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Monday, June 27, 2011

10 Books That Changed or Impacted My Life

The Autobiography of Malcolm X – Alex Haley
What can I say? This is an absolute classic that has impacted young minds(especially black males) for generations. The most powerful concept in this book is the power of transformation. We are always told that we can become whatever we wish. Here is the story of a man who actually did it.

The Isis Papers:The Keys to the Colors – Dr. Frances Cress Welsing
Very, very controversial. This book attempts to answer the question, “Why is there racism/white supremacry?” The Isis Papers will not be comfortable reading for most. You’ve got to read this one with an open mind. Prepare to have your mind ‘blown’.

Moneyball – Michael Lewis
This book and the principles behind it have changed the dynamics of the national pastime for good.  There’s great information here for business students as well. Here comes sabermetrics. Saber who? Forget the upcoming movie. This book is the real deal.

Blindside – Michael Lewis
I read this way before the movie. I think I read it before Michael Oher was even drafted. This is a powerful lesson of how one person(or family) changed a young man’s life completely. Blindside made me evaluate whether or not I’m doing enough to help others. Once again, forget the movie. This book is the real deal. And if you didn’t know it, Michael Lewis is one helluva writer.

Gang Leader for a Day
A graduate student stumbles into one of Chicago’s most notorious housing projects…and the gang that runs it. What happens next is both shocking and eye-opening.  Without giving away too much, it turns out that the gang’s leader is a college grad. His story and he interplay between the two is really iluminating.

Freakonomics
Quite simply, this book will change the way you think of economics. I swear, if econ had been taught like this in college, I might have done much better.

Capone – John Kobler
I don’t know how long ago this book was written, but I do remember reading it when I was around 10 or 12 years old. Back then, a local TV station was running the old 1950’s show, ‘The Untouchables’. I loved it.  This book brought many of those TV series characters to life for me. It didn’t make me want to be a criminal or anything. Thank god.

How To Get Rich in Mail Order – Melvin Powers
Shortly after I entered college, I started a publishing business and I used the mail as my medium of choice.  I never did get rich but this book was one of my reference bibles that I used to succeed.  “How To Get Rich…” is a classic read and provided me with a true source of both wisdom and inspiration during those days.

Black Folks Guide to Making Big Money in America – George Subira
Black Folks Guide to Business Success – George Subira
Way before “Rich Dad, Poor Dad”, “The Millionaire Next Door” or Suza Orman were these two gems from Subira. Great for taking a lay person through business opportunities, financial investments, personal financial planning and really how to change your mind and program it for success!

What books have you read that either changed your life or made a great impact on you?

Wednesday, June 22, 2011

I NEVER THOUGHT THEY WOULD GO OUT OF BUSINESS

I was talking to a young acquaintance of mine a few days ago.  This guy is one of those kids who always has his nose in front of a computer, headphones firmly affixed on his head, playing Worlds of Warcraft, Tron or whatever the heck the latest computer game is.

Anyway, I ended up having a debate with this youngster about corporate life.  He insists that companies like Facebook and Google, for example, will never go out of business. He says they are too big, too powerful, and too wealthy. 

I tried to explain to him that when I was young there were companies that we thought would last forever. But, as we now know, forever can happen tomorrow. The rules have changed, corporate activity is greatly accelerated.  Remember Bear Stearns? Bear was trading at $172 a share as late as January 2007, and $93 a share back in February 2008.  On March 16, of that same year, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. That figure is less than 7 percent of Bear Stearns' market value just two days before.

If that doesn’t illustrate the speed of business, I don’t know what does.

With that in mind and as a little history lesson to my young acquaintance, I thought I’d take a walk down memory lane through the wreckage of some once mighty companies that have fallen on hard times.

Montgomery Ward- - this place holds a special place in my heart.  As a kid I made a lot of visits to this place with my mom. Man, I loved their donuts. A former American department store chain, founded as the world's #1 mail order business in 1872 by Aaron Montgomery Ward, and which went out of business in 2001. At its height, it was one of the largest retailers in the United States.

Wang Laboratories was a computer company founded in 1951 by Dr. An Wang and Dr. G. Y. Chu. At its peak in the 1980s, Wang Laboratories had annual revenues of $3 billion and employed over 33,000 people. Wang Laboratories filed for bankruptcy protection in August 1992. After emerging from bankruptcy, the company eventually changed its name to Wang Global. In 1999, Wang Global was acquired by Getronics of The Netherlands.

The Bethlehem Steel Corporation (1857–2003), based in Bethlehem, Pennsylvania, was once the second-largest steel producer in the United States, after Pennsylvania-based U.S. Steel. Bethlehem Steel's demise is often cited as one of the most prominent examples of the U.S. economy's shift away from industrial manufacturing, its inability to compete with cheap foreign labor, and its’ short-sightedness in business management with little long-term strategy.

Trans World Airlines (TWA) was one of the largest United States commercial airlines from 1930 until its merger with American Airlines in 2001. Flying to most major U.S. cities, TWA was one of the largest domestic airlines; before deregulation it and American, United and Eastern were known as the Big Four.

Adelphia Communications Corporation was a cable television company headquartered in Pennsylvania. Adelphia was the fifth largest cable company in the United States before filing for bankruptcy in 2002 as a result of internal corruption. Adelphia was founded in 1952 by John Rigas in the town of Coudersport. The majority of Adelphia’s assets were acquired by Time Warner Cable and Comcast in 2006. As a result of this acquisition, Adelphia no longer exists as a cable provider.
Arthur Andersen LLP, was once one of the "Big Five" accounting firms along with PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations. In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm's handling of the auditing of Enron(see below).

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies.  Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial success was sustained in large part by systematic, and creatively planned accounting fraud, known as the "Enron scandal". Enron has since become a popular symbol of corporate fraud and corruption. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm (see above).

Long Distance Discount Services, Inc. (LDDS) began in Hattiesburg, Mississippi in 1983. In 1985 LDDS selected Bernard Ebbers to be its CEO. The company name was changed to LDDS WorldCom in 1995, and later just WorldCom. By 2000, the telecommunications industry had entered a downturn. In 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time (since overtaken by the collapse of Lehman Brothers and Washington Mutual in September 2008).
On April 14, 2003, WorldCom changed its name to MCI and moved its corporate headquarters from Clinton, Mississippi, to Dulles, Virginia.

Circuit City Stores, Inc. was an american retailer in brand-name consumer electronics, personal computers, entertainment software, and (until 2000) large appliances. The company opened its first store in 1949 and pioneered the electronics superstore format in the 1970s.   
Circuit City liquidated its final American retail stores in 2009 following a bankruptcy filing and subsequent failure to find a buyer.

Good Guys was a chain of consumer electronics retail stores with 71 stores in California, Nevada, Oregon, and Washington. Good Guys was founded in 1973 by Ron Unkefer on Chestnut Street, San Francisco. By 2006, all of this company's stores had closed. Computers, televisions, VCRs, and DVD players, stereos, etc.  This company holds a special place in my heart as I worked there for about a year.  A long…long…time ago.

Washington Mutual, Inc. abbreviated to WaMu, was the United States' largest savings and loan association until its collapse in 2008.  (Who can forget those ubiquitous commercials that played on television during the early 2000’s?)

Washington Mutual Bank's closure and receivership is the largest bank failure in American financial history. Before then, it was the sixth-largest bank in the United States.  As of June 30, 2008, Washington Mutual Bank had total assets of US$ 307 billion, with 2,239 retail branch offices operating in 15 states, with 4,932 ATMs, and 43,198 employees.


The Sharper Image The Sharper Image Corporation was the brainchild of Richard Thalheimer. The company started as a catalog business to sell jogging watches. He started advertising in running magazines, and within 2 years he had made his first million.

The consumer products retailer was active in business from 1977 until it’s closing in 2008. On February 19, 2008, the company filed for Chapter 11 bankruptcy, blaming low sales aggravated by a decline in consumer spending and negative publicity surrounding its Ionic Breeze air purifiers.

Today The Sharper Image is an American product brand, formerly associated with a now-defunct retail company, now licensed for use on consumer electronics and gift products. 

Mervyns was an American department store chain based in Hayward, California. It carried national brands of clothing, footwear, bedding, furniture, jewelry, beauty products, electronics, and housewares. Many of the company's stores were found in shopping malls.
        
In December 2006, Mervyns had 189 stores in 10 states. In July 2008, Mervyns announced it filed for Chapter 11 bankruptcy protection.[3] Three months later (October 17, 2008), the company announced that it would liquidate its assets through a Chapter 7 filing.

Lehman Brothers was a global financial services firm.  Before filling for Chapter 11 bankruptcy protection on September 15, 2008, Lehman was the fourth largest investment bank in the U.S. That bankruptcy remains the largest filing in U.S. history with Lehman holding over $600 billion in assets. Lehman borrowed heavily to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging.  In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis

What are some companies that you thought you would never see go out of business?

Wednesday, June 15, 2011

BUBBLE ON THE RISE?


Back during the days of the original dot-com mania, I was working in Menlo Park, right in the heart of the silicon valley. I distinctly remember feeling like a bit of an outsider. Hell, I wasn’t getting rich. What the heck were all these ‘geniuses’ doing that I wasn’t? Well all these years later I now know that a) I wasn’t an outsider, b) those ‘geniuses’ weren’t and c) all that bragging was just a bunch of hot air and d) I’m still not rich, but thankfully I’m not broke either.

Are we heading towards another tech bubble or have we learned our collective lessons from the dot-com disaster?

One has to wonder when the headlines shout with exuberance regarding the  IPO’s of Groupon, Facebook, Linkedin, Twitter, Zynga et al.  I mean, exactly how does one place a value on these social media companies?

If it does turn in to another bubble, what will the ramifications be for the country’s economy?

As I mentioned earlier, back in the mid to late 1990’s everyone was an investment guru, to hear them tell it. Regular working people who were planning their retirements, bragging about how much their stocks were worth. Well, we all know how that worked out. And yet here we are in 2011 getting all hyped up over the IPO’s of the social media sites.  I’m no expert in these matters but I still marvel at how the more things change, the more they stay the same.

I’m sure most of these businesses are more viable than say pets.com or webvan but are they worth the astronomically high valuations being bestowed on them

As the market continues to heat up it appears as though the surprisingly-high valuations being placed on several firms could easily translate into higher valuations for other social media sites.  In such  an enthusiastic environment you’ve got to believe that many other players are just chomping at the bit.  Eventually this will saturate the market(a la 1990’s)  and lower the values of all these firms in the long run.

When investors get excited a certain herd mentality seems to set it.  There exists an inclination to just rush out to grab the first available name, even at a steep price tag, just to claim status as a player in the market.

Only time will tell if these firms will become and remain solidly successful, and  generate solid profits or end up vanishing like many of their predecessors did years ago. Until then those involved with the upcoming social media IPO’s can only hope that investors keep the capital spigot wide open.






Monday, June 13, 2011

The One Trillion Dollar Economic Trigger

 Corporate America is currently sitting on(or hoarding depending upon your point of view) nearly $1 Trillion in cash and short-term investments. That’s an awful lot of “dry powder”.

"Dry powder" in the world of finance refers to a company's cash reserves, especially during difficult economic times. These cash reserves may be needed by the company to meet its obligations, so building up its "dry powder" in anticipation of tough conditions ahead is smart planning.

An equivalent situation for an individual would be if you: owned your home and automobile(s) outright, had no debt elsewhere and at least $100,000 in the bank. In other words, you’d be resting pretty easy at night.

A snapshot taken in April and May by the Federal Reserve of the 12 regions they serve showed a gradual improvement in the U.S. labor market. United States firms sold more products overseas over the last 3 months. That narrowed our trade gap but not with China.

U.S. employers hired 54,000 in May.  Last week only an additional1,000 individuals filed for unemployment benefits. Total new unemployment claims are stuck at above 400,000. It has been stuck there for nine weeks. 7.6 million people are currently receiving some sort of jobless benefits. That figure is down by 90,000 but that could be as a result of unemployment benefits running out.

Evidence of a recovery is not very encouraging. There are 4.6 unemployed people now  competing for every one open job.  A ratio of two to one is considered healthy for our economy.  This brings us back to the corporate stash. According to the U.S. Commerce Department, since the recovery began corporate spending increased 2% on employees. On the other hand spending on software and equipment is up 26% during that same period. Why? Businesses want to save money, increase profits, and improve their position. Demand is soft in this country because people aren’t working. Since people aren’t working they can’t buy.  Since they can’t afford to buy corporations don’t hire them. And so they can’t buy. Stop me if you’ve heard this one before.

Here’s where it gets interesting. Businesses receive tax incentives for capital expenditures on equipment. Unfortunately, for us, a lot of that software and equipment is manufactured overseas. Obviously, you don’t have to train or pay a machine an hourly wage.  And you definitely don’t have to provide benefits to a machine. So not only are businesses not hiring, they’re sending business you and I subsidize to places that don’t use American workers.  That raises the question: What would happen if we replaced tax incentives for software and equipment with targeted hiring?


What does all of this corporate “dry powder” mean for the average person?
It means that when the fear subsides, the economy stabilizes and companies are convinced that the “coast is clear”, the turnaround could be rapid.  Putting $1 trillion of cash to work in the economy, whether in the form of mergers and acquisitions, new product launches, capital expenditures, or even buybacks, can do a heck of a lot to solve those stubborn unemployment figures.


Thursday, June 9, 2011

An Epidemic of Liars and the Creation of a Shameless Society

Chances are, when you were a kid, your parents and adults in general taught you to tell the truth. We all grew up with the “Honest Abe” stories and George Washington’s cherry tree.  Looking back, we were some amazingly gullible little suckers. 

But what the heck did we know? I ate that stuff up with a spoon. Now, I’m one of the more cynical people you’ll run into. What can I say? Life just does that to you sometimes.

What led people forty or fifty years ago to hang their heads in shame: infidelity, divorce, children born out of wedlock, boorish behavior in public, skipping out on debts -- has given way to an “anything for fame” mentality: sex tapes, steroids in sports, cheating, sexting, boldface lying. Hey, just give me my fifteen minutes of fame.

For better or worse, many of us tend to receive our cues on how to behave from business leaders, politicians and celebrities. One would presume that positive parental guidance figures in there somewhere as well.

Over the last 10 to 15 years especially, we have been inundated with a steady diet of liars, reality TV personalities and media-driven scandals that make me wonder what affect this is having on our society as a whole.

The recent scandal involving U.S. congressional representative Anthony Weiner is simply the latest in a very long list of public indiscretions featuring famous figures that we’ve been treated to: U.S. Senator John Edwards, President Bill Clinton, South Carolina Governor Mark Sanford, Idaho Senator Larry Craig, former mayor of Detroit Kwame Kilpatrick, Richard Heene (balloon boy hoax), Congressman Gary Condit, Ponzi kingpin Bernie Madoff, former Enron CEO Kenneth Lay, and baseball great Barry Bonds.

You know, sometimes you just get caught. That’s life. The adult thing to do is simply own up to it, take your medicine and move on. But for whatever reason: ego, hubris, folk’s today just refuse to give up the ghost even when caught dead to rights.  You know what they say; usually it’s not the act that gets you in so much trouble. It’s the cover-up.

With all of this bad behavior on full display I can’t help but wonder if regular folks feel that they’re being given the green light to: cheat on their taxes, lie about speeding tickets, sneak around on their spouses, lie under oath, steal from others, etc.  After all, if our “leaders” can do it, why can’t I?

I’m no prude but I am wise enough to recognize the value of shame.  Shame is a valuable commodity to have in a family, within neighborhoods, the workplace or within the country as a whole. Shame should serve as a deterrent to the flaunting of deviant behavior. With no shame, there’s almost no limit to what a person will do. I don’t expect perfect behavior from anybody, but once caught, don’t make it worse by pleading innocence.

I’m not na├»ve enough to think that prominent people telling lies is new. What is new is the influx of social media, reality TV, low-class talk shows, tabloid TV shows that have merged to create a toxic concoction abhorrent behavior all in the pursuit of a ratings bonanza.

What ever happened to “You do the crime, you do the time?”
There is a decided lack of shame in this country today.

Ultimately, what long-range affect do you think this environment of lying, cheating and shameless behavior will have on America?


Sunday, June 5, 2011

The Great Recession vs. The Great Depression

The over day I read this article about the city of Oakland being on the brink of closing several city libraries. As someone who grew up going to local libraries and still has a love of reading, I began to wonder how this would affect young people today.

Almost daily I’m reading about things I never even dreamed were possible when I was young: Firefighters and police officers facing layoffs, the closure of as many as 70 of California’s 280 state parks, an absolute glut of available office space everywhere you look, adult children having to move back in with their parents. It’s all quite overwhelming.

I always figured that this Great Depression stuff was ancient history, no need for me to give much thought to it. Well, all of a sudden I have quite an interest in those desperate years. What, I wonder, are some of the lessons we should have learned and can still possibly learn for the future?

Causes of the Great Depression

1. The Stock Market Crash of 1929

2. Bank Failures – Throughout the 1930’s over 9,000 banks failed.

3. When the fear of an uncertain future hangs in the air, everyone tightens their belt. As spending slows down, manufacturers stop producing goods, which leads to a reduction in work.

4. As businesses began to fail, the government created the Smoot-Hawley Tariff in 1930 which unfortunately led to higher taxes for imports. This in turn led to a reduction in trade between America and foreign countries.

5. The Dustbowl conditions of the 1930’s(think Grapes of Wrath) in the Mississippi Valley led to many farmers having to sell their farms for little or no profit.

Not to mention that back then there were no pensions, no retirement plans, no unemployment benefits and no Social Security benefits to fall back on.  The Great Depression was truly a struggle just to survive.

While not nearly as devastating as the Great Depression, the Great Recession is nonetheless nothing to sneeze at.

Causes of the Great Recession

1. Low interest rates the mid 2000’s helped created the housing bubble. Many investors got carried away and took advantage of these low rates and bought homes just to resell them.  Others bought homes they couldn't afford thanks to interest-only loans, “liar” loans and “pick a payment” loans.

2. Later in the decade higher interest rates kicked in, housing prices declined and many new homeowners were caught in a bind.. Foreclosure rates skyrocketed and panicked many banks and hedge funds who had bought mortgage-backed securities and now realized they were facing huge losses.

3.  Credit markets froze as banks became afraid to lend to each other because they didn't want these toxic loans as collateral. In order to stave off catastrophe the federal government instituted a $700 billion bailout in hopes of shoring up a flagging economy.

4. Bankruptcies of  Bear Stearns, Lehman Brothers, IndyMac Bank, and Washington Mutual along with the government nationalization of, AIG, Fannie Mae, Freddie Mac, created a full on financial crisis. By the late 2000s,  unemployment was climbing.

5. Major ratings agencies i.e. Moody’s, Standard and Poor’s and Fitch’s were guilty of gross misjudgments as best, outright corruption at worst.

Almost everyone knows someone who has lost either a home or a job (or both) since 2008.

What affect did living through the Great Depression have on those who went through it?

Some of those who lived through the Depression feel that it instilled in them the importance of planning for the future, to live well within their means, save the rest and not waste anything. Not surprisingly, many of them never outgrew a distrust of banks. Coming out of the depression with a more conservative mentality in general would be practically inevitable.

Even though it was clearly the worst of times many felt that it brought out the good in most because people had to rely on each other. I have to believe that people were either happier then or at least they had a greater sense of managed expectations. In other words it had to be much easier back then to be satisfied with the little things in life. 

One consistent theme both in the 1930s, and true today is the necessity to learn new ways to make money. Bootlegging, picking fruit and cotton, selling apples, cooking, building and repairing items were popular avenues of earning income during the Depression. This article outlines a few of the measures people are taking today to weather today’s great recession.

What long lasting affect(s) will the Great Recession of 2008 and beyond have on us? How will it change our relationship with money and financial decisions? How will this latest economic downturn affect our collective expectations of home, family, government, education, and the American Dream? Have you developed an attitude of frugality?

Although I vehemently disagree with much of the government’s decision to use our tax money to rescue banks, if it actually kept us out of another Depression, then I’m for it. 

From all I’ve read and heard we don’t ever want to go back there.