A Feast of Financial Leftovers

The day after Thanksgiving is not the only time to have tasty leftovers. (Sometimes they tasted better than the original.) In my financial fridge there are some goodies lurking that didn't make it all the way to prime time in the first pass. So I am going to open them up, lay them out and wish you bon financial appetit!

• Bloomberg Data says that only 5% of stock analysts’ recommendations are to sell stock and even less, 1% of the S&P 500. Lesson: Make sure you have clear criteria in mind for what, when and how much stock you intend to sell before you make any purchase. It will make a world of difference.

• Four out of every five credit reports have errors of some type. Maybe information about someone else with the same name else is included in your report, maybe it's a late-payment report on an account you’ve always paid on time, whatever. Check each of the three credit-reporting agencies: Transunion, Equifax and Experian. You’re entitled to a free report from each of the three credit bureaus once a year and can download them at Annualcreditreport.com. If you find a mistake, write a letter with documentation to the agency(s). By law, they must respond within 30 days. Your credit history plays a role in everything from the rate you’ll pay for credit, to how much you pay for insurance, and a whole lot more. It’s important, stay on top of your reports.

• Insurers love authorizations because it is rationing by inconvenience.

• My estate planner tells me that his biggest problem is that he does not get a complete accounting of the financial circumstances of his clients. Why would they omit this critical information? They forget, they don't understand the ambiguities of valuation, they do not keep their lawyers updated and … they hide things. They shield assets from spouses or the IRS, and even such extreme things as second families with unacknowledged children. (No, Arnold is not the only one.)

• If possible, make your important phone calls in the morning. People are sharper, will pay closer attention and make better decisions. We'd all do better to keep the afternoons for routine things, researchers say.

• When introducing yourself, pronounce your name precisely to give others their best chance at retention.

• Buy stocks late on Monday when there is a slight tendency for the price to dip and sell late on Friday when there is a slight tendency for prices to rise.

• When hiring, hold out for an obvious best candidate. It will be the smartest thing that you ever do in your practice, and one that will also save you from the expensive, difficult and unpleasant task of letting the mediocre hire go.

• On the subject of employees, an excerpt from Dale Carnegie might help: 1) ask questions instead of giving orders; 2) praise in public; and 3) criticize in private, always being specific, focusing upon the effect of what behavior is being criticized and offering the suggested remedy.

• If you are a renter, hoping to save for a down payment to buy a home, test-drive your mortgage first. That is, save the difference between your rent payment and what you might expect to pay on a mortgage you can afford. It will speed your savings and get you used to making the adjustments in your life that might be required to support that mortgage when you’re ready to buy.

• There are two kinds of meetings, ones held for approval and ones held for idea generation. Each works best if they are not combined into one meeting. Start each type of meeting with the stated purpose of the meeting and finish with a summary that states what was said, who's to do what and by when. Oh, and keep in mind that the usefulness of any meeting is inversely proportional to the size of the group.

• Almost every advance in medicine has occurred when someone challenged a rule or a perceived truth to try another approach. And that is in spite of lawyers, not because of them.

• Consumer Reports looked at a group of people who had consulted a financial planner in the prior year and found that they averaged a 62% gain on their investments. Those who had a planner, but had not had contact with that person for more than a year, earned 59%. People without a planner earned 57%. The conclusion was that those who saved the most and invested the funds in tax-advantaged retirement accounts did the best of all, planner or no planner.

• You can train a supervisor. An anecdotal report says that a person gave her chief a piece of candy every time he spoke to her with a positive comment and offered no candy if he was negative. There was an immediate drop in his negative comments. Try it. All it costs is some candy.

• If two portfolios have the same average return, the one with the lower volatility will have the greater cumulative rate of return. That's not observational, it's math. Compare $100,000 in an account that earns 10%, 10%, and 10% over three years, with one that earns 20%, loses 10% and earns 10%. Same average return, different result ($133,100 versus $129,600).

Not money ala king or finance tetrazzini, but pretty tasty, these leftovers. Now when we have the next financial feast, we will also look forward to leftovers again.