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Reading the Tea
Leaves
By Nancy
L. Anderson, Ph.D., CFA
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Published
in the Mississippi Business Journal, June,
2008
My
phone has been ringing off the hook lately with
telemarketing calls. While I’ve placed
my home number on the “do not call” list,
businesses don’t have the same privilege. My work
day is being interrupted by these annoyances. It’s
9:30
in the morning, and I’ve already received 3
calls.
And…
After taking a break from the real estate crisis over
the holidays and first part of the year, we decided to put the for sale sign back
in the yard a couple of
weeks ago. Already,
we’ve had return lookers. Just down the street from
us a new development is
going in. We see lights in the windows within weeks of
the final landscaping.
And…
My
husband bought a little furniture store in Fondren
last year. It’s a fun little shop with quirky furniture and accessories. While we’ve
been hearing complaining from some retail sectors, he has experienced record sales
in the last few months.
This
from merchandise you wouldn’t put in the necessity
category.
So,
what’s going on?
Just
when everyone started running around screaming that
the sky is falling, the economy is
quietly coming back to life. The earnings and sales
revenue reports from the first
quarter were quite good. Of course, this is with the
exception of the financial stocks,
but even they are weathering this thing fairly well.
Just
this morning, the productivity numbers came in and
they were up 2.2%. Manufacturing appears to be leading
the way in this area. Treasury Secretary Paulson is indicating there is now a light at
the end of the tunnel in the
credit market crisis. The Fed lowered rates another
quarter point but said, “No
more.” The
stock market got hammered the first quarter but made
great gains in
April. If you had cut and run with respect to stocks, you
would have missed the
best returns
of the year so far.
As
I read the tea leaves, I feel quite optimistic about
2008. Are we or were we in a recession? The economists can only figure that
out by looking in the rear
view mirror. Generally,
by the time they figure out the signs, the times have
changed.
We
are continuing to struggle with high gasoline prices.
Recently, the meter passed the $50 mark on my little car. I noted it, but I
didn’t change my driving habits. I
can see that more people
are looking at fuel efficient vehicles and shunning
the big SUVs. Thank
goodness! I hate those tanks. We’re complaining
about the price at the pump and
talking about alternative fuels, but I don’t see
many people carpooling. And whatever
happened to walking?
If
you live in rural
Mississippi
and have to drive an hour one-way to get to
work, you are certainly feeling the pinch. But most of us
live within a few miles of
work, school, church and
grocery store. The price increase is enough to make us
grumble but not enough
to make us change.
My
grocery bill is more. It’s just the two of us, but I
can’t get out of the grocery store without spending $100. And I have very little to
show for it. High fuel
prices are
finding their way into everything we purchase. We just
notice the
groceries
more. For a family, that may mean changing to cheaper
brands or using
cheaper
cuts of meat. But I don’t see many
people going without. Around the globe
we
hear about food shortages and riots. Meanwhile, we
just keep getting fatter.
While
the economy is showing signs of life, we are still
facing inflationary pressures from gasoline and food, in particular. The
combination of a
weak dollar and speculation in the oil market has resulted
in these rising prices.
Last
month, consumer spending increased. If you take out
gasoline and food, we still
increased our spending 0.1%. That doesn’t sound like
a bunch of folks
running
scared. Of course, maybe we’re just putting that
increase on our credit cards. Frightening!
As
for the real estate market and the credit problems,
things are settling down
but are nowhere near their heights. If you are
connected to real estate
or homebuilding, you are
hurting. For this group, recession is real and
personal.
But most of
us make our livings in other
ways. And if you didn’t buy a house in
the
last few years and get into one of those strange
loans, big deal. You’re still
paying your
mortgage. You are still building value in your home.
No
doubt about it. The problems in real estate and in the
credit markets dealt our economy a blow. Most of us
were a step removed from the epicenter of this
earthquake. We felt a little rumble underfoot, but we
didn’t fall in the crack. The
strength of our
U.S.
economy combined with the growing global economies
served to
absorb these shocks.
The
pick-up in the economy is happening just as the rebate
checks are hitting the
mail. Talk about a windfall. Expect retailers to
benefit from our newfound
wealth. Use
it to pay down our debt? No way. Save it
for a rainy day? Forget about
it. Spend it on necessities?
That’s no fun.
We’re
Americans. We love our cars. We’re fat and happy.
And we have very short-term
memories. By the time the economists figure out what
this bump in the
road was, we’ll be on to the next thing.
Nancy Lottridge Anderson,
Ph.D., CFA, is President of New Perspectives, Inc.,
in
Ridgeland, 601-991-3158.
She is also an Associate Professor of Finance
at Mississippi College. Her e-mail address is nanderson@newper.com,
and her
website is www.newper.com.
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That middle
ground looks pretty good when it comes to politics
By Nancy
Anderson, CFA
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Published
in the Mississippi Business Journal, January,
2008
I’ve always been interested in politics.
As
soon as I turned 18, I registered to vote.
I shook Gerald Ford’s hand at a rally in
Gulfport
as he came through on a campaign stop.
My friend got the chance to meet an unknown
candidate, Jimmy Carter, and couldn’t say enough
good about him. More
than 30 years ago, I attended a barbeque/rally for
Trent Lott on Highway 49, north of Gulfport.
Lott, a
Coast native, was running for Congress, and we were
delighted to see a fresh face on the ticket.
I can attest to the fact that his hair hasn’t
changed a bit in that time.
Years
later, my interest has turned to cynicism.
All the news media are trooping to
rural
Iowa and who-knows-where,
New Hampshire, and we Mississippi
voters are forgotten.
Fred Thompson and Barack Obama made quick runs
through the state recently, but I only heard about it
after the fact. Nobody
seems to care what we think.
The pollsters have already determined the
mindset of the Mississippi electorate. It’s
a foregone conclusion, and, so, we are written off.
How
great would it be to meet all the candidates, to ask
them YOUR question,
to see them face-to face, to check
out their hairlines?
Why is it that only a few
choice states get
that opportunity?
Then,
I hear the news. Oxford, Mississippi,
will be the site of the first Presidential debate.
How exciting!
Finally, the world will be coming to Mississippi. We’ll
get to meet the final two candidates, talk to them,
watch them interact with the crowd. But, wait.
I’m an independent.
I don’t vote along strict party lines.
I don’t attend party meetings.
My political bashing cuts both ways.
I don’t stand a chance in… well, you know.
I
don’t feel like I’m part of the process.
Between pollsters, marketers, and the party
faithful, it’s a done deal before the polls even
open. This
is democracy?
So
my Coast connection, Trent Lott, retires.
And the battle begins.
The Governor appoints Roger Wicker to the
position, and I think great.
He was born in Pontotoc and lives in the Tupelo
area. Thad
Cochran was born in Pontotoc and lives in Jackson. The
people of the Coast, who suffered so much and are
struggling still,
have lost representation.
I’m sure Wicker is a nice guy, but is this
democracy?
Now,
the two parties are fighting over the date of the
election for this post.
They are threatening court action, and both
sides are bowing up.
Mind you, neither side really cares what you,
the people of
Mississippi, want. They
only want to score one for
their party.
Forget
about spreading democracy around the globe.
How about bringing it
BACK to the good old U.S.
of A.? With
all the technology at our fingertips, isn’t there a
better way to do this?
A way that makes candidates more accessible?
A way that makes political races about issues
and not about money spent on marketing?
A way that makes it easier for citizens to
express their opinions?
Just
when I find myself sinking back into the pits of
cynicism over the state of our political process, I
remember the words of my Economics professor, Dr.
Becky Campbell. With
all her graphs and charts, she explained that
elections are
determined by the median voter.
Not the average voter, but the median voter.
The one in the middle.
Hey, that’s me!
So,
ignore me all you national candidates.
Thumb your nose at me all you media pundits.
Pass me over Governor Barbour, and forget about
me Attorney General Hood. Exclude me from your focus groups.
Bar me from the debate.
Count me out of the process.
When all is said and done, I WILL cast the
deciding vote.
Suddenly,
I’m feeling like I’m 18 again.
I’m heading to the harbor to throw some tea
in the water. Now,
that’s democracy.
Nancy Lottridge Anderson,
CFA, is President of New Perspectives, Inc., in
Ridgeland, 601-991-3158.
Her e-mail address is nanderson@newper.com, and her website is www.newper.com.
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Real estate at
the local level
By Nancy
Anderson, CFA
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Published
in the Mississippi Business Journal, November,
2007
We have our house on the market.
Every morning, I run around clearing away dishes, making beds, and straightening magazines.
We put the sign up in July.
By August, the real estate bubble was bursting
spectacularly. Lookers
dried up to a trickle.
The listings in our price range on the MLS site
turned into a flood.
We found ourselves swimming upstream.
The
national news has been full of stories of real estate
woes. From ever-rising delinquency rates to ever-declining
prices, you can’t escape it.
It’s been the story of the day for the last
three months. While
I don’t deny the problems, it appears that the
constant hounding about housing has caused the story
to be seared into consumers’ brains.
Whisper these two words on the street—“real
estate”—and onlookers will moan and clear a path
around you. Real
estate—bad.
A
recent Wall
Street Journal article looked at delinquencies and
pricing nationwide.
I was surprised by their findings.
Yes,
delinquency rates have increased, but they’re still
low. Nationally,
the average rate is 3.15%.
The real estate market peaked in the last
quarter of 2005. The
current delinquency rate is 1.12% higher than the
peak. At
the market peak, the median home price stood at
$225,450. In
August, that stood at $224,400 and dropped to
$220,040, at the time of this article.
A day after the article ran, WSJ printed another story showing the median price in
September had fallen to $211,700.
For the first time in a long time, we are
seeing declining values in real estate, but it’s
difficult to dissect the statistics to see what is
really going on.
Anyone
with a house on the market can tell you it’s tough
out there right now.
Owners are slashing prices, in hopes of
drumming up interest.
Existing home sales
fell 8% in September.
Is this because of the problems in the credit
market, or is it because of everything we hear on the
nightly news?
Median
home prices, which have held nicely, have suddenly
taken a big dip. Were
the steady rises in prices due to increased
inventories on the high-end side, or were we still
seeing price appreciation?
Is the recent drop due to bigger price
decreases on expensive homes, or is the drop being
felt across the board?
Are we still experiencing a correction in the
real estate market, or are we seeing overreaction by
investors?
Of
course, any good real estate agent will tell you that
all real estate is local.
National averages don’t give us an accurate
picture of problems in individual areas of the
country. So,
where is it the worst?
Parts
of
California,
Florida, and
Michigan
seem to be the hardest hit.
Merced,
California, has a delinquency rate of 8.08%.
That’s more than 6%
higher than the market
peak. Their
median home price has fallen over 10%, but it still
sits at a lofty $330,211.
Of the metropolitan areas reporting, only a
handful have seen declines of 10% or more, and most of
these have above average median home prices, meaning
they had above average price appreciation in the last
few years.
And
who is faring the best?
Albuquerque,
New Mexico, had an increase of over 16% in prices since
the peak
in 2005 and a delinquency rate of only 2.64%.
Seattle
saw prices rise over 20%, in the same time period, and
reported a delinquency rate of 1.55%. Trenton,
New Jersey’s prices rose almost 20%.
Boise,
Idaho, had an increase of 25%.
Most of the price increases came in the Western
states, sans
California
and
Nevada, but there are increases in many areas of the
country. Real
estate is still a good investment.
And
what about our area?
While
Hurricane Katrina caused prices to increase in
Gulfport
by 8%, prices
in
Mobile,
Alabama, fell 1.3%.
Gulfport’s delinquency rate is below the national average at
3.35% and has declined since the market peak.
Memphis
has one of the highest delinquency rates in the
country at 5.51%, and their prices have
fallen 2.6%.
But,
let’s get even more local… the Metro Jackson area
has a delinquency rate of 4.49%.
We are above average, and this number has
increased 1.62% since 2005.
More people in our area are delinquent on their
loans and are facing possible foreclosure.
While this is something to take note of, the
rate is still, relative to the entire mortgage market,
quite small. Of
every 100 mortgage holders, less than 5 are in danger
of losing their homes.
(If you’re one of those 5, knowing these statistics don’t help.)
More
important to homeowners, our median home price has
risen 1.9% since
the market peak.
While our homes are not appreciating at the
lofty levels seen in
some markets, we are still seeing
steady increases, even though most people are
thinking
“real estate—bad.”
For
many people, their house is their biggest investment.
More than that,
it’s the place they call
home. Being
a homeowner is still a good move, but this recent
downturn in real estate has taught us valuable
lessons. Treat
the purchase of a home as a long-term investment.
Buy only as much house as you can afford on a
fixed-rate mortgage.
Don’t expect returns beyond the 3 to 5% range
each year. Buy
the house that will be your home.
I’m
feeling better about that real estate sign in my yard,
after examining the
real statistics.
I still don’t expect to have an offer in hand
by the end of the week.
Buyers are scarce, and they’re nervous.
We may have to wait for things to calm down and
get back to normal.
Back
to normal in real estate is a good thing.
It means steady price increases
and a stable,
not overheated, market.
I can wait.
Nancy
Lottridge Anderson, CFA, is President of New
Perspectives, Inc., in Ridgeland, 601-991-3158.
Her e-mail address is nanderson@newper.com,
and her website is www.newper.com.
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Am I the only one
dreaming about customer service?
By Nancy
Anderson, CFA
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Published
in the Mississippi Business Journal, September,
2007
I had a dream. I
dreamed I placed a customer service call to Corporate
America. After
only one ring, a pleasant voice answered the phone.
The representative listened attentively to my
complaint, then quickly set about resolving the
problem. Within
five minutes, the issue was solved.
I hung up the phone with a smile on my face and
a decision to drop her boss a nice note.
Then
I woke up. And
I was still on hold with the utility company.
These
days, most of my waking hours are spent on the phone,
trying to fix some small problem that should only take
a few minutes. I’m
tired of going through ten menus to get to a real
person. I’m
weary of being treated like my business doesn’t
matter. I’m
exhausted by having to tell my tale three times to get
anyone moving.
What
happened to customer service?
No
business is immune to errors.
Accidents happen.
Mistakes are made.
The real hallmark of a good business is one
that deals well with its problems.
I
keep a quote from Abraham Lincoln on my desk.
“How many legs does a dog have if you call
the tail a leg? Four.
Calling a tail a leg doesn’t make it a
leg.”
The
first rule in good business dealings is to own up to
the mistake. Come
clean. Tell
your customer you’ve make a mistake.
Do the mea culpa.
Don’t try to blame someone else for the
error. And,
for goodness sake, don’t blame the customer (even if
they have some part in it).
Most people are understanding and forgiving, as
long as the errors aren’t a habit.
You can take some of the wind out of their
outrage by simply saying, “We blew it.”
Next,
don’t just make it good.
Go above and beyond to make them happy, even if
it costs you in the short run.
A recent Fortune
article talks about companies who understand this
concept. One
such business is a hair salon in
Cleveland
,
Ohio
. When a
customer’s suit was stained during a hair coloring,
the owner sent her a check for $385 to replace the
suit, no questions asked.
In addition, he offered her a free facial and
pedicure. This
owner turned a potential problem into a loyal
customer.
Another
company, literally, uses humble pie.
When they’ve made a mistake, they deliver an
apple pie to the door of the customer with an attached
apology note. The
company has $10 million in sales and has spent around
$1300 on pie—a good return on their money.
Experts
say that bad customer service can cost you business.
On average, the customer who has received good
service will tell five other people, but the one who
had a bad experience will tell ten.
In this age of the internet, this number may be
much higher, if they decide to send out a mass e-mail
or write in their blog about their experience.
Diffusing
a situation may be as simple as offering a discount or
sending out a small token of apology.
If you think you will come out better by
letting the customer walk out the door mad, think
again. This
can come back to haunt you.
I
learned something from a former boss many years ago
that has served me well.
He said, “Treat your customer the same way
when he walks out the door as when he first comes in,
because you never know.”
That customer may come back in your door at a
later date. Or
they may speak well of you to someone else.
Or you just may be happy that they don’t take
out a full page ad listing your faults.
In business, it pays to suck it up and be nice.
But
good customer service is more than just addressing
problems. It’s
learning how to treat your customers well on a regular
basis. That
means trying to put yourself in their shoes.
When your customer calls in, is it easy to get
someone on the phone, or are they frustrated by a
series of recorded messages?
Do you call them back in a timely manner?
Can your customer find your physical location
without being inconvenienced?
Is your website easy to navigate?
Are your mail-outs readable?
Do you make it difficult for customers to
return items?
This
is the harder part of offering good customer service.
Often, we get into a rut and don’t realize
we’re making it difficult for our customers.
It’s important to listen to customer concerns
and complaints and then, do something about them.
Sometimes, you need to ask customers about your
service. You
can send out a survey or simply ask them each time you
see them. Even
if they end up saying they’re happy, at least they
know you’re interested in making improvements.
Any
business owner knows that it’s tough out there.
The competition is always nipping at your
heels. You
may be limited when it comes to competing on price or
product offering, but you’re never limited when it
comes to competing on customer service.
In fact, for a small business, it’s the one
ace in the hole.
So,
as you dream of a Corporate America that actually pays
attention to you, apply principles of good customer
service to your own business.
When you treat people WELL, it will always come
back to haunt you!
Nancy Lottridge Anderson, CFA, is President of
New Perspectives, Inc., in Ridgeland, 601-991-3158.
Her e-mail address is nanderson@newper.com,
and her website is www.newper.com.
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New
Perspectives, Inc.
A fee-only
financial advisor.
1.00% of
assets or $150 per hour.
Nancy
Lottridge Anderson, CFA
601-991-3158
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