Monday, February 13, 2012
Saturday, January 7, 2012
College Costs
Here is an interesting article about college costs from the Detroit News written by Mike Wilkinson.
DECEMBER 30, 2011 AT 3:02 PM
Michigan feels strain of college costs
Analysis shows tuition in state is among the nation's most expensive
Declining state aid and rising costs have made getting a top-notch education in Michigan among the most expensive in the country, gobbling up parents' savings and saddling graduates with tuition bills that typically are far higher than their peers across the country, according to a Detroit News analysis of national education statistics.
At the University of Michigan, one year's tuition is now equal to more than 26 percent of the state's median household income — more than double what it is in Florida. In 2010-11, U-M's in-state tuition and fees hit nearly $11,837, according to the National Center for Education Statistics; the University of Florida charged state residents $5,044, or just 11 percent of median household income.
Even though state and business leaders continue to preach the need for a highly skilled, well-educated work force to ensure Michigan adapts to a move away from manufacturing in the wake of the devastating recession, the impact of the economic downturn continues to resonate.
As other states poured billions more into their university systems over the last decade, Michigan was forced to cut $300 million.
The result was tuition bills whose growth far outstripped inflation. And it's not just at U-M, which is among the most selective public universities in the country. Both Michigan State and Michigan Tech are among the most expensive public schools in the United States.
"The route we're going is not sustainable," said Michael Boulus, executive director of the Presidents Council State Universities of Michigan, an advocacy group for the 15 public colleges and universities in the state.
A number of states — including Virginia, Texas, North Carolina, California and Florida — have highly selective schools. Among those, the Ann Arbor school's in-state tuition is nearly 20 percent higher.
It's not just Southern universities that are cheaper: The most selective big public schools in New York, Ohio, Illinois and Wisconsin are all charging substantially lower tuition.
Fears over affordability prompted Mary Sue Coleman, president of the University of Michigan, to write a letter recently to President Barack Obama. She lamented the cuts in state funding and the state's dismal higher education funding ranking (38th). Despite $235 million in cuts over the last eight years, UM has been forced to raise tuition. She called for a national conversation on higher education.
"To meet the myriad needs of students and society, we absolutely must find ways to provide a college education at a cost that is sustainable," she wrote.
It's an issue Coleman has addressed with state leaders as well. In her most recent budget letter to the state budget director, Coleman wrote that the state's future depends on higher education. "We are managing our resources strategically so that we can maintain the ability of the University to contribute to the vitality of our region, and the nation," she wrote. "The state's continued and expanded investment in our success is central to our collective future."
A goal of stability
Gov. Rick Snyder, who earned three degrees from the University of Michigan, has made education a priority. But he has been faced with an unrelenting budget that required "tough" cuts — including millions in higher ed — to reduce a $1.5 billion deficit.
His goal is to bring stability to the state's finances that will allow for "strategic" investments that reward success, spokeswoman Sara Wurfel said. Schools that kept tuition increases low got more money, for instance.
"Gov. Snyder absolutely believes that education — from early childhood through K-12 and onto career or higher education — is one of the longer term keys to reinventing Michigan's economy and positioning the state for success," Wurfel said. "But it's also simply not just about more money. It's about achieving the best outcomes and results possible."
Advocates fear the rising costs are putting the greatest pressure on middle-income and upper-middle income families who don't qualify for need-based aid. It's burdening families and graduates with debt that may have some questioning whether a college degree is worth it.
"People are stretching and borrowing just to get in," said Doug Rothwell, president and CEO of Business Leaders for Michigan, which works on policies to improve the state's economy.
Leaders at the University of California's Berkeley campus — one of the nation's best public schools — announced this month that it will spend more than $10 million a year, raised privately, to help families making as much as $140,000 a year who are unable to get need-based assistance.
Ray Kuczwara owns a shoe store in Marquette and his son, Russell, is a computer engineering sophomore at U-M. Russell, who participated in a recent rally in Ann Arbor protesting the high cost of tuition, qualified for substantial scholarships and will still graduate with more than $20,000 in debt.
Ray Kuczwara said people in Michigan have to realize that parks, roads and schools cost money and it may require more to maintain what the state has.
"I think you've got to pay for what's there if you want a good standard of living and good schools," he said. "It's not free."
Despite its higher cost, Michigan is blessed with a high-quality university network that competes with any state, Rothwell said. But "you risk eroding that … if you're not careful," he said.
Rising costs could lead to a dip in qualified graduates, or force the top students to chose based on price, not quality. For a state that needs thousands more college graduates as its economy shifts, neither option would help, Rothwell said.
"You're going to force more kids to go to other schools or out of state," he said.
Cuts continue
While state leaders continue to say how important higher education is to Michigan's future, they've been shackled by plummeting tax revenues that forced a seismic shift in how a public university education is funded: Once contributing 75 percent of university revenues, the state's share is now below one-quarter.
Meanwhile, Sun Belt and Western states are pouring millions into their education systems — even fellow Rust Belt states Wisconsin and Ohio are keeping costs lower at comparable universities.
For states offering lower-cost educations, the quality of their university systems are magnets for development. In North Carolina, poised to pass Michigan in population in the next decade, the University of North Carolina system is high quality and relatively low-cost. At its school in Chapel Hill, tuition in 2010-11 was still below $7,000 a year.
"It goes beyond the existing work force," North Carolina Gov. Bev Perdue told a group of CEOs in April. "If you're going to invest hundreds of millions of dollars, or a billion dollars (on a new facility), you're looking for a long term, not a guarantee, but a commitment that you're going to have several generations' worth of really qualified workers."
It's a sentiment expressed countless times by former Gov. Jennifer Granholm and Snyder: The state needs to invest in education to produce workers who are attractive to employers. Yet the cuts have continued; the state slashed the higher ed budget by 15 percent this year.
"We've gone to shared sacrifice for about a decade," Boulus said. "It's time to move to shared commitment."
Tuesday, October 25, 2011
BP Confident of Turnaround
By GUY CHAZAN
LONDON—BP PLC shares jumped 4% Tuesday as Chief Executive Bob Dudley said the company had reached a "turning point" in its efforts to rebound from last year's Deepwater Horizon crisis, though some quickly said his declaration was premature.
Mr. Dudley was speaking as BP reported a third-quarter profit of $5.3 billion, down 4% on a year-to-year basis but still slightly higher than most analysts had forecast. In announcing the results, Mr. Dudley said BP, with last year's Gulf of Mexico debacle receding, now enjoys a rosier future of higher production and strong cash-flow growth.
Track the performances of 150 companies as they report and compare their results with analysts' estimates. Sort by date and industry.
![[earningspr2]](http://si.wsj.net/public/resources/images/OB-NP072_earnin_D_20110421084109.jpg)
The results come on the heels of a $4 billion settlement with one of its partners in the blown-out well that caused last year's spill and amid signs that it might soon be able to resume drilling in the Gulf.
Mr. Dudley also said BP would sell $15 billion in assets by the end of 2013, on top of the $30 billion divestment program it announced last year. That includes the two big U.S. refineries it announced it was selling earlier this year.
But there was some skepticism that BP has truly turned a corner. "I think they're overplaying it," said Peter Hutton, an analyst at RBC Capital Markets. He said a real inflection point would be news that the company had won its first permit to drill for oil in the Gulf of Mexico, after months of frustrating delays.
BP insists it is on the road to recovery from last year's Deepwater Horizon disaster, caused when a drilling rig it was leasing in the Gulf exploded, killing 11 men and triggering the worst offshore oil spill in U.S. history. BP has estimated it may cost as much as $40 billion to pay for the spill, including the clean-up and penalties. A slew of spill-related civil litigation is pending in a federal court in New Orleans.
To repair its battered reputation, the company has put a focus on safety and launched a wide-ranging program of maintenance and repairs at 48 of its facilities.
But the overhauls put a lot of its fields out of action. That, coupled with the delays in BP's return to the Gulf of Mexico and the effect of asset sales, has led to a big drop in production: it fell 12% in the third quarter. That meant BP was less able than peers such as Royal Dutch Shell PLC and Chevron Corp to benefit from high oil prices, which soared this year owing to unrest in North Africa.
Concerns about output have weighed on BP's share price, which is still nearly a third lower than it was before the Deepwater Horizon crisis. Some investors have called for drastic action, such as a break-up of the company.
But Mr. Dudley insisted Tuesday that the company is at a turning point. "The low point in production has now been passed," he said. "Most of the big turnarounds this year are complete and production is rising again." However, he also said that BP wanted to get off the "treadmill" of constantly having to report higher production volumes. "We're going to focus on value rather than volume," he said.
Investors, however, are still eager for more concrete proof that BP can stop the slide in production. In particular, they want it to resume operations in the Gulf of Mexico, an area that accounted for a huge chunk of BP's output before Deepwater Horizon and is a source of much of its future growth. "We really need to see them drilling again in the Gulf before we can get sanguine about production," said Jason Gammel, an analyst at Macquarie Research.
That value will come from concentrating on high-margin barrels—oil fields that yield fat profits in places like the North Sea, the Gulf of Mexico and Angola. He predicted that by 2014 BP's operating cash flow will have increased by 50% compared to 2011. Half of the increase would be invested in oil and gas projects and around half paid out to shareholders in dividends and share buybacks. That raises hopes that BP will increase its dividend next February, possibly restoring it to the level it was before the spill.
On that front, though, the signs are encouraging. Last week, U.S. officials approved BP's first offshore-oil-exploration plan since last year's disaster. Mr. Dudley said that BP hopes to have five deep-water drilling rigs operating in the Gulf by the end of the year, increasing to seven in 2012.
Another reason for the greater optimism in BP is the long sequence of official reports into the accident that it says bolster its view that it wasn't solely to blame for the blowout. Another big success for BP was when Anadarko Petroleum Co., one of its partners in the Macondo well, agreed to settle with it earlier this month. Analysts say the likelihood that BP will be accused of gross negligence—an outcome that could leave it exposed to massive fines and penalties—is receding.
BP said its clean-replacement-cost profit, a keenly watched figure that strips out gains or losses from inventories and other non-operating items, fell 3.6% for the period to $5.33 billion, compared with $5.53 billion for the third quarter of 2010.
Fromt the Wall Street Journal.
Friday, October 21, 2011
Asia Job Outlook
Malaysia, Indonesia,Thailand the New Frontiers of Asia
Written by Kyle Stock
China and India have long been called the "Wild West" of contemporary business and lands of unlimited upside. People forget that in the original Wild West, every yahoo with a pick-axe and a gold pan showed up.
In Asia today, the savviest finance professionals are looking further afield, prospecting in a rash of smaller markets benefitting from the boom of bigger neighbors, but lacking the bustle.
"There's clearly an acknowledgment that this is where the growth is," said David Webbe, the head of Southeast Asia for recruiting giant Korn/Ferry. "And a good banker wants to exercise their skills in a market that is dynamic and will reward them."
In recent months, Webbe's team has been on the hunt for commodities and currency traders, capital markets professionals and consumer bankers, among others.
While China and India keep growing, they have pulled surrounding countries along in their tracks. Labor markets are strengthening all over these tiny markets. Consider, for example, the unemployment rate in Thailand: 0.42% (yes, the decimal point is in the correct place). Or a new fund launched by HSBC in May dubbed CIVETS. Intending to target the newest and hottest emerging markets in the way the BRIC moniker did; the "I" and "V" stand for Indonesia and Vietnam.
What's more, professionals in many smaller countries often don't have the same level of education, so a degree from the West can open doors quickly.
"People like to hire Asian bankers who have a Western influence," Webbe said. "The perfect balance is a young man or woman who is Singaporean or Indonesian and has been educated in the United States or Australia."
Cartus Corp., a global relocation firm, has seem a big uptick in business in Malaysia, Indonesia and Mongolia among others, said Kenneth Kwek, managing director for the region. Kwek and his team have been lining up housing and language lessons for managers of big global companies who are rotated through Asia on two- to three-year tenures.
"If you look at the economy on a whole, these markets are some of the only places where results are way up," Kwek said.
Below are some basic stats on the emerging emerging markets of Asia:
Indonesia
Credit rating: Ba1
GDP growth since 2008: 17.6%
Personal spending growth since 2008: 15%
Unemployment rate: 7.1%
The engine in Indonesia is human capital. As the fourth-most populous nation, the country is a consumption powerhouse. That isn't lost on Goldman Sachs and Morgan Stanley who are reportedly jockeying to buy Indonesian broker Tiga Pilar Sekuritas. If the deal gets done, look for a tide of wealth-management talent flowing in from the States.
Malaysia
Credit rating: A3
GDP growth since 2008: 8.7%
Personal spending growth since 2008: 13.2%
Unemployment rate: 3.4%
Malaysia now has a bank for every one million or so residents, crowding that has spurred its lenders to look for business all over Asia. The country is also a high-tech hub, an attribute that has won a lot of back-office work from finance firms worldwide.
Philippines
Credit rating: Ba2
GDP growth since 2008: 14.5%
Personal spending growth since 2008: 11.7%
Unemployment rate: 7.2%
The Philippines is another attractive market for wealth managers. Workers around the world consistently send more money back to this island nation than almost any other country. Only India, China and Mexico have more remittances.
Like Malaysia, the Philippines is also a popular hub for back-office bank support.
Thailand
Credit rating: Baa1
GDP growth since 2008: 6.6%
Personal spending growth since 2008: 6.2%
Unemployment rate: .42%
Thai banks are some of the world's most resilient, according to a recent Deutsche Bank report. As if to buttress that claim, Bank of Thailand Governor Prasarn Trairatvorakul recently said his country's finance sector would be largely unaffected by the European debt crisis.
Vietnam
Credit rating: B1
GDP growth since 2008: 33.4%
Personal spending growth since 2008: 31.6%
Unemployment rate: 4.4%
Though it has been plagued by inflation, Vietnam is still a manufacturing darling, welcoming assembly lines from Japan and other more affluent areas.
It's also in the process of opening closely held state enterprises to the markets at large. Just a few days ago, the government sold a 15% stake in its Vietcombank to Japan-based Mizuho Financial Group for $567 million. Credit Suisse brokered the deal.
Source: Moody's, Thompson Reuters
Write to FINS at editor@fins.com
Thursday, October 20, 2011
Working the Recruiters
By DENNIS NISHI, from The Wall Street Journal
Laurie Ruettimann does not want to be sent flowers. Ever.
The human-resources professional from Raleigh, N.C., remembers getting an expensive bouquet while working as an in-house corporate recruiter years ago. The arrangement had been sent to her by a hopeful job hunter but the overture actually made her angry.
"Gift giving means that you're somehow indebted, and when you force that on somebody it's inappropriate, even offensive," says Ms. Ruettimann. "I responded like I would with any other candidate. When we didn't move forward with his résumé, I just sent him a note, automated through the system."
Find the recruiters who service your specific niche and try to meet them face-to-face at trade events. Getting an introduction from a colleague is another good way to get in.In the current tight job market, cold calls and gimmicky gestures are the worst ways to approach recruiters—especially if your skills don't exactly match the job. Instead, experts recommend old-fashioned networking as the best way to get onto a recruiter's job-candidate list, but the effort requires more than just a LinkedIn invitation.
But don't launch into a sales pitch upon meeting, says Ms. Ruettimann. Try throwing the recruiter some business. Offer an introduction to somebody within your network who's having a hard time filling a job. The recruiter may return the favor by keeping you in mind for future jobs.
Recruiters prefer working with employed job candidates, so make your connection while you are still employed or immediately after being laid off.
There are exceptions, says Tim Honn, president of Fortis Recruiting Solutions in Lisle, Ill. If you took time off to care for an ill parent, companies will understand that. But it's important to show that you stayed active while unemployed, and this includes pursuing extra career training, consulting or doing volunteer work.
"You never want to give the impression that you're just sitting around and waiting for calls," says Mr. Honn, who also advises job hunters to never omit anything that can be uncovered with a Google search. He recently uncovered résumé inconsistencies while doing reference checks on a job candidate. The omissions killed the job hunter's chances with the company and Mr. Honn.
Be strategic with your job search. Plastering yourself all over the Internet and on every job site and database can make recruiters suspicious, says Ms. Ruettimann. "It makes you look desperate, and recruiters don't want to waste their time if you've already been turned down by a bunch of companies."
—Email: sjdnishi@gmail.comWhy We Can't Let Go of Our Losers
Taking a loss is hard to take. But avoiding a loss can be much worse.
U.S. stocks have lost some $4 trillion since their peak in October 2007, but investors aren't fleeing the market en masse. So far this year, according to investment-research firm Morningstar, investors have taken $14 billion more out of U.S. stock mutual funds and exchange-traded funds than they have added. That is less than 0.4% of the total assets of U.S. stock funds.
Can losing money feel good? Recent experiments show that reward circuits in the brains of investors who have losses will fire intensely whenever money-losing holdings have an uptick in price. Jason Zweig has details on The News Hub.
In other words, while some investors have taken their losses, most are grimly sitting on them.
That could be a mistake. Research published in 1998 by behavioral-finance professor Terrance Odean of the University of California, Berkeley, showed that individual investors are 50% more likely to sell a winning stock than a loser—even though, on average, the stocks these investors sell go on to outperform while those they hold onto underperform.
Why the reluctance to bail? Selling an underwater asset, says Mr. Odean, "isn't primarily about economic loss, it's about emotional loss." Once you sell below your purchase price, he believes, you can no longer tell yourself, "I still made a good choice, and it'll come back."
Individual investors aren't the only ones who can't make peace with their losses, according to numerous academic studies. Mutual-fund managers who cling to losing stocks underperform, by roughly four percentage points annually, the managers who cut their losses.
Christophe Vorlet
While some investors have taken their losses, most are grimly sitting on them.
On average, professional futures traders and stock traders hurt their returns by clinging to their losers. Real-estate investment trusts hang onto properties that are losing money longer than they keep those that are in the black.
Unpublished research presented at the annual meeting of the Society for Neuroeconomics earlier this month sheds new light on this old problem. Neuroeconomics is an emerging field that combines the techniques of neuroscience with theories from psychology and economics to study financial behavior.
In one study, led by Gregory Berns of Emory University, people lay inside a brain scanner while deciding to hold or sell an investment; the price of the asset changed randomly up or down. The researchers focused on the ventral striatum, a region of the brain that has been shown to respond to rewards, particularly when they are unexpected.
When an asset was underwater and its price rose, activity in the ventral striatum of the typical person in the experiment was "blunted," or insignificant, rather than robust. "Many of the participants told us they had hope for a rise," says Andrew Brooks, a co-author of the study. Perhaps because these people got what they expected, an uptick in price "wasn't surprising," Mr. Brooks says, and therefore didn't excite this part of the brain's reward center.
That suggests that many investors who are losing money may automatically assume—rightly or wrongly—that their position is bound to recover.
Other research at the meeting pointed to a second flaw in how investors might think about losses. A study led by Camelia Kuhnen of Northwestern University found that people are much worse at estimating whether a bad investment will produce mild or severe losses than they are at predicting whether a winning investment will generate small or large gains. "Learning [about probabilities] is particularly faulty," Prof. Kuhnen says, "when people are in a bad environment with losses left and right and they have their own money at stake."
There are several steps that can help you dump your losers.
First, get a second opinion, from a financial adviser or an investor you respect, on your money-losing positions. Ask not whether you should sell the investments, but rather if they are worth buying at today's price. If the answer is no, consider selling.
Measure how long you hold your losers and your winners. If you hang onto your money-losing positions much longer than your winners, then put yourself on a regular schedule of looking for losses to harvest. (You don't have to wait until December.)
Taking a loss is easier when you think of it as a swap—in which you replace a loser with a new investment in a similar (but not identical) asset—rather than a sale. That makes taking action easier, since you aren't forced to admit that your original judgment was a complete failure.
Finally, realize that a loser can change from a liability to an asset when you close it out at a loss, since you can use losses to offset up to $3,000 of ordinary income on your tax return.
"Think about the term 'harvesting your losses,'" suggests Meir Statman, a finance professor at Santa Clara University. "That should put you in mind of strolling in an orchard picking ripe peaches rather than rotten losses." Just be sure to check with your accountant to make sure the loss is worth taking.
http://online.wsj.com/video/can-losing-money-feel-good/4AB9017B-0118-43F9-8890-6540ED4A1654.html
From The Wall Street Journal. Written by Jason Zweig
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