It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
Friday, April 8, 2011
Kissing Frogs Equals More Profits
Liam O’Reilly, a recent graduate from the University of Maryland, told The New York Times that he had applied to 50 employers — to be a paralegal, a researcher for a policy organization, an administrative assistant — got a few interviews and no offers. So he took a minimum-wage job selling software that includes an occasional commission.
“Had I realized it would be this bad,” he said, “I would have applied to grad school.”
My Number Three Son was due to graduate this spring. But when he got accepted into a special five-year BA/MBA program at his school last month, I encouraged him to take it. Like Liam O’Reilly, his prospects for employment are limited. They might not be better next year, but at least he can approach the market with another year of learning and an MBA to boot.
Back then, any kid fresh out of college could have his pick of good jobs in preferred locations with plenty of perks.
Today, the economy is a mess, businesses are floundering, and unemployment is record high. As a result, college graduates are taking what they can get. Many, not finding jobs, are forced to move back in with their parents.
(The situation is considerably better for kids with engineering and computer degrees, but otherwise the landscape looks bleak.)
Recently, I received this e-mail from a young ETR reader:
Hi Mr. Masterson
My name is Eric Ryczek. I am a sophomore at Drake University in Des Moines, majoring in International Business and Finance.
My uncle urged me to subscribe to ETR a few years back, and I did so as a senior in high school and enjoyed and benefited from many of the articles. I am currently reading your book Automatic Wealth for Grads — which my uncle bought for me as part of my 18th birthday/graduation present — and am loving every minute of it. And last week, he forwarded me an excerpt from your bookThe Pledge, and I am eager to read the rest of it.
But I’m wondering if I am still too young for The Pledge, even though I am trying to do everything I can and gain as much knowledge as I can now to invest in my future. And I am hoping you will tell me that the book is beneficial for anyone, no matter how old they are.
I know you have millions of e-mails to respond to, so if I do not get a response I will purchase the book anyway to read over winter break. I think it will be a good investment for my future.
Hope to hear back from you.
Sincerely, Eric L. Ryczek
I’m worried for Eric’s generation. They are facing, without a doubt, the worst job environment since the Great Depression.
The economy is in shambles and, despite what the government is saying, it’s not getting better. In fact, it will get worse. Possibly a lot worse.
As far as I’m concerned, the only relevant indicator of economic recovery is employment. And despite the government’s efforts to mislead the public, employment in America is heading down. The government pegs unemployment at 9%, but that’s because the primary measure it uses — the U3 rate — counts only people who have been actively looking for work over the past five weeks. It doesn’t count the millions who have given up. And it doesn’t count the executives who have lost their jobs and are bagging groceries.
If it did count those people, the unemployment numbers would be very different. How different?
That’s not a hard question to answer. You see, there is a second way to calculate unemployment that the government doesn’t publicize. Its the U6 rate, which the government agreed to report after economists pointed out that the U3 is unrealistic.
The real (U6) unemployment rate is 17%, and it will probably climb to 20% or more before things straighten out.
That bodes poorly for young people, because the 83% of the population that is still employed is going to be kicking and screaming to hold on to their jobs.
And not only are there about 20% fewer job openings now than there were last year and in 2008, businesses are paying less than they did back then.
Only one in four college graduates who apply for jobs while in college can expect to have one of them when they graduate, according to a study by the National Association of Colleges and Employers.
The situation is difficult but it’s not at all impossible. If you know how to game the system, you can still get a great job with good pay and great prospects for a fulfilling career.
The problem for most kids is that they don’t know how to get a job. Liam O’Reilly, the young man I talked about at the beginning of this essay, is a typical example.
He sent job applications to no fewer than 50 companies in three distinct areas. But his cover letters and resumes were pretty much the same as the thousands of others those companies received: the same old boring crap.
If I hadn’t wanted Number Three Son to get his MBA, I would have given him the following advice. And this is advice that applies to anyone at any age.
Don’t apply to 50 companies. Getting a job is not a numbers game. Instead, select three companies that you think you’d like to work with. Then study those companies outside and in. By that, I mean read everything you can about them that’s in the public records. Then make a trip to their headquarters and have an informational interview with someone in the division or department you want to work for.
Don’t say you want a job. Just tell them you are trying to learn more about their industry. Tell them you admire their company. Tell them exactly why you do. And then ask specific questions about how the company has achieved the success it has. Ask about problems the company is facing and how they are handling them. And ask the person you are speaking to how what he or she does helps the company achieve its goals.
Spend the entire interview asking questions and allowing yourself to be impressed. Don’t show off. Don’t try to be smart. Just be friendly, curious, and respectful.
After the interview, send a personal thank you note to the person you spoke with, and start to plan your next move.
Your next move will be another meeting with that same person in about two weeks. At this meeting, you should pitch him or her on why you believe you are the person they need to help resolve some of their problems and achieve their goals. Be very specific. Make it apparent that you have done your homework. Be positive. Exude confidence. Ask for a job.
If you did that with three companies — really did it — you would get at least one job. (When I first did it, 30 years ago, I got great job offers from all three of the companies I had targeted. That is the kind of problem a young person needs to have these days.)
I explain this approach in detail in Automatic Wealth for Grads… and Anyone Else Just Starting Out. So when I got that e-mail from Eric, since he was already reading Automatic Wealth for Grads, I sent him a copy of The Pledge along with the following note:
Finish reading Automatic Wealth for Grads. Then read it again. And again! And then read The Pledge. You are certainly not too young to benefit from it.
These two books contain all of the important lessons I learned about building wealth over the years, including:
How to figure out what you want to do with your life.
Which industries and businesses offer the greatest wealth-building potential.
What sort of jobs you should be looking to land.
How to prepare for and get the job of your dreams.
Why most advice about wealth-building is good only for losers.
How to create a second and third income so you don’t have to rely on your first one.
When to seize a wealth-building opportunity and when to abandon a good idea gone bad.
How to set serious, wealth-building goals.
How to become super productive — so productive that you’ll need an intervention to slow you down.
What advice to listen to and what to ignore.
And much more.
You’ll also learn how to be a smart consumer of wealth-building advice and information and how to speed-read investment and business books (including mine!).
I wrote Automatic Wealth for Grads and The Pledge with my three boys in mind. One of them is your age. The other two are a bit older. I want my boys to be financially independent. I don’t want them to rely on their employers or anyone else to secure the wealth they need in life. But I’ve structured all my advice based on the idea that financial wealth in and of itself is only one of four important life goals. They must also focus on their health, their social lives, and their personal interests.
I want my boys to have full, happy lives, not lives that are dictated by financial pressures. And I want the same for you.You just need to be smart enough to hire the right people to help you do it.