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Sunday, 31 May 2009

Money thrown time and timeshare again

SINGAPORE: Instead of calling it quits after pouring so much money into certain questionable timeshare deals, some customers keep buying similar investments over and over again.

Retiree Wong Liang Yong, 69, is one such investor. He has spent close to S$80,000 since 1996, when he bought two timeshare investments for S$25,000.

"We did enjoy the timeshare holidays but when I retired in 2002, I found the S$1,000 in maintenance fees costly to upkeep and wanted a way out," he said.

In 2004, a timeshare company LGM approached Mr Wong to terminate his two contracts and promised him a cashback of around S$25,000 within five years. The catch: He had to pay S$10,000 upfront, which he did.

Mr Wong went on to sign two more resale timeshare contracts. In February this year, another timeshare firm Maxmega Group promised him a cashback of S$104,000 within 18 months, but he had to fork out S$35,000 first and he did.

Two weeks after signing the contracts, Maxmega told him that "they had problems with LGM as it had been suspended".

"They said Maxmega is an agent for Colco Ventures — a firm that has taken over all the timeshares all over the world, and it could not use LGM services. So it had to charge me some S$200,000 liability for subscription fees," he said.

Mr Wong became upset when the company threatened to sue him if he did not pay. He then contacted other timeshare victims. On Friday, 16 of them went to the Consumers Association of Singapore (CASE), but only six filed complaints against Maxmega.

Customer service officer Juraimi Selamat, who has invested around S$85,000, hopes CASE can help get his money back. If not, the 16 of them might consider "legal action", he said.

"I’m doing this to warn other people about terminating their timeshare. I hope the government can do more against these practices," Mr Wong said.

CASE will be sending a Voluntary Compliance Agreement to Maxmega and will investigate whether it has breached the Consumer Protection Fair Trading Act. If it has, an injunction will be filed against the company.

Since 2008, CASE has received a total of 27 complaints against timeshare companies totalling S$791,000 in value.

Saturday, 30 May 2009

Search Wars: Forget Bing, Google Has More to Worry About from Twitter

CARLSBAD, CALIF. -- Microsoft's Bing may be an improvement in search, but short of anticipating queries and "hitching up to my synapses" it's probably not enough to get people to change their habits, says Paul Kedrosky, senior research adviser at Ten Asset Management.

Microsoft and anyone else trying to unseat industry titan Google (including my employer) face a simple but daunting problem, Kedrosky says: "You're trying to replace a product people are reasonably happy with, with something where it's not clear what the quantum improvement is."

This challenge is made even tougher because it's hard to compete on price, considering search is free.

But while Kedrosky says Google doesn't have much to worry about from its big rivals, real-time search could upset the current paradigm.

"Live data pouring in on a real-time basis - a fire hose of data," is both compelling for users and a "very different thing architecturally" from how search is currently structured, he says in the accompanying video, taped Thursday at the AllThingsD conference. As a result, Google, Microsoft and Yahoo are going to have "redirect the [search] aircraft carrier to make it do things nimbler [and] faster," he says, even as smaller players can focus entirely on real-time search.

Real-time search is one of the great promises of Twitter, according to many, and a big reason why Kedrosky believes the firm isn't likely to be independent much beyond next year.

Financial Advice for Fresh College Grads

by Laura Rowley

My niece Kara just graduated from a Rhode Island university with a teaching degree; this was a bit of a shock to my system, since I first met her when she was just learning to walk. This week I wanted to offer Kara and other grads some advice on how to think about money and how to use it as a tool to achieve more happiness. Given what’s happened over the past year and a half, this isn’t an easy assignment.

Too many people are no longer reaping what they sow. They worked hard and got laid off. They saved diligently for college, and their 529 plans tanked (while tuition grew at double the rate of inflation). They contributed regularly to their retirement funds and lost 40 percent or more of their portfolios. They took out a mortgage they understood to buy a home they could afford, and it plummeted in value. They paid for health insurance but ended up bankrupt when they got sick. They followed the rules, and their dreams were derailed.

Some writers have suggested that recent experience means the death of personal-finance advice, because the conventional wisdom turned out to be so wrong under the circumstances. But this is a knee-jerk response that throws the baby out with the bathwater.

Perhaps the real problem is that the personal-finance advisers sold people on the illusion of total control. The underlying message of most personal-finance books is, "Do this and you’ll be rich like me! Guaranteed!" This ignores the fact that making big money -- and hanging onto it -- comes from a confluence of unique factors: upbringing, education, talent, a lucky break, perfectly timing a market bubble, and not bumping into Bernie Madoff at a cocktail party.

We Don't Have Control

The truth is we don’t have control. We can set goals based on what we value most, take concrete steps to achieve them, live within our means, do our best to manage risk, try to find good advisers, and sidestep the bad guys.

But that doesn’t protect us from the stupid things that government, institutions, and other people do that wreak havoc on the economy. In other words, you can eat right and exercise and still get run over by a drunk driver. That’s why we need to have common-sense regulation of financial services in the same way that we regulate drinking and driving. (How about a simple suitability requirement for the nation’s mortgage brokers so they can’t refinance an 84-year-old six times in three years? And a fiduciary duty for anyone who makes his living managing other people’s money?)

To my darling Kara and the other 2009 college graduates, here are the habits of financial peace that I have found in the past two decades, and they do work -- whether the Dow is at 14,000 or 6,000.

1. Work hard at the right things.

Continually develop your joyful skills, broaden your experience, raise your hand for new challenges, and take every free seminar your employer offers. Be as accomplished at making friends and contacts as you are at your job. Keep in mind that public companies often reward their executives in stock, and the stock prices usually go up when the cost of labor goes down (translation: you get laid off, your job moves overseas). Even if you work exceedingly hard, be aware that your competition is global and you are entirely dispensable. So invest your time developing your distinct abilities and a network that goes with you from job to job.

2. Define “rich” on your own terms.

Make a list of a dozen things you value most in life -- the qualities as well as the stuff -- whether this includes strong friendships, excellent health, independence, or a home on the beach. Set priorities and put a dollar figure on them, then work backwards -- if you want to buy a home in 10 years, what do you have to do in five years, two years, six months, or next week and even today to get there? Keep your list in your wallet, and pull it out every time you are tempted to trade what you want most in life for what you want this second.

Be creative and flexible in your definition of rich experiences. Whether you own a house on the beach or you housesit for free, you still get to feel the sand between your toes. If you barter your babysitting skills for personal training instead of paying cash, you still get abs of steel.

3. Banks should pay you interest, not the reverse.

Pay credit cards on time and in full every month. If you already carry a revolving balance, get rid of it as quickly as possible, even if it requires living at home (or with 12 roommates) for a period of time. Credit card firms pretend they exist to help you “live richly,” to borrow from an old ad campaign. But they are like drug dealers -- you’ll get a momentary high and then become wretched and dependent and kill yourself trying to kick the habit. Just say no. Do not arbitrage credit cards, rolling from one zero-interest card to another, because it can trash your credit score, and one tiny misstep can cost a fortune. Given recent legislation reining in the worst practices of credit companies, the days of ubiquitous zero-interest offers are probably over anyhow. Meanwhile, choose a credit union or local bank for your day-to-day finances, and if you do choose a megabank, don’t run afoul of their rules. Your finances will die the death of a thousand stupid fees.

4. Treat your credit score like a vintage race car.

Understand the mechanics of the thing, maintain it, buff it, shine it, and it will speed you in style to your destination. If you let it break down, it will damage your ability to get a job, rent an apartment, or borrow money to buy a car or a home -- and add tens of thousands of dollars in extra costs to everything in your life.

5. You do not need a million dollars for retirement.

The retirement industry will try to convince you that you do, because they make a lot of scratch managing your excess dough. Save 15 percent of your income from the time you start working in a tax-sheltered vehicle and you should be fine, although there are no guarantees. If you don’t have a 401(k) plan, lean toward a vehicle such as a Roth IRA, where you pay the taxes now, when you are in a lower income bracket, and take the money out tax-free later. The preposterous bailouts of this decade will come back to haunt Americans in future decades in preposterously high tax rates.

6. Learn to manage your own money.

Figure out what a stock is, what a bond is. Learn how the power of compounding works and how taxes affect your returns. Do not invest every penny in the stock market unless you have the stomach to lose every penny you put in. Find a percentage you are comfortable with, and if that’s 90 percent or 10 percent, know that there are risks on both sides. Historically, the broader stock market has never gone down to zero -- but individual stocks and funds have. So if you want to be in stocks, diversify your risk by buying very low-cost index funds or exchange-traded funds. Don’t know what an index fund is, or an ETF? There are dozens of free Web sites and classes where you can learn.

7. Understand the cost of your investments.

Know exactly how much you are being charged in fees for the privilege of investing in whatever it is you choose to invest in, and that includes your 401(k) retirement plan. You may be getting ripped off royally by your plan administrator, in which case you should only participate if you get a match, and then only up to the match.

8. Take good care of your health.

Exercise, eat your vegetables, and don’t smoke. No one knows what’s going to happen with the health care system in this country. But at the moment, illness is financially devastating. A 2005 Harvard study found that medical reasons caused half of U.S. bankruptcies -- and more than three-quarters of those households had health insurance at the onset of the illness.

9. Be giving, be grateful. Both are surefire strategies to well-being.

This advice might give you better control over your path to money and happiness. But there are no guarantees. Spend your money and time doing things with people instead of buying a bunch of stuff. Because, while you may find yourself caught in the crossfire of an embattled economy, no one can evict you from your experiences or repossess your memories.

Is Diversification A Strategy Of The Past?

Simon Maierhofer

In the early 80s, DOS was the most commonly used and recognized operating system (OS). In fact, DOS became the OS of choice and turned Microsoft into the leading software and computer technology provider. Newer Windows versions however, have proven more effective and reliable. At one point, MS DOS was the standard. Today, MS DOS is nearly obsolete.

Ever evolving products and standards are the result of a dynamic and efficient market place. The stock market dynamics of the last two years have certainly raised the bar and forced investors to rethink their strategies. Is diversification the financial equivalent of MS DOS?

For decades diversification has been the standard for many investors. The idea behind diversification is clear: exposure across multiple asset classes increases the odds of picking pockets of strength, just as placing multiple bets across the Roulette table gives you a higher chance of picking the winning number.

Pros and cons of diversification

A diversified portfolio for example, deflected the aftermath of the dot.com bust quite well. Even though the tech-laden Nasdaq (Nasdaq: QQQQ - News) and Technology Select Sector SPDRs (NYSEArca: XLK - News) lost some 40% in the year 2000, several industry sectors such as the Financial Select Sector SPDRs (NYSEArca: XLF) and Vanguard Consumer Staples ETF (NYSEArca: VDC - News) gained 20% and more.

On the flipside of the coin, regarding diversification and asset allocation, one could argue that placing bets on all sorts of asset classes doesn't make much sense. If you don't even fully understand the U.S. stock market, why would you want to commit money to international stock, bond, or commodity markets? If you can't even drive an automatic, why would you push your luck with a stick shift?

Investment strategies work... until they stop working. And more often than not, they become popular at the wrong time. Let's take a look at some numbers.

The year 2007 entered the history books as the last year of the boom and the beginning of the bust, at least for equities. The S&P 500 (NYSEArca: SPY - News) and Dow Jones (NYSEArca: DIA - News) were still able to eke out single digit gains, while commodities had started their final push to all-time highs.

International developed markets and emerging markets kept their winning streak alive for a little longer compared to U.S. equities, but were in a confirmed downtrend by early 2008. Global markets - previously considered 'decoupled' from the U.S. markets - became conjoined again.

Rising commodity prices in early 2008, neutralized losses in domestic and international equities. This continued until prices for wheat, corn, soybeans, oil, copper, nickel, and many other commodities plunged up to 70% within months of reaching all-time highs in Q1 08. ETFs affected include the PowerShares DB Agriculture ETF (NYSEArca: DBA - News), United States Oil Fund (NYSEArca: USO - News), and PowerShares DB Commodity Index ETF (NYSEArca: DBC - News).

With falling commodity prices, diversification had lost its touch. The onset of the financial meltdown was the beginning of the end' for diversified portfolios.

Even before the financial meltdown, the ETF Profit Strategy Newsletter considered financials a 'downward spiral with no stop-loss provision' and recommended to unload all asset classes in favor of short ETFs. Those short ETFs recorded double and triple digit gains in 2008 alone.

The end of diversification?

From the 2007 highs to the March 2009 lows, the S&P 500 lost 55.19%. How did a diversified portfolio fare over the same period of time? A portfolio with equal exposure to the Vanguard Total Stock Market ETF (NYSEArca: VTI - News), iShares Barclays Aggregate Bond ETF (NYSEArca: AGG - News), iShares Dow Jones US Real Estate ETF (NYSEArca: IYR - News), iShares MSCI EAFE (NYSEArca: EFA - News), iShares MSCI Emerging Markets ETF (NYSEArca: EEM - News), and iShares S&P GSCI Commodity ETF (NYSEArca: GSG - News) would have lost 48.12%.

Admittedly, 48.12% is better than 55.19% but either way investors lost about half of their money. That is simply not acceptable.

Did the 2008 meltdown usher in a new area that will render diversification obsolete just as windows did with DOS, or is the recent rally an indication that diversification bears timeless wisdom?

The ETF Profit Strategy Newsletter has become the default destination for profit minded investors. According to the newsletter, the bear market is not yet over. In fact, a deflationary environment will continue to put pressure on all asset classes.

Even the recent rally is no surprise to subscribers. The following was foretold in February: 'The best target for this low is 6,700 for the Dow and 700 for the S&P 500. Extreme pessimistic sentiment may drive the indexes even towards Dow 6,000 and S&P 600. A multi-month rally founded on this low should lift the markets by 30-40%.'

Despite the recent 30% bounce, the major indexes are still some 40% below their 2007 high watermark. At this point, it would still take an additional 75% rally and many years just to break even.

A pro-active, profit oriented approach on the other hand would put this mission on a fast track. By implication, a diversified approach always strings along weak sectors and asset classes that don't contribute to overall gains; in fact they often turn out as performance drag.

Rather than investing in a dozen asset classes (domestic and international small, mid, and large cap stocks, domestic and international bonds, commodities, real estate, etc.), many of which that are less than transparent, investors may want to consider investing in only one or two areas that offer the biggest and most likely profit potential.

While many lost 50% or more when the Dow Jones dropped from 14,000 to below 7,000, some actually used short and leveraged short ETFs to their advantage and recorded double and triple digit gains. Long-term indicators such as P/E ratios, dividend yields, the Dow measured in gold, and investor sentiment point towards new lows.

This will bring to an end (or at least put on hold) the era of diversification. Complacency will result in more losses. During the Great Depression, the Dow Jones lost more than 89% of its value. During those 34 months, there were five counter trend rallies with gains ranging from 25% to 50%. Only a pro-active, profit oriented approach protected investors from more losses.

The March and June issue of the ETF Profit Strategy Newsletter provided a detailed short, mid, and long-term outlook for the U.S. stock market, along with target levels for the ultimate market bottom. The Newsletters also included target levels for the end of this bear market rally, along with timely corresponding ETF profit strategies. Don't allow your portfolio to become extinct like MS DOS.

10 Part-Time Business Ideas

by Jeremy Quittner and John Tozzi

In any economy, a part-time business can bring in extra income, give you a fallback plan if you lose your job, or plant the seed for a larger venture. In a downturn, it's hard to argue with preparing a backup plan. Of course, starting a business is always risky, and you will almost surely spend more than you make at first. Previously, we offered advice for recently laid-off workers considering going into business for themselves. Now we're offering snapshots of part-time solo business ventures that could turn into full-fledged businesses, including tips on getting started.

Baker

Man does not live by bread alone, or so the saying goes. But if anyone checked the sales of some of the best independent bakeries around the country, they'd be astounded. In 1994, Jim Lahey started Sullivan Street Bakery after several years experimenting as a home baker. Today, his company, which has about $6 million in annual revenues and about 90 employees, is a New York City bread-baking institution. Lahey has a word of warning, though: "Knowledge of cooking is much greater than 20 years ago," he says. "The market is more competitive and if you want to develop a cottage industry, the product better exceed expectations."

And if you want to jump on one of the hottest trends nationally—cupcakes—you might even find yourself selling upwards of 2,000 a day, an amount that New York's famed Magnolia Bakery easily exceeds. At $2 a pop, you can do the math, even for your home-based business.

First steps: Break out your market. Are you going to make muffins and cupcakes or bagels and baguettes? As with most food businesses, you'll need a state license in order to sell to the public. If that seems daunting, you can start by selling to friends and relatives or at local bake sales.

You also need to decide how much space you'll need. If you outgrow your home kitchen, consider renting space in a professional kitchen.

Time needed: Baking is a time-consuming business, so expect to devote 10 to 20 hours a week on it for part-time work.

Average sales: $41,000, based on Labor Dept. data.

Blogger

It's true that few bloggers make enough to earn a living—most make nothing at all. But if you can write well about a topic you're passionate about, you may develop a following, and with enough page views you can start bringing in revenue from ads. Pick a narrow topic that you're intimately familiar with and that has a well-defined audience. For example, a site that covers the world of digital SLR cameras in minute detail has a more natural audience than a broad technology blog; likewise, a general restaurant review site may elicit yawns, while a blog chronicling the seafood shacks of New England could attract a cultish following.

First steps: Begin writing and start participating in online communities where people interested in your topic hang out. Start for free on a platform like Blogger or WordPress.

Time needed: Prepare to spend at least a few hours each day writing. Keep a regular schedule to make sure your blog doesn't get stale.

Average sales: $24,335, based on Economic Census data.

eBay Seller

Yard-sale mavens who already spend weekends trawling for hidden treasures can resell what they salvage online, on eBay or other sites. Pick a niche that interests you and that you have some expertise in and monitor what already sells online so you can set prices accurately. If you know your vinyl, buy old record collections in bulk and resell the gems individually online. From books to electronics, you may be able to find resalable items out on the street on trash night or given away for pennies at moving sales.

First steps: Set up a shop on eBay or other e-commerce sites and begin to build your seller rating. It's free to list items on many e-commerce sites, though eventually you may want to invest in your own Web site, advertising, or premium services.

Time needed: Expect to spend several hours a week finding inventory and listing it for sale.

Average sales: $22,196, based on Economic Census data.

Floral Designer

Turn your love of flowers and colors into bouquets and arrangements for occasions that vary from weddings and bar mitzvahs to confirmations and dinner parties. About one-third of the estimated 87,000 floral designers are self-employed, according to the Labor Dept.

First steps: Community colleges, vocational schools, and private floral schools all offer courses in flower design. You'll need to find a source for flowers, too. If you don't live near a flower wholesaler, a growing number now sell online. This is a supply-intensive business. You'll need a workshop space, refrigeration system, and some means of delivering your goods to clients.

Time needed: Three to 20 hours per week.

Average sales: $21,700, based on Labor Dept. data.

Jewelry Designer

It's probably easier than you think to turn your love of bling into cash on the side. About half of all jewelry makers in the U.S. are self-employed. You can sell online or to thousands of brick-and-mortar retailers.

First steps: You'll need design flair, manual dexterity, and attention to detail to get started. Technical and vocational schools offer classes on basics; community colleges also offer courses on design. A clean, well-lit workspace is necessary. Be sure to design pieces in a variety of price ranges. You'll probably spend $500 to $2,000 for materials, from beads and wire to gold and silver to cloth and wax, plus tools like a vise, pliers, and jigs.

Time needed: Evenings and weekends.

Average sales: $30,000, based on Labor Dept. data.

Pet Sitter

Love animals? Opportunities abound in the pet care industry. Consider walking dogs during the day, grooming or training pets on weekends, or boarding animals overnight. Even if you're not equipped to keep others' pets in your home, you can offer to wash and groom animals at clients' houses, or check in on their pets at their home while they're away. Owners often need someone to watch their pets on weekends and holidays, so pet care can be an easy business to start if you work during the week.

First steps: Start by caring for your friends' animals and get referrals through them, because trust is key for people placing their pets in other people's care.

Time needed: You can get started working on weekends and evenings.

Average sales: $22,183, based on Economic Census data.

Photographer

The barriers to starting a photography business virtually disappeared with the dawn of affordable digital SLR cameras and software like Photoshop. If you're skilled in taking great pictures, pick a niche and build a business around it. You might want to shoot weddings, bar mitzvahs, or corporate events. Or consider family or individual portraits. You could even set up a small studio space in your home. Consider what services you'll offer clients beyond just taking pictures—can you build a Web page to showcase the photos of their event as well?

First steps: Put together a portfolio of your existing work to show potential clients.

Time needed: For event photography, expect most gigs to be on weekends or evenings (galas, for example). You may be able to arrange portrait appointments on a more flexible schedule.

Average sales: $26,259, based on Economic Census data.

Translator or Interpreter

Those who speak more than one language have a ready skill to turn into a part-time business. You can get work translating documents or as an interpreter over the phone or in person. Focus on an area you have some deeper knowledge in. For example, if you have a legal background, angle your business around translating legal documents.

First steps: Get a certificate proving your proficiency from the American Translators Assn. and/or the American Council on the Teaching of Foreign Languages.

Time needed: Translation work can be done from home on your own schedule, but be prepared to meet client deadlines.

Average sales: $21,541, based on Economic Census data.

T-Shirt Vendor

Launching a T-shirt business is about as American as apple pie and your first paper route. Take the Life is Good guys, Bert and John Jacobs, who started out in 1989, selling their shirts door to door, at street fairs, and from the back of their van. Today, the company has about $100 million in annual revenues. T-shirt design is a hotly competitive market, however, and it should go without saying that the barriers to entry are low.

First steps: Create a catalog of design ideas, or simply one good one, like the Jacobs brothers, whose smiling stick figure captured the national mood. You need to decide if you will invest in the manufacturing materials or use a third-party designer, frequently known in the trade as a publisher: Lots of these exist, from CafePress to T-Shirt Monster. Using a publisher is cheaper, but you have less control and you'll be handing over most of your profits. On the other hand, investing in your own equipment, including a heat transfer press, can be expensive: $500 to $1,000. Again, this is an intensely crowded and competitive industry.

Time needed: Nights and weekends.

Average sales: $48,000, based on Economic Census data.

Web Designer

If you're adept at coding and have an eye for sharp design, you make be able to make a business making Web sites—especially if it's something you already do professionally. Begin by building sites for friends and contacts to accumulate a portfolio. Focus on a niche, like designing pages for bands or restaurants, where you can develop a name for yourself in the community and get referrals from your early clients. Decide whether you want to build a one-time site for clients or take on the responsibility of updating and maintaining it, and bill appropriately.

First steps: Set up your own Web site with a portfolio of your work.

Time needed: You can make your own hours as long as you meet client deadlines—which may mean pulling some all-nighters.

Average sales: $42,104, based on Economic Census data.

The New Resume: Dumb and Dumber

by Jane Porter

Kristin Konopka sent out nearly 100 copies of her résumé in January in search of receptionist work, but got only one callback. That's when Ms. Konopka, a 29-year-old New York actress and yoga teacher, took her master's degree and academic teaching experience off her résumé.

The calls started coming in. The slimmer version of her résumé landed in 30 in-boxes and earned her three callbacks and two interviews. "It definitely picked up the interest," says Ms. Konopka, who realized quickly that people don't "want to hire anyone who is overqualified."

Securing work in a tight economy means more job seekers might find themselves applying for positions below their qualifications. Many unemployed professionals are willing to take paycuts for the promise of a paycheck. But to get a foot in the door, candidates are gearing down their résumés by hiding advanced degrees, changing too-lofty titles, shortening work experience descriptions, and removing awards and accolades.

In the past eight months, Jamaica Eilbes, an information-technology recruiter for Milwaukee employment agency Manpower, has had to weed out more overqualified résumés than usual from the stacks that cross her desk each day. "I'd never feel comfortable putting a really high-level candidate into a lower level position," says Ms. Eilbes, who recruits for Manpower and other clients. "We don't want to take you on if we think you are going to jump ship."

But in recent months, Ms. Eilbes has seen more master's and doctoral degrees at the bottom of résumés instead of at the top. She's also seen candidates omitting or trimming job descriptions that showed they had substantial years of work experience. Résumés on which job descriptions taper off as they progress down the page raise Ms. Eilbes's suspicions. "How do I know I can trust them later down the road if there's something on their résumé they decided to take off so they could have a better chance at getting that job?" she says.

Still, for some professionals who find themselves constantly rejected despite decades of experience, scaling back the truth -- or at the least, some of their experiences -- can feel like the only chance at an interview.

Lenora Kaplan, 49, has 26 years of marketing experience but doesn't want her résumé to show it. When she lost her job as vice president of public relations at a small Las Vegas marketing firm in January, Ms. Kaplan searched for work with little success. At an interview for a shopping-mall marketing-director position in February, she was told that the hiring budget had only enough for a junior-level employee and that her résumé showed she was overqualified.

Many of the jobs she comes across ask for far fewer years of experience than she has. "There is nothing to apply for" at my level, Ms. Kaplan says. She quickly realized her job experience was pricing her out of too many positions. Her solution: To try not to look as senior level as she really was. So she eliminated certain jobs and removed details about speaking engagements and board positions.

In some cases, job seekers are being told by hiring agencies to tone down their résumés if they want to get hired. When Bridget Lee, 29, moved to New York from Shanghai eight months ago and put her application in at three temporary agencies, she was told to play down her work experience before they would send her résumé to potential clients. The temp-agency version of her résumé changed titles like "manager" and "freelance trend researcher" to "staff" and "office support" and omitted entirely her title as partner of a small marketing agency. "It's been a lesson for how I present myself," Ms. Lee says.

Career counselors advise against making too many drastic changes. But they also say the demand for this kind of restructuring is on the rise. In the past three months, Tammy Kabell, a Kansas City, Mo., job-search coach, says more clients are requesting her help to "dumb down" their résumés, whether by changing job titles, playing down experience, or altogether omitting some impressive achievements. One recent client, a 61-year-old former chief learning officer at a tech company, insisted on omitting her C-level job title from her résumé. She was fearful her application would be weeded out by the Web search-optimization tools companies use to manage résumés.

Some résumé writers advise reworking a résumé into a functional one stressing transferable skills instead of past job titles and accomplishments. "Instead of focusing on the big achievements that might scare an employer away, you can spell out what you can bring to an employer in the next position," Ms. Kabell says.

Of course, reducing your résumé to a skeleton of what it truly should be isn't likely to land you the job you really want. While it took Ms. Lee eight months to get a call back for a job that matched her real experience, this month she landed a position as a temporary account manager -- with potential for permanent work -- at a New York design firm. The interview and job offer weren't earned using her dumbed-down résumé, but rather with the original.

"You have to make those creative edits when it comes to short-term work, but in terms of long-term work, you have to stay true to your experience," says Ms. Lee.

Thursday, 28 May 2009

If You Think Worst Is Over, Take Benjamin Graham's Advice

by Jason Zweig

It is sometimes said that to be an intelligent investor, you must be unemotional. That isn't true; instead, you should be inversely emotional.

Even after recent turbulence, the Dow Jones Industrial Average is up roughly 30% since its low in March. It is natural for you to feel happy or relieved about that. But Benjamin Graham believed, instead, that you should train yourself to feel worried about such events.

At this moment, consulting Mr. Graham's wisdom is especially fitting. Sixty years ago, on May 25, 1949, the founder of financial analysis published his book, "The Intelligent Investor," in whose honor this column is named. And today the market seems to be in just the kind of mood that would have worried Mr. Graham: a jittery optimism, an insecure and almost desperate need to believe that the worst is over.

You can't turn off your feelings, of course. But you can, and should, turn them inside out.

Stocks have suddenly become more expensive to accumulate. Since March, according to data from Robert Shiller of Yale, the price/earnings ratio of the S&P 500 index has jumped from 13.1 to 15.5. That's the sharpest, fastest rise in almost a quarter-century. (As Graham suggested, Prof. Shiller uses a 10-year average P/E ratio, adjusted for inflation.)

Over the course of 10 weeks, stocks have moved from the edge of the bargain bin to the full-price rack. So, unless you are retired and living off your investments, you shouldn't be celebrating, you should be worrying.

Mr. Graham worked diligently to resist being swept up in the mood swings of "Mr. Market" -- his metaphor for the collective mind of investors, euphoric when stocks go up and miserable when they go down.

In an autobiographical sketch, Mr. Graham wrote that he "embraced stoicism as a gospel sent to him from heaven." Among the main components of his "internal equipment," he also said, were a "certain aloofness" and "unruffled serenity."

Mr. Graham's last wife described him as "humane, but not human." I asked his son, Benjamin Graham Jr., what that meant. "His mind was elsewhere, and he did have a little difficulty in relating to others," "Buz" Graham said of his father. "He was always internally multitasking. Maybe people who go into investing are especially well-suited for it if they have that distance or detachment."

Mr. Graham's immersion in literature, mathematics and philosophy, he once remarked, helped him view the markets "from the standpoint of eternity, rather than day-to-day."

Perhaps as a result, he almost invariably read the enthusiasm of others as a yellow caution light, and he took their misery as a sign of hope.

His knack for inverting emotions helped him see when markets had run to extremes. In late 1945, as the market was rising 36%, he warned investors to cut back on stocks; the next year, the market fell 8%. As stocks took off in 1958-59, Mr. Graham was again pessimistic; years of jagged returns followed. In late 1971, he counseled caution, just before the worst bear market in decades hit.

In the depths of that crash, near the end of 1974, Mr. Graham gave a speech in which he correctly forecast a period of "many years" in which "stock prices may languish."

Then he startled his listeners by pointing out this was good news, not bad: "The true investor would be pleased, rather than discouraged, at the prospect of investing his new savings on very satisfactory terms." Mr. Graham added a more startling note: Investors would be "enviably fortunate" to benefit from the "advantages" of a long bear market.

Today, it has become trendy to declare that "buy and hold is dead." Some critics regard dollar-cost averaging, or automatically investing a fixed amount every month, as foolish.

Asked if dollar-cost averaging could ensure long-term success, Mr. Graham wrote in 1962: "Such a policy will pay off ultimately, regardless of when it is begun, provided that it is adhered to conscientiously and courageously under all intervening conditions."

For that to be true, however, the dollar-cost averaging investor must "be a different sort of person from the rest of us ... not subject to the alternations of exhilaration and deep gloom that have accompanied the gyrations of the stock market for generations past."

"This," Mr. Graham concluded, "I greatly doubt."

He didn't mean that no one can resist being swept up in the gyrating emotions of the crowd. He meant that few people can. To be an intelligent investor, you must cultivate what Mr. Graham called "firmness of character" -- the ability to keep your own emotional counsel.

Above all, that means resisting the contagion of Mr. Market's enthusiasm when stocks are suddenly no longer cheap.

Write to Jason Zweig at intelligentinvestor@wsj.com
Copyrighted, Dow Jones & Company, Inc. All rights reserved.

Wednesday, 27 May 2009

How Businesses Can Prosper, Even Now

Rick Newman

Many Americans are hunkering down, but even a grinding recession presents chances to get ahead--and maybe even earn your fortune. The very disruptions causing pain for many workers--spending cutbacks, layoffs, and corporate bankruptcies--often create openings for others. To figure out where to look, I asked William Sahlman of Harvard Business School, an expert on entrepreneurship. Some of his observations:

Creative destruction, like we're seeing now, generates opportunities, right? Do you see new opportunities forming? There's always been a yin and yang of opportunity. One person's crisis is another's opportunity. If you're a buyer of assets in distress, for example, you're able to pick up companies you may never see again at these prices. Right now there's $8 trillion or $9 trillion of cash sitting on the sidelines. People are waiting for signs so compelling that they're willing to go back in.

What are some of the best opportunities you see? Healthcare and education are growing, in terms of fields to work in. And in terms of getting education, the opportunity cost of that is going down, since jobs are harder to find. I know that applications to Harvard Business School are up, for example.

What other fields could be good growth areas? There are enormous opportunities related to energy. Insulation: Believe it or not, that's the highest return on investment related to carbon. Solar. Improving the electrical grid. Biofuels. The biggest problem with energy is that oil's at under 60 bucks a barrel. That destroys the incentive to innovate. I'd almost rather see a fixed price for oil higher than today.

Interesting. That's something a lot of auto executives would like to see as well. With prices that go up and down, we've wiped out predictability. If you're trying to make the case for investing in alternative fuels, you'd like to be able to put a floor under the price of biofuels.

But overall I'm extremely optimistic about the future of science. There's more reason than ever to think there will be technology advances. For one thing, we need them more. Things like poverty and the environment, these are things viewed best as opportunities for technology to solve problems.

I also think you're going to see a lot more kids going into social enterprises like Year Up or Teach for America, something they wouldn't otherwise have done.

Some people are able to remake themselves during times of transition, like we're in now. Can that happen in banking and finance? That seems to be one part of the economy that's under a lot of stress, and likely to change. We will need financial institutions that are effectively restarts. More community banks. The challenge is getting money. In the short run, we're not going to see the rebuilding of the financial system. People with capital are going to put it into distressed debt, not into new banks.

Yeah, you hear of the lot of big investors talking about the riches to be made in distressed debt these days. Is there any way for ordinary people to get in on that? Not really. Unfortunately, distressed debt is a complete insiders game.

If you're trying to find opportunity on an economic landscape that looks pretty barren, what are some things you need to think about? If you can lower the cost of doing things, this may be a great time for disruptive technologies. There are also opportunities to compete on price, as long as you have an acceptable level of quality.

The challenge with retail products is, we're over-retailed. But online firms like eBay should do well, because it cuts out the middleman. Amazon is another one.

People have to cut back, use less leverage, rely on lower incomes. That means renting Kate Spade bags instead of buying them. If you can be the one who rents those bags, it will make you very competitive.

Do you think the recession will get a lot worse? Or are we getting close to a bottom? We're closer to the bottom. I'm optimistic that we'll pull out of this, but not before the housing market stabilizes. The problem is uncertainty about where house prices will go, not where they end up. And all of it is related to trust and confidence in the idea that tomorrow will be a better day.

Monday, 25 May 2009

Crisis spurs prayers in Asia

WITH the Singapore government warning of a worsening economy, IT administrator Ismarini Ismail is praying the recession won't upset her wedding plans for December.
'I pray harder in times of economic downturn, although my job is not affected this time,' the 25-year-old Singaporean told Reuters as Singapore's unemployment rose to the highest in over three years in the first quarter of 2009. 'I'm praying for my fiance that his job is safe.'

Ismail is not alone. As companies shed jobs and governments inject funds to stimulate economies, recession-hit Asians from Taiwan to Thailand are flocking to temples, churches and mosques to seek solace in religion - and pray for a quick economic recovery.

Analysts say religion is a good refuge for people suffering from an economic downturn.

'People might experience depression and socio-psychological problems as they worry about jobs in a recession. It is through such worries that they turn to religion,' said Alexius Pereira, sociologist at the National University of Singapore.

While some may seek supranatural power for help, others look to relieve their stress through meditation, said Tay Sin Wee, a meditation course administrator.

'With the economy in such bad shape, people are finding an avenue to find peace and calm,' he said, adding he saw a 20 per cent rise in participants in classes at Singapore's Amitabha Buddhist Centre this year.

Others echo his views. 'The recession is a wake-up call to remind us to trust in God and not in money,' said Timothy Teo, a board member at Singapore's Bartley Christian church which has raised nearly S$16 million (US$11 million) to fund its new church facility in the midst of a recession. - REUTERS

Saturday, 23 May 2009

With Jobs Scarce, Age Becomes an Issue

by Dana Mattioli

Age discrimination in the workplace has long been a concern for the 55-and-older set. In this downturn, however, younger workers may have as much to fear as their more-mature colleagues.

Employees in their 20s and 30s are finding themselves more at risk of a layoff, according to labor lawyers, as employers look to avoid age-discrimination lawsuits by adopting a "last one in, first one out" policy and turn to tenure as a means of conducting layoffs. In some cases, young, childless professionals say they feel they're being targeted in layoffs, while employees who have families to support are given special consideration.

While no age group is exempt from layoffs, younger workers seem to be shouldering a larger percentage of the burden, according to recent Labor Department figures. The unemployment rate for those between the ages of 25 and 34 was 9.6% in April 2009, up from 4.9% a year earlier. For those ages 55 and older, the unemployment rate was 6.2% in April 2009, compared with 3.3% a year earlier.

Wary of Lawsuits

While younger workers tend to earn the lowest salaries, making them the least-expensive workers to retain, companies are becoming wary of laying off older, better-paid workers. In fact, Gerald Maatman, co-chairman of the class-action litigation practice at Seyfarth Shaw LLP, which represents employers, says he has been fielding more inquiries about laying off younger workers than in years past, especially from companies in states like New Jersey and Michigan that have laws to protect workers as young as 18. Age-discrimination lawsuits brought by older workers can cost more than the salary of the worker who was laid off and can hurt the company's reputation, according to Andria Ryan, partner at Atlanta law firm Fisher & Phillips LLP.

"Younger people, in general are a lot less of a risk [for lawsuits] when you do a reduction in force," says Ms. Ryan. While most states protect employees 40 and older from age discrimination, only a handful of jurisdictions extend this protection to employees as young as 18, she says.

"Companies don't like [layoffs by seniority], but [they're] also the easiest to defend," says Gerald Hathaway, co-chairman of the business-restructuring practice group with employment law firm Littler Mendelson. "If you have a bona fide seniority system it's a defense for any type of discrimination," according to the law, he adds.

Seniority in Education

This is particularly true in the education field, where many colleges and schools are taking measures to protect tenured teachers and professors. David Schauer, superintendent of Kyrene Elementary School District No. 28 in Tempe, Ariz., sent layoff notices to 68 teachers in anticipation of budget cuts. The cuts target only first-year continuing teachers, most of whom are in their 20s, says Mr. Schauer. "My worst fear is that really good people will leave teaching," he says.

Nicole Ryan, a 24-year-old sixth-grade math teacher for Fox Lane Middle School, in Bedford, N.Y., received such a layoff notice. The notice was sent out to teachers and staff based on their seniority. So, despite strong performance reviews, budget cuts mean she may not have a job to return to in the fall. "I knew it was coming because, based on seniority, I was lower on the totem pole," she says. "It didn't make it any easier."

The emotional impact of layoffs can affect a manager's decision when it comes to choosing who gets the ax -- and that can also disproportionately affect younger workers. "It takes a tremendous toll on managers," says Mitchell Marks, a professor of organizational change in the College of Business at San Francisco State University. Mr. Marks says when layoff decisions come to a tie breaker, personal and family situations often come into play.

"I've had plenty of managers sit me down and say 'Joe's spouse just got diagnosed with cancer but Jane's spouse is an M.D.,' " says Mr. Marks of the explanations of how a layoff has been decided. The same decision-making process can occur when choosing who gets laid off between a single 20-something employee or, say, a 50-year-old employee with two kids in college.

Svetlana Gelman, 24, worked in the marketing department of a law firm until December when she was laid off. She feels strongly that her age and the fact that she doesn't have a family to support put her at greater risk before the layoff. Ms. Gelman says she was competing head-to-head with another employee with a child, who was hired a few months after Ms. Gelman and often would use her sacrifices as a parent to tout her dedication to the firm. "The person was very tactical, she would bring the child in, spoke about him all the time and would say things like 'My child is sick but I'm still here,' " says Ms. Gelman.

And as work became more scarce and layoffs loomed, Ms. Gelman says she was let go while her colleague remained, despite the fact that Ms. Gelman earned less and often worked longer hours because of her co-worker's child-care responsibilities.

Staying Safe

Still, there are ways younger workers can go about safeguarding their jobs. High-maintenance attitudes typical of younger workers also make them more prone to the chopping block in a down economy, says Bruce Tulgan, author of "Not Everyone Gets a Trophy." Twentysomething professionals tend to demand flexibility, responsibility and high pay, he says -- all things that aren't going to be well-received in this environment.

"This is a really great time to come in early, stay late, dot your i's and cross your t's," says Mr. Tulgan. He says young employees should volunteer to do grunt work, take advantage of free certifications their companies offer and be compliant, rather than demanding.

Staying Valuable

Ms. Ryan, the attorney, says now is the time to make yourself as invaluable to a company as possible. She recommends cross-training in another department, learning as much as possible about different areas of the company and expressing a willingness to relocate to less desirable locations (something those with families often can't do).

You might also try to align yourself with someone in senior management. This could be in a mentor relationship or as a volunteer on a big project a manager is working on. Although executives are busier these days, they often view being asked to mentor as a compliment, says Mr. Marks. And if it should come to layoff decisions, "It doesn't hurt to have someone in the executive conference room on your side," he says.

Write to Dana Mattioli at dana.mattioli@wsj.com

Thursday, 21 May 2009

Outlook on UK economy downgraded to 'negative'

LONDON (AFP) - - International ratings agency Standard and Poor's on Thursday downgraded its outlook on Britain's economy to "negative" from "stable" owing to the country's "deteriorating public finances."

The change may eventually lead to S&P downgrading Britain's top-level sovereign credit ratings, the agency warned in a statement.

"The outlook revision is based on our view that, even factoring in further fiscal tightening, the UK's net general government debt burden may approach 100 percent of GDP (Gross Domestic Product) and remain near that level in the medium term," S&P said in a statement.

Britain's public deficit ballooned to a record 8.5 billion pounds (9.6 billion euros, 13.22 billion dollars) in April as the Labour government was forced to bail out ailing banks and recession slashes tax revenues, according to official data published Thursday.

The data, together with S&P's downgrade, sent the British pound and stocks sliding in London, traders said.

S&P credit analyst David Beers said the agency had based its revision on its "updated projections of general government deficits in 2009-2013.

"These projections reflect our more cautious view of how quickly the erosion in the government's revenue base may be repaired, the extent to which the growth in government spending can be curtailed, and consequently the pace at which historically high fiscal deficits are likely to narrow," Beers said.

S&P on Thursday maintained its sovereign credit ratings for Britain at 'AAA' long-term and 'A-1+' short-term. Both ratings signify the highest confidence that Britain will repay its borrowings.

However, the agency warned that the ratings could be lowered following Britain's next general election that must be held by mid-2010.

"The rating could be lowered if we conclude that, following the election, the next government's fiscal consolidation plans are unlikely to put the UK debt burden on a secure downward trajectory over the medium term," Beers said.

"Conversely, the outlook could be revised back to stable if comprehensive measures are implemented to place the public finances on a sustainable footing."

A downgrade of a credit rating can have significant consequences for a country, pushing up the interest rates demanded by savers to buy new debt, increasingly being issued to help cover soaring budget deficits.

Britain's recession-battered economy is shrinking at its fastest pace in almost 30 years.

GDP contracted by 1.9 percent during the first three months of 2009 compared with a decline of 1.6 percent in the last quarter of 2008.

Google's Days are Numbered

Analysis: Sure Google's 73% share of U.S. searches is impressive, but business is a fragile ecosystem.

Kaila Colbin, Network World

Please trust me on this one: Google will die. If it hasn't happened by the time you read this post, you're just not patient enough.

Last week, Piper Jaffray analyst Gene Munster was quoted by Wall Street Journal blogger Andrew LaVallee as saying that Google is "essentially insurmountable." And certainly Google's 73 percent share of U.S. searches is, shall we say, intimidating.

But business is a fragile ecosystem, and even redwoods meet their makers. Yes, Google's lead is massive. But Internet Explorer had an even bigger lead in the browser market. Yes, Google has more money than anybody else. But so did Circuit City in 1999, when it was the 800-pound gorilla of big-box electronics retailers. By 2001, it was an also-ran; seven months ago, Circuit City filed for bankruptcy. And brick-and-mortar time frames are glacial compared to the fruit-flyish life spans found online.

To understand why Google will die, let's take a trip back in time to look at Clayton Christensen's 1997 book, The Innovator's Dilemma . I'll review three of Christensen's five principles here:

Companies depend on customers and investors for resources. Simply put, this means that Google can't afford to alienate its existing customer base by adopting disruptive technologies until those technologies are well proven -- by somebody else, who will then be the de facto leader in that technology. All it can do is roll them out into Google Labs and hope.

Small markets don't solve the growth needs of large companies. Google's 6 percent YoY revenue growth in the first quarter was modest by its historical standards, but to maintain even that level for the second quarter, the Google team is going to have to come up with an additional $180 million in revenue. Again, this means they can't afford to make a disruptive innovation into a primary strategy -- which means, again, that by the time a disruptive innovation is big enough to matter, somebody else will own the new space.

Markets that don't exist can't be analyzed. Post-Its. Twitter. Personal computers. The telephone. History is littered with innovations whose inventors had no idea of their future ubiquity. More than perhaps any other company, Google is data-driven to its core -- but there's no data on markets that are yet to exist.

Taken in this light, things aren't looking to good for the cheeky Mountain View upstart. In Part II, I'll cover Christensen's remaining two principles, plus one massive risk Google faces all on its own. In the meantime, what are your thoughts? Does poor Google even stand a chance?

For more information about enterprise networking, go to NetworkWorld. Story copyright 2008 Network World Inc. All rights reserved.

Harvard’s masters of the apocalypse

Philip Delves Broughton

If Robespierre were to ascend from hell and seek out today’s guillotine fodder, he might start with a list of those with three incriminating initials beside their names: MBA. The Masters of Business Administration, that swollen class of jargon-spewing, value-destroying financiers and consultants have done more than any other group of people to create the economic misery we find ourselves in.

From Royal Bank of Scotland to Merrill Lynch, from HBOS to Leh-man Brothers, the Masters of Disaster have their fingerprints on every recent financial fiasco.

I write as the holder of an MBA from Harvard Business School – once regarded as a golden ticket to riches, but these days more like scarlet letters of shame. We MBAs are haunted by the thought that the tag really stands for Mediocre But Arrogant, Mighty Big Attitude, Me Before Anyone and Management By Accident. For today’s purposes, perhaps it should be Masters of the Business Apocalypse.

Harvard Business School alumni include Stan O’Neal and John Thain, the last two heads of Merrill Lynch, plus Andy Hornby, former chief executive of HBOS, who graduated top of his class. And then of course, there’s George W Bush, Hank Paul-son, the former US Treasury secretary, and Christopher Cox, the former chairman of the Securities and Exchange Commission (SEC), a remarkable trinity who more than fulfilled the mission of their alma mater: “To educate leaders who make a difference in the world.”

It just wasn’t the difference the school had hoped for.

Business schools have shown a remarkable ability to miss the economic catastrophes unfolding before their eyes.

In the late 1990s, their faculties rushed to write paeans to Enron, the firm of the future, the new economic paradigm. The admiration was mutual: Enron was stuffed with Harvard Business School alumni, from Jeff Skilling, the chief executive, down. When Enron, rotten to the core, collapsed, the old case studies were thrust in a closet and removed from the syllabus, and new ones were promptly written about the ethical and accounting issues posed by Enron’s misadventures.

Much the same appears to have happened with Royal Bank of Scotland.

When I was a student at Harvard Business School, between 2004 and 2006, I recall a distinguished professor of organisational behaviour, Joel Podolny, telling us proudly of his work with Fred Goodwin at RBS. At the time, RBS looked like a corporate supermodel and Podolny was keen to trumpet his role in its transformation. A Harvard Business School case study of the firm entitled The Royal Bank of Scotland: Masters of Integration, written in 2003, began with a quote from the man we now know as Fred the Shred or the World’s Worst Banker: “Hard work, focus, discipline and concentrating on what our customers need. It’s quite a simple formula really, but we’ve just been very, very consistent with it.”

The authors of the case, two Harvard Business School professors, described the “new architecture” formed by RBS after its acquisition of NatWest, the clusters of customer-facing units, the successful “buy-in” by employees. Goodwin came across as a management master, saying: “A leader’s job is to create the conditions that enable people to believe, in their hearts and minds, in the value of what they are doing.”

Then just last December, Harvard Business School revised and republished another homage to RBS – The Royal Bank of Scotland Group: The Human Capital Strategy.

It is tragic to read now of all the effort put in by those under Goodwin, from “pulse surveys” to track employee performance to “the big thank you”, a website where managers could recognise individual excellence in customer service.

Every trendy business school idea was being implemented, it seemed, while what really mattered – the bank’s risk assessment, cash flow and capital structure – was going to hell. To be fair, neither Podolny nor the authors of the case studies were finance professors, but it’s still pretty shocking that a school that purports to teach general management should fail to see the gaping problems at a firm they studied in such depth.

Is there a pattern here? Go back to the 1980s, and you find that Harvard MBAs played a big enough role in the insider trading scandals that washed through Wall Street for a former chairman of the SEC to consider it a good move to donate millions of dollars for the teaching of ethics at the school.

Time after time, and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it. Yet there is remarkably little contrition.

Last October, Harvard Business School celebrated its 100th birthday with a global summit in Boston. While Wall Street and Washington descended into an economic inferno, Jay Light, the dean of the school and a board member at the Black-stone private equity group, opened the festivities by shrugging off any responsibility.

“We all failed to understand how much [the financial system] had changed in the past 15 years or so, and how fragile it might be because of increased leverage, decreased transparency and decreased liquidity: three of the crucial things in the world of financial markets,” he said.

“We all failed to understand how that fragility could evidence itself in a frozen short-term credit system, something that hadn’t really happened since 1907. We also probably overestimated the ability of the political process to deal with the realities of what could happen if real trouble developed.

“What we have witnessed is a stunning and sobering failure of financial safeguards, of financial markets, of financial institutions and mostly of leadership at many levels. We will leave the talk of fixing the blame to others. That is not very interesting. But we must be involved in fact in fixing the problem.”

You would think after failing on so many levels, the school that provides more business leaders than any other might feel some remorse. Not in the least. It’s onwards and upwards, with the very people who blew apart the world’s financial plumbing now demanding to fix the leak.

You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lak-shmi Mittal – and there’s not an MBA between them.

Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business.

Given the present chaos, should-n’t we be asking if business education is not just a waste of time, but actually damaging to our economic health?

If doctors or lawyers wreaked such havoc in their own professions, we would certainly reconsider what is being taught at medical and law schools.

During my time at the school, 50 students were chosen to participate in a detailed survey of their development. Scott Snook, the professor who ran it, reported that about a third of students were inclined to define right and wrong simply in terms of what everyone else was doing.

“They can’t really step back and take a critical view,” he said. “They’re totally defined by others and by the outcomes of what they’re doing.”

A group of people unable to see their actions in the broader context of the society they inhabit have no business being self-regulating. Yet in the financial services industry this is pretty much what they demanded and to a large extent got – with catastrophic consequences.

The happiest in my cohort, which graduated into the rosy economic conditions of 2006, are now certainly those who went off to do the unfashionable jobs: a friend who spurned Wall Street to join a Mid-western industrial firm, and now finds himself running the agricultural division of an Indian conglomerate; one who joined a foundation promoting entrepreneurship; one who went into Boston city government, another who moved to Russia to run a cinema chain.

However, these were the rarities: 42% of my class went into financial services and another 21% into consulting, both wretched sectors to be in today and for the foreseeable future.

Applications to business schools in America and Europe are broadly up, as people search for a safe haven from the recession. What are they thinking? Many MBA jobs will not be coming back. Students who stump up more than £60,000 for a two-year MBA can expect a long wait to make that back.

For those about to graduate from business school, these are grim times. Financial and consulting firms, which used to soak up two-thirds of the MBAs from top schools, have all but vanished from campuses. Suddenly jobs in government and at nonprofit organisations are in hot demand from students who used to consider them laughably underpaid.

A dose of modesty among MBAs and business schools is long overdue. But it’s not going to come from Harvard. Light, told his audience in October: “The need for leadership in the world today is at least as great as it has ever been. The need for what we do is at least as great as it has ever been.”

A bold claim to which many might say: please, spare us.

Philip Delves Broughton is the author of What They Teach You at Harvard Business School, published by Viking at £12.99. Copies can be ordered for £11.69, including postage, from The Sunday Times BooksFirst on 0845 271 2135

Harvard’s masters of the apocalypse

If his fellow Harvard MBAs are all so clever, how come so many are now in disgrace?

Philip Delves Broughton

If Robespierre were to ascend from hell and seek out today’s guillotine fodder, he might start with a list of those with three incriminating initials beside their names: MBA. The Masters of Business Administration, that swollen class of jargon-spewing, value-destroying financiers and consultants have done more than any other group of people to create the economic misery we find ourselves in.

From Royal Bank of Scotland to Merrill Lynch, from HBOS to Leh-man Brothers, the Masters of Disaster have their fingerprints on every recent financial fiasco.

I write as the holder of an MBA from Harvard Business School – once regarded as a golden ticket to riches, but these days more like scarlet letters of shame. We MBAs are haunted by the thought that the tag really stands for Mediocre But Arrogant, Mighty Big Attitude, Me Before Anyone and Management By Accident. For today’s purposes, perhaps it should be Masters of the Business Apocalypse.

Harvard Business School alumni include Stan O’Neal and John Thain, the last two heads of Merrill Lynch, plus Andy Hornby, former chief executive of HBOS, who graduated top of his class. And then of course, there’s George W Bush, Hank Paul-son, the former US Treasury secretary, and Christopher Cox, the former chairman of the Securities and Exchange Commission (SEC), a remarkable trinity who more than fulfilled the mission of their alma mater: “To educate leaders who make a difference in the world.”

It just wasn’t the difference the school had hoped for.

Business schools have shown a remarkable ability to miss the economic catastrophes unfolding before their eyes.

In the late 1990s, their faculties rushed to write paeans to Enron, the firm of the future, the new economic paradigm. The admiration was mutual: Enron was stuffed with Harvard Business School alumni, from Jeff Skilling, the chief executive, down. When Enron, rotten to the core, collapsed, the old case studies were thrust in a closet and removed from the syllabus, and new ones were promptly written about the ethical and accounting issues posed by Enron’s misadventures.

Much the same appears to have happened with Royal Bank of Scotland.

When I was a student at Harvard Business School, between 2004 and 2006, I recall a distinguished professor of organisational behaviour, Joel Podolny, telling us proudly of his work with Fred Goodwin at RBS. At the time, RBS looked like a corporate supermodel and Podolny was keen to trumpet his role in its transformation. A Harvard Business School case study of the firm entitled The Royal Bank of Scotland: Masters of Integration, written in 2003, began with a quote from the man we now know as Fred the Shred or the World’s Worst Banker: “Hard work, focus, discipline and concentrating on what our customers need. It’s quite a simple formula really, but we’ve just been very, very consistent with it.”

The authors of the case, two Harvard Business School professors, described the “new architecture” formed by RBS after its acquisition of NatWest, the clusters of customer-facing units, the successful “buy-in” by employees. Goodwin came across as a management master, saying: “A leader’s job is to create the conditions that enable people to believe, in their hearts and minds, in the value of what they are doing.”

Then just last December, Harvard Business School revised and republished another homage to RBS – The Royal Bank of Scotland Group: The Human Capital Strategy.

It is tragic to read now of all the effort put in by those under Goodwin, from “pulse surveys” to track employee performance to “the big thank you”, a website where managers could recognise individual excellence in customer service.

Every trendy business school idea was being implemented, it seemed, while what really mattered – the bank’s risk assessment, cash flow and capital structure – was going to hell. To be fair, neither Podolny nor the authors of the case studies were finance professors, but it’s still pretty shocking that a school that purports to teach general management should fail to see the gaping problems at a firm they studied in such depth.

Is there a pattern here? Go back to the 1980s, and you find that Harvard MBAs played a big enough role in the insider trading scandals that washed through Wall Street for a former chairman of the SEC to consider it a good move to donate millions of dollars for the teaching of ethics at the school.

Time after time, and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it. Yet there is remarkably little contrition.

Last October, Harvard Business School celebrated its 100th birthday with a global summit in Boston. While Wall Street and Washington descended into an economic inferno, Jay Light, the dean of the school and a board member at the Black-stone private equity group, opened the festivities by shrugging off any responsibility.

“We all failed to understand how much [the financial system] had changed in the past 15 years or so, and how fragile it might be because of increased leverage, decreased transparency and decreased liquidity: three of the crucial things in the world of financial markets,” he said.

“We all failed to understand how that fragility could evidence itself in a frozen short-term credit system, something that hadn’t really happened since 1907. We also probably overestimated the ability of the political process to deal with the realities of what could happen if real trouble developed.

“What we have witnessed is a stunning and sobering failure of financial safeguards, of financial markets, of financial institutions and mostly of leadership at many levels. We will leave the talk of fixing the blame to others. That is not very interesting. But we must be involved in fact in fixing the problem.”

You would think after failing on so many levels, the school that provides more business leaders than any other might feel some remorse. Not in the least. It’s onwards and upwards, with the very people who blew apart the world’s financial plumbing now demanding to fix the leak.

You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lak-shmi Mittal – and there’s not an MBA between them.

Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business.

Given the present chaos, should-n’t we be asking if business education is not just a waste of time, but actually damaging to our economic health?

If doctors or lawyers wreaked such havoc in their own professions, we would certainly reconsider what is being taught at medical and law schools.

During my time at the school, 50 students were chosen to participate in a detailed survey of their development. Scott Snook, the professor who ran it, reported that about a third of students were inclined to define right and wrong simply in terms of what everyone else was doing.

“They can’t really step back and take a critical view,” he said. “They’re totally defined by others and by the outcomes of what they’re doing.”

A group of people unable to see their actions in the broader context of the society they inhabit have no business being self-regulating. Yet in the financial services industry this is pretty much what they demanded and to a large extent got – with catastrophic consequences.

The happiest in my cohort, which graduated into the rosy economic conditions of 2006, are now certainly those who went off to do the unfashionable jobs: a friend who spurned Wall Street to join a Mid-western industrial firm, and now finds himself running the agricultural division of an Indian conglomerate; one who joined a foundation promoting entrepreneurship; one who went into Boston city government, another who moved to Russia to run a cinema chain.

However, these were the rarities: 42% of my class went into financial services and another 21% into consulting, both wretched sectors to be in today and for the foreseeable future.

Applications to business schools in America and Europe are broadly up, as people search for a safe haven from the recession. What are they thinking? Many MBA jobs will not be coming back. Students who stump up more than £60,000 for a two-year MBA can expect a long wait to make that back.

For those about to graduate from business school, these are grim times. Financial and consulting firms, which used to soak up two-thirds of the MBAs from top schools, have all but vanished from campuses. Suddenly jobs in government and at nonprofit organisations are in hot demand from students who used to consider them laughably underpaid.

A dose of modesty among MBAs and business schools is long overdue. But it’s not going to come from Harvard. Light, told his audience in October: “The need for leadership in the world today is at least as great as it has ever been. The need for what we do is at least as great as it has ever been.”

A bold claim to which many might say: please, spare us.

Philip Delves Broughton is the author of What They Teach You at Harvard Business School, published by Viking at £12.99. Copies can be ordered for £11.69, including postage, from The Sunday Times BooksFirst on 0845 271 2135

Banking crisis is ending

WASHINGTON - RENEWED signs of health among big US banks is sparking hope that the credit crisis is over, with the risks diminishing for a new financial meltdown.

Despite a still-fragile situation, some analysts point to easing interest rates, rising stock prices for major banks and the renewed ability of banking firms to raise new capital in the private sector.

This could lead to many banks repaying the US government by repurchasing the shares from capital injections.

'America's banking crisis is over,' said Avery Shenfeld, senior economist at CIBC World Markets, in a recent note to clients.

Mr Shenfeld said one major factor is the drop in the key Libor interest rate for lending between banks 'to the point that indicates that the fear of failure has been shaken out of the system.'

The conclusion of the 'stress tests' of the system along with requirements that major banks raise modest amounts of new capital - which they have been doing - indicates the United States will not allow a failure that could lead to a major shock to the system, said Mr Shenfeld.

'The US will not be left with an empty shell of a banking system, the way Japan was in the 1990s after its equity and real estate crash,' he said.

Numerous banks have been able to raise fresh capital, including Bank of America, which issued some shares to reap roughly US$13.47 billion (S$19.6 billion).

Citigroup, meanwhile, raised US$2 billion in bonds without a guarantee that had been offered by US authorities.

Treasury Secretary Timothy Geithner said on Wednesday that he sees 'important indications that our financial system is starting to heal.' -- AFP

Wednesday, 20 May 2009

Commentary by Brad Gareiss: Trading Psychology- Dealing with a Drawdown

Trading psychology is the most important aspect of a trader's success. This may surprise some readers, specifically those that are new to trading. However, the psychological makeup of a trader is more important than market knowledge, market analysis, and even money management. The reason psychology is so important is that even the best information can be distorted by a poor mindset.

Most new traders think the key to profiting in trading is knowing more about the market. For instance, most new traders clog their screens with every indicator they can find, read up European GDP trends, and feel that pro traders have some sort of secret knowledge. However, this inevitably does not provide the lofty results the novice trader hopes to achieve.

After realizing that excessive market information doesn't help (and may hurt) results, the next moment of truth most traders have is money management. Instead to trading 1 lot every time, or even trading the maximum lots their account will allow, these traders realize losses will happen no matter what. When you realize that everyone loses on occassion, it is easy to see why money management is necessary. This is a big step, but does not ensure success.

Now, don't get me wrong, you need to have a form of analysis and a form of money management to profit in the long term. In other words, you need an edge that when applied with proper money management leads to positive returns over the course of many trades. Great money management with no edge will only mean you lose your money more slowly. A great strategy without money management will lead to an inevitable blow up. However, without the proper mindset, it is nearly impossible to continue to get good results in the long run.

The bottom line is that a poor mindset can sabotage even the best trading strategy or money management strategy. I could write about this at great length, but we will look at one key example for now. The biggest test in trading psychology occurs during a drawdown. This occurs when a trader gets in a "slump" and has bad results for a given period of time. Usually the most devastating drawdowns eliminate a significant amount of a hard earned profit.

Keep in mind, drawdowns are completely normal. Everyone has them on occasion. However, the key is reacting properly to drawdowns. This is why trading psychology is so important. The natural reaction during a drawdown is to change your strategy. Sometimes traders will even take trades for no reason at all except for a desperate chance at a profit. Assuming you believe your methodology is sound, there is no reason to change anything during a drawdown. In fact, that is the most important time to follow the basics. Think about a baseball hitter in a slump. Sometimes they will change their stance, but usually they keep the same basic stance and swing. Instead, they focus on the fundatmentals of keeping their head still, keeping their hands back, and so on. For some reason traders tend to panic in this situation and change everything up. This leads to a larger drawdown, which usually ends when the trader reverts back to their primary strategy.

Housing bottom in sight, but recovery will be slow

Martin Crutsinger, AP Economics Writer

WASHINGTON (AP) -- Single-family home construction posted a modest rebound in April, raising hopes that the three-year slide in U.S. housing is leveling off. But a bulging supply of unsold homes, record levels of foreclosures and still-falling home prices suggest a sustained recovery isn't likely until next spring at the earliest.

The Commerce Department said construction of homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units. That's the lowest pace on records going back a half-century.

Applications for new building permits dropped 3.3 percent to an annual rate of 494,000, also a record low.

"I think we have probably reached the low point for this housing crash, but I don't expect us to come roaring back," said Mark Zandi, chief economist at Moody's Economy.com. "I think it will take another year for a recovery in housing to get going."

All of last month's weakness came in the volatile multifamily part of construction. By contrast, single-family construction and permits both rose, which economists took as a hopeful sign that this bigger sector of home construction was stabilizing.

That would be crucial for the broader economy. The recession -- the longest since the Great Depression -- was triggered by a collapse in the housing market that led to soaring loan losses and a grave crisis for the banking system. A healthy home market is needed to feed an economic recovery.

Many economists say home construction likely will stop falling in the current quarter. But any rebound isn't expected to take hold until next spring, and even then is likely to be slow. The reasons are the huge overhang of unsold homes, a wave of mortgage foreclosures and persistent job losses.

With foreclosures and other distressed properties for sale at deep discounts, builders often can't compete. Rather than launching new developments, they are waiting for signs of a broader recovery.

"They're being really cautious," said Michelle Meyer, an economist with Barclays Capital. "It will likely be a pretty gradual recovery in construction."

Zandi said he thinks home prices will keep falling until next spring and that sales won't start to show significant gains until the summer of 2010. And Wachovia economist Adam York said prices are likely to fall 10 percent more by mid-2010. Until then, the oversupply of homes is likely to remain a drag on the housing market.

The median price of a new home sold in March was $201,400 -- down 23 percent from a peak of $262,600 two years earlier. The median price is the midpoint, which means half the homes sold for more and half for less.

The supply of unsold existing homes at the end of March fell 1.6 percent from a month earlier to 3.7 million, according to the National Association of Realtors, but still remained at elevated levels. With sales sluggish, it would take nearly 10 months to rid the market of those properties, compared with about 6.5 months in 2006, according to the Realtors data.

The government report Tuesday showed construction of single-family homes rose 2.8 percent in April to an annual rate of 368,000. That followed a 0.3 percent gain in March and no change in February.

Building permits for single-family homes rose 3.6 percent to a rate of 373,000 last month.

Multifamily construction plunged 46.1 percent to an annual rate of 90,000 units after a 23 percent fall in March. Permits for multifamily construction dropped 19.9 percent to 121,000 units.

Analysts said apartment construction is being hurt by a glut of condominiums on the market and by tightening credit conditions for commercial real estate.

While housing construction and home sales appear to be at or near a bottom, two big unknowns are the sagging job market and the effectiveness of President Barack Obama's plan to help up to 9 million borrowers obtain more affordable mortgages.

In April, housing construction fell 30.6 percent in the Northeast, the largest drop for any region. Housing starts dropped 21.4 percent in the Midwest and 21.1 percent in the South. The West was the only region showing strength, with a 42.5 percent jump in housing starts.

The National Association of Homebuilders said this week that its survey of builder confidence rose for the second straight month in May, reflecting growing optimism.

The Washington-based trade group's index rose two points to 16, the highest reading since September. Even with the rebound, the index remains near historic lows. Readings lower than 50 indicate negative sentiment about the market.

The housing slump has hurt related industries such as home remodeling. But two national chains reported better-than-expected earnings this week.

Home Depot Inc. said its first-quarter profit climbed 44 percent on fewer charges, and the largest U.S. home improvement retailer beat Wall Street's expectations despite lower sales. And its smaller rival Lowe's Cos. reported a quarterly profit that also beat analysts' expectations, and the company boosted its full-year outlook.

But the top three U.S. homebuilders reported results earlier this month that give little hope the spring selling season will be strong enough to stop the red ink.

Pulte Homes Inc. and Centex Corp., which agreed to combine this year to become the largest U.S. homebuilder, said that while their quarterly losses narrowed, they are still battered by falling prices and a glut of unsold homes.

D.R. Horton Inc., the industry's No. 1 home builder, also reported that its losses had shrunk. But the company said it still faces challenges from foreclosures, high inventory levels, tight homebuyer credit, low consumer confidence and job losses.

"The good news is that the bottom for house construction is in sight ... in this very long and painful construction cycle," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

AP Real Estate Writer Alan Zibel contributed to this report.

How to Earn Money as a Professional Blogger

Kimberly Palmer

It's an appealing fantasy: Start a blog. Watch it take off. Then, quit the office life, sit at home, and live off the advertising revenue.

But successful, moneymaking blogs elude most people who try to start them. The vast majority of blogs, written primarily for family and friends, attract fewer than 50 page views a day and earn pennies per month, if anything. According to a Problogger survey, most bloggers earn less than $100 per month, and 3 in 10 earn less than$10 per month. Only 16 percent of the 4,000 respondents say they make more than $2,500 a month.

Gia Lipa, 43, is one of those success stories. In 2006, she started her personal finance blog, the Digerati Life, to teach herself more about the Internet. She started networking with other personal finance blogs and soon had a growing number of online friends who linked to one another's blogs. Within six months, her blog pulled in between 800 and 1,000 visitors a day, and the audience has since grown sevenfold. In early 2008, Lipa left her full-time job as a technical engineer to put 50 hours a week into her blog. She now earns about $10,000 a month through ads, links, and guest blogging. "I'm amazed how it turned out," says Lipa. "I didn't know I could replace my [engineer] salary after a year."

Like Lipa, the most successful bloggers tend to pick a topic that they love but that also fills a niche in the blogosphere. And while building traffic is a prerequisite, learning how to monetize the content is just as essential to turning a hobby into a moneymaking operation. Here are tips from experts on how to turn your blogging habit into a lucrative job:

--Monetize in multiple ways. Paul McFedries, author of The Complete Idiot's Guide to Creating a Website, says there are three basic ways to make money. First, bloggers can run advertisements through a program like Google AdSense, which matches up ads with blog content and pays based on how often visitors see and click on the ads. A blog about dogs, for example, might feature ads for shelters and dog food. The second way is through affiliate programs such as Amazon.com, which shares book-sale profits with websites that refer customers. And third, bloggers can turn a profit by selling related products that they design, such as T-shirts or crafts.

--Begin with ads. Lynnae McCoy, a 37-year-old mother of two and the creator of the Being Frugal blog, recommends placing ads on the site from the start so readers get used to the look and don't complain when they're added later. McCoy, who earns about $1,000 a month from her blog, says advertisers started contacting her as soon as her blog began to appear as one of the top links in popular Web searches, such as "being frugal." "The first six months are the hardest because you have to work hard to get your blog noticed," says McCoy.

--Look for partnerships. When Jim Wang, 28, the Columbia, Md.-based author of the Bargaineering blog, writes about saving money on vacation, he tries to mention the site Travelzoo, which pays him $2 for every person who signs up for its newsletter after clicking on Wang's link. He didn't earn much money during the first two years of his blog. But now it gets around 850,000 page views a month, and he turns those eyeballs into $10,000 a month.

--Make extra cash offline, too. Some bloggers also use their site as a way to advertise their skills and services for additional income. After Lipa took advantage of Google AdSense and affiliate programs, which each make up about one third of her revenue, she offered her blogging services, including outreach work, to other sites and corporations. She now charges an hourly rate that makes up the rest of her revenue.

--Be patient. "It takes years to get to the point where you can earn a living off the site," says Wang, who didn't get more than 100 visitors a day for the first six months of his blog's life. From a monetary perspective, he says, it would have made more sense to stick with his day job as a software developer. That's why he warns anyone against pursuing a blog just for the moneymaking potential. "Your time is better invested elsewhere if you're doing it for the money, but if you have a passion or some other motivation, do it," says Wang.

He follows his own advice: In addition to Bargaineering, Wang writes low-earning blogs on grilling and Scotch.

Many Bought Shares High, Sold Low

by Mary Pilon

As stock markets slid in March, Judy Brady lay awake at night thinking about her portfolio.

"My retired friends who had all CDs and gold, and they were still making money, and my investments just kept going and going," she said. "I thought: I can't afford to lose all this."

So the 70-year-old retiree in Schaumburg, Ill., sold most of her stocks. Instead of the 40% of her portfolio that was in stocks, now she has just 10%. The rest is in cash, bonds and federally insured certificates of deposit.

The Dow Jones Industrial Average hit a bottom at 6547.05 on March 9, a 12-year low and less than half its October 2007 level. Many investors like Ms. Brady cut their losses. Some $70 billion flowed out of stock mutual funds or exchange-traded funds in February and March, according to TrimTabs Research.

Since bottoming out, the Dow has surged 26%. That means investors who sold at the bottom have missed out on one of the most powerful rallies in decades. "Their timing was almost perfectly bad," said Dennis Houlihan, a Fort Wayne, Ind., financial adviser who tried unsuccessfully to steer three of his clients away from selling in early March.

Mr. Houlihan said he hasn't heard from any clients who dumped stocks. "There's a tail between the legs. You don't want to rub their nose in it," he said.

Some investors said they had no choice but to bail out when stocks were sinking. Josh Caucutt of Lakewood, Colo., cashed out his individual retirement account in early March to help pay the $1,200-a-month maintenance costs on his unsold home in Wisconsin. The IRA, valued at $3,000 a year ago, was divided evenly between a stock-index fund and funds that blended stocks, bonds and other investments. When he cashed it out, it was valued at $1,800, a 40% slide.

"I knew exactly what I was doing," said the 34-year-old father of three. "By no means am I convinced I did the right thing. But we needed this money immediately. And there wasn't much to indicate that things were going to change."

Jesse Archambeault of West Hartford, Conn., worried he would lose his children's college money if he didn't get out of the market. Mr. Archambeault got $100,000 from selling his previous Connecticut house in 2007.

But when the $100,000 turned into $60,000 late last year, Mr. Archambeault and his wife went in to see their financial adviser, Rick Shapiro. Mr. Shapiro told them about his "two-Ambien" test, referring to the sleeping pill.

"If two Ambien can allow you to sleep," Mr. Shapiro said, "then it still might make sense to stay invested."

The Archambeaults passed Mr. Shapiro's test. They sold anyway, reducing their stock holdings to 20% from 85%. They sold in November, which hasn't hurt them since the market is now roughly flat for 2009.

Still, Mr. Archambeault said it is tough to watch the rally pass him by. He is thinking of putting half the money back into the stock market in coming months.

Financial advisers said they usually discourage clients from tugging money out of the stock market during downturns. They know that buying high and selling low is a formula for awful returns. But panicked clients often want safety now.

Lucas Hail, an adviser in Cincinnati, said two of his clients sold close to the market bottom. They waited until the market recovered a bit and recently bought back in.

"They know that in hindsight, it wasn't the best thing to do," Mr. Hail said. "But it was what they had to do emotionally. Math and the mind don't always add up."

Not everybody who sold earlier this year considers it a mistake. Holly Hunter, a financial adviser in Portsmouth, N.H., advised many of her clients to sell, first in the summer of 2007, then again in February of this year.

"My folks need income," she said. "They need to know they can pay their bills....There is no waiting time for things to come back around."

Ms. Hunter estimates that two-thirds of her 80 clients are retirees. She met with clients individually to determine how much of their portfolios should be scaled back. A few years ago, it wasn't unusual for those portfolios to be 60% in stocks, she said. Now, many older clients have scaled back to 20% or less.

Only two have since questioned whether selling was the right move. "The downside would have been horrific," she said. "What if we were at 3000 now? Selling at 6500 would have been brilliant. And you don't know that at the time of the decision."

Ms. Brady, the Illinois retiree, has no regrets about selling near the bottom. The stock market is a popular topic of conversation in her art classes at the local senior center, and when she sees the market going up, she sometimes wonders about the gains she is missing out on. Her account is about half of its value at the start of 2008.

"I wasn't comfortable," Ms. Brady said. "It's not just about money."

Job Seekers: How to Negotiate a Higher Offer

by AnnaMaria Andriotis

With an average of five unemployed people now vying for each job opening, according to the nonprofit Economic Policy Institute, employers who are hiring can afford to be picky — and tight-fisted. Many companies are reducing compensation for their existing employees, which means they’re more likely to offer lower salaries to new hires, says Fred Crandall, a senior consultant at human resources consulting firm Watson Wyatt. In April, 21% of employers had reduced employee compensation, according to a Watson Wyatt survey, up from 7% in February.

And while you may feel compelled to accept any job offer, failing to negotiate a compensation package can cost you. These days, employers who engage in such “lowballing” are offering an average 10% to 15% less than what they would have offered before the recession began, says Ford Myers, president of Career Potential, a Haverford, Pa.-based career coaching and consulting firm.

Here’s how you can find out how much you’re worth in this economy — and how to get it.

Know How Much Your Peers Make

Start your research at Salary.com, which offers free salary range reports based on your job title and location. You can also purchase reports that show salary ranges based on education and experience. Entry-level position reports cost $30 each, while midlevel and executive reports cost $50 and $80, respectively. Another free resource: the Bureau of Labor Statistics’ Occupational Outlook Handbook, which includes median salary statistics for hundreds of occupations.

For more personalized advice, team up with a headhunter who specializes in your industry, says Bonnie Monych, a career coach based in The Woodlands, Texas. Headhunters track average salary ranges and can tell you what skills are most sought-after by employers in your field. Public libraries and professional industry associations often keep lists of local headhunters. Your employed friends may also help with referrals.

Finally, consider broadcasting your request to your Facebook and Twitter contacts. You can’t just ask someone how much they make, but you’d be surprised how many people would be willing to share a typical salary range for their field, says Annemarie Segaric, owner of the Pelham, N.Y.-based Career Changer Company, which offers career coaching. LinkedIn users can join industry networking groups and post questions about salary trends.

Polish Up Your Skills — and Boast Them

Faced with tight budgets, few companies these days are willing to spend money on training new hires, says Joe Kilmartin, managing director of compensation consulting at Salary.com. Instead, they’re looking for applicants who can hit the ground running from the first day on the job. During your interviews, ask what the company is looking for and explain how you can fulfill those needs, says Robert Todd, head of compensation and benefits operations at Novartis Vaccines & Diagnostics, which is currently hiring.

Training or certification programs can hone your skills or acquire new ones. The good news: Many courses are offered for free. The Department of Labor’s Career Voyages program, for example, provides educational and apprenticeship information for auto workers transitioning to careers in public safety, marketing or sales. And many prestigious universities, including Harvard University, Massachusetts Institute of Technology and Yale University, post the materials that professors use to teach their regular classes on the web for free. States also receive funding from the federal government for one-stop career centers. Services vary by center but include interview preparation and training events.

Don’t Be Afraid to Negotiate

Many employers won’t extend their best offer unless you negotiate, says Monych. So now is the time to use all that research and come up with a desired salary range. Don’t be afraid to ask for a 10% increase from your last salary -- especially if you were underpaid. Ranges for five-figure salaries should be within $10,000 (for example, $60,000 to $70,000), while six-figure salary ranges can be wider (say, $100,000 to $140,000).

When an employer doesn’t budge from their initial offer, try negotiating other terms, like an extra week’s vacation, says Segaric. Or see if your employer will consider a raise six months after you start working — assuming that you meet their performance standards.

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