Archive for May, 2009
This Week in Review – Graduation Edition
Posted by: Todd Metheny in This Week in Review on May 29th, 2009
I’m writing this a little ahead of time, but as I write this, my wife, Rachel, is about to graduate from medical school with an M.D. I’m proud of her. She’s worked and studied harder than a person should. She’s been a top student. So much so, that when she interviewed for residency programs, one interviewer asked her what her GPA was and when she said it, he scoffed, and said, “No, I mean your medical school GPA.” She gracefully repeated the GPA and made it clear that that was in fact her medical school GPA. Of course, her transcript was right in front of her as he was interviewing her. She ranked that program low because she felt like that particular person was somewhat rude to her. It all worked out, she got her first choice for residency, and she’s ready to start her career as a doctor. I’m confident she’ll be a great one. Here are some of the stories I stumbled across over the course of what’s been a very busy week for us:
Conflict of interest doesn’t apply to blogs @ Penelope Trunk’s Brazen Careerist – The people that read this blog regularly, you know that I love Penelope Trunk. I think she produces some of the best content across the blogosphere when she’s on. I disagree with this post. I don’t think her analogy of disclosing other benefits is equivalent to disclosing when you’re getting paid to write a post. She says that as long as she writes well, it shouldn’t matter how much she’s making to post about a particular company, and that we should trust her to choose good companies to write about. I can’t agree. I think bloggers have an obligation to disclose when they are getting paid to write a particular post. Money hurts objectivity. I don’t think anyone would disagree with that. If you’re going to pay me write about your company, you have an expectation that this will bring your company business in the future. A favorable review will bring you more business, and thus is worth more money to you. I have an incentive to make as much money as possible. A negative review might also hurt my reputation with companies and give them a lesser incentive to hire me in the future. I think a byline, stating that this is my true opinion of the company but disclosing that I was compensated for giving it, would do the trick. That would be the a true and honest way to handle it. One of Penelope’s strengths is that she’s honest. I think bloggers should be consistent with that value on this particular issue.
The Great Piggy Back Adventure @ Get Rich Slowly - Just for the sake of example, JD over at Get Rich Slowly, another big and successful blogger, reviews something and discloses the company’s involvement/compensation. He’s an honest and ethical guy. He always points it out if he’s getting paid for something. I pledge to do the same on this blog.
Money Mistake: Assuming a college degree guarantees a good job @ Christian Personal Finance – A college degree doesn’t guarantee you anything. Lots of people have degrees that are waiting tables and working at blockbuster. Your ability to network is paramount when it comes to getting a job. I hate that word, networking, but it’s true. I graduated from law school in May of 2008. I have lots of out of work classmates. I have been fortunate enough to have gotten a good job, but having a college degree, or law degree, doesn’t guarantee you a job. It’s what you do in the aftermath of getting the degree that matters.
Dividend Investing vs Trading @ Dividend Growth Investor – “Reinvested dividends magnify total returns and deliver even faster compounding of dividend income. Reinvested dividends are believed to have accounted for 97% of S&P 500 total returns since 1871.” That sounds like a pretty good argument for dividend investing to me. Of course, it’s not the only way to invest. Philip Fisher liked to focus on companies that don’t pay dividends and was one of the most successful investors of all time. DGI closes with this, “By creating a diversified income portfolio through dollar cost averaging and by reinvesting dividends, investors are more likely than not to achieve long-term sustainable success in the market.” I agree.
Why I Wanna Spend @ Sense to Save – This post points out something important. Once you reach a certain point in your financial journey, it may become increasingly tempting to spend more. If you check your bank account, and think, I’ve never had so much money before, you might walk around thinking, I can spend more going forward. It’s tough to adopt the frugal lifestyle and stick to it. Every frugal person knows this, and is affected by it in one way or another.
Have a great weekend and thanks for reading.
The Issue of Underemployment
Posted by: Todd Metheny in Economics on May 27th, 2009
Unemployment stats have made headlines in recent months. Many think that the unemployment rate is one of the best measures of the current state of the economy. When there’s money floating around, and people are using that money to buy more things, companies make and market more things, creating jobs. That is not the case right now. In April, according to the Bureau of Labor statistics employers took 2,712 mass layoff actions, laying off 271,226 workers. It’s a problem that gets a lot of press.
What doesn’t get a lot of press are the many workers who still have jobs, but aren’t working nearly as much. How many people out there have had their hours cut back? How many people don’t get the shifts they need to make ends meet? How many have been asked to take a pay cut? Or have duties added in order to keep their job? How many people out there are working more for the same or less pay? This is an issue that doesn’t show up in the statistics, but damages the economy just the same. Like unemployed workers, these workers are bringing in less money, giving them less money to spend at other businesses that employ people, which in turn creates jobs and stimulates the economy.
There’s another, less obvious type of unemployment going on as well. Lots of people out there have skills that aren’t being utilized. That is, you have lawyers, computer science degrees and MBAs waiting tables, walking dogs and delivering pizzas. This isn’t necessarily wrong. If there was sufficient demand for more people to do the jobs that these people would do in their specialty areas – they would be able to get jobs in their field. This creates other problems though. A lawyer, straight out of law school has knowledge and skills that aren’t being acquired. They also tend to have debt. MBAs are the same way. Their mistake was going into fields that had a surplus and inadequate demand. Both degrees provide knowledge that is very practical and useful. Using lawyers as an example, there are 553,690 lawyers employed in the US. That number doesn’t include lawyers doing something else (and there are lots).
The point is, based purely on perception, people have pursued careers that the market lacked sufficient demand to support. By the time applicants realize this, it’s too late, and there are too many of a particular thing. Of course, the correction will work the same way. A shortage of lawyers (or whatever) will creep up on us, and before we know it, the 300,000 people practicing law will be raking it in, it will gain a reputation for being the place to be again, and people will rush out and take the LSAT, eager to fulfill their dream of becoming a lawyer. Of course, it may never swing this much. This is just an example for the sake of the example. Because so many have pursued degrees and training that isn’t in adequate demand, underemployment occurs, and the economy suffers. Thanks for reading.
The Personal Finance Playbook was honored to be awarded the Silver trophy in the most recent Carnival of Real Estate hosted by Web Real Estate Marketing. Head over and check out all the posts.
Declutter Your Life
Posted by: Todd Metheny in Frugal Living on May 26th, 2009

Since we’re getting ready to move, it gives us a great opportunity to assess whether we really need all the stuff in our place. We look around at all the furniture we’ve accumulated over the past few years, the books, and everything else you just seem to accumulate when you live somewhere for any significant period of time. We live in a country where it’s easy to get caught up in the pursuit of stuff. Of course, when you think about it, you don’t need that much stuff. You don’t need to drive a cool car, or have a huge collection of rookie cards, or new gadgets as they hit the shelves. You don’t need much of it at all. You can be more than happy with less.
My wife has taken action on this and has started to put our stuff on Craigslist. Craigslist and eBay are the newer, easier garage sale. Our stuff has generated a lot of interest, thanks to what we think are very reasonable prices. My wife loves doing this, too. She’s fine living with less, too. Plus, she knows she’s going to help move it if we can’t sell it. The only thing I would say about Craigslist or eBay is that you are taking on some measure of risk. With Craigslist, anytime we post something, we get contacted by several people within minutes. Unfortunately, lots of the people don’t end up following through. There’s a chance that people won’t follow through with the transaction. Fortunately for us, we sold both our kitchen table and entertainment center almost immediately to out of towners. They’re both sending us cashiers checks by priority mail, then having a moving company come by to pick up the stuff. It’s a clean way to do these types of transactions.
Even if you aren’t moving, using things like Craigslist or eBay is a great way to sell your stuff to raise extra cash. Everyone seems to win in these situations. People get to buy things they want or need for less than the cost of buying something new, and hopefully, the market takes the goods to the people who are most likely to get the most use out of them and who value the item the most highly. Thanks for reading.
The Personal Finance Playbook was included in a blog carnival over at Greener Pastures. Lots of great posts over there. Check it out.
This Week in Review – Buy My Condo Edition
Posted by: Todd Metheny in This Week in Review on May 22nd, 2009
It’s been a busy week. We allegedly have an offer on our place in Kansas City, but we haven’t seen it or heard much about it, other than it’s coming. The fellow making the offer is reportedly going through a divorce and has some restrictions based on that fact. The good news is that we’ve had a lot of traffic/interest lately. Hopefully it will sell soon. In other news, I’m also still trying to work out the particulars for my transfer. I think I have a pretty solid lead on a transfer position within my office, but nothing is certain right now. Hopefully it will work out. I’ve been stressing about it a little bit lately. Anyway, here’s some of what I’ve been reading over the course of this past week:
A Typical Day in the Life as an Independent Trader @ Bargaineering- This is Part 1 of a 3 part series over at Bargaineering. Check out parts 2 and 3 here. The stock market has historically been the greatest wealth creating machine in the history of mankind. That being said, day trading is a practice that most people shouldn’t be partaking in. Very few people are able to make a profitable living doing this. Regardless, it’s fun to read about, think about, and talk about. Check out these posts by someone who does it for a living.
Find a Mentor Using the DISC Method @ Studenomics – Finding a mentor can help your career – and theirs, believe it or not. Check out this approach to finding one.
Tips for Coping When Your Startup is Out of Cash @ Penelope Trunk’s blog- This post isn’t going to help your startup. It’s not going to help you get funding for your business or idea. But it is a touching, poignant story about how to cope with problems. She’s such a good writer, it’s officially one of my favorite blogs. I’m familiar with the criticisms of her career advice, but you can’t deny her ability to make words on the page something special. It takes a lot of courage to be as vulnerable as she is for a living.
What Else Can We Rebrand @ Weakonomics- Check out this article about “rebranding.” Would a stinkin’ rose by any other name smell as sweet? I would throw Worldcom into the ring as an example that isn’t so far removed from the news. Shortly after the famous accounting scandal, they merged with MCI and became (mostly) known by that name. Later, they were acquired by Verizon – a move that has made Verizon the juggernaut we know today and was essentially another attempt at rebranding.
Bragging and Blogging @ Finance for a Freelance Life – Mrs. Micah offers you this tip if you’re having a lot of success, be humble about it. I couldn’t agree more. I love the voice she writes with. I would be that she’s a very humble person. I’ve mentioned before that a very authoritative voice kind of turns me off. Like I mention above with Penelope, it takes courage to be vulnerable and honest – Mrs. Micah realizes that. Check it out.
My post 5 Reasons Not to Accept that Counter-Offer was included in the Money Hacks Carnival over at The Stretchy Dollar. It looks like there’s a lot of good stuff in that carnival this week. I’d also like to thank The Suburban Dollar for taking the time to answer some blogging questions for me this week. The blogging community always seems to be incredibly helpful when you have questions – remember that if you have a new blog or are thinking of starting one. Have a good weekend and thanks for reading.
I Hate the Word Networking
Posted by: Todd Metheny in Careers on May 21st, 2009

I worked with a guy in the summer of 2007 that should write a book called How to Get a Job. I just did a Google search, and I don’t think a book with that exact title exists, believe it or not. I really think I’m going to encourage him to write that book. We were both clerking at the same place, and there were no more spots for clerks once he decided he’d like to work there. He was just a first year law student, and wanted to make sure he had something. So he offered to work for free. I met him at an orientation session. He warmly introduced himself to every person he encountered throughout the day. He smiled, shook hands, and acted genuinely interested in anything being said to him. Ever the skeptic, I suspected that he might secretly be recruiting people to join his cult or something. He wasn’t. He was just a genuinely nice a polite person.
He took it one step further. He did great work while working for free. He didn’t assume that everyone would be grateful that he showed since everything he did was free. But he made an impression on the people he worked with. People remember a person that walks up introduces himself without fear or insecurity. People remember a person that acts genuinely interested in what they’re saying. At the end of the summer, he wrote thank you notes to every person that he directly worked with, handwritten, that thanked them specifically for helping him and being so nice to work with.
Some people might think of this as overkill. It isn’t. It’s exactly how people should handle an internship. People remembered him. They knew who he was. Plus, he was likeable. People liked having him around and being around him. I’m happy to say that he and I became friends. Our office invited him back to work again the next summer. I was already employed full time as an attorney, though in another office, but he kept winning people over. People in my division, working in the office he was, mentioned to me that this friend sent them thank you notes. I asked the Chief Counsel of the Division he was in if she knew him, and she said that everyone she had talked to was “very impressed with his work.” Needless to say, he got offered a full time position when he graduates.
An internship is really just an extended job interview. It’s an opportunity for people to decide (a) whether they like you and (b) whether you can competently handle the tasks they throw you. If those two things are true, and you show up on time looking decent, there’s a good chance they’ll offer you a job when the time comes.
The fellow I’m talking about is a born “networker.” For some people, networking is a way of life. Except he wouldn’t call it that, and I personally hate that word. I hate the word networking because anyone who talks about getting a job will tell you that it’s key. It’s true, networking is truly the way people get jobs. But the idea of networking is overblown. It isn’t about going to cocktail parties handing out business cards – that’s just annoying. Networking is about genuinely becoming friends with people. It’s about not being afraid to approach people at work and be nice to them. It’s about presenting yourself every day. Anyone that worked with this guy would help him get a job if they could. Because he did good work. No one wants to hire some guy or gal that gave them a business card at an art show (unless you really did something to knock their socks off). Network by putting yourself out there and doing a good job. Meet people when there’s a genuine opportunity, but don’t push yourself (or your business card) in inappropriate situations. If you’re looking for a job, good luck, and don’t be afraid to put yourself out there. Thanks for reading.
The Cost of Being a Vegetarian (or Vegan)
Posted by: Todd Metheny in Green Living on May 20th, 2009

My wife is a brand new vegan (I’m an omnivore). She’s been one for about 3 days now. She also gave up all diet and fat free food products in one fell swoop. I’m proud of her. Whenever someone would point out how pointless it was for her to eat foods with no calories, she would always say, “I know, I know.” She also decided that she’s going to avoid any processed foods at all costs. Her primary motivation is a basic desire to be healthy (ironically, I’m the animal lover out of the two of us), an ailment that a lot of medical doctors suffer from. She was also inspired by a book called Skinny Bitch, which I guess has inspired a lot of people to go vegetarian or vegan. I haven’t read the book myself, and my wife told me that she didn’t think I’d like it. The authors speak to the reader with a very authoritative voice, I guess, and my wife knows I don’t really like that. In fact, I tend to sort of pick apart assertions if they’re too absolute. It’s in my nature. She likes it, though. In fact, she’s encouraged me on numerous occasions to adopt a more authoritative voice on this blog. I think it comes down to a matter of personal style. The authors of this particular book have sold millions of copies of their book, so obviously whatever they’re doing is working for them.
From a health perspective, there’s really only one thing you get from meat, milk and eggs that you can’t get from any other food, and that’s Vitamin B12. If you’re a vegan, or are considering becoming one, make sure you take some type of supplement to get your allowance.
In any case, the vegan buzz around our house has caused a couple of developments around our house: (1) It’s caused me to eat less meat, a development I’m fine with (I’ve been trying to eat less meat for awhile anyway), and (2) It’s caused me to think a lot about the cost of meat substitutes and meat free products. Vegetarians eat fruits and vegetables, which aren’t any more expensive regardless of whether you’re an omnivore or a vegan. They aren’t more expensive, that is, unless you’re trying to exclusively eat organically grown fruits and veggies, which my wife is. The fact that organics cost more makes perfect sense. It’s cheaper to grow extra fruits and vegetables, and have that crop have a better yield, through the use of pesticides and artificial fertilizers and chemicals that cause the food to ripen more quickly. Without these, you have to wait longer for the food (and time is money), and potentially end up with less of it.
Consumer demand for organics is fairly inelastic, meaning that even as prices rise, demand essentially stays the same. This is likely because people who have made a lifestyle choice aren’t doing it based on factors that have anything to do with the price of the good they’re buying. If you believe that non-organics raise your risk of cancer, you don’t mind paying an extra $1.29 for the foods you’re buying. (For a more complete discussion on the US Food industry, check out this post by the blog’s resident energy expert, my brother-in-law RJ) RJ would add that the environmental savings of eating less meat is extreme and would easily dwarf the spending necessary to sustain this lifestyle.
Also expensive are the meat and dairy substitutes available to vegans. Now taking a place in our fridge is almond milk, as well as various organic premade bowls and meals, lots of tofu, etc. When my wife came home bearing these gifts, I asked about the grocery bill (I predict this will triple our grocery bill over time – it currently has been worse than that). She looked at me sweetly and smiled, “But I’m worth it, right?” She really is. Thanks for reading.
Piggybacking Buffett
Posted by: Todd Metheny in Business Profiles, Value Investing on May 19th, 2009

At the annual meeting, one of the questions was, and I paraphrase - why should we invest in Berkshire when we can just follow the public reports of your investments and make those investments yourself. Charlie Munger leaned forward and simply said (still paraphrasing), I think that would probably be a decent strategy, to find investors who you believe in and mirror their investments. The concept behind the questioners strategy is known as “piggybacking.” I’ve talked about piggybacking on the blog before.
There are definitely some obvious risks involved in piggybacking, in that you don’t know why an investor bought a particular position, at what price, or when they intend to sell. That being said, it can be a great place to start your research if you’re interested in investing in individual securities. Lots of the stuff Buffett buys has to be reported in accordance with SEC rules (which are voluminous – one such rule is that if you buy or sell stock in a company that you own 5% or more of it has to be reported).
Buffett has already been in the news this week for some of his recent buys and sells. A lot has been made about a comment he made regarding Wells Fargo (WFC), saying that if he had to go all-in on one stock, that would be the stock (reportedly he was referring to WFC when it was at $9/share – now trading at $26.93). It was reported today that he’s been backing up that statement by increasing his positions in both Wells Fargo and US Bancorp (USB). He also added to his position in Johnson & Johnson (JNJ), which he was selling not too long ago – a move he explained by saying that it was necessary to sell some at the time in order to fund other acquisitions.
He’s also reportedly been trimming his stake in ConocoPhillips (COP), which he made a big bet on at peak oil prices in 2008 – a move he has since publicly called a mistake. His reported reason for selling COP is for “tax reasons.” I don’t know if Buffett is being coy because he doesn’t want to sink the market for a stock he’s going to be selling over the next quarter, or if he’s just being honest. The tax reason that springs to mind would be a situation where he was realizing some losses in order to offset some capital gains. This might be necessary because Buffett doesn’t sell at a loss that often. It’s a plausible situation. I don’t know. Keep both possibilities in mind.
So should you run out and buy Wells Fargo, US Bancorp and Johnson and Johnson? Should you immediately liquidate your position in ConocoPhillips? I don’t know. Buffett does tend to buy stocks that outperform the market over the long haul. In any case, you should understand the underlying reason for buying these stocks, know something about valuation and be able to buy with a disposition that won’t cause you to sell at the first sign of trouble. When buying anything, you need to determine a fair value point, and sell when the stock approaches that point or passes it. I definitely take notice when Buffett is in the news buying or selling. I do the same thing with Seth Klarman, whose investments are harder to assess because they tend to be companies I’ve never heard of, since he mainly focuses on small-caps. Good luck. Thanks for reading.
The Five Dysfunctions of a Team – Review
Posted by: Todd Metheny in Reviews on May 18th, 2009

Anyone involved in the management of people should understand the basic principles of team dynamics. Entrepreneurs need to understand their shortcomings as leaders and managers, and members of a team need to understand each other’s respective strengths and weaknesses in order to utilize their resources properly. Even family units display the fundamental characteristics of teams. Both management teams and families have roles that, when unmet or improperly filled, cause dysfunction that negatively affect their ability to meet their goals or foster healthy relationships.
If you’re an executive or a manager, being both a team builder and team member is an essential part of your job. The people who work for you are your resources and your job as a manager is to use those resources in a productive way. In The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni, he uses a fictional company to create realistic situations regarding many of the challenges that executive teams face.
From an entertainment perspective, the book is excellent. It has short chapters and is written in a concise, to the point manner. The storyline makes the points very clear and easy to follow. It’s teaching by example at its finest. The characters all have unique attributes and characteristics and bring different types of value to the team. This is an effective way to teach – by showing how the principles would apply in a real world situation. Here are Lencioni’s principles:

We’ll start from the bottom of the pyramid and work our way up:
1. The Absence of Trust – Members of a team need to trust each other. By this, Lencioni means that it’s important for team members to trust that the other members of the team have the best interests of the team at heart. If this is the case, then the team members are able to believe that the criticism they may receive comes from a place that has the best interest of the team’s common goals at heart. The leader of the team should be typically be the first to demonstrate vulnerability. This without question sets the tone for how the group will respond.
The question is how to build that trust. According to Lencioni and his characters, trust is built through vulnerability. I’ve found this to be the case in my own life. If you’re willing to show people that you aren’t perfect, and that you have fears and vulnerabilities, they’ll often reciprocate. This forms a sort of bond that I’m not sure can be built any other way. The book points out several exercises that can be done to build that trust. These included discussion of personal histories, discussion of each individuals strengths and weaknesses and possibly some experiential exercises.
One that I’ve done myself (as part of a leadership conference, nonetheless) is having a group of people take a Myers-Briggs Type Indicator exam and discussing the characteristics assigned to you by the exam. I think this is an excellent way to point out that people have various strengths and weaknesses that can all be used to further the goal of a group or team. Like any test, it has its shortcomings, but I enjoyed taking the test and the discussion that followed.
2. Fear of Conflict – Effective teams disagree with each other. You have to be comfortable enough with each other to say, “I disagree, here’s why.” If you can’t disagree, debate, and pound out solutions, you’re unable to come to the type of decision that reflects the core values that influence the direction of your company (or group).
I had a class on mediation in law school, and one of the key takeaways from the class was that mediation was often a more effective way of settling disputes than litigation. Litigation focuses on taking as much as you can possibly get, whereas mediation focuses on coming up with a solution based on what the parties actually want. The research presented in the class demonstrated that people were more satisfied with a settlement that they had a hand in negotiating, even if they got less. I think this illustrates the importance of this point. When you debate and embrace conflict on a team, you end up making decisions that have been attacked and defended. Not everyone has to walk away in agreement, but this recognizes that always having a consensus isn’t necessarily best for the company/team/group.
3. Lack of Commitment – Committing to goals takes the ambiguity out of a scenario. It creates a culture where it isn’t okay to fail. It’s not okay to let down the team. If all the people on the team are committed to common goals, they’re more likely to succeed.

4. Avoidance of Accountability – I think this is a very important one. People like to have low standards set for them so they can easily achieve or outperform the metrics being applied to them. It holds a team back when they think as individuals and are more worried about avoiding blame for themselves or their division than advancing the overall mission and goals of the team.
In the group presented in the book, several of the characters tried to point their fingers at a particular division was lacking. They did not want to recognize that when the company is failing, then all of them were failing – as a team. The divisions of a company should not be independent of one another, because all should be united towards a common goal. Any and all individual achievement goals should be secondary to the overall goals of the team.
5. Inattention to results – This falls right into line with number four (and all the goals, really). What should ultimately matter are whether you met your ultimate goals. Team members need a way of measuring their performance, and the results you get as a team should always be the ultimate focus. If the team, or a section of the team is not performing well, then they need to evaluate why that would be, and subsequently, how to attain the needed results.
The fable goes through how a leader builds a team and manages people. In the book, people are fired, people quit, there’s team dissension, consensus building, and ultimately good leadership and a team that works. It’s a feel good success story, and it’s fun to read. I recommend it to anyone running a company or managing people. If you feel your family is dysfunctional, it might have some insight to those problems as well. If you read it or have read it, let me know what you think. Thanks for reading.



