Mini-lesson On Stock Valuations
I hope everyone who had boxes for Super Bowl Sunday won some money! Also, that everyone is on time for work this morning (apparently millions of Americans are late or call out on the Monday after Super Bowl…)
LinkedIn got hit in the pocketbook this Friday after not meeting expectations. This led to their stock dropping more than 40%. It was a bad day for LinkedIn but what does this mean in the long term? In my opinion, I do not think there is another service / web site community that can replace LinkedIn. I know there are other platforms out there but none that really provide the depth and breadth of content, job focused professionals like LinkedIn. (Blogger’s note: I am not a LinkedIn investor or spokesperson.)
I do think the company will find its footing and its value – the market does not allow any bad news to pass by without making a dent. As I discuss in my managerial finance courses, valuation of a public company and the idea that stock prices should be at "equilibrium" representing the true value of the company is basically an impossibility. Everything is based on expectations, perceptions and the version of the spin we get from various companies. Like with Yahoo right now there is so much being discussed around corporate decisions, parties and layoffs – but the true idea of what goes on in a large company behind its doors and in every cubicle is a mystery at times to even those inside said company.
To help demonstrate this, I like to tell my students the story about my experiences at a large multinational corporation (MNC). (I tell stories a lot as part of my teaching style; it helps keep the textbook information interesting by relating it to real-life experiences and it has served me well for my lesson-based seminars, speaking engagements and training sessions.)
My story is from when I was part of one division with a large MNC and thought the division was its own company. I mean, I was young and stupid but not that young and stupid I did realize there were other “parts” of the company but really thought we were a stand-alone entity. I thought this way until I was promoted up the ranks into another division of said company and began to meet with the actual CEO and CFO of the whole corporation. All of a sudden, I became aware of the fact that we all were one company and yet no one and I mean no one really knew what the other sides were doing. We had projects being replicated across divisions and corporate was trying to uncover these instances so that we could negotiate corporate pricing and not division 1 pays so much and division 2 pays an additional so much. It was like being a detective or a spy. So many things were done in so many ways and some of it sneakily to avoid full reporting. For example, project over $5m had to go through hoops and ladders to be approved so many projects were $4.9m.
The point is that as much as everyone tried to get a full picture at the C-suite and below, it was very hard. So when it came to reviewing financials, every sector / department rolled up their numbers until it got to the top – did any one person understand every one thing going on in this huge company? It would be an impossible feat to even know a fraction of everything that was going on in said company and yet this is how all large companies are – it is the nature of the beast. In fact, I would argue any company over 20-100 people will potentially also now have an absolute 100% clear picture into what every person is doing/working on. Multiply that by orders of magnitude with a company with thousands of people and the fact that some people are disingenuous and you can have disaster and/or hidden minefields everywhere. We were told by the CFO that every time we launched a project and mis-spent x amount of dollars that it would take x amount of cents off earnings per share (EPS) and this would be disastrous for the stock price. It really was a powerful statement and whenever I tell my students about it we ruminate on how these dollar amounts really impact stock price and what that means to a corporation.
So valuation of corporations is a challenge but missing a profit number or an EPS amount is something that will send stock price falling especially in an economy that is struggling. I am assuming LinkedIn will get back into the right track as they overall had an awesome 2015. More and more professionals, hiring managers and more are using LinkedIn as a way to find talent and to recruit future employees. Having an awesome profile on LinkedIn can get you in the door at many companies for an interview faster than any other way. I will say that I have been sought after as a service provider by clients who see what I am doing on LinkedIn AND I have been sought after by other professional organizations for my content and training programs and more via my work on LinkedIn – or just by sharing the work I am doing via my blog and YouTube to LinkedIn.
There is a lot of value in this website and this community, if you know how to use it. It is NOT Facebook as the popular meme going around LinkedIn says – but just posting that meme kind of shows you are not sure that LinkedIn is NOT Facebook (oh the irony). If you try to apply some of my tips, you can find yourself being sought after on LinkedIn, too.
For more help and information, check out my product page I over a complete LinkedIn profile overhaul along with detailed personalized lessons and instructions on how you can implement your new Next Step profile for $150 or I am now doing value bundle of resume, cover letters and LinkedIn overhaul for $300. I put in at least 8-10 hours of work into every LinkedIn profile I redesign and I do redesign and recreate it to the point that it becomes a better version of your resume, it is interactive, available and always online for recruiters and potential hiring managers to see – order yours today here: http://www.thenextstep1234.com/store/c1/Featured_Products.html
If you want more information, chat with me via my Website or any of my social media channels! Happy Hunting!
I think everyone knows what Black Friday is but I have gotten a few questions regarding what it means so I figured it would be an easy day after Thanksgiving blog post when I have eaten so much turkey I still feel tired after sleeping two hours later than normal (7am vs 5am)…
Black Friday was always historically known as such because it was the day many retailers went into the black. Meaning that up until this day, they were operating in the red (or having more expenses than income). Being in the black means you have more sales than expenses. (Just explaining it simply, here.)
There are grumblings that Black Friday will become irrelevant sometime soon but given my Facebook feed and the amount of people lined up via news broadcasts outside of stores last night before they opened on Thanksgiving, no less, I do not think this Black Friday phenomena will be ending anytime soon.
I do not go shopping on Black Friday. I never did. But, when I owned a small retail store on Staten Island in 2005-2008, I did open on Black Friday and was always astounded at the amount of customers I would see on that day (and that amount would never replicate again at any day of the year). And everyone who walked in my store, left with something they purchased. That was also something that was not replicated on any other day of the year.
So Black Friday is something that is a powerful force in our economy. It spurs spending but maybe the type of spending that cannot be replicated on any other day or time. Maybe it does mean we are a mercenary culture dictated by things and purchases instead of warmth and home given how many store employees had to leave / miss Thanksgiving dinner to be at work (though according to reports and friends who work in retail, for double time pay). I do not know. I do know that spending spurs economic growth and that having a store open for Black Friday can make the whole year for that store.
I have always done the bulk of my shopping on Cyber Monday but to be honest, I am usually done with my holiday shopping before this because I am super early on everything (note in point; my holiday cards are already out – which you saw if you follow me on Instagram).
As a web based business owner, now, I do hope Black Friday and the upcoming holidays spur people to make the investment in themselves and their futures either through one on one consulting work from me on resumes, LinkedIn profiles, cover letters or application essays. I also hope people register for my upcoming seminars and courses at Wagner College Office for Lifelong Learning. But I think for a business like mine, New Year’s and its resolutions would be more of my busiest time in getting new clients. Hey, if a business in Brooklyn can be highlighted on news’ sites for a woman offering to rent herself out as a “mom” for $30/hour, I am sure many people need a career guru (who also happens to be a mom – lol) for my low rates given how many hours of work I put in to helping people achieve their next step dreams…
What do you think about Black Friday? Were you out shopping today? Have a great day of leftovers!! Happy Hunting!
Starting over can always be scary and challenging but if done right, can be so worth it. Many people go to work every day and consider it a chore for some people it can be torture but there are some who have the ability to be happy at work. What does it mean? How can you balance your personal life and your professional life so that you can be successful at work and be happy.
For most people, the ability to walk away from a paying job into the unknown is just not possible. I recently read an article suggesting that everyone should have a “walk away” fund to leave a bad position. However, that walk away fund needs to be pretty large for most people who have responsibilities like mortgages, children’s school bills or even just medical insurance needs. The new rule of thumb is something like 1-2 years’ salary in savings to act as a cushion – it used to be more like 6 months of salary but with the economy and job market the way it has been since the financial services “collapse” 2007-2009 , 1-2 years’ is the safer bet.
That being said, as a country, the USA is full of horrible savers. It is just one of the many economic statistics I have gleaned from teaching Economics and Finance courses for various local colleges since 2003. Our savings rate is next to nothing. There are exceptions to the rule, of course, and if you are one of them – that is great. Some people are just natural savers; it is not the rule though. I often talk, in my classes, about the differences between life here and in, for instance, Italy. Here, we can have 2-4 cars per household (minimum is 2; maximum can be 4 if there are teenagers in the house with driver’s licenses) we have TV in every room and our houses are on average large. Versus living in Italy – all live in apartments, maybe one TV in the house and at most one car (but multiple motorinos – scooters).
In regards to our economy, I have been posting on Instagram an almost photographic journey of how I run my business and what things in the press and economy interest me and I recently put up two pics that show a little bit about how economics is shared with the public. One was a pic of the NY Times recent report on the government’s jobs report for October showing how job creation has improved so much for this month and indicating that the Fed will definitely raise the interest rate by early 2016. The other pic was from NY Post columnist John Crudele saying the jobs report is just magical made up numbers based on how many “phantom jobs” could be created by “new businesses” in October but will probably be dropped back down in November when said jobs did not materialize. It is an interesting read on the economy by two different sources.
Mr Crudele has been providing his cynicism on financial reports put out by the government for at least the last 10+ years (as long as I have been reading his reports). I actually once had his son in one of my classes and that is the first and last time I have taught the child of a “celebrity” – that I know of – but it was one of the most exciting for me because every time I mentioned an article by Mr Crudele (which was often), I was like – “hey, that’s your DAD!” . I am still kicking myself for not having said student invite his dad to speak to the class – hey, Mr Crudele, if you are reading this, I will be teaching Finance at College of Staten Island in the Spring, maybe you can fit us into your schedule for an in class discussion on finance?
Anyway, so job numbers and current unemployment rate of 5% recently publicized might be false numbers, false sense of security – so how does this apply to you starting over? It means you have to be brave and ready for your next step. You need to do all that you can to minimize your wait time between positions. Ideally, you will remain at your current job until you find your next step but sometimes, that is impossible to do. Your resume needs to be as close to perfect as possible, you should be considering how to use LinkedIn and leveraging your networks on helping you to find your next step – but remember not to make it a one-way street, reach out to any networking partners with something for them and a request for yourself (learn more in my category How to Network blog posts).
What do you think about my economics lesson and my quick advice on starting over? Have you ever started over? What did you do to prepare? Check out my upcoming seminars on how to take your next step for more information on how to prepare. Happy hunting!
This article is an interesting overview on the tie in between education and economic growth.
The idea is that education alone is not the answer because if it were, there would be way more results in countries where education has been promoted and extended and yet, we do not see the increases in economic growth following that pattern. It also points out the short-sightedness of education as the growth strategy as it would only truly benefit those under 18 or younger than 25, at best. For those of us who are older and not in the mindset of schooling, how could it help us to get more education, especially with the cost of higher education here in the US particularly?
I thought this article was going to address the rising cost of higher education in the US or at least reference it - but it did not. However, it does quote that , "At most modern firms, fewer than 15% of the positions are open for entry-level workers, meaning that employers demand something that the education system cannot - and is not expected - to provide."
This ties back to a higher-ed viewpoint of firms looking to hire employees. It does not really relate to the immense number of economies that have increased schooling to the high school level.
The article provides per capita income for the average country with at least ten years of schooling of $30000USD in 2010 but that same level of education had per capita income of $5000USD in Albania, Armenia and Sri Lanka. Or course, it does not clarify if this figure is adjusted for local cost of living - so what does $5000USD provide you with in these economies? But, it does still show a lower GDP and thus a lower growth that is stopping these countries from becoming richer.
I feel more research can be done on this topic - I found the article enlightening and it led me to more questions so maybe one day I will write a follow up on this topic.
What do you think about this article? Do you think education is a key to economic growth? What do you think are the key(s) to economic growth?
Does Better Education Really Drive Economic Growth
Fortune has a great article "Humans are Underrated" and it has so much information in it. It is adapted from an upcoming book called Humans Are Underrated What High Achievers Know That Brilliant Machines Never Will by Geoff Colvin. This is the kind of article I would spend at least two classes going over as a Prof but it is summer and I am off, so I get to ramble about it here (lucky you).
The article talks about technology and the analogy is that jet planes sped up travel by a factor of 100 (compared to walking) while now, every two years, computer processing power doubles which is an "increase in computer power of a million every 40 years". I am (almost) 40 years old and I have seen how technology has absolutely changed by what feels like about a million in the years since I was a kid and all we had was DOS programming and a modem that squeaked to show it was online - not to mention landline phones and cell phones that looked (and felt) like bricks. Now we have the equivalent of the computer processing that sent rockets to the moon in our pockets (or pocketbooks) and can stream any show we want at any time and so much more...
Ok, so the article talks in detail about technology and the impact on employment. There is a potential for trucks to be driven by computers, which would impact about 2million jobs held by, you know, actual truck drivers. (I digress, but would the show Ice Road Truckers be as popular with computers driving the rigs instead of people?) When I teach, I often discuss "The World is Flat" the article by Thomas Friedman and how the outsourcing and offshoring of jobs (caused by technology leveling the playing field) has impacted the economy and jobs available to recent college grads. We usually talk about how blue-collar jobs are least likely to be decimated because, like, who would pick up the garbage - a worker in India or China cannot do that -- but by reading this article, there is a very real fallacy to my logic because things that were considered "un-programmable" are more and more becoming programmable - such as truck driving. In 2004, there was belief that driving was intrinsically human and could never be done by computer and then several years later, Google had a self driving car. So what we think cannot be done by computer and technology is actually consistently proved wrong because of the absolute staggering increase in computer processing and abilities.
So the crux of the article (and subsequent book, which is about to be pre-ordered by me) is to highlight how "humans add value"? Empathy is highlighted as being something that is very necessary to hiring managers - but, ironically, empathy is on the decline in most people (maybe because we are always looking at our smartphones or something). Also needed for employees is "relationship building, teaming, co-creativity, brainstorming, cultural sensitivity, and ability to manage diverse employees". There is even a vignette about a new Technology Director who was hired and then quickly fired by Southwest because he just could not handle the culture of friendliness and openness - it was not based on his ability to do the job but because he did not have the people friendly skills necessary for the culture he was in. The article discusses this as being the focus of the future and that even one employee who is disengaged and not meeting the people skills necessary for this new world is one too many.
This article is so intense and has so much interesting information in it, you really have to read the whole thing. It makes for good interview small chat - adding in how your people skills are so important to the future of the company you want to work for and why - it is the wave of the future.
Check out the book below; also the link to the Fortune article is below, too.
Lisa Vento Nielsen