Insurance is one of the least interesting things we can think of. We don’t even like typing the word. But you know what? There are some really good reasons why it’s really important.
Allow Jessica Serbin, Senior Vice President at Willis, to school you in less than two minutes:
>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!
(credit: Sougent Harrop)
…with robot cars!
We’re always prattling on about the importance of diversification around here. You know, the “don’t put all your eggs in one basket” philosophy, applied to your investment portfolio. (If you don’t believe us that a diverse portfolio is the way to go, take the Timing the Markets Challenge!)
Well the same principle can apply to all areas of life – baskets of eggs, for example, or Internet empires like Google’s. They’ve been branching out from their humble search engine roots for years (email, document sharing, voicemail), but now they’re taking it to the streets. With robot cars.
Robot cars, as you might imagine, are currently illegal on U.S. roads. But if Google does a good job lobbying the Nevada legislature, then Sin City may become the first market for automated overlords vehicles.
Hey, if the Internet implodes some day, at least they’ll have something to fall back on.
Freaked out about your career? Amanda Pouchot and Kathryn Minshew from prettyyoungprofessional.com have been there, and they have some sage words of advice for you:
Check out Amanda and Kathryn’s other TILE appearances here.
>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!
(credit: jmv)
You may not have heard yet, but there’s been some interesting drama in the house of the country’s most-worshipped investor – the Oracle of Omaha, Mr. Warren Buffet. One of the top execs at his company (Berkshire Hathaway) seems to have, well, cheated at the game. David Sokol looked like he was next in line to replace Buffet when he eventually retires. But then he pulled a little thing called insider trading.
He bought a bunch of shares in a company, and then convinced Buffet that Berkshire Hathaway should buy that company, which raised the price of the shares and made Sokol a tidy profit. Unfortunately for everyone, that’s illegal. (For the record, Sokol so far denies doing anything wrong.)
There are many ways the company could have handled it – they could have tried to cover it up, or denied the whole thing and given Sokol a big bonus. But to his credit, Berkshire’s famous leader just fessed up. At the company’s annual meeting, where company executives meet with investors, explain their decisions, and take feedback, Buffet basically said that his top aide had done a terrible thing. He also heaped some blame on himself, saying that he wasn’t skeptical enough when Sokol came to him with the proposal.
Now Sokol is out of a job and the company is moving forward. Easy as that. The truth is, bad things happen all the time. But in business as in the rest of life, all it really takes to make things right again is to take responsibility for what happened, fix what you can fix, and move on.
(photo credit: isafmedia)
“People like to read the books,” says Daniel Borochoff, president and founder of the American Institute of Philanthropy in Chicago. “But the expense statement tells a story, too. Not as entertaining, but perhaps just as revealing.”
This seems like an appropriate follow-up to yesterday’s post about operational costs… A prominent organization dedicated to building schools and increasing access to education in Afghanistan – the Central Asia Institute – has recently gotten some bad press about its alleged money mismanagement.
Well, not money mismanagement exactly… more like financial nondisclosure. State auditors, donors, and charity ratings organizations have been surprised to find that more than half the CAI’s annual budget was spent in the U.S. instead of being sent overseas to pay for bricks and pencils.
Now, no one’s being accused of embezzlement – but it does seem like, at the very least, the organization’s finances were pretty incompetently handled. This is a great example of why it’s so important to do your homework before you give. Most charities are required to make their financial statements public, and you can use sites like GuideStar.org to help you get a better picture of where a nonprofit’s money is really being spent.
It’s also a pretty good example of how important it is to be on top of your finances. Even if you’re a great person (or organization), someday you’re going to be held responsible for the money coming in and going out of your account. SPEND.GROW.GIVE. will help you keep track, but you can get involved by setting a budget and sitting down with your advisor to talk about where you want your money to go.
(credit: scui3asteveo)
Q. What’s the difference between defaulting on your student loans and defaulting on your credit card debt?
A. If you fall into a hopeless debt spiral because you can’t pay back your credit card company or your mortgage, you can declare bankruptcy and get a clean credit slate after a few years. If you default on your student loans, you can never escape. Ever.
Unfortunately, it looks like a lot of college grads are about to find themselves with a black mark on their permanent records. Your credit history, unlike that mythical permanent record your teachers threatened you with in 4th grade, can really affect your opportunities in life. It can determine whether or not you get a credit card, a school or car loan, or a mortgage on a new home. Some employers even check credit reports to get the dirt on potential new hires.
Check out this article on good.is for more fun details and a glance at the ever-increasing Student Loan Debt Clock!
See also: this depressing article on “mal-employed” college grads.
Also see also: this list of the “20 most useless college majors,” which shows the limited mid-career earning potential for chemistry majors, among other obvious low-paying career tracks (hello, art history scholars!) Of course, being “useless” financially doesn’t mean your degree of choice won’t make your heart soar like an eagle. We recommend you use your own criteria for success when making major career choices. And don’t default on your student loans.
(credit: REUTERS/ Shannon Stapleton)
Ah, spring! Baby birds stretch their wings, trees release deadly spores, and Wall Street awakens from its long post-Ponzi slumber. You know, Ponzi. Scheme. Ponzi scheme. Madoff?
But we digress. Today’s news is about Raj Rajaratnam, the founder of a successful hedge fund called Galleon Group. He’s been accused of insider trading – this is, unfairly using information from outside sources in order to make a big profit for his company (and himself).
Here’s what you need to know about Bernie and Raj:
What would you do if someone gave you valuable information about a potential investment win?
(photo credit: ezioman)
Let’s see if we can explain this one:
- The laws of supply and demand say that when supply of a particular product is low, its price goes up. And when consumer demand for that product is high, prices also go up.
- The opposite is also true: low demand = low prices; high supply = low prices.
- So when the oil minister of Saudi Arabia says that OPEC is cutting down on oil production because there’s too much supply in the market, you would think that oil is pretty cheap right now.
Nope. The price of oil is actually higher than it’s been in two and a half years. But it’s not high because of strong consumer demand (apparently demand is quite low since no one can afford it), and it’s not because of low supply (the minister says the market is actually “oversupplied” with barrels and barrels of black gold).
The price of oil is high because of the investors trading it on commodity markets. Because of all the civil unrest/ revolutions/ humanitarian disasters in North Africa and the Middle East right now, they’re worried about whether oil will become harder to get in the future.
So in this case, the price of oil has nothing to do with present-day supply and demand. It’s about a bunch of analysts who think that if a lot of oil-rich governments collapse, tomorrow’s supply might not meet tomorrow’s demand. (Dun dun dun dunnnnnnnnnn!)
(photo credit: striatic)
Well, that pesky federal deficit has finally caught up with us. Standard & Poor’s, a credit rating agency that basically judges how risky (or safe) it is to invest in a country, has officially said that the United States’s economic shenanigans may end up costing it its pristine AAA credit rating. (That’s three A’s, so you know it’s extra awesome.) The main reason? Washington’s seeming inability to agree on a plan to reduce the deficit.
S&P didn’t actually downgrade America’s credit rating, but it did change its “outlook” from “stable” to “negative.” This is basically a shot across the bow, or a warning from your mother that if you keep hanging out with those corner boys all you’ll get is a reputation.
This is kind of a big deal. If the U.S. is downgraded (and according to S&P is could be within three years), we’ll be out-credited by France. And foreign investors might be less interested in buying Treasury bonds, which would cut off an important source of income for the government. Which might result in more cuts to services like health care, education, and, you know, repairing roads.
Let’s see where we are in two years. In the meantime, how do you think you would do in S&P’s eyes?
Can you weather the credit storm?
Frank Murtha is a psychologist with MarketPsych who specializes in investor behavior. Or misbehavior. Or misconceptions. Well, all of that. His job is to study how people make decisions with their money, and to help us understand (and avoid) common mistakes.
He stopped by to talk to us about how a crashing stock market changes the way investors invest. (Hello, recession of 2008!) Pretty interesting stuff. Check it out:
>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!