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Archive for April, 2007
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Saturday, April 21st, 200760 Seconds to Understand Index Funds
Sunday, April 8th, 2007Wanna own shares of some of the best-known companies in America and beat the pants off of most mutual funds? It’s shockingly easy with index investing. In the next 60 seconds, we’ll show you how to do it.
0:60 What is an index?
The Dow, the S&P 500, the Nasdaq 100, the Wilshire 5000, the finger next to your thumb — they’re all indexes. Each is a group of stocks chosen to represent portions of the stock market (except for your index finger, of course). Most index investments are based on the Standard &Poor’s 500 (the stocks of 500 leading companies in leading industries) and the Wilshire 5000 (all the publicly traded companies in America). Heard of General Electric, Tupperware, and Microsoft? If you invest in the S&P 500 or the Wilshire 5000, you are a part owner of these companies.
0:50 Why invest in an index?
A broad-market index matches as closely as possible the return of the overall stock market. What’s so great about that? Most mutual funds find it hard to do. In fact, less than 20% of actively managed diversified large-cap mutual funds (in plain English: big funds managed by guys and gals in fancy suits) have outperformed the S&P 500 over the last 10 years. Pretty dismal.
0:40 Save money!
One of the reasons index investing kicks butt is because it’s so cost-efficient. Index funds just invest in whatever companies are in the index. No MBA-toting analysts needed! This significantly reduces the operating fees the fund must charge shareholders, leaving more of your money to grow, grow, grow.
0:30 Buy the fund or the stock
There are two main ways to invest in indexes: through mutual funds and through “exchange-traded funds” (ETFs), which trade like regular stocks on the American Stock Exchange. ETFs that track the S&P 500 include Spiders (AMEX: SPY) and iShares (AMEX: IVV). The Wilshire 5000 can be tracked by investing in Vipers (AMEX: VTI).
Which are better, mutual funds or ETFs? Performance-wise, it doesn’t really matter; the returns are almost identical. But there are a few things about each type of investment that may sway you one way or the other:
Index funds: There are a whole bunch of them, as you can see from this comparison table (and that just scratches the surface). Funds can have high minimum investments, but those are often waved if you enroll in an automatic investment program (which regularly transfers money from your checking account to your fund each month). You can invest in a mutual fund directly through the mutual fund family or through your brokerage account.
Exchange-Traded Funds (ETFs): Since they are bought and sold just like stocks, you must have a brokerage account. (If you don’t — or you want to see how yours stacks up — visit our Discount Broker Center). This means you’ll pay a commission each time you buy or sell.
0:10 Keep those fees in check!
Index funds and ETFs charge investors annually for the costs of running the fund. This is known as the expense ratio, and it’s calculated as a percentage of the amount you have invested. There’s no need to invest in an index fund or ETF with an expense ratio greater than 0.40 (four-tenths of a percent).
Note: Make sure that you invest in a no-load fund, i.e., a fund that does not charge a commission.
Goldsmith 20 bad habits of executives
Sunday, April 8th, 2007Goldsmith compiled the following list of negative habits after years of working with top executives in Fortune 500 companies. Some of the qualities cited are subtle, while others are glaringly obvious. Often, they may not appear to be harmful on the surface; in reality, they’re bona fide detriments.
1. Winning too much. The need to win at all costs and in all situations—when it matters and even when it doesn’t, when it’s totally beside the point.
2. Adding too much value. The overwhelming desire to add our two cents to every discussion.
3. Passing judgment. The need to rate others and impose our standards on them.
4. Making destructive comments. The needless sarcasm and cutting remarks that we think make us sound sharp and witty.
5. Starting with “no,” “but” or “however.” The overuse of these negative qualifiers, which secretly convey to everyone, “I’m right. You’re wrong.”
6. Telling the world how smart we are. The need to show people we’re smarter than they think we are.
7. Speaking when angry. Using emotional volatility as a management tool.
8. Negativity (“Let me explain why that won’t work.”). The need to share our negative thoughts, even when we haven’t been asked to do so.
9. Withholding information. The refusal to share information so we can maintain an advantage over others.
10. Failing to give proper recognition. The inability to praise and reward.
11. Claiming credit we do not deserve. The most annoying way to overestimate our contribution to any success.
12. Making excuses. The need to reposition our annoying behavior as a permanent fixture so people will excuse us for it.
13. Clinging to the past. The need to deflect blame away from ourselves and onto events and people from our past; a subset of blaming everyone else.
14. Playing favorites. Failing to see that we are treating someone unfairly.
15. Refusing to express regret. The inability to take responsibility for our actions, admit we’re wrong or recognize how our actions affect others.
16. Not listening. The most passive-aggressive form of disrespect for our colleagues.
17. Failing to express gratitude. The most basic form of bad manners.
18. Punishing the messenger. The misguided need to attack the innocent who, usually, are only trying to help us.
19. Passing the buck. The need to blame everyone but ourselves.
20. An excessive need to be “me.” Exalting our faults as virtues, simply because they embody who we are.
10 Rules for Effective Language
Sunday, April 8th, 2007*Posted from ActiveRain Blog*
10 Rules for effective Language (another book review)
As some of you Active Rain bloggers know I’m an active reader. Recently I was at Borders and happened across this new gem. “Words That Work, It’s not what you say, it’s what people hear”, by Dr. Frank Lutz. What perked my interest was the inside book cover. There was a direct quote from Al Franken that made me laugh, “Language is like music. Unfortunately, the Republicans have a Paul McCartney in the person of Frank Luntz. Somehow, we Democrats got stuck with Yoko Ono.” That of course made me chuckle, and so I read the rest of the bio. He also helped the republicans with the wording of their 1994 victory in the House, ” Contract for America”, and also was instrumental in changing the debate on the estate tax, “Death Tax” as he coined it, which stuck and is used by others today.
Basically the guy is a brilliant when it comes to using language. He also makes sure that you understand that the common American isn’t into Harvard/Yale vocabulary, but they want it simple and concise. He said that we’re even moving further into a “picture” or video world, with communication of the written and verbal language being reduced to quick sound bites. Therefore the sound bites need to be carefully thought out, and allot more thought then I ever believed is put into the jingles and marketing that we purchase from companies every day. He also gave us 10 rules of language that I’d like to go over as well.
(10 Rules of Language ~ Dr. Frank Luntz, commentary in bold is direct quote, regular type is my commentary)
10 Rules for Effective Language
Simplicity, use small words…. basically he demonstrates that some of the all time highest rated products and companies have developed short and concise jingles. He basically points out how companies like Kentucky Fried Chicken have shortened their names to KFC, or Oil of Olay to just Olay. If you look at the movies we watch like T2,T3 (terminator movies), or MI2 or MI3 (Mission Impossible). Sometimes less is better in the name of your business.
Brevity:Use short sentences… basically he points out that 3 to 4 word sentences are great when it comes to describing your product or message. He points out that shorts beats long, and plain beats complex. And sometimes a visual beats them all.
Credibility is as important as philosophy… This was a great one, because of the example he used in regards to companies that love to recycle old idea’s and claim they are new. Basically he points out that your communication must be credible, and you cannot fool your audience.
Consistency Matters… This rules points to a repetition in your communication. He pointed out that too many politicians would insist on new talking points on a daily basis. This often diluted their message and the voters had a hard time understanding what they stood for. I’ve heard that a message needs to be repeated 7 times before it finally lodges in our craniums. Think of all the times you’ve watched a commercial, then try and remember how many times you watched the same commercial before the jingle or melody became something you remembered.
Novelty: Offer something new … I love this quote, “In Plain English, words that work often involve a new definition of an old idea”. At first I thought this rule conflicted with rule #3, I basically understood the difference in regards to the business actually being different or a business that truly uses a new way to teach old idea’s or concepts. Example is the Mortgage Planning movement. Some people have basically said, “What’s the big deal?, it sounds like your still a mortgage loan officer”. True, but if they had to ask that question then I have not been clear that the product is still a mortgage, but what is unique is that mortgage loan officers have really never risen to the “adviser”, or “planner” level.
Sounds and Texture Matter…. The sounds and texture of what you communicate should make your client or audience gasp! In other words that your clients will relate to, like the phrase, “Snack, Crackle, and Pop”, Rice Krispies. The funny thing is that a bowl of Rice Krispies actually sounds like that! He also suggested that music has a powerful affect on the message your relating. Example was Alka-Seltzers, “Plop, plop, fizz, fizz, oh what a relief it is”. Sound and texture do make the message much more recallable, I can’t count the number of times I’ve remembered a product because of how it made me feel, or a music jingle I remembered.
Speak Aspirationally… This was a nice rule regarding how the message makes you feel. As mortgage and real estate professionals this shouldn’t be too hard to think of when putting together a phrase. Think about the emotional benefit a home brings to your audience and then relate that in a your communication.
Visualize….. A picture is worth a thousand words, and if your message can get someone to visualize then your in good shape. Dr. Lutz used several political examples of this process, but one he used in commercial advertising was Dodge Pickups famous visual, “Grab life by the horns”, which basically conveyed to me that driving a dodge truck was manly, exciting, and I would be powerful behind the wheels of my new Dodge Ram Truck.
Ask a question… Everyone should remember this one from the 80′s, “Is it live, or is it Memorex”, or for those who are too young how about this one from Verizon Wireless, “Can you hear me now”. Basically asking questions are fantastic when it comes to marketing your message. Attorney’s call this rhetorical questioning and use it all the time. Robert Shapiro was great at using this type of questioning, he would use it on his juries in a brilliant way. If the jurist had believed that his client was guilty before hearing the actual case, Shapiro would quickly destroy that belief with a series of rhetorical questions.
Provide Context and Explain Relevance…. You have to give the people a reason why before you can tell them the reason to go forward. In other words their must be a need for the public to respond to your message, you need to indentify the why before you can explain your solution to their needs. Dr. Lutz used several great political and commercial examples, one of the most famous was James Carville’s famous quote that the Clinton campaign used successfully against George Bush Sr., “It’s the economy Stupid”, another good commercial example of this process is American Express with it’s, “Don’t leave home without it”. That strikes to the core of why we need our AMEX card, how many times when on vacation have you worried about your wallet or other valuables.
So again I’ve found another Gem of a book, and I’m only into the book 2 chapters. I highly recommend it just based on the two chapters I’ve read.




