How long do people generally keep their New Year’s resolutions? Information on the subject is variable and non-scientific, but around my house, thirteen days is about average, so this seemed like a good time for an article such as this one. The reason resolutions are so hard to keep is we so often resolve not to do certain things: smoke, drink, eat an entire pizza at one sitting, etc., so we only have to blow it once before we have, in effect, blown the whole year. Or at least that’s what we tell ourselves, since that means we can go back to doing what we like.
The ideas I’m putting out there today are things you only have to do until they’re done. After that, you can go back to whatever things (laudable things, I’ve no doubt) that you were doing before. And of course, I don’t know that any of these apply to you, specifically. I only know that they apply to us, statistically.
Let’s start with a couple of pretty easy ones, and work up from there.
1) Analyze your portfolio
Things go from good to bad by way of many small improvements. So it is with the little tweaks we make, here and there, to our portfolios. Each may be understandable, wise, and even right in its way, but over time, they can leave us heavily overweight in particular sectors. This became a very big issue for a great many investors in 2014 and 2015 when they discovered themselves over-invested in energy. It was easy to understand how this happened, as for several years prior to the oil crash, energy stocks had been among the market’s most consistent, and of course, among those with the highest dividend yields.
Every trading platform has some tool for rudimentary portfolio analysis: if you trade online, check the site, and if you trade through a broker, ask your broker. Having performed this service myself a few times, I almost can’t overstate the percentage of large portfolios that are at risk. Why? Because life happens: stocks go up and down, our confidence in them, too, goes up and down, retirement accounts from old jobs get rolled into our IRAs, and we need money, at times, for houses, education, new business ventures… In short, over time we subject our portfolios to many small improvements.
And yes, this really, actually matters, not just in theory. Here’s why.
Someone is thinking
Someone somewhere is thinking—“Fine, but this doesn’t really matter. If you get your portfolio perfectly balanced, it’s just as likely to do worse, not better, as a result. Having a balanced portfolio just means that your total returns will be about the same as the broader market’s. It’s a formula for averageness!”
Ah, but I’m not suggesting that you need to be equally distributed in all sectors or investment types—go with what you like, if you like! It’s the actual glitches, the unforced errors, that you need to find and fix.
Here’s an example that I actually encountered, more than 20 years ago. In order to reduce risk, a client of mine sold about 30% of his stock and used the proceeds to buy bonds. He bought relatively conservative bonds, yielding quite a bit less than he would have liked. And yet, he put all his bond money into a single offering from a single company. As it happens, that company was TCI Cable which, while solid looking on paper, was actually thoroughly unpredictable as it suffered frequently from incessant financial rejiggering by its wildly ambitious billionaire founder/CEO, John Malone. The company almost doesn’t matter, though. Any company can suffer unexpected financial problems, and if TCI suffered them at the wrong time, my client’s bond money—his safe money, he thought—could have taken a huge hit, or even a total loss. It was a high-risk, low-reward strategy: a mistake.
2) Check your bills
In roughly 25 years of bill paying, I have on many occasions caught companies overcharging me—overcharging me significantly and overcharging me every month. I don’t remember the exact number of times; it may be as high as ten, but I’ll say eight, just to make sure I’m estimating conservatively. These were not fly-by-night outfits, mind you, but big public companies, and don’t worry, I’ll be naming the names.
But first… if this has happened to me eight times in twenty-five years, then it happens to me about once every three years, and unless you have managed to find more honest companies than I, it probably happens about the same amount to you. So do yourself a favor and gather up all your bills into a pile and go through them line by line. Yes, I know, some of you go through every bill line by line every month, but for the rest of us, the very idea of slogging through all those bills, squinting at the tiny print and puzzling over the incomprehensible legalese, is enough to give us a migraine.
If you need inspiration, consider these stories…
Bill first, dodge questions later
The first several times a company tried to rob me this way, the company was US West, now a part of CenturyLink (CTL). Most Baby Bells were pretty bad in the mid-1990s, but US West was certainly the worst I ever encountered.
Then in the middle, Sprint (S) spent several years charging me $15 per month for living in Virginia and $15 per month for living in New York, though I assure you, I was living in only one of the two. Most companies that send you bills make it their business to know where you live. You would think that by default, and as a function of their billing software, when you give a company a new address, it would overwrite the old one. But apparently Sprint just keeps adding them, charging you for all your old addresses unless you get on the phone and scream at various people for hours and hours and hours.
But the worst, by far, is Comcast (CMCSA). Comcast bills can change inexplicably, as mine has three times in five years. Nothing, however, compares to the mess I eventually sorted out for a friend of mine—let’s call her Diana. When Diana got sick, she wanted to keep her bills down, so she called Comcast and told them she wanted only minimal service for a while as she would be in the hospital for most of the month. She was quoted a lower price, and accepted it. Sadly, when Diana got out of the hospital, she was still sick, and tended to let other people handle things like the cable bill. But after about 13 months, as she became more and more healthy, it seemed to her that she was being overcharged, so she had me check. Rather than reduce her bill to the quoted price, they had added more than $100 per month to her bill, mostly in redundant services. I got Diana reimbursed, but I had to threaten to take it to the Supreme Court first.
For way too many companies, it’s bill first, and dodge questions later.
3) Ask for a raise
Corporate profits are at an all time high, yet wage growth has been slow ever since the financial crash of 2008. Now, for the first time, there is evidence that some real wage pressure is finally coming. Most people will tell you to ask for a raise when and if you think you have earned one. I agree with that, but I would add that you almost certainly have, particularly if you work for a large company, as large companies are where most of the profits in this recovery seem to be going. Furthermore, they are very likely about to get a boost from a corporate tax cut. You, as an employee, have every right to consider it an insult if that money goes to share repurchases instead of, in appropriate proportion, to you.
It follows as night from day that corporate earnings cannot rise much from where they are now unless workers/consumers have more money to spend. Hence, if wages do not rise, the US economy will not improve. So I contend that asking for a raise is actually your patriotic duty.
There is one unfortunate problem. Any realistic appraisal of the economic landscape must acknowledge that the civilian Labor Force Participation Rate has fallen dramatically in the last ten years from 66% to 62% and change. With so many workers on the sideline, many employees are afraid that if they ask for more money, they will simply be replaced.
This fear is overblown, as you are only actively competing against that portion of the workforce that is looking for a job, and that is measured by the unemployment rate, which is now a low 4.7%. If for whatever reason you still aren’t confident enough to ask for a raise, go on to the next page to see exactly what you need to do. Chances are good, you already know.
4) Make some inquiries…
Being coy is usually not my thing. The reason for this vague entry is that I’m being discreet. Why? I’m modeling, because discreet is exactly what you are going to have to be if you look for a new job while still working an old one, and this is something you will need to do at some point if you are being at all serious about your career. Everyone tells you not to quit your job unless you have another lined up, but few people want to dwell on the fact that this will mean acting, if not deceptively, then at least surreptitiously with regard to your employer.
True story: once, while looking for a new job, I came across the ad my employer was running to hire my replacement. The lesson there is that if you aren’t particularly happy with your employer, there’s a pretty good chance that your employer isn’t happy with you either.
Finding a job is a lot of work. Sometimes it can be a full time job, and a full time job that can go on for months, so it’s understandable that when we are already working, we would rather keep our free time free, but unless you make these inquiries, you could easily be unaware of just how valuable you are in the workplace.
Need some inspiration? If you are reluctant to ask for a raise on the merits of your work alone, imagine how confident you’ll be as you walk into your boss’s office with another offer under your belt. You’ll be ten feet tall and bullet-proof.
5) Start your project
Everyone has ideas for a project or projects. (Project meaning anything big, challenging, and potentially life-changing.) Some of us have a novel (or four) deep in the recesses of our computer, but for others, it could be a business they want to start, a language they want to learn, or an instrument they want to learn to play.
Whatever it is, do it. Don’t just start it, but work on it, and work on it a lot. Make working on the project the thing that defines you, at least for a while. By the end of 2017, try to be far enough along that turning back is no longer an option. Why should you do this today? Because today is all you have, along with some chance—high, but not 100%—of a tomorrow.