. "The sellers are paying the buyers to rid themselves of the stress of ownership that they can no longer endure." These traits are reflected in investing styles, according to Sanders.

Value investors, he said, are willing to take on the stress, but in return they spend their lives "being depressed, afraid and subject to repeated threats to their self-esteem." Growth investors seek a declining risk premium and are willing to pay more for perceived certainty. Finally, there are speculators, whom Sanders described as being often cloaked as growth investors, operating on "skewness" or extremes in price swings.

Human behavior also influences forecasting, Sanders told his audience.

Much of the bias in market forecasts derives from "mental shortcuts. Typically, we're overconfident." Forecasters seek to find an anchor or reference point to build projections, but the anchor can be based in quicksand. Many forecasters focus too much on their own, recent
experiences, Sanders noted, adding that corporate managers, too, seek anchors and will cling to business plans they have recently formulated even if the plan is not working. "All of this leads to inadequate judgments in the face of change."

The "Inertia of Regret"
Investors create price anomalies when they are slow to change course due to what Sanders called the "inertia of regret. The regret associated with taking action is considerably greater than taking no action at all, which leads to inertia."

Forecast biases are influenced by what Sanders identified as the availability heuristic - or judgments based on information that is easy-to-grasp and readily available in the decision-making environment. He pointed to the hype surrounding the stock market peaks during the Nifty Fifty craze in the early 1970s, the real estate bubble in the early 1990s and the spike in Internet stocks in 2000.

"If you look at all the peaks, they are associated with very popular wide-spread ideas about what the future held. The winners and losers were divided along a simple boundary. In the Internet bubble it was the new economy versus the old economy. There was hopelessness around the old economy companies.

"Looking back [these bubbles] seem too obvious," conceded Sanders, "but when you are in them, the ability to extrapolate what's underway is very difficult."

Sanders pointed to research indicating that consensus growth-rate forecasts for companies will remain on the same track, either fast or slow, as a cautionary sign. "People are very married to extrapolating recent success," said Sanders, noting that in fact, very few companies remain on the same course and tend to revert to the mean. Moreover, forecasters often underestimate a poorly performing company's ability to turn itself around. "An interesting bias is the inability to
imagine that someone will conjure up a way out. You don't see one and management hasn't offered one. However, the probability is that with time and pressure they will, as all those mean reversions clearly imply."

This so-called "failure of initiative" generates some of the best investment moves. He pointed to problems at Citigroup and IBM in the early 1990s that turned out to be opportunities. He also noted the forecasting danger of "misplaced concreteness." What's going on here" is the forecaster has proposed an elegant model with many variables and it fits so well you start to think you really have discovered something. People fall in love with these models."

The problem, said Sanders, is that with more variables, data and complexity introduced to a model, the greater the chances it will implode. "The message in all of this is you have to understand that as forecasters you have limitations. Things are going to get blown around by the issues of the day. You have to wager with a certain sense of humility."

Asked what psychological traits make good analysts, Sanders said drive would come first. Communication skills are also essential, not only the ability to write and articulate a position, but also to listen. "You'd be surprised how many research analysts don't really listen.
They develop a point of view and when they do an interview with someone who has knowledge, they don't really pay attention. They're more interested in supporting a preconceived view."

Finally, Sanders said that while he looks for intelligence, brilliance can be a liability. "People who are brilliant spend their entire lives never being wrong. In a forecast setting they're vulnerable. A little bit of insecurity is a good thing."

Investment managers need to consider their fiduciary responsibility when building portfolios, Sanders concluded. He pointed out that it would have been responsible to acquire Citigroup in 1991 when the company appeared to be on the edge of failure. But a move like that is often difficult to justify to clients. The problem comes "when you can't explain why you bought all this garbage … It's difficult, without the depth of research to see through the anomalies, to explain
why you will ultimately win and why you are not gambling with the client's money."

Maximum wealth "isn't all there is to life," Sanders added. "In the value world in particular, you make the most money by feeling the most insecure. Do you really want to do that with your life? Is it worth it?"

Pearls of Wisdom

2004-10-07T01:16:00.000-07:00

" Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world."
- Joel Barker

" The fishermen know that the sea is dangerous and the storm terrible, but they have never found these dangers sufficient reason for remaining ashore."
- Vincent Van Gogh

" No one gets an iron-clad guarantee of success. Certainly, factors like
opportunity, luck and timing are important. But the backbone of success
is found in basic concepts like hard work, determination, good planning and perseverance." -
- Merlin Olsen

"Individual commitment to a group effort - that is what makes a team work."
- Vince Lombardi

"Your talent is God's gift to you. What you do with it is your gift back to God"
- Leo Busecaglia

"It is on our failures that we base a new and different and better success."
- Havelock Ellis

"People become quite remarkable when they start thinking they can do things. When they believe in themselves, they have the first secret of success."
- Norman Vincent Peale

"If your heart acquires strength, you will be able to remove blemishes from others without thinking evil of them."
- Mohandas K. Gandhi

"Always bear in mind that your own resolution to succeed is more important than any other one thing."
- Abraham Lincoln

"Small opportunities are often the beginning of great enterprises."
- Demosthene

"Many people have a wrong idea of what constitutes true happiness. It is not attained through self-gratification, but through fidelity to a worthy purpose."
- Helen Keller

"The greatest discovery of our generation is that human beings can alter their lives by altering their attitudes of mind. As you think, so shall you be."
- William James

THE 90/10 PRINCIPLE

2004-10-06T22:19:00.000-07:00

Have you read this before? Discover the 90/10 Principle. It will change your life (at least the way you react to situations). What is this principle? 10% of life is made up of what happens to you. 90% of life is decided by how you react. What does this mean? We really have no control over 10% of what happens to us. We cannot stop the car from breakingdown. The plane will be late arriving, which throws our whole schedule off. A driver may cut us off in traffic. We have no control over this 10%. The other 90% is different. You determine the other 90%.

How? By your reaction. You cannot control a red light., but you can control your reaction. Don't let people fool you; YOU can control how you react.

Let's use an example. You are eating breakfast with your family. Your daughter knocks over a cup of coffee onto your business shirt. You haveno control over what just what happened. What happens when the next will be determined by how you react. You curse. You harshly scold your daughter for knocking the cup over. She breaks down in tears. After scolding her, you turn to your spouse and criticize her for placing the cup too close to the edge of the table. A short verbal battle follows. You storm upstairs and change your shirt. Back downstairs, you find your daughter has been too busy crying to finish breakfast and get ready for school. She misses the bus. Your spouse must leave immediately for work. You rush to the car and drive your daughter to school. Because you are late, you drive 40 miles an hour in a 30 mph speed limit. After a 15-minute delay and throwing $60 traffic fine away, you arrive at school. Your daughter runs into the building without saying goodbye. After arriving at the office 20 minutes late, you find you forgot your briefcase. Your day has started terrible. As it continues, it seems to get worse and worse. You look forward to coming home, When you arrive home, you find small wedge in your relationship with your spouse and daughter.

Why? Because of how you reacted in the morning. Why did you have a bad day?
A) Did the coffee cause it?
B) Did your daughter cause it?
C) Did the policeman cause it?
D) Did you cause it?

The answer is D. You had no control over what happened with the coffee. How you reacted in those 5 seconds is what caused your bad day. Here is what could have and should have happened. Coffee splashes over you. Your daughter is about to cry. You gently say, "It's ok honey, you just need,to be more careful next time". Grabbing a towel you rush upstairs. After grabbing a new shirt and your briefcase, you come back down in time tolook through the window and see your child getting on the bus. She turns and waves.You arrive 5 minutes early and cheerfully greet the staff. Your boss comments on how good the day you are having.
Notice the difference? Two different scenarios. Both started the same. Both ended different. Why? Because of how you REACTED. You really do not have any control over 10% of what happens. The other 90% was determined by your reaction.

Here are some ways to apply the 90/10 principle.

If someone says something negative about you, don't be a sponge. Let the attack roll off like water on glass. You don't have to let the negative comment affect you! React properly and it will not ruin your day. A wrong reaction could result in losing a friend, being fired, getting stressed out etc.

How do you react if someone cuts you off in traffic? Do you lose your temper? Pound on the steering wheel? A friend of mine had the steering wheel fall off) Do you curse? Does your blood pressure skyrocket? Do you try and bump them? WHO CARES if you arrive ten seconds later at work? Why let the cars ruin your drive? Remember the 90/10 principle, and do not worry about it.

You are told you lost your job. Why lose sleep and get irritated? It will work out. Use your worrying energy and time into finding another job.

The plane is late; it is going to mangle your schedule for the day. Why take out your frustration on the flight attendant? She has no control over what is going on. Use your time to study, get to know the other passenger. Why get stressed out? It will just make things worse. Now you know the 90-10 principle. Apply it and you will be amazed at the results. You will lose nothing if you try it.

The 90-10 principle is incredible. Very few know and apply this principle. The result? Millions of people are suffering from undeserved stress, trials, problems and heartache. There never seem to be a success in life. Bad days follow bad days. Terrible things seem to be constantly happening. There is constant stress, lack of joy, and broken relationships. Worry consumes time. Anger breaks friendships and life seems dreary and is not enjoyed to the fullest. Friends are lost. Life is a bore and often seems cruel. Does this describe you? If so, do not be discouraged .

You can be different! Understand and apply the 90/10 principle. It will change your life.

Courtesy : Stephen Covey

Thinking of quitting ??

2004-10-06T22:09:00.000-07:00

A candidate for a news broadcasters post was rejected by officialssince his voice was not fit for a news broadcaster. He was also toldthat with his obnoxiously long name, he would never be famous.
He is Amitabh Bacchan, the famous Indian actor.

A small boy the fifth amongst seven siblings of a poor father, wasselling newspapers in a small village to earn his living. He was notexceptionally smart at school but was fascinated by religion androckets. The first rocket he built crashed. A missile that he builtcrashed multiple times and he was made a butt of ridicule. He is theperson to have scripted the Space Odyssey of India single handedly.

He is Dr. A P J Abdul Kalam, President of India.

In 1962, four nervous young musicians played their first recordaudition for the executives of the Decca recording Company. Theexecutives were not impressed. While turning down this group ofmusicians, one executive said, "We don't like their sound. Groups of guitars are on the way out."

The group was called The Beatles.

In 1944, Emmeline Snively, director of the Blue Book Modelling Agencytold modelling hopeful Norma Jean Baker, "You'd better learnsecretarial work or else get married."

She went on and became Marilyn Monroe.

In 1954, Jimmy Denny, manager of the Grand Ole Opry, Fired a singerafter one performance. He told him, "You ain't goin' nowhere....son.You ought to go back to drivin' a truck."

He went on to become Elvis Presley.

When Thomas Edison invented the light bulb, he tried over 2000experiments before he got it to work. A young reporter asked him how itfelt to fail so many times. He said, "I never failed once. I inventedthe light bulb. It just happened to be a 2000 step process."

When Alexander Graham Bell invented the telephone in 1876, it did notring off the hook with calls from potential backers. After making ademonstration call, President Rutherford Hayes said, "That's an amazinginvention, but who would ever want to see one of them?"

In the 1940s, another young inventor named Chester Carlson took his idea to 20 corporations, including some of the biggest in the country.They all turned him down. In 1947, after 7 long years of rejections, hefinally got a tiny company in Rochester, NY, the Haloid company, to purchase the rights to his invention an electrostatic paper copying process.

Haloid became Xerox Corporation.
A little girl the 20th of 22 children, was born prematurely and her survival was doubtful. When she was 4 years old, she contracted doublepneumonia and scarlet fever, which left her with a paralyzed left leg.At age 9, she removed the metal leg brace she had been dependent on andbegan to walk without it. By 13 she had developed a rhythmic walk, whichdoctors said was a miracle. That same year she decided to become arunner. She entered a race and came in last. For the next few yearsevery race she entered, she came in last. Everyone told her to quit,but she kept on running. One day she actually won a race. And thenanother. From then on she won every race she entered.

Eventually this little girl Wilma Rudolph, went on to win three Olympic gold medals.

A school teacher scolded a boy for not paying attention to hismathematics and for not being able to solve simple problems. She toldhim that you would not become anybody in life.

The boy was Albert Einstein.
The Moral of the above: Character cannot be developed in ease andquiet Only through experiences of trial and suffering can the soul bestrengthened, vision cleared, ambition inspired and success achieved.You gain strength, experience and confidence by every experience whereyou really stop to look fear in the face. You must do the thing youcannot do. And remember, the finest steel gets sent through the hottest furnace. In LIFE, remember that you pass this way only once! let's live life to the fullest and give it our extreme best.

"Failure is the pillar of success!" And if you know me well - you will vouch for it - every word.

Commonly Used Phrases..

2004-10-01T01:03:00.000-07:00

Commonly Used Phrases at the Official communications and... What they really mean!(in the lighter vein..of course)

1) For your information, please. (FYI)
We don't know what to do with this, so please keep it.

2) Noted and returned.
We don't know what to do with this, so please keep it little while.

3) Review and comment.
Do the dirty work so that I can forward it.

4) Action please.
Get yourself involved for me. Don't worry, I'll claim the credit.

5) For your necessary action.
It's your headache now.

6) Copy to.
Here's a share of the headache.

7) For your approval, please.
Put your neck on the chopping board for me please.

8) Action is being taken.
Your correspondence is lost and we are still trying to locate it.

9) Your letter is receiving our attention.
We are still trying to figure out what you want.

10) Please discuss.
I don't know what this is, so please brief me.

11) For your immediate action.
Do it NOW! Or we'll all get into trouble.

12) Please reply soon.
Please be efficient. It makes me look inefficient.

13) We are investigating/processing your request with the relevant authorities.
They are causing the delay, not us.

14) Regards.
Thanks for reading all the above nonsense.

DON'T QUIT - A MANAGEMENT THOUGHT

2004-08-08T21:12:00.000-07:00

When things go wrong, as they sometime will,
When the road you're trudging seems all uphill,

When the funds are low and the debts are high,
And you want to smile, but you have to sigh,

When care is pressing you down a bit -
Rest if you must, but don't you quit.

Life is queer with its twists and turns,
As everyone of us sometimes learns,

And many a fellow turns about
When he might have won had he stuck it out.

Don't give up though the pace seems slow -
You may succeed with another blow.

Often the goal is nearer than
It seems to a faint and faltering man;

Often the struggler has given up
When the might have captured the victors cup;

And he learned too late when the night came down,
How close he was to the golden crown.

Success is failure turned inside out -
The silver tint of the clouds of doubt,

And you can never tell how close you are,
It may be near when it seems after;

So stick to the fight when you're hardest hit -
It's when things seem worst that you mustn't quit

"Quitters never win
Winners never quit".

Courtesy - "Companies don't succeed - People do!" by Graham Roberts Phelps

HOW WILL CURRENCIES BE AFFECTED BY RISING OIL PRICES

2004-08-05T05:32:00.000-07:00

How Will Currencies Be Affected By Rising Oil Prices

Higher Oil Prices - USD ($↓) JPY (¥↓) EUR (€ ↑) GBP (£↑)

Why Are Oil Prices Rising So Sharply?

To understand how currencies will be impacted by rising oil prices, it is important to first understand why oil prices have been rising so sharply recently. The price of oil surged through $41 a barrel recently, to its highest level in history, that key technical level seems to send a signal of even slower world economic growth to come. Widespread economic concerns continue to weigh on investors, heightened by fears that oil supplies could be disrupted by an escalation in Middle East violence. Evidence of this is clear from recent attacks on oil terminals in Saudi Arabia and Iraq as well as the latest assassination of the Iraqi Council Governing Leader. Even worse, all of this uncertainty is occurring when supplies are extremely tight and demand continues to grow at an alarming rate. A strong non-farm payrolls report catapulted the price of oil higher based on the assumption that the economy is improving and the Fed will begin raising rates. In turn it bolstered the outlook for fuel consumption in general. Thus the price broke through the key psychological and technical $40 level and has now proceeded even higher. Oil had a brief sell off on profit taking, and also on comments from OPEC members, regarding increased production. Often these are false promises that never come to pass so the market continued its run higher, causing prices to reach all time contract highs. Oil has been trading above $30 a barrel since late last year and the pump price of gasoline has been at a record high across the U.S. and Canada. The rising cost of oil has been crippling to fuel-sensitive industries such as airlines and truckers. However, motorists have shown little sign of reigning in their consumption. OPEC, which accounts for about one-third of world oil production, already exceeds its projected daily production by an estimated 2 million barrels, but it has had no impact on lowering prices. The oil cartel is now coming out again with talk of increasing production prior to their next meeting on June 3rd in Beirut. Traders are skeptical that an increase will not be of any immediate help.

How to Determine Oil Price Impact on Specific Currencies

Here is a framework to determine how higher oil prices will impact certain currencies: How dependent on oil is a particular country? A country’s dependency is very important in determining how its currency will be impacted by a change in oil prices. Intensive energy users (or net oil importers) will be more negatively impacted than other countries. Falling oil prices benefit consumers in the same way as tax cut, while higher oil prices act like a tax hike. For corporations, higher oil prices can translate into lower profits. Countries with alternative fuel sources, and other resources have the ability to switch from strict oil dependence to other energy sources, which helps to reduce their exposure and sensitivity. Monetary Policy Responses How reactive a country’s monetary policy authorities are to rising inflation is also very important in forecasting a currency’s reaction. Countries with inflation targets may be more aggressive at combating inflation and will adjust their monetary policies accordingly, while others who may be dealing with low inflation will keep monetary policy accommodative to guard against slower growth as a result of higher oil prices. Monetary policy and interest rates are key drivers of currency movements. Does the economy have a large oil-related market cap vs. industrial market cap? Market cap composition may also influence how the oil price affects a currency via capital flows. The currencies of countries with a low energy-related market cap, but a high industrial market cap is more likely to be hurt by higher oil prices. Investment flows may be muted by the decreased profitability of these types of industries. Countries with heavy manufacturing and high levels of oil imports will most likely have the most exposure. Key Factors Are Growth & Inflation - Oil Isn’t The Only Factor Driving Inflation... Inflation has been creeping up everywhere. The Bank of England recently raised its main interest rate by a quarter of a point, citing the need to keep inflation under control. The ECB left its interest rate on hold at 2%, signaling its concern over inflation and is calling on OPEC member countries to act responsibly on oil prices. However, inflation isn’t only driven by high oil prices. In the US, higher prices for everything from chemicals and food to industrial commodities and labor are hitting the US economy hard. As the US economy sputters trying to gain momentum, employers are faced with more and more obstacles. Costs are skyrocketing across the board. Employers are faced with rapidly rising expenses including severance, health insurance, vacation pay and referral bonuses – all of which rose 6.9 % over the past 12 months, compared with a rise of 6.1% in the prior year, according to the latest figures. The employment cost index, a gauge of labor expenses for businesses and government, climbed 0.8% in Q4 according to the Labor Department report. Benefit costs rose 2.4 % from January through March - the largest rise since Q3 of 1982. U.S. costs for labor jumped 1.1 % in the first quarter, as benefits costs rose by the most in more than two decades. Looking back from the early 70’s forward, there are observable and dramatic changes in GDP growth in relation to changes in the world oil price. The price shocks of 73-74, the late 1970s/early 1980s, and early 1990's were all followed by dramatic recessions, which have then been followed by a rebound in economic growth. The pressure of energy prices on aggregate prices in the economy created problems for the economy as a whole. The chart below of oil prices and GDP 12 months forward clearly shows the effects of higher oil prices on GDP. There have been three global recessions in the past 30 years, and all of them were pre-dated by a sharp rise in oil prices. Higher oil prices are already hurting the global economy and could further hamper growth, bolster inflation and increase unemployment over the next two years if prices stay at their present levels. According to a recent study released by the International Energy Agency (IEA): “If oil prices stay at their current level of more than $35 a barrel, more than $10 a barrel above their level of three years ago, world GDP would be at least half of 1% lower -- equivalent to about $255 billion -- in the year following a $10 oil-price increase.” So with the threat of inflation looming it’s important to consider the monetary policy reactions of the global central banks.

Which Currencies Will Most Likely Be Negatively Impacted By Higher Oil Prices?

The USD ($↓) and the JPY (¥↓)

Dependency on Oil - The US and Japan are the world’s two largest net oil importers. Skyrocketing oil prices will have a particularly damaging effect on the economic recoveries in both countries by effectively threatening to stall growth. Fed Chairman Alan Greenspan has already warned that rising oil and gas prices could have a significant impact on the long-term development of the US economy. In the case of Japan, their lack of domestic sources of energy and their need to import vast amounts of crude oil, natural gas, and other energy resources makes them particularly sensitive to changes in oil prices. Japan also lacks the flexibility to switch to nuclear power because they are a huge net importer of uranium for their nuclear power plants. In 2001, the country's dependence on imports for primary energy stood at more than 79%. Oil provided Japan with 50% of its total energy needs, coal 17%, nuclear power 14%, natural gas 14%, hydroelectric power 4%, and renewable sources a mere 1.1%.

Monetary Policy - Aside from their high reliance on external oil, the Federal Reserve and the Bank of Japan are also more likely to focus on growth rather than inflation. Both countries have been grappling with very low levels on inflation and even what may be considered deflationary conditions. U.S. inflation is now only about 1.4 %, within range of the 2 % to 2.5 % deemed as acceptable by most economists. It's also below half the average of the last 20 years -- during which the economy was in recession a total of five quarters -- and a third of the rate during some of the most prosperous years of the 1980s. With inflation so low the Fed may refrain from increasing rates out of fear that rising oil prices will hurt deflation. In fact, some feel the economy would be well served by inflation. First, producers of goods and services could impose minor price increases that translate to higher profits and potentially higher pay for workers covering some of the increased expenses. Second, it would take the rate above its current ultra-low level. If inflation were to remain at its current level, the economy would rise then fall into deflation in the next go round. Most economists agree deflation is a more difficult problem to fix with monetary policy than inflation, because consumers hold off making purchases today anticipating prices will be lower tomorrow. Unfortunately with interest rates already at such low levels the Fed has a limited ability to combat deflation. After all, interest rates cannot be set below zero.

Which Currencies Will Most Likely Benefit From Higher Oil Prices?

- EUR (€ ↑) and the GBP (£↑)

Dependency on Oil – The United Kingdom is a net oil exporter and stands to benefit from rising oil prices. Although their oil exports are relatively small, they are not subject to the same net ramifications as oil importers such as the US or Japan. On the other hand, Germany and France, the two largest countries in the Eurozone are net oil importers. Germany's crude oil imports, especially from Iran have been climbing drastically since the year 2000. Another Eurozone country that may suffer from higher oil prices is Italy. Almost 60% of Italy's energy comes from oil, most of which is imported. Gas accounts for another 30% of energy use. So Italy is exposed to a great deal of price exposure from rising oil prices. However, according to a Eurozone source, the robustness of global growth and the expansion of international trade remain stronger than had been expected a few of months ago and thus help to soften the blow to eurozone economic growth resulting from higher oil prices. At the same time, inflationary risks are being contained in part by positive wage developments in Europe. Another windfall for the Eurozone is that the EU holds 7.3% of proven coal reserves, 16% of the world's capacity for refining crude oil into petroleum products, and 16% of the world's electric generating capacity. In addition, the Eurozone is making diligent efforts to increase the role of renewable energy sources in the EU fuel mix. In 2001, renewable energy accounted for 6% of EU energy consumption. The EU aims to derive 12% of the group's gross energy consumption from renewable fuels by 2010, according to the 2001 Directive on renewable energy sources. Renewable energy sources are defined as wind, solar, geothermal, wave, tidal, hydropower, biomass, landfill gas, sewage treatment plant gas and bio-gases.

Monetary Policy – More importantly though are the forecasted monetary policy reactions of the Bank of England and the European central bank. Both monetary policy authorities are particularly concerned with rising inflation. The minutes for the May 5/6 monetary policy meeting at which the BoE raised rates by 25bp indicates that inflation is forecasted to rise by such a quick pace over the next two years that the BoE even contemplated raising rates by 50bp in May. Should oil prices continue to rise, pushing inflation higher, the MPC would be expected to take initiatives to curb inflation. In the Eurozone, the ECB is traditionally a very active fighter of inflation and tends to take aggressive action in staving it off, far more so than the US. This may explain the ECB’s strong resistance to further rate decreases and the hawkish press conference by Trichet on May 6th. Continual rallies in oil will give ECB officials more reason to argue against the politicians advocating another rate cut to support growth.

Caveat - Changes May Be in Store for How Oil is Priced Globally

The global oil trade is currently based in dollars. This means that US is the only country in the world that incurs no currency risk when it deals in the oil market. It is also the sole country that can print money to purchase oil. The dollar-based global oil trade gives the United States free reign to print dollars without sparking inflation – it allows the US to fund huge expenses on wars, military build-ups, and consumer spending, as well as cut taxes and run up huge trade deficits. Almost two-thirds of the world's currency reserves are kept in dollars, since oil importers pay in dollars and oil exporters tend to keep their reserves in dollars. This effectively provides the U.S. economy with an interest-free loan, as these dollars can be invested back into the U.S. economy with zero currency risk. In the euro zone things are different. Europe would prefer to see payments for oil shift from the dollar to the euro, which effectively removes the currency risk like it does currently for the US. It would also increase the demand for the euro and thus help to raise its value. Moreover, since oil is such an important commodity in global trade, in terms of value, if the pricing of oil were to shift to the euro, it would have a strong symbolic implication. There are also very strong trade links between OPEC Member Countries and the Eurozone, with more than 45 % of total merchandise imports of OPEC coming from the countries within the Eurozone. In the Baltic region, Russia is a big net exporter of oil, which means that the Russian economy is poised to benefit from higher oil prices. A move by Russia, the world's second largest oil exporter, to price its oil in euros poses a potential downside risk to the dollar as it opens the door for other oil exporters to follow suit. If oil were not priced in dollars, countries have less of a need to hold dollar reserves and may rebalance their currency holdings. The effect of this rebalancing could lead to a sharp sell-off in the dollar as countries shift a portion of their dollar holdings into euros. Iran for example, the world's 5th largest oil exporter, has also debated a move into euros. After the war in Iraq, there has been growing debate in the United States' longtime ally Saudi Arabia on possibly switching as well - though its government has not come down firmly on one side or the other. All of this talk of change could also have a negative impact for the dollar down the road if these changes take place, even on a limited basis. The bottom line is that the current record highs in the price of oil will likely have a continued global impact, with long lasting repercussions for global economic recovery.

Courtesy: Forex Capital Markets

Do You Want Me to be Good to You, or Good for You?

2004-07-27T02:02:00.000-07:00

One of my clients (who publish monthly real estate books that market residential properties.) had a great comment about how he takes care of his customers, the real estate agents and brokers that buy the ads in his books. He asks them, 'Do you want me to be good to you, or good for you?'

Think about that question for a moment. Being good to the customer means you take care of them, give them great service, etc. But being good for the customer is different. It is helping them or enhancing their experience.

Sometimes it is easy to enhance an experience or increase the value of your products or services by just making suggestions or helping the customer. Other times you have to sell more. Up- selling sometimes scares sales people, but it has to be done. It is a disservice not to up-sell the customer when it is appropriate and necessary to the success of the product.

As mentioned above, my client sells advertising in a book. Being good for the customer means the sales person can help design the advertisement for the customer. They may even suggest a larger advertisement, not because it brings more revenue to the company, but because it will truly create better results for the customer. The sales rep is helping the customer receive maximum impact for the advertising dollars.

How about the server at a restaurant that suggests that the guest try the new appetizer? The server could just take the food order, but instead is suggesting something that might add to the enjoyment of the meal. Yes, it adds dollars to the check, but it also enhances the experience.

Recently at a retail golf store I saw the sales person sell some expensive golf clubs. What compelled the customer to buy the clubs on the spot was when the sales person said, 'I could sell you these clubs today and I know you would be happy with them. But I won't sell them to you until I make sure they are the right clubs for your golf swing. So, let's step over to our practice facility and make sure you are comfortable with these clubs. Fifteen minutes later the customer felt like they had a golf lesson – with clubs that would help improve the game. Sold!

Let's take the question a bit further. The question is really a philosophy. There really isn't a choice. The customer deserves to have both. We should be good to and for the customer. That is what my client intends. Posing it as a question is only for the benefit of the customer.

In conclusion, don't just take care of the customer. Help the customer. Don't just be good to the customer. Be good for the customer. Show value, create an experience and always strive to exceed their expectations.

Courtesy: Shep Hyken

Immortality - The Driving Force Behind the Legend!

2004-07-27T01:17:00.000-07:00

The closest man comes to happiness is in the ardent pursuit of his passion!

Some achievers are not satisfied at being the best in their field. They stretch the limits of the possible and then go beyond that. They don't compete. They define and run their own race. They change the realms of possibility. They set new benchmarks. They strive to the point of absurdity. Their contributions and accomplishments defy description. Their accomplishments are treasured for centuries. They are revered long after their time!

What motivates this select group? Why do they strive so hard? What drives them?

Psychologists and Scientists who study success and its roots have come up with numerous reasons and factors that help drive a person to achievement. Dominant and affectionate mothers (Jack Welch, Lance Armstrong), a slightly insecure personality characterized by some degree of introversion, and an intense deep rooted desire to be appreciated and liked, have been some of the reasons used to explain the intense drive exhibited by high-achievers.

The purpose of this article is not to study or understand the factors that drive the high-achievers of our society, but an attempt to understand the factor that is most critical in the making of legends - i.e. high achievers whose achievements transcend generations.
Right from the biblical age (the forbidden fruit!), human beings have had a tendency to long for and go after what they can't or shouldn't have.

Said or unsaid, every one of us is fearful of his own mortality - the knowledge that each of our place and role on this planet is one of impermanence; a temporary small speck in the planet's long history. As a result, we long for a state of permanence or immortality, in some form or fashion.

This longing for a state of permanence manifests itself in several forms.

For most of us, this is manifested in the form of procreation. Most men feel the need for children, to carry on the family line and name. Most women feel fulfilled by nurturing and rearing their own children. Parents, to a great degree, see themselves in their children. They want their children to "carry on" and "live up to" the family name.

It is their way of leaving a mark in the world. Their progeny is a way of satisfying their need for permanence - a way to indicate their continued existence. It gives them a sense of satisfaction that has never been and probably never will be defined. So much so that a childless couple more often than not go through deep existential pain and trauma; to a degree that life becomes dull and purposeless. Coming to terms with the hard reality of childlessness is a challenge. Most childless couples never come to terms with it.

A more simplistic manifestation of the above "want / desire for permanence" is people striving to look good in their wedding photographs, for posterity. That is also the same reason why many people indulge in writing an Autobiography - to record their life and works for future generations - yet another way of trying to achieve some form of permanence.

In summary, our frailty makes us long for permanence. We are constantly striving for immortality. Till such time that scientist can concoct the eternal youth potent, we derive satisfaction by leaving some aspect of ourselves (progeny, ideas, company, nation, philosophy, invention, art, literature, etc.) behind, as we leave the world.

While many people view progeny as leaving some aspect of themselves for posterity; there are individuals who though driven by the same desire, their manner of leaving their footprints in the sands of time is not through their progeny but through their life's vocation or passion. These individuals could be poets, craftsmen, artists, inventors, entrepreneurs, scientists, politicians, business leaders or one of a host of other professions.

These high-achievers are driven by a desire to leave a mark. Their ardent endeavor is to leave an imprint that is as deep and permanent as possible in the sands of time, though they realize that any imprint they leave, irrespective of its impact, will never be permanent. This imprint could be in one of many different forms - work of art, literary classic, company, philosophy - thoughts - ideas - writings, nation building, sport, science etc.

These individuals pursue their chosen area with intense passion and single minded devotion - they are driven by an obsessive drive for perfection - to be the best - perhaps better than the best, to create / contribute something that will be recognized as unique, something that will last long after they are gone - that will stand the test of time and provide them and their feats an elevated place in history. They dedicate their body, mind and soul to their endeavor.
This ardent pursuit of their passion gives them a strong sense of purpose and satisfaction. The satisfaction obtained from pursuing this goes way beyond any material benefits or fame that may be obtained as byproducts of their journey.

While plenty of them strive for posterity and become world famous during their life times, very few actually succeed in leaving a mark that transcends generations. A few names that come to mind include: Socrates - Logic / Philosophy, Gandhi - Non-Violent Movement / India, Albert Einstein - Theory Of Relativity / Physics, Leonardo da Vinci - Mona Lisa / Art!

Courtesy: Navin V. Nagiah

The ART of Transferring Risk

2004-07-23T22:09:00.000-07:00

The ART of Transferring Risk From the University of Chicago: ''alternative risk transfers'' blur distinctions between insurance companies and banks.

Once upon a time, in the not-so-distant past, a finance chief could tell the difference between an insurance policy and a derivative contract.

It was really a no-brainer. An insurance policy was a signed agreement under which your company paid a premium. In exchange, the company got to transfer some of its risks — like fires or class-action lawsuits — to a property/casualty insurance company.

A derivative, on the other hand, was a security you bought from a banker or a dealer to hedge corporate financial risks or to bet on a good investment return.

In recent years, however, distinctions between the commercial insurance industry and the capital markets have blurred. Both camps are routinely lumped under the adroitly coined rubric of ART, short for "alternative risk transfer." The only common element? Risks are covered in nontraditional ways.

Indeed, it's hard to tell the players without a scorecard. Looking like investment bankers, some insurers and reinsurers now help clients issue securities — not necessarily to raise capital for a project, say, but to cover the client's risks. Carriers are also venturing into what was once exclusively capital-markets terrain by serving up hedging features in some P/C products.
For their part, some bankers can easily be mistaken for insurance executives. Like insurers, they take part in deals involving captive insurance companies — perhaps the oldest part of the ART scene. Further, capital-markets mainstays like Lehman Brothers and Goldman Sachs are players in the Bermuda reinsurance market.

Navigating such shifting — and often offshore — waters can be tough for CFOs with risks to cover and capital to protect. But if they're equipped with a coherent way to shop the ART market, they can find ways to cut risk-transfer costs, says Christopher Culp, who teaches
"Alternative Risk Transfer: The Convergence of Corporate Finance and Risk Management," an executive education course at the University of Chicago's Graduate School of Business.

What finance executives need is a methodical way to sort through the mounting numbers of alternative-risk offerings, according to Culp, an adjunct professor of finance who often consults for participants in the insurance and derivatives industries. While selecting alternative risk coverage might involve dicier decisions than choosing a breakfast cereal in a supermarket, he suggests, similar principles apply.

In the latter case, the professor asks, "wouldn't it be great if we had a more systematic way of knowing which box to go to?"

Between RAROC and a Hard Place: To be sure, the observation that corporate finance and risk management are melding is nothing new. Culp, however, says contends that his course has gained become especially important just now.

University administrators apparently agree: They began offering a version of the class as part of Chicago's regular MBA program for the first time last autumn and will offer two sections of it this fall. (Culp and a Swiss Re executive have recently taught similar courses open only to the reinsurer's client companies and its own executives, and Chicago will do the same for other interested companies.)

Convergence is an idea whose time has come, Culp believes — in part because the ART market is in the midst of a "revolution" in product offerings. Just a few years ago, the market consisted mainly of all-purpose, multiyear, multiline insurance policies and catastrophe-linked futures sold at the Chicago Board of Trade. Mainly because they were relatively pricey, the policies and the futures drew less-than-enthusiastic receptions from corporate buyers.

During the hard insurance markets of 2001 to 2003, however, traditional insurance made alternative products look cheap by comparison. As a result, the ART market took off. Among the most successful products, says Culp, are "multitrigger," business-interruption policies that pay off for a disaster only if one or more other bad things occur. One example of an added trigger might be a 20 percent drop in net cash flows.

Another hot product: "Finite risk" insurance and reinsurance policies. Under such policies, buyers typically plunk down premiums big enough to cover most expected losses over a period of as long as 10 years. Buyers often get rebates if losses are less than expected. It's the insurer for whom the risk is "finite," since the policyholder ponies up a hefty sum to help cover the risk.
Even though prices for traditional coverage have softened over the last year or so, the demand for ART products hasn't slowed, Culp observes. According to the professor, many commercial insureds have become accustomed to a more "holistic" way of financing risk and favor it over the "silo by silo" approach involved in purchasing a variety of insurance policies.

Besides the burgeoning of the ART market, executives' increasing caution about how to disperse capital has brought risk management and corporate finance closer together, says Culp. Senior managers have simply grown wary of making investments without having some idea of what the downside might be.

Using metrics like risk-adjusted return on capital (RAROC), executives are factoring operational risk into their calculations of the cost of capital projects, the professor adds. When companies deploy capital in new areas, he explains, they "demand a high risk-adjusted return."

In the course, Culp tries to show how deft ART-buying choices can help companies make more efficient use of such scarce capital. Normally, he notes, a corporation short on funds might issue stock or corporate bonds, for instance. But if the shortfall is triggered by a negative event like a drop in product demand, it might be hard to find willing investors or lenders.

In such cases, companies might more wisely have tapped the ART market beforehand and bought "contingent capital," according to Culp. Offered by insurers and reinsurers, the product enables a company to pick up quick capital by selling securities to the insurer at a preset price if a specified bad event happens.

That could make raising capital a whole lot cheaper. "Instead of having to issue common stock, you get it from a contingent-capital insurer that knows you better than the investor community does — and thus gives you a better price," he explains.

Hacking Through the Hype: To make such moves, however, finance executives need to know what the various ART products actually do. That's tricky, says Culp, since the products are often ill-named.

Among his examples of flashy, though unhelpful, terms of ART: "earnings-per-share insurance" (a policy including a number of different kinds of coverage) and "adverse-development coverage" (insurance for that part of a loss that exceeds what the buyer has self-insured).

Indeed, Culp thinks that much of his task in teaching the course is to help executives sort through puffery. To be astute consumers, they need to be able to "look at what the product itself is," he says, "rather than what somebody calls it in the marketing department."

Courtesy: David M. Katz, CFO.com

What advice did the CEO give?

2004-07-18T21:16:00.000-07:00

Morris had just been hired as the new CEO of a large high tech corporation.

The CEO who was stepping down met with him privately and presented him with three numbered envelopes....#1,#2,#3.

"Open these if you run up against a problem you don't think you can solve," the departing CEO said.

Well, things went along pretty smoothly, but six months later, sales took a downturn and Morris was really catching a lot of heat. About at his wit's end, he remembered the envelopes. He went to his drawer and took out the first envelope.

The message read, "Blame your predecessor."

Morris, the new CEO called a press conference and tactfully laid the blame at the feet of the previous CEO. Satisfied with his comments, the press -- and Wall Street -- responded positively, sales began to pick up and the problem was soon behind him.

About a year later, the company was again experiencing a slight dip in sales, combined with serious product problems. Having learned from his previous experience, the CEO quickly opened the second envelope.

The message read, "Reorganize."

This he did, and the company quickly rebounded. After several consecutive profitable quarters, the company once again fell on difficult times.

Morris went to his office, closed the door and opened the third envelope.

The message said, ..."Prepare three envelopes."

How Tax system works?

2004-07-18T21:03:00.000-07:00

You've heard the cry in the past "It's just a tax cut for the rich!", and it is accepted as fact. But what does that really mean?

The following explanation may help.

Suppose that every day, 10 men go out for dinner. The bill for all 10 comes to $100. They decided to pay their bill the way we pay our taxes, and it went like this:*

The first four men (the poorest) paid nothing.*
The fifth paid $1.*
The sixth $3.*
The seventh $7.*
The eighth $12.*
The ninth $18.*
The tenth man (the richest) paid $59.

All 10 were quite happy with the arrangement, until one day, the ownersaid: "Since you are all such good customers, I'm going to reduce the costof your daily meal by $20."

So now dinner for the 10 only cost $80. The group still wanted to pay their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free. But how should the other six, the paying customers, divvy up the $20 windfall so that everyone would get his "fair share"?They realised that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth and sixth men would each end up beingpaid to eat.

The restaurateur suggested reducing each man's bill by roughlythe same percentage, thus:
* The fifth man, like the first four, now paid nothing (100% saving).
* The sixth paid $2 instead of $3 (33% saving).
* The seventh paid $5 instead of $7 (28% saving).
* The eighth paid $9 instead of $12 (25% saving).
* The ninth paid $14 instead of £18 (22% saving).
* The tenth paid $49 instead of $59 (16% saving).

Each of the six was better off, and the first four continued to eat forfree, but outside the restaurant, the men began to compare their savings

."I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man "but he got $10!"

"That's right," exclaimed the fifth man. "Ionly saved a dollar too. It's unfair that he got ten times more than me!"

"That's true!" shouted the seventh man. "Why should he get $10 back when Igot only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't getanything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for dinner. The nine sat downand ate without him, but when they came to pay the bill, they discovered that they didn't have enough money between all of them for evenhalf of it.

That, boys and girls, journalists and college professors, is how our taxsystem works.

The people who pay the highest taxes get the most benefit froma tax reduction. Tax them too much, attack them for being wealthy, and theyjust may not show up at the table anymore.

There are lots of good restaurants in Monaco and the Caribbean(tax saving havens)

Courtesy - David R. Kamerschen, Professor of Economics, University ofGeorgia.

Executive Charisma: Can It Be Learned?

2004-07-07T03:45:00.000-07:00

Ask for adjectives describing a finance chief,and ''charismatic'' doesn't normally leap to mind.

When hiring, companies tend to value the candidate "who is appropriately serious and sober, and a big listener at the right time in the conversation," says John Wilson, whose San Francisco-based recruit firm, J.C. Wilson Associates, San Francisco-based recruiting firm, J.C. Wilson Associates, specializes in finance executives. That's true even more these days, perhaps, when "personal magic"—part of Webster's definition of charisma—could get a CFO into trouble in the boardroom.

But in a world where finance-department executives have become strategic corporate players and must communicate their goals to executives in other departments, some management experts suggest that a little leadership magnetism and charm are qualities CFOs should nurture. And a few think that charisma can be taught, at least to some degree.

With the right approach, all executives can up their charisma quotients, says Debra A. Benton, a Fort Collins, Colorado-based executive career counselor. "Technical brilliance is necessary, but what will take you farther is an understanding of how to deal with people," she says. "It might require learning to do more with your natural personality."

The challenge is tougher in finance, where executives are often pegged as quiet types. "I don't think their training encourages" charisma, she says. "And they can get away with not having it," since solid finance ability is indeed the traditional bedrock of most positions in the field. Yet those finance officers who have both the technical skills and a compelling persona can stand out from their generally reserved peers—in a good way, according to Benton.

Her recent book, Executive Charisma: Six Steps to Mastering the Art of Leadership (McGraw-Hill), presents a game plan for developing one's ability to command loyal troops. Benton quotes one executive who describes a bell curve in which executive charisma is found between temerity on one side and uncontrolled hubris on the other. "You want to be in the center and high on that scale," says the executive. Benton names such qualities for the midpoint as confident (but not arrogant) and tough (but not bullying). Her six steps, while often pretty obvious ("stand tall, straight, and smile"), are supposed to map out a route to the peak of that curve.

Over at Harvard Business School, though, assistant professor Rakesh Khurana shudders at the idea that charisma is a key to business success. He traces the word back to its roots as a religious term meaning "the gift of grace" or "the ability to speak with God." And therein lies its danger, says Khurana. "Charisma has always been attractive to people," he says, "because it offers a simple answer: suspend disbelief and follow blindly, and everything will be all right."

A Vision Salesman
Professor Khurana, author of last year's Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs (Princeton University Press), proposes that loyalty to a charismatic leader may be among the explanations for why Enron employees followed the lead of former CFO Andrew Fastow. "What we're looking for in a CFO is trust and rationality," says Khurana. "The CFO is supposed to be a counterbalance to the charismatic CEO."

Indeed, those who do see charisma as a valuable commodity believe it could help turn today's finance leader into a chief executive. "What separates the cream from the rest of the crop is the ability to sell a vision, and to get people working for you," says Natalie Laackman, Chicago-based senior finance officer and vice president of the ConAgra Foods Deli division of ConAgra Foods Inc. She cites the ability to relate personally to staffers as another aspect of charisma—a characteristic she associates with Jack Greenberg, the recently retired McDonald's Corp. chairman and CEO who once served as the company's CFO. Laackman worked closely with Greenberg at McDonald's before arriving at ConAgra in April. "He'll focus on the person who's talking to him, not just on the business agenda, and that has really endeared him to people and caused them to be very loyal," says Laackman. "He treats you like you're the most important person in the room."

Any list of charisma-blessed executives in the CFO arena is likely to include names of some who have moved on to lead companies or take positions of responsibility outside finance, like Hilton Hotels CEO Stephen Bollenbach; former Dell Computer CFO Tom Meredith, now an angel investor and philanthropist; Continental Airlines president and COO Larry Kellner; and PepsiCo president and CFO Indra K. Nooyi.

"The CFO will always be the numbers guy or gal," says Craig Watson, CEO of Opti-Pay Technologies LLC, an electronic-payment management company, and former CFO at Pepsi Central Co., which ran PepsiCo's Midwest beverage unit. "But I think it's up to CFOs to break the mold and demonstrate that they are first and foremost effective businesspeople." Watson, who has worked with Benton to improve his own style, believes her suggestions are especially helpful in promoting interdisciplinary contacts.

"The CFO really needs to cultivate the respect and support of the line managers," he says. "To do that, you have to have the capability to interact with people."

While Watson agrees that some executives can become too involved in creating a dynamic persona, he doesn't think there's much danger for finance officers. "What helps save a CFO from being hung up on his or her charisma," he says, "is that at the end of the day, the numbers have to make sense."

Courtesy - Kate O'Sullivan, CFO Magazine