March 1, 2013
Financial Myths: “Go West, Young Man”
 This famous comment attributed to Horace Greeley galvanized many during the nineteenth century. At that time the West was the modern Mid-West. Over time, the center of US population shifted westward. (Note, however, that the geographical center of North America has not changed!) The majority of Americans acted on this myth even if they weren’t conscious that someone had made the statement. But, does the myth still retain its power? Wealth, Western Style Is the West a fruitful place for business? Bill Gates, Warren Buffett and Larry Ellison, respectively number 1, 2 and 3 in wealth in the US are firmly planted in the western half of the country. Warren Buffett, the dean of this affluent trio, affirms the myth. After spectacular early success, the Oracle of Omaha bought Burlington Northern Railroad, headquartered in Texas, and is involved in “clean (more)…
February 4, 2013
Financial Myths: If You Have to Ask…
 “If you have to ask how much it costs, you can’t afford it.” In this piece, the Myth Buster looks at this iconic statement by JP Morgan. Maybe he was right at the time, but what about now? Morgan lived from 1837 to 1913. Does his quip still retain its power? After gaining headwind for a decade or more, even through the recession, high ticket alternatives are exploding. Take golf, long a symbol of wealth. The US now boasts more than 16,000 courses and Americans play more than 600 million rounds of golf a year. In China, whose GDP is ballooning, golf courses tripled in five years. Looking back at the holidays, many of us felt inundated with new brands of luxury candy, all wrapped nicely in gold, silver and red. The unquenched luxury appetite implies two things about the (more)…
January 2, 2013
It’s Not the Size of the Dog in the Fight
 “It’s not the size of the dog in the fight; it’s the size of the fight in the dog,” said Mark Twain. This statement by America’s greatest novelist carries significant business sense as well as wit. As 2013 opens, the major economies, the big dogs, face sluggish times. The slow gait derives from a variety of slow moving economic forces: high unemployment; the financial woes of the euro; slumping demand; slow growth of investments. It appears that the GDP leaders are slower than many of the small fry. The US is widely seen as doing a little better than some other giants. Even so, US growth in 2013 is only projected to be about 2.1% (according to the IMF). Europe overall is expected to hit +.8% and Japan +1.2%. Germany and France will be under +1.0% while Italy, Spain and (more)…
December 3, 2012
Financial Myth Busters: A Look Back at 2012
 Over the past tumultuous year, we tackled many subjects, busting or confirming myths. Let’s see how well we did. Several of the entries will be difficult to assess, such as “I Buy My Straw Hats in The Fall.” Good advice from Bernard Baruch, but difficult to assess. Several others lend themselves to an update. Real Estate in the Doldrums One piece debunked the myth that one’s home is their best investment. As the year winds down, real estate continues its crawl. In September, Ben Bernanke referred to housing as “one of the missing pistons in the engine.” This must appear strange to those who live by the myth. The Federal Reserve must be frustrated also. Interest rates are amazingly low, about 3.5% for a thirty-year fixed loan. As with other parts of the economy, low interest rates just do not (more)…
November 15, 2012
Financial Myths: A Rose By Any Other Name
 “A rose by any other name would smell as sweet.” These are Juliet’s words in a soliloquy about Romeo. She loves him but his family name Montague (no relation to this author) makes him anathema to her family. If only he had a different name! The line is used often in the business world and needs myth buster treatment. Several meanings of the line relate to business. One stream of thought concerns the value of the name itself, or branding as it is now widely called. Is a generic product equal to a name brand? For example, is generic aspirin as good as Bayer? Are no name laundry detergents equal to Tide? Looking at the branding issue opens several lines of inquiry. One approach concerns the product itself – its content, potency and value. Invariably, people say Tide is the (more)…
October 1, 2012
You Can Lead A Horse To Water…
 “…but you can’t make him drink.” This myth worked its way into management DNA. Executives call it out whenever employees balk at a directive from the top or whenever employees do not ratify a proposal or more generally when things don’t go well. Employees use it to express their frustration by implying that the whole plan was never good to begin with and that they knew better. Following the sworn duty of the myth buster, this myth needs examination. The management view is that those at the top show employees how to do things correctly. For example, an excellent compensation plan or benefits package can be designed and presented; employees should accept it. But what happens when a new product is designed and launched and nothing works. Employee whining kills the new 401K plan; and the superb product flops on (more)…
September 4, 2012
Myth Busters: “I Buy My Straw Hats in the Fall”
 Bernard Baruch’s famous statement needs a careful look from the myth busters. The first reaction is: Why would someone buy a summer hat after the season is over? It won’t be useful during the Fall and Winter. It also wastes money for something not needed for six to nine months. The legendary investor and advisor to Presidents had a purpose behind the comment. First, using language from many decades ago, since few men wear straw hats now, the myth implies that one should buy when there is a sale. The bigger the sale the better. Fall sales on summer clothing amaze shoppers. A quick Internet search shows the following: Women’s clothes at The Gap (GPS) (15% to 67% off) J Crew (extra 30% off) Banana Republic (down 29%) Kohl’s (KSS) (70% off selected man’s jackets) Pretty impressive! Even if you (more)…
July 9, 2012
Myth Busters: A Camel Is a Horse Designed by a Committee
 You enter a conference room. The CEO smiles; he or she is making an annual appearance. A long table holds bagels, Danish and coffee. You know this must be important. Maybe everyone is getting a raise, you think. Maybe the CEO is retiring. Then again, this looks serious. Fifteen minutes later, the speeches begin. The meeting was called to launch a new manufacturing process, or a new company policy on travel and expenses, or a new drastic-cut budget or a new software system to be set in motion immediately. The meeting over, everyone grabs another donut, checks their smart phone and toddles back to the office. Along the way, the mumbling begins. One doesn’t like the features; another abhors the timing; still another wonders why no one asked the employees about it. Then someone says, “A Camel Is a Horse (more)…
June 4, 2012
Financial Myth Busters: You Can’t Predict the Future
 Recently, our office received an unwanted fax – perhaps you get these also. An oracle offered to predict the future. I often see people on the train flipping through The New York Post until they find the horoscopes. Soothsayers and mediums – does anyone take them seriously? Then again, if one could predict the future, it would lead to considerable wealth. “You can’t predict the future” is a widely held myth. It is true, but it does not stop people from trying. Beyond women with red headdresses who ask visitors to “cross my palm with gold,” management and investment companies claim to see the future. Management consultants decree strategic futures; five years is common. Market research studies predict consumer behavior. Regression analysis shows which stocks and bonds will perform best. Each December and January feature numerous articles on what to (more)…
May 3, 2012
Myth No. 5: Your Home Is Your Greatest Investment
 Despite the housing bubble of the last few years, despite the overbuilding in Florida and other locations, this myth persists. It seems that no smart thinking person would adhere to it, but adhere they do. The myth trustees generally take the view that only some people are under water, only some people got involved with subprime mortgages and that their own home is in fact their best investment. “Just wait a year or two,” they like to say. For the reader with a wider scope, we extended the myth to include land. In a knockoff of the myth, Will Rogers famously said, “Buy land; they a’int makin’ no more of it.” In the interests of myth busting, it is our sworn duty to topple all myths. Let’s start with Will Rogers. If the focus were on agricultural land, he would (more)…
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