Leadership Mojo

Alex Ramsey's Thoughts for Finding Solutions with Conflicting Information

 How do you find an answer when expert opinion smashes into one another? I was at an NSANT meeting this weekend where two "technology" gurus both spoke. They gave conflicting information about different ways to solve similar problems. Especially where technology is concerned, this happens all the time. It's not always a bad thing. Nor is it always a good thing. For any strategic thinker, it's a critical concern.

My 83-year old father sits in the hospital right now, waiting on surgery tomorrow, in part because the doctors couldn't agree on a diagnoses months earlier. This is the second time in three weeks we've been in the ER. Months ago, his internist's diagnoses, "He can wait to get a pacemaker" was countered by the electro-cardiologist's emergency surgery to actually place a pacemaker in his chest.

For every one person who insists, "This is the correct answer," there is another person who insists only they have the correct answer. And, frankly, who cares, except when it is costing you tons of money, and, even more importantly, possibly your life? Then, it matters a great deal. So how do you decide? (Dad and me at my birthday at Al Biernet's a few months ago.)

Rodney Johnson's Future and Mad Men's Past

             When Rodney Johnson, President of HS Dent, a company that provides economic research, spoke in Dallas last Friday, I was there. I'd not seen Rodney, a long-time client of mine, present since several years ago when I was invited to speak at the annual HS Dent conference myself. It's always provocative to hear his economic insights.

            At one point, Rodney referenced famed economist John Maynard Keynes, an advocate of government stimulus during recessions. Keynes often spoke of stimulating man's "animal spirits." A woman near me smirked, thinking Rodney was making fun of Keynes. He did have a point, but it was not so much about Keynes as referencing our current government.... When people who run companies and those who lend money are paralyzed with fear, they don't take appropriate risk to grow the economy.... That's what Keynes was talking about.  But what Rodney then said was the reason why he brought it up in the first place: 

Bravo for the Gutsy Babes at Angels and Demons

The Cigar Peg is the kinda place you'd expect to see testosterone in action. You just don't always expect to see it from a couple of dainty and determined women. Without them, this economic slump would have slammed the Cigar Peg last Monday night, since the bidding was anemic until my friends stepped up and created a steamy battle for the best items.

I was in Phoenix last week at the  National Speakers Association (NSA) annual conference and attended the Cigar Peg for the first time.

Rodney Johnson, President of HS Dent, Answers Your Questions

   

Hello to everyone who participated in the You Can't Afford the Luxury of a Negative Thought  teleconference call in March with the President of HS Dent,  Rodney Johnson. Took me a while to post 'cause I came down with a big case of the flu. Just now getting back in the swing and catching up. Thank goodness! Below is the first set of economic questions that you asked me to ask Rodney after the call. I have a few more than came in later which I'll post in a couple of days.There is a motherlode of powerful information here. Let me know what you think, and keep your eyes open for the next You Can't Afford the Luxury of a Negative Thought teleconference call. 

1. What kind of return do essential service bonds tend to pay?

The returns used to be 4-5%, but with the recent turmoil, the interest rates are a little higher, 5-7% depending on location, rating etc.  Remember, these are tax-free, so you divide this interest rate by 1-tax rate, (in the 35% bracket it would be 1-0.35, or .65), to arrive at your taxable equivalent rate. 

2. Why have you adjusted your Dow high forecast down? What was driving your thinking before than now? 

In terms of the recent market action, we adjusted down our expected Dow high for this summer because the market fell further than we had anticipated on this first move down.  As the markets fell last fall and early this year, we thought that the Dow would hold the 1998 lows of approximately 7,400-7,600. When we went lower to the 1996 lows of approximately 6,500, then we adjusted down our rebound forecast accordingly.  We use Elliot Wave analysis to forecast short term moves, which is not 100% accurate for sure, it is just a technical tool.

3. I retired at 65 two years ago. I was rewarded with a loss of over $250K from my retirement portfolio. Is there any hope for seniors like myself to get a decent recovery in the near future?

Yes there is, but don’t put yourself in harm’s way too soon.  At 65, you’ve got another 20 years to go on average.  Remember, we are talking about this down turn lasting for several years, but not two decades!  We would advise keeping yourself as liquid and flexible as possible through the next several years (2012-2013) more focused on streams of income and capital preservation, and then be more aggressive!

4. Talk about current account deficits. Do you see the current level as being a problem? If so, what would you suggest as being the solution?

The US Current Account (what we export minus what we import) has been running at a deficit for many years because of our propensity to consume low-cost imported goods, but it also includes imported oil, which showed an incredible spike in ’07 and ’08.  With the fall of oil and the slowing in spending, the deficit is contracting.  While that sounds good, the current account normally does contract with economic slowdowns.  I believe you will see it continue to fall for the next several years, so it won’t necessitate a “solution” per se.  However, as we work more concertedly on alternative energy, this is one of those areas that could see a very dramatic turnaround, changing the playing field of international capital flows.

5. How are we going to fund social security and how big a problem do you see it as being? When you see this impacting us and how?
   

It’s not as big of a problem as it might seem.  Not because the numbers “work out”, but because Congress will never leave it in its present form.  There will be means testing and a change in the age of eligibility.  The much, MUCH bigger problems are Medicare, for which there is no fix, and state and local pensions.  On Medicare, we will ration availability of treatments, much like other systems (Canada, UK, etc.), which will lead to bigger supplemental insurance for those that can afford it.  On state and local pensions, they will have to deal with greatly increased pension contributions to make up for all of the recent losses and previous underfunding.  Where will they get the money?  From you of course, in taxes.

 

Shakespeare on Risk: Anything New Under the Sun?

            "There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures. "
                                                                    William Shakespeare From Julius Caesar

           And you thought this economic crises was personal? Since Shakespeare spoke about similar challenges as those we face today 500 years ago, no less grand and world changing than today's financial crises, the eternal nature of difficult times gives us some perspective.
            The greatest challenge we face is in recognizing the signs and then is being flexible enough to adapt and react without creating tragedies. (By the way, Julius Caesar is a tragedy. That's something we want to avoid, right?....) When working with clients at LodeStar Universal, my role is to make sure that people things clearly, choosing courses of action that prevent tragedy.
            Shakespeare, through his plays, presents timeless issues. Here he tells  us that timing, free

Sex Isn't Selling? Martin Lindstrom's Buyology

        In spite of conventional wisdom, the research reveals other factors are far more important if you're spending millions of dollars to push product. That's what best seller Martin Lindstrom tells us in his new book Buyology. It's called neuromarketing and it's hot. Martin has been studying the neurology and neuroimaging of thousands of people in one of the biggest studies ever conceived to pinpoint exactly where what really goes on in your head when you are out shopping, and frankly, making any decision. His cool website is filled with insights and creativity.
         Check it out.
        And while you are checking it out, keep in mind what we at LodeStar Universal constantly remind our clients is what Martin says the research bears out: How well your story is crafted increases the true value of your brand. And it doesn't matter if your brand is $60 a bottle water or your personal brand as an executive who is either valued or discounted in the marketplace. We all have a brand, whether or not we acknowledge it consciously or not. The question we all face is how can we do a more effective job with branding. After all, it's really just another form of communication. The people and products who do the better jobs of communicating tend to be the ones who come out on top no matter what or where they are.

"Matress" is a Game That Gets Old Fast

Remember those days when "all" the economic news was cheery? Remember when you felt like everybody "else" was making tons of money? From the hedge fund to the venture capital clicks, if you weren't an insider, at least, you could put your money in the market and feel like a player. Money was flying faster than a speeding bullet, only even Superman couldn't stop it from falling. Today, the only money game anyone wants to play is: Matress. That's where most people are putting their money.

Interesting isn't it? A year ago, almost none of the journalists were writing about the problems we now face. No one was talking about the remotest possibility of an implosion with Bear Sterns or Lehman. Headlines today are radically different than they were then. And just as few people were writing about the flaws in our economy, few people are writing about the positives that could come out of this situation. 

Frankly, I've had enough about Doomsayers.