Issue #2420
- WEALTHY: Why you should send your money to Australia (Andrew Gordon)
- HEALTHY: 3 foods with super free-radical fighting power (Kelley Herring)
- WISE: Zig Ziglar on the importance of money
ALSO IN THIS ISSUE:
- Weeding out the bad in your organization (MaryEllen Tribby)
- You and I vs. you and me (Suzanne Richardson)
- It’s Fun to Know… about the next solar eclipse
- Add "soporific" to your vocabulary
What George Bush Was Told Behind Closed Doors…Could Make You Very Rich
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"Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘gotta have it’ scale."
Zig Ziglar
Australia: Where the Beer Is Great and the Bonds Are Better
About a year ago, my father invested in a Merrill Lynch bond. I looked it over… noted its high rating… and saw nothing wrong with it.
Not long after that, I was speaking to a vice president of Bank of Nova Scotia. I asked him about the bank’s exposure to the subprime crisis. He said it was negligible. I then asked him about the GMAC loans it had recently bought. He said they were fine… the defaults lower than they had projected. So I added the bank to one of the portfolios I recommend to my subscribers.
The Merrill Lynch bond has since plunged and then rebounded. And the Bank of Nova Scotia’s shares are almost exactly where they were when I made my recommendation. That’s much better than most North American banks have done over the past year.
No harm, no foul?
I’d be the stupidest guy on the planet if I thought there were no lessons to be learned just because those investments didn’t turn to mush.
Fact is, my assumptions have changed.
Had I known then what I know now, I would not have touched that Merrill Lynch bond with a 10-foot pole. And I wouldn’t have cared if a high-ranking bank official swore to me they weren’t exposed to the U.S. subprime mortgage market. I wouldn’t have believed him. I definitely would have put off investing.
The housing bust, subprime mess, credit crunch, and resulting financial crisis have done more than just bring the market down. They’ve led to a stunning collapse of confidence that has infected the entire investment world. Banks don’t want to lend to each other… institutional investors no longer know what’s safe… and retail investors don’t believe anything anymore.
How can they? The rating agencies have proved beyond a shadow of a doubt that they do not understand derivatives. Their ratings are worthless.
And the brokers and analysts who follow every twist and turn the market makes? The last year must have made them so dizzy that they can’t see the forest for the trees. They’ve been making one bad call after another.
A few months ago, for example, Buckingham Research estimated that Bear Stearns had $35 billion in liquid assets and borrowing capacity, enough to operate for 20 months. Turns out it had enough for three days. This is one of dozens of examples I could cite.
There’s so much uncertainty in the investment world that we can no longer fall back on our long-held ideas of what makes a safe investment.
Munis? Sorry. Thanks to the shaky status of the monoline insurance companies (which insure munis), they’re no longer the safe investments they used to be.
Money market funds? They’ve been hit too. Some brokerages are covering losses with their own money rather than pass them on to those who invested in these supposedly safe havens.
Good move. I don’t blame them.
What’s left? Oh, yes. How could I forget U.S. government bonds? Okay, they’re still safe… but are they really investments? I mean, can anything you get a negative return on be considered an "investment"?
I don’t think so – and that’s exactly what you’re getting with them. A 10-year Treasury note would give you a 4.01 percent yield. Meanwhile, inflation is running at 4 percent, and that excludes food and energy prices. The real rate of inflation would be much higher.
Investing in U.S. bonds is worse than giving the government a free loan. Instead of the government paying you for the loan, you pay the government for the privilege of loaning it your money.
Do you feel honored? Or cheated? Well, I can’t speak for you. But this is the kind of honor that could land me in the poorhouse. I’d say cheated.
So… is there any investment that is truly safe?
There sure is. Australian government bonds have never looked better than they do right now. And this is the perfect time to jump into them…
Not only because Australia has one of the strongest economies in the world. Unemployment is at a 33-year low. And prices of its two big exports – coal and iron ore – are at historical highs. It doesn’t hurt that around 66 percent of Australia’s exports are commodities.
And not only because Australia is effectively shielded from the problems we’re having in the U.S. They trade mostly with fast-growing Asia. In fact, 60 percent of their exports go to Asia.
The biggest reason the timing couldn’t be better is because the Aussie government has been raising its key interest rate to stave off inflation. They’ve raised it all the way to 7.25 percent. They’re at or near the top of their rate-raising cycle.
Other interest rates, including bond rates, feed off this basic government rate. If this rate is more than twice as high as the U.S. benchmark interest rate, then most of the other rates will be too – including Australia’s government bond rates.
Sure enough, the Queensland 10-year government bond pays a nice 6.99 percent interest. That’s not quite twice as high as the equivalent U.S. government bond rate, but it’s close.
What’s more, you can buy these bonds for a discount. And the discount isn’t going to get any better. Here’s why…
The Australian government paused its key interest rate hikes three months ago. That means, for now, interest rates have peaked in Australia. The only way they would go higher is if the Reserve Bank of Australia resumed rate hikes. That’s possible, but unlikely.
And if you don’t want to tie up your money for 10 years? There’s another group of Australian bonds that could be perfect for you. I’m talking about corporate bonds, including bonds issued by GE – one of the biggest companies in the world.
These GE bonds are triple-A rated – the highest rating bonds can get – which means they come with very little risk. Usually, the lower the risk the lower the yield. But these highly rated bonds offer high yields of 7.97 percent. (Ask your broker for 8.5 percent coupon February 2011 maturity bonds from GE in Australia.)
Or you might prefer Australian bonds from Nestle, the huge Swiss firm. Its bond is double-A rated and offers a yield of 7.0 percent. (Ask your broker for 7.25 percent coupon January 2011 maturity bonds from Nestle in Australia.)
Because these bonds mature in 2011, they would tie up your money for less than three years. To get in before prices go higher (and yields go lower), you should buy Australian bonds NOW.
Buying international bonds is pretty easy… as long as you go to the right place. You can always go to a full-service brokerage specializing in international bonds. But many of the bigger brokerages are able to trade them, too, so call a few and find out.
You could also call up your broker. Ask him to recommend someone who does overseas bonds. Or you could call my colleague Richard Panchookian. (He’s with International Assets Advisory – telephone number: 800-432-0000, ext. 514.) He has several Australian and Queensland bonds to offer.
[Ed. Note: Sometimes, as ETR's Investment Director Andrew Gordon just explained, making money is as simple as looking overseas. In fact, there's plenty of money to be made in the markets. It's practically raining cash - and all you have to do is set out a bucket to catch your share. Andrew can show you where to put the bucket.]
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What Do Donald Trump, Jack Welch, and I Have in Common?
The other night at dinner, my seven-year-old son Connor asked, "Mom, is it easy to fire people?"
I told him it was the hardest thing that any boss has to do.
His next question was, "Then why do you do it?"
I asked him a simple question: "Do you remember when Delaine (his three-year-old sister) bit the little boy in the park and we took her home and gave her a time-out?" He nodded.
"Do you think I should have given you a time out as well?"
"Of course not," he said. "I didn’t bite the kid."
I explained that I have an obligation to every single person in the ETR organization. I cannot let one person have a negative effect on 26 other people’s lives. And keeping an employee who is not doing his job properly, or who is disruptive to her co-workers, is not fair to the company as a whole.
It seems like such a simple concept to rid your organization of sub-par players. Yet it is one of the largest problems I see among entrepreneurs and fledgling business builders. They have an extremely hard time firing people.
Instead of confronting the situation head on, they start taking over the sub-par employee’s tasks or parsing them out to the good employees. But instead of helping, this causes resentment and anger. And soon the good employees start jumping ship.
Don’t let this happen to you. It is your business, and so it is your responsibility to create and maintain a culture that is conducive to productivity.
If you have been toying with the idea of firing someone but keep saying to yourself "It will get better"… if you have been on the fence for a month or more… you are wasting too much time and mental energy on a decision you have already made. You should be spending that time and energy on making sales and growing your company.
Fire the person. Make sure you do it with respect and compassion. Everyone in your organization will be better off for it.
[Ed. Note: It may be tough, it may be unpleasant. But you can't grow your company if you allow the bad eggs to stick around. Once you get rid of your sub-par employees, you can concentrate on taking your business to the next level. Learn how to get expert advice about what you need to do to create a blockbuster business from the ground up right here.
Is firing hard for you? Have you ever kept on an employee longer than you should have? Let us know in our comments section here.]
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Dear ETR: "Has the ‘I and me’ rule changed?"
"I enjoy your daily newsletter very much! It keeps me motivated and full of new ideas.
"I have a question for Suzanne Richardson:
"When I took grammar in school, I was taught that the use of I and me is not interchangeable. And I remember Miss Fancher in high school saying, ‘If a sentence is appropriate using me, you still use me if another person is included. Example: Give it to me. Give it to Susie and me. Same goes for I. Example: I want to go. Jane and I want to go.’
"However, I now hear, almost every day, people saying things like ‘John wants to go shopping with you and I’ instead of ‘John wants to go shopping with you and me.’
"Has the ‘I and me’ rule changed? Or is vernacular changing so the old rule does not apply anymore?
"A little thing, but I am beginning to doubt myself!"
Carrol S.
Dear Carrol,
Ah, pronouns. Tiny little words – but a huge pain in the rear.
Miss Fancher was right – and she hit on the easiest way to figure out when to say I and when to say me when another person is included. Merely remove the other person from the sentence.
Take this sentence, for example: "Do you want to go to the marketing conference with Aaron and I this weekend?"
Is that correct? Or should it be: "Do you want to go to the marketing conference with Aaron and me this weekend?"
One way to tell is to take Aaron out of the sentence.
"Do you want to go to the conference with I?" doesn’t sound right. But "Do you want to go to the conference with me?" does sound right. So, in this case, you’d know that me is correct.
Another trick is to try out we and us in the sentence. If us sounds better, use me. If we sounds better, use I. In our example, "Do you want to go to the conference with us" sounds a lot better than "Do you want to go to the conference with we." So, again, you’d know that me is correct.
Some incorrect applications of the "I and me" rule have become so common that you risk sounding pompous or pretentious by being grammatically correct. (Correctly saying "It is I," for example, instead of "It’s me.") In a case like that, just say something else. ("It’s Jim.")
We’ve just scratched the surface on how to use pronouns the right way. (And I haven’t even mentioned what’s behind it all – objects, subjects, and such.) For a good reference book on all the complicated rules of grammar, check out Patricia O’Connor’s Woe Is I.
- Suzanne Richardson
[Ed. Note: Speaking well can garner you respect and appreciation from friends and colleagues alike. One of the best ways to improve your speech is by understanding more about the words you choose. The bigger your vocabulary, the easier it is to choose the most appropriate word for any situation. With ETR's Words to the Wise CD Library, you can add 120 new words to your personal lexicon. Learn more here.
Send your questions to AskETR@ETRFeedback.com. Include your full name, your hometown and state, and the ETR team may answer you in an upcoming issue.]
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Get More Antioxidants and Satisfy Your Cravings
We all need to get more antioxidants in our diet. That’s because free radicals – rogue molecules that wreak havoc on our cells and contribute to disease and degeneration – are constantly being generated, even as a result of basic biological functions like breathing and digestion. But by choosing foods that are high on the oxygen radical absorbance capacity (ORAC) scale, we can pack more free-radical-fighting power into every bite.
Researchers at the USDA Nutrient Data Laboratory recently released the ORAC values of various foods. In the report, raw broccoli came in with an ORAC score of 1,362. That’s pretty good, but not nearly as high as blueberries. With a score of 6,552, blueberries rank near the top of all fruits and vegetables. But even blueberries can’t hold a candle to cocoa. With an ORAC score of 80,933, the antioxidant power of cocoa powder is simply off the charts!
When choosing cocoa, be sure to opt for the organic, non-alkalinized variety. (I like the one from NOW Foods.) "Dutched" cocoa has been treated with potassium carbonate, which cuts the antioxidant capacity in half.
Fend off free radicals deliciously, by stirring antioxidant protection into your coffee, blend it into a berry smoothie, or make your own cocoa-packed desserts at home with low-glycemic sweeteners like erythritol and stevia.
[Ed. Note: Getting healthy doesn't have to be hard. By making a few simple changes to your lifestyle, you can feel better than you have in years.
You can get antioxidant protection in a sinfully sweet package. Kelley Herring's new company, Wellness Bakeries, has created all-natural, protein-packed, high-fiber, low-glycemic, and completely guilt-free dessert mixes. To try a delicious slice for yourself, click here.]
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It’s Fun to Know: The Next Solar Eclipse
The next total solar eclipse will take place this coming Friday, August 1. You might have to do some traveling to see its full effect, however. The eclipse will be most visible in northern Canada, then the Arctic, Russia, and China. People in northeastern North America, as well as most of Europe and Asia, will see a partial eclipse. If you miss this one, mark July 22, 2009 on your calendar. That total solar eclipse will be visible in India, China, Japan, and some islands in the South Pacific.
For more information and a schedule of upcoming solar, as well as lunar, eclipses, go to eclipse.gsfc.nasa.gov/eclipse.html.
(Source: SPACE.com)
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Word to the Wise: Soporific
Something that’s "soporific" (sop-uh-RIF-ik) – from the Latin – induces sleep.
Example (as used by Benjamin Schwarz in The Atlantic): "Since the war – beginning in 1950 with… Richard M. Titmuss’s Problems of Social Policy – … a tour de force whose soporific title belies its often disturbing contents – historians have probed, revised, and re-revised nearly every aspect of this self-defined finest hour of the British people [the Blitz]."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Copyright ETR, LLC, 2008
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You are absolutely right. I love McKay’s book, How to Swim with the Sharks and Not Be Eaten. Chapter 13 is one sentence long, it reads: “It is not the employees you fire that make your life miserable, it is the ones you don’t.”
One aspect of firing an employee that is overlooked by employers is the benefit of being fired! Benefit you say, what benefit? Without the accute feedback of ‘firing’ someone; how else will a rebellious, lazy, or disruptive employee learn to modify his/her behavior. For many people being fired is a life changing and a behavior changing event. How better to learn how to be an exemplary employee…for the NEXT employer!
Peggy DeKay
DK Communications
What happens if YOU are the subpar employee. I try to do a good job. But I almost aways don’t fit in. And I have no idea what I can do about it. Alice
Where The Beer Is? How about where the OIL isn’t!
$50.00 a barrel soon! US of A dwindles. We have to turn this around, somehow!
good day
If you are the subpar employee, and feel that you don’t fit in, you should make an appointment with your immediate supervisor to discuss things that you can do to fit in and do a better job.
If you are the boss, you should make sure that you have given your employee a pep talk and specific steps they need to take to correct their disruptive behavior as well as steps to meet your requirements for productivity. Jack Welch says that the one thing that has made a tremendous difference at GE was letting people know truthfully where they stand regarding their future with the company.
Good luck in turning around those employees, or letting them go…but at least whichever occurs, they will know you gave them every chance to change.
As a former employer of a small staff (usually 3 to 5 people) I found it hard, if not impossible, to find ‘good’ employees for my book shop. After almost 20 years of endurance, I decided to give it all up because I could not stand the daily hassels of trying to work around ‘their’ problems.
In retrospect, my mistake was in not hiring a sub boss whose job would have been primarily to hire/fire/maintain and/or be responsable for hiring/firing within the ranks. The lesson I learned is to delegate, the key word to an easier life for the person at top who then simply must pick that person! Some fun…!
I just encounter a problem with one of my employee, I gave that employee a directive, which was to pass in the key to their office, before leaving the building. This person from what I can gather from the other employee was saying they should just leave the key on their desk and just leave. And that just what this person did. I have gone to this person work area to get some answers to some issues that was coming up in the office area. While I’m talking to this person they would never look at me, they would just look straight ahead and response very harshly. Now this person will be gone for about three months on a medical leave (FMA), You know I have always been very nice to my employees. Because I was once over on that side of the fence, but I was never disrespectful to my boss.
Processed cocoa has half the ORAC score? That half is still VERY good. So I think I will not worry about the type of hot chocolate. I’ll just add cinnammon and Xylitol.
I cannot agree with you more! Getting rid of sub-par employees is absolutely critical to any organization. I only wish that I could somehow get you to advise my current employer of this. He will not listen to me, nor anyother of his employees (not surprising) as he doesn’t trust our judgement ( I can see his point of view).