Thursday, December 31, 2009

Three Types of Interpersonal Power

WASHINGTON - JANUARY 20:  In this handout phot...Image by Getty Images via Daylife
Dr. Blaine Lee in his book "The Power Principle", have identified 3 types of interpersonal power, i.e. how does one person gain influence over another. This has tremendous implications for everybody, not just managers, but also investors, or even people in general. The three types of power are:

* Coercive power: you will do so because... I am telling you so! (and if you don't, something bad may happen to you or others!)

* Utility power: you will do so because... I can do something for you! (i.e. quid pro quo, backscratching, and so on)

* Principle-based power: you will do so because... You believe in what I believe (or stand for, or hope to achieve)

The powers can be used for good, or evil. That is not the point tough. Let us analyze each type of interpersonal power, and see how each one works, and how you can tap them.

Monday, December 28, 2009

Three Types of Work in Getting It Done, or GTD

David Allen, author of "Getting Things Done", or GTD, is one of the best known "productivity gurus" known today. GTD itself is a well-thought-out system that deals with every aspect of work, from optimizing the process to optimizing output, this got it all.

So how can GTD help you get rich? Let's analyze some aspects of GTD. Please note that this is NOT an attempt to teach GTD, but rather how GTD can be applied here, and everywhere.

GTD defines three types of work:

* work that has been defined (in other words, a "to do" list)
* unplanned work (i.e. sudden interruptions, minor emergencies, etc.)
* defining work (in other words, figure out what must be done)

Depending on your responsibilities, the mix will be different. If you're an employee, you'll have mostly defined work. If you have more responsibility, like supervisor or manager, you'll do more defining work for self and others.

And this "work" is anything that needs to be "worked on", not just "job" work, but work in general. To buy wife flowers is work. To get car's oil changed is work. To pick up daughter after sports is still work.

The problem with the three types of work is that the mind tends to AVOID "defining work". We often consider that sort of time as "wasteful" "not doing something", even though it's actually often the MOST productive time possible, but we'll get to that later.

Thursday, December 24, 2009

Investment lessons from Warren Buffet and Bill Gates

Public Broadcasting ServicePBS Logo via Wikipedia
PBS played "Buffet and Gates goes back to school" the other day, and there are a lot of good lessons for investors. These are not in particular order, and are NOT the exact words uttered, but the meaning is accurate.

Gates: Warren [Buffet] taught me this, "Be good at saying no."
Buffet: Save "yes" for important stuff.

Investment-wise: Buffet had said it before, you don't need to invest on every "good" stock that comes by. There is no need to "swing" at every pitch. They meant time management, but it works for investment as well.

Monday, December 21, 2009

Public Speaking Confidence

More realistic Image via Wikipedia
Most people communicate just fine, yet most are extremely uncomfortable speaking in front of crowds. This is usually caused by two problems: presentation, and confidence. There's a third cause, topic, but usually you don't get to choose that. Howeve,r you can often make up for a boring topic by having a good presentation, and a lot of confidence.

Presentation includes a lot of things, from having the right "hook", to a bit of theatrics, humor, involving the audience, and so on. Most public speaking courses focus on presentation techniques, and you can pick up plenty of books on that topic, such as "scan the room in concentric patterns, slowly, from outside in", "present the proper body language", and so on. While they are important, they are practical skills. In terms of the military, presentation techniques are tactics: what you do DURING the battle. You also need to have the proper strategy: what you do BEFORE the battle. That's where confidence comes in.

Thursday, December 17, 2009

Peter Lynch's 6 Stock Archetypes

View of Wall Street, Manhattan.Image via Wikipedia
Peter Lynch classifies all stocks into roughly 6 categories: slow growers, stalwarts (mid-growers), fast growers, cyclicals, asset plays, and turnarounds. Later, he also gave some human equivalents.

Why human equivalents? Human beings are a lot like businesses. Businesses, like human beings, even if they haven't earned anything, have the POTENTIAL to earn. A 12-year old child has more potential to earn (mow lawn, lemonade stand, etc.) than probably some 80 year old in a nursing home, even though the 12-yr old has no history of earning, while the 80-year old have a very long record. Add up the assets, and the liabilities, and you end up with book value (or in human terms, "net worth").


Slow Growers

Slow growers are extremely stable, like utilities are now (they were fast-growers back in the 1960's). If it pays a generous and regular dividend, it's probably a slow grower. Figure, 2-5% growth per year, right about rate of inflation. [In general, companies pay dividend because the managers can't think of a way to expand their business using their profits, but it doesn't want to buy back its own stocks either, so they give the profit back to the stockholders as dividends to enhance the company prestige and goodwill instead.]

Monday, December 14, 2009

Three Types of Market Leadership

Reading the book "The Discipline of Market Leaders" by Michael Treacy and Fred Wiersema is very interesting... it defines the three ways to achieve market leadership: operational excellence, product leadership, or customer intimacy. Each goes after a different way of perceiving "value" by the customers.

Operational excellence

A market leader of operational excellence has a business that is run extremely efficiently, all in operation and execution of business functions. They often promise lowest prices and/or hassle-free service. They don't innovate, and they don't offer one-on-one customer service. What you get instead is a very smoothly run operation with low operating costs, which enables them to lower prices while consistently delivery quality in either products or service.

One example is PriceCostco. They stock less than 5000 items, compared to over 50000 items in a typical supermarket, but they are as large or LARGER than most supermarkets. You don't go there for the selection; they already selected the "best stuff" for you, and they say on on their newsletters / magazines. The lack of selection to them is an asset, not a liability. They buy in bulk of the best sellers to lower the prices, and pass on the savings to you. They move a LOT of merchandise, and the result shows.

Friday, December 11, 2009

Achieving Great Work, not just Good Work

Productivity Magazine (http://www.productivitymagazine.com) has an article about Michael Bungay Stanier, one of Canada's best productivity coaches, where he discusses the concept of bad work, good work, and great work.

Bad work is pointless work, work you need to avoid, no politeness needed. If you have read the cartoon strip Dilbert (tm), he's almost always doing "bad work". Organizations tend to assign bad work. Actual examples would be having you fill out detailed time logs and expense reports that nobody ever reads.

Good work is familar and useful work you do and do well. You have the training, you have the education, and you enjoy the good work. This is good, but it's just that, "good". You do the normal work that you do well.

Monday, December 7, 2009

More than just IQ

Cover of
Everybody knows what IQ is, but that's just one number. People are good at different things, so why is it that we only ever hear about IQ?

Howard Gardner, in his book "Frames of Mind: The Theory of Multiple Intelligences", wrote that there are actually SEVEN different intelligences, and who'd be good in them

* linguistic -- linguists, polygolots, writers, speech-writers, etc.
* Logical-mathematical -- mathematicians, theoretical physicists, philosophers
* musical -- musicians and singers
* bodily-kinesthetic -- athletes
* spatial -- pilots, architects, team-sports athletes etc.
* interpresonal -- salespeople, teachers, etc.
* intra-personal -- this is an exception: this is more about self-worth and self-image. If you have high intra-personal intelligence, you're described as confident, sure of oneself

Mr. Kiyosaki mentioned him in multiple books, esp. "Increase your financial IQ".

Friday, December 4, 2009

The Gold Bubble

The ratio of the Dow Jones Industrial Average ...Image via Wikipedia
As gold prices rises to unprecedented levels, one does start to wonder about how it actually rates as an investment vehicle, and what are its long and short term trends. Just as Dec 5,2009's reversal shows, gold has very few reasons to keep going up.

US public weren't allowed to hold gold as result of Great Depression and the ban is only lifted in 1975, we have to start then. As the gold prices did fluctuate a bit, we will take the gold prices at the end of February 1975 as the starting point, which is... 187 per ounce

http://66.38.218.33/charts/historicalgold.html

Bonds can be risky too!

Most people thought that government bonds, those issued by the Feds, State, or Municipalities are about as safe as they come, and often TAX FREE, making them very attractive in bad economical times when stocks are too volatile, but keep in mind that not all bonds are created equal, and bonds CAN be risky.

Forbes Magazine, October 5th, 2009 issue, page 30, has an article called "Potemkin Village". For the whole thing, you'll have to read the magazine, but I'll summarize for you... Some so-called "municipal bonds" are actually community development district bonds. The CDD bonds are issued by a conglomerate of bankers, land owners, home builders, and developers, with approval of local government, to build expensive communities with golf course, tennis courts, country club, lots of houses, roads, and so on. When the real estate market went bust, it took out a LOT of CDD bonds with it, because the builders won't build houses any more, seeing no profit in it, and without houses, the whole thing goes kaput.