Lessons In Career Management, Economics, and Investor Impulse

September
29

Written by: Jon McGraw

Last week offered some lessons in career management, economics, and investor impulse, among other things. Derek Jeter, the well-loved Yankees shortstop, finished the final home game of his career by smacking a game-winning hit. Throughout his last season, ticket prices for Yankees games soared on the secondary market with $16 bleacher seats selling for more than $200. By the end of the season, ticket vendors were asking as much as $11,000 a seat.

On the other coast, Bill Gross, renowned bond guru, did not retire. Gross left the firm he helped found for a smaller money manager. Shares of stock in his new company rose about 43 percent as investors anticipated the potential inflow of new assets. They also anticipated an outflow of assets from his old firm, according to Barron’s, which caused yields on Treasuries and corporate bonds to move higher on Friday, pushing prices south.

Gross’s shifting alliance wasn’t the only thing churning bond markets last week, however. Trepidation about global economic growth and geopolitical matters (e.g., Russia vs. Ukraine, etc.) had investors fleeing to “safe assets” earlier in the week. That pushed Treasury yields lower and prices higher. Barron’s reported:

“Thursday’s markets were all about a flight from risk, in part because of reports of a Russian draft law to confiscate foreign-owned assets in retaliation for Ukraine sanctions. More important is the message from “Dr. Copper,” suggesting weakness globally, whether in faltering Europe or slowing China. All of which suggests it will be an even more “considerable time” until the Federal Reserve raises interest rates.”

Volatility may be the name of the game for a while. Bloomberg suggested looking backward for guidance about the future. In 2013, Fed Chairman Ben Bernanke suggested tapering could begin sooner than expected. Treasury yields leapt by 1 percent as the market threw a “taper tantrum.” Just last week, Chairwoman Janet Yellen warned markets the Federal Open Market Committee statement was not a promise about the timing of rate hikes. Bloomberg said investors remained complacent. Apparently, they weren’t concerned unexpected economic strength in the United States could move the timetable forward.

At the end of the week, the Commerce Department reported economic growth was more robust than originally thought during the second quarter. The economy grew at the fastest rate in more than two years.

Data as of 9/26/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) -1.4% 7.3% 16.7% 19.5% 13.3% 6.0%
10-year Treasury Note (Yield Only) 2.5 NA 2.6 1.9 3.3 4.0
Gold (per ounce) -0.5 1.0 -9.0 -8.8 4.1 11.5
Bloomberg Commodity Index -0.3 -5.2 -6.7 -6.0 -0.8 -2.3
DJ Equity All REIT Total Return Index -1.0 14.0 12.2 16.1 15.4 8.7

Do You Have CEO Characteristics? No, Try Power Posing!

Do you have what it takes? If you’re about 74 inches tall, have a deep voice, and have run a marathon, you may. The Economist’s recent article, Look of a Leader, found, “It is remarkable, in this supposed age of diversity, how many bosses still conform to the stereotype.” The article included a mixture of studies describing the characteristics of chief executive officers (CEOs) and other leaders:

  • 30 percent of Fortune 500 companies’ CEOs are 74 inches or taller (less than 4 percent of Americans are that tall).
  • Voice quality was more important than content when people were asked to evaluate executive speeches.
  • Male CEOs with the deepest voices earn $187,000 more each year, on average.
  • Companies with CEOs who had finished marathons were worth about 5 percent more, on average, than those with CEOs that had not.

Don’t worry. All is not lost. Those who have not been gifted with height, athleticism, and lower voice registers can give themselves a leg up by adopting power poses. Amy Cuddy, a Harvard professor (who delivered an exceptionally popular TED talk in 2012), has found non-verbal expressions of power dominance (body language) can influence other people’s perceptions and our own well-being:

“There’s one very important thing everyone should do before heading into a job interview, giving a big speech, or attempting an athletic feat… Everyone should spend two minutes power posing. What, you ask, is power posing? It is adopting the stances associated with confidence, power, and achievement – chest lifted, head held high, arms either up or propped on the hips.”

These poses can change body chemistry. High-power poses increase levels of testosterone and decrease levels of cortisol (a stress hormone), helping people feel more confident. Low-power poses, on the other hand, increase cortisol levels, causing people to feel more stressed. If you’re after an executive-level position competing with equally qualified candidates, power poses could give you an edge.

It’s Not Too Late – Economist Troy Davig, Kansas City Conversations

If you missed last week’s Kansas City Conversations on The U.S. Economic Outlook presented by Troy Davig, Federal Reserve Bank of Kansas City Senior Vice President and Director of Research, it is not too late “Click Here” to see his informative slide presentation.

Weekly Fun – Think About It

“Your image isn’t your character. Character is what you are as a person.”

–Derek Jeter, New York Yankee’s recently retired shortstop