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June 5, 2012
No Shortage of Irrational Decisions

CHICAGO — Why supposedly rational humans make so many irrational decisions

CHICAGO — In all of the animal kingdom, only we humans have the ability to employ reasoning in a way that allows us to reach rational decisions. Why is it, then, that we seem to misuse that ability so often, especially in important areas such as money matters?

In coining the phrase “irrational exuberance” more than 15 years ago, former Federal Reserve Board Chairman Alan Greenspan was thought to be warning us that the stock market was irrationally overvalued. As it turns out, his comment may have presaged a new field of study called behavioral economics—a new science that makes an effort to determine why supposedly rational humans make so many irrational decisions.

When it comes to how we handle our money, there’s no shortage of irrational decisions. Consider the person who drives five miles to save three cents per gallon of gasoline, or the investor who consistently buys stocks at their highs and then panics when the market goes down and sells them at their lows.

March 6, 2012
Brokerage Services Brush-Up

CHICAGO — It’s important to know the difference between full-service and discount brokers

CHICAGO — If you’re one of the millions of Americans who own stocks and bonds, it’s a good bet that you maintain those investments in a brokerage account. Keeping physical possession of stock or bond certificates in this digital age makes about as much sense as stuffing cash under the mattress.

But opening a brokerage account was only your first decision. These days, you must also decide whether to go with a so-called full-service broker or a discount broker, and it’s important to understand the difference.

Discount brokers such as TD Ameritrade, E*TRADE, Charles Schwab and others typically charge between $2 and $20 for individual online trades; full-service brokers such as Merrill Lynch, Morgan Stanley and others charge as much as 10 to 15 times that much. While competition has caused many full-service brokers to reduce commissions lately, on average, you'll still pay $100-$150 for an average trade done through the typical full-service (translation: full-price) broker. And it doesn’t stop there.

August 3, 2011
Industry Observations: Don’t Sell Out Yet

PEMBROKE, Mass. — I meet lots of drycleaners who are looking to sell. There’s nothing wrong with that, but there is a time to sell and a time not to sell. This is a time not to sell. Wait a few years, and it should be a better market. You might even double your price if you wait. Here’s why.

The current economic situation is quite tenuous. Now, nobody is ever really sure what’s going on, but the last few years have been particularly iffy. In 2008, the economy almost collapsed. We have not experienced such a crisis since the Great Depression. Government tinkering averted a complete meltdown, but the fear of that almost-catastrophe lingers.

The economic situation is looking up. Major companies such as Microsoft, Intel and Exxon have billions in their tills. The stock market has recovered, and the future looks promising. If you’d invested $100,000 in the market at the depth of the recession, you might have $140,000 now.

December 25, 2009
Phase-Out Strategies (Part 2 of 2)

Many plant owners are starting to plan for retirement, or at least winding down on responsibilities. Because this brings up a host of challenges, it’s never too soon to start the process.

Part 1 of this story discussed initial considerations for making the transition, along with all-cash sales and buyouts. Another type of transition is the earnout.

THE EARNOUT

December 18, 2009
Phase-Out Strategies (Part 1 of 2)

Many plant owners are starting to plan for retirement, or at least winding down on responsibilities. Because this brings up a host of challenges, it’s never too soon to start the process.

Some owners choose to continue as always, and then, on a given day, sell out all at once. For others, it makes more sense to phase out gradually. Whatever choice you make, the day will come when it’s necessary for you to make your exit. To ensure a well-coordinated departure, it’s necessary to develop an exit strategy, and the sooner you start, the better.

July 23, 2008
Sales Down? Stay the Course

Oh no! Sales are way down this week! Sales were down last week, too! You should probably issue some coupons right away, since customers are getting tight with their money and aren’t spending it on drycleaning.

Have you felt this pang of anxiety over a few weeks or a month in which sales didn’t meet expectations? You have a deep-seated need to take action — any action — to stem the tide, communicate with customers, lower prices, increase discounting or something.