Does anyone really understand Politics?

We are in an election year, so I thought that this op-ed was appropriate.  In recent months, I've been thinking to myself, does anyone really understand politics?  My question is a bit more complicated than that.  However, at the heart of what I'm asking...if you were to poll 10 random voters, could any of them be able to articulate what the major fiscal or social issues are in today's society?  My estimation is that less than 2 of those 10 voters can do so.  And that estimate might be a stretch.  

What does this mean?  I'm proposing that 80% of American voters are disconnected from political issues and their real implications/impacts to our society.  Don't get me wrong...I'm not telling you that I understand every political issue, because I certainly don't.  I'm just making some over-arching observations.

Aren't political races just adult 'popularity' contests?!  If you're a charismatic leader, articulate conversationalist, and you appeal to the masses, you will get people to follow you.  Then, as you gather followers, pressure builds for others to follow suit.  Conformity becomes a driving force.  Issues and implications on issues don't mean squat at this point.  It's all about what others are doing and saying.

A real-world business example:

• A business has an open position they are interviewing for
• 3 employees interview the same candidate in different rooms
• When the 3 interviewers are done interviewing the candidate, they have informal side conversations indicating what they thought of the candidate

At this point, all integrity of the interview process is lost.  The second that someone starts to impress opinions upon others, those others will be influenced.  This is where human nature takes over: humans want to feel accepted and tend to follow others.

I am definitely not someone with an affiliation to any particular party.  I am a a scientist or realist at heart.  I consume data and make decisions from it, while trying to avoid too many influential outside factors.  I boil issues down to very basic fundamental aspects.  

In looking at the current fiscal and social issues that most people focus on (i.e. energy costs, financial crisis, abortion, social security, health care, etc.) I would tend to think that most people don't know how to articulate the mechanics behind each of these issues.  

Take Social Security for example.  It's pretty cut and dry related to the two positions:  Republicans support privatization of social security funds, Democrats don't.  So, just because someone affiliates with one party, do they really know the mechanics and implications of social security privitzation?  Highly doubtful.  That would require the voter to be an Economist, Psychiatrist, CEO, etc....all wrapped up into one.  

The issues that face society today are complicated...very complicated.  It's nearly impossible to expect anyone to know them inside and out.  So, it amazes me that our political parties don't choose candidates based on charisma and popularity, more than resume.  

I'm confident that the Democrats nailed it on the head this election with their nomination of Barrack Obama.   The Republicans completely missed the target with their nomination of John McCain.  Obama is the guy that most people can associate with and he will win the "popularity" contest.  McCain has way too many strikes against him from a leader and affiliation standpoint.  At a very fundamental level, he misses the mark on being a leader and appealing to large masses of people.  

Republicans 8 years from now will look back on 2008 as a year of lost opportunity.  A year in which they could have nominated a candidate that would have had a chance against a charismatic leader like Barrack Obama.  They had candidates at their disposal to do so...instead, they nominated John McCain.

 

Don't abuse the break pedal please...

Living in Chicago (or any other urban area) comes with one major piece of baggage: traffic. I'd have to say that traffic is one of my biggest pet peeves of all time. I'm an efficiency freak, so the thought of sitting in a car for over an hour to travel 10 miles makes my blood curdle.

In light of this, I thought I'd bring to light (no pun intended) one of my biggest pet peeves of all time: abusing the break pedal when driving! What do I mean? Well, if you are a conscientious driver, you should always be in a situation where you are maintaining a comfortable speed where there is a decent amount of space between you and the car in front of you, to not require over-use of the break pedal. This is true when you are traveling at 70 mph or 5 mph.

I am convinced that one of the biggest causes of traffic jams and the occasional delay is due to too many people tapping on their breaks, when not needed. When people see the break lights come on in front of them, what do they do? That's right, they break. Thus, a domino affect and a traffic jam.

It drives me crazy to see some drivers using/tapping their breaks when they really don't need to. I'm not sure why they do it...maybe they like keeping their feet busy or they are just a 'nervous Nellie'. Whatever the reason, it's just wrong and poor driving. If you have enough room in front of you, are coasting at an appropriate speed, and you are anticipating traffic above the car in front of you, you shouldn't have to break that often! Please do your part to reduce traffic jams...give your breaks a break!

Ok, off my soap box now...at least until I write a blog post about people who drive with both feet!

Buyers' Market

By no means am I a financial analyst...nor am I licensed to give advice to any clients. That is my disclaimer. I hold no responsibility for this post!

However, for the past 6 months, I've been telling a lot of people that we are in one of the best buyers' markets in a long time. In recent months, most investments have been a good place to park any available liquid cash that you have.

• If you've been thinking about purchasing property, do it now
  
• If you have cash in a savings account earning less than 3%, put it in the market
  
• If you've got any kind of retirement account (401k, 401b, etc.), increase your contribution percentage
  
• If you have an existing portfolio of funds, shift from conservative bond funds to those indexed to the DOW/S&P

The combination of the lending problems, the DOW hitting 14,000 just under a year ago, oil ballooning, and the weak dollar have all produced a big-time bear market...for both real estate and securities. Yeah, a lot of the news you read is doom and gloom, but if you're a smart/aggressive investor you get excited about those times, because that means there are tons of opportunities to "buy low". On the flip side, when things are humming along and news is positive, your portfolio may look great...but it's a bit harder to find the bargains.

In my estimation, this post might be a bit late as I think we're early in the wave of a pickup, on our way to a bull market. Just recently the DOW dropped to just under 11,000 and I don't foresee the market going back below that in the near future. I don't know if we'll get back to 14,000 any time soon, but I'm thinking that 12,000 and above should be the norm in the next 2-3 months. Oil has been a bit on the dip. The dollar has gained a little strength. And corporate earnings have been meeting expectations. The only holdout is real estate, as the picture isn't as optimistic. There's just way too much inventory on the market as well as a ton of loans that are still going to be adjusting for the next 2-4 years.

On the topic of the current real estate market, people have to remember that what caused this mess is ridiculously loose credit risk guidelines by lenders, which allowed way too many people to get into ARM mortgages that they couldn't afford when they adjusted. Those ARMs range anywhere from ~2 to 15 years, so they will continue to adjust upward. When they do, those homeowners try to sell, but they can't...thus foreclosure. I think the worst is behind us, but many lenders will feel the affects for the next 2-5 years. In addition, I have a feeling that mortgage rates will soon go up steadily and approach 10% in the next few years. This will create more barriers to entry for home buyers. Again, there's two main positives in this real estate market: a) buy now or b) re-invest in your property. Either way, invest and hunker down.

One last note on real estate. I still have very vivid picture in my head of a business trip to meet with a home equity executive at 5/3 Bank in Cincinnati. About 3 years ago he told us point blank, "there's a tidal wave of defaults and foreclosures coming...you better get ready". At the time, we thought he was crazy....nothing was wrong with real estate at that time. However, sure enough he was right. I'm sure a lot of other banks knew about it too. Obviously not all reacted to that in the right way.

Anyway, do your part to lift everyone up...it's not that bad out there! Put your money to work!

Don't look for a job at the U.S. Mint

A bit of a mindless op-ed post for a Saturday...

I've noticed in recent months that I'm carrying less and less cash in my wallet. Yeah, we bought some Visa stock a while back, but that definitely was not the primary reason for me making a migration to plastic (primarily debit cards).

In particular, I think a lot of people have a fear of using debit cards for everyday/small purchase items (i.e. gum, coffee, etc.) for fear of being labeled as that person who is using credit to by gum, coffee, etc. When, in reality, most people are using debit cards for that type of transaction. In addition, I think some feel like they're "holding people up" when paying electronically for small ticket items, versus whipping cash out of their wallet. I am not one of these people. I'll pay for a $.25 sucker with a debit card, if the establishment accepts it.

I think a number of things came together (in subtle ways) which contributed to this shift:

1) To me, the risk associated with carrying cash is way too high. If you get mugged, lose your wallet, or misplace it, you're out 'x' amount of dollars. Gone.

2) If you get mugged, lose your wallet, etc. and you have fraudulent charges on either your debit or credit card, all you have to simply do is cancel the card and report the erroneous charges to your bank. Nearly every time, they will credit your account for these charges. I've had to do this a few times...with 100% success rate. A much higher recovery rate than losing a wad of cash.

3) Nearly 90% of establishments accept any number of payment processing networks (Visa, MC, Amex, etc.) so coverage is very high.

4) Going to the ATM or using a "cash back" terminal to retrieve $20, $50, or $100 at a time is just a pain in the butt. Too much wasted time.

5) If you're going to create a decent budget for yourself/family, you need a way to track expenses right? Well, if you're constantly using an ATM and paying with cash, how do you track where you're spending money? Very manual and highly inefficient. If you constantly use your credit/debit cards, you will have all merchants/categories/expenses in any easy to consume format for software like Quicken, Quickbooks, or even Mint.com to track these items. Try it for yourself. Open a Mint.com account, suck in your checking account, and watch how quick it is to see how much money you're spending at Starbucks!

6) Avoiding ATM fees. Ever add up how much money you lose each year due to ATM fees? It's not pretty for most people. If you're in a pinch and can't find your own banks' branch, you're going to loose $2-4. Why not just avoid these situations and save yourself a couple hundred dollars per year?

Ok, so I know there will always be those emergency situations in which cash is needed...so have that $20 tucked away next to your library card in your wallet/purse.

I think it's quite clear to see that in 50 years, cash will largely become a thing of the past. For me, it already is!

Chicken or the Egg with Online Advertising?

If you're in the business of matching up publishers with advertisers, I'm sure you or your company has had a hard time dealing with the chicken or egg scenario. Whether your revenue model is CPM (cost per thousand), CPC (cost per click), CPL (cost per lead), or CPA (cost per acquisition), the challenge remains the same: do you focus your resources on appealing to publishers (sellers) to maximize eCPM (effective cost per thousand impressions) or to maximize ROI (return on investment) for advertisers (buyers)?

From my experience, far too many online exchanges are focusing on the advertiser versus the publisher. What often drives this focus is plain and simple: short-term revenue. Yes, it is a critical component of any business. However, what I have found is that in the early years of establishing relationships between publishers and advertisers, the focus should be on the publisher side of the equation. As it exists right now, publishers don't have enough outlets to monetize their web traffic for the highest eCPM possible. Many ad exchanges in the industry suffer because they are using legacy monetization strategies that don't generate the highest possible payouts for the publishers and are solely focused on selling web traffic this isn't of value. This in turn equates to lower value/demand for advertisers.

The answer is to shift the balance from advertisers to publishers. This can be done with a strategy that focuses on a) simple, high-converting, lead gen mechanisms b) scrubbing data to ensure highest lead quality imaginable and c) requiring that integration with the publisher to be as simple and seamless as possible. By employing an world-class lead gen strategy with your publishers, you strengthen the relationships you have with them and begin to take market share away from other less effective advertising models. As you build and focus on a strong foundation of quality traffic from your publishers, you will build an everlasting foundation that will always be in high demand by advertisers. Even if those leads that might not be easily sold at first due to less focus on the advertiser side of the equation.

My simple thinking: if you build it, they will come. You don't make a lot of money getting golfers to come play at your brand new golf course, if little thought was put into the individual holes, quality of facilities, strategic placement of bunkers/trees, etc. You won't get a big following by golfers as they soon discover that there's nothing to your product. Same with online advertising. You can't just build a marketplace of non-converting, low quality leads, and expect that advertisers will come, and come often. Build a strong base of publishers/traffic, with the buyer in mind....and when the advertisers come, they will come in droves.

Whether your in the business of creating a marketplace of buyers and sellers or you yourself is a buyer/seller, be sure to work with a company that executes a similar strategy.

Thoughts on M&A Activity

Over the years, I've been witness to a number of different merger and acquisition scenarios with the companies/departments I've worked for. I'm sure a number of you have as well. Whether your company was sold, your department merged with another, or some other large transaction occurred...the fact is, you probably have witnessed the best and worst that business has to offer in these situations. Generally, there's almost always going to be situations where positions are eliminated, exciting new opportunities emerge, employees become disgruntled about new culture/people/products, and/or just a general feeling of anxiety sets in among most colleagues.

From my standpoint, it's obviously a necessary evil. As Alan Greenspan would probably say, it's creative destruction at its best. Survival of the fittest. Everyone who is in business is in business for one reason, and one reason only: return on investment. Most often, mergers and acquisitions occur because one company is trying to fill a void, gain market share, buy a company in distress, etc. The reasons are endless. M&A is the Nasdaq for macro business activity. Buyers and sellers coming together to trade competencies, products, and services. At the end of the day, it's what creates shareholder value and eventually return on investment.

So what have I learned thus far in my career? Well, I think I've seen enough real-world M&A activity occur in which I can make the following recommendations/observations:

If you are the acquirer:

1. Spend the necessary time to evaluate the talent, products, services, and organizational structure of the company your acquiring in order to unlock the scale and value of the company you're acquiring.
   
2. Hire from within (or outside talent) to be the "integration expert" to successfully plan/merge the companies/departments. Often times, the main focus is the consolidation of the business units and not enough energy is invested in making sure it's the right fit or that the post transaction activity is seamless.
3. Provide an outlet where all affected parties can provide input as to the concerns, suggestions, or expectations of the transaction. Your frontline associates are going to bear the brunt of the work, anxiety, etc. around the transaction...solicit their feedback throughout.
   

If you are the acquiree:

1. Ensure that the acquiring company has a long-term strategic/tactical plan in place to integrate businesses, cultures, departments, etc.
2. Ensure that the acquiring company will invest in internal/external consultant help pre/post transaction to execute a macro transaction at a micro level.
3. Ensure that the acquiring company values your management talent to make decisions and help with the transaction for a time period of no less than 2 years after the transaction occurs.
   

If you are an employee (either acquirer or acquiree):

1. Meet regularly with your current management to position yourself in the new organization. Don't get lost in the shuffle as many new opportunities will likely arise.
2. Understand the reason/value behind the transaction to help evangalize the event with other associates. Be a champion of the transaction with your colleagues and if you don't agree with it, express your concerns/recommendations on how to make it a success.
   
3. Ensure that there is focus and plan by both the acquirer and acquiree to execute a seamless integration
   

At the end of the day, these macro business decisions need to be thought through at the micro level. True M&A success only occurs when all affected parties provide input early, often, and throughout. I have been witness to a number of macro transaction of high $ amount that translated in very poor execution. Companies can save a lot of money and high caliber talent if a strategic and tactical plan is in place.

This feedback is a bit terse and high-level, but I hope that helps those of you in similar situations.

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My first post...

Well, I thought it was about time that I created a blog/site for myself...and here it is. I think my main intent with this site is to share a bit more about me, my career, the industry I work in. In the future, I'll be uploading my favorite blogs, a lot of content about my career, and some articles related to my career. I'll leave all of the family related content to theeathertons.com which my wife and I will be updating in the near future. More to come soon, so stay connnected!