Tuesday, January 27, 2015

My Career Part 4

By this time in my career, I am in my mid 40's, have attained the exalted level of executive, and have only worked for a few companies, but in a lot of different jobs.  My company, Nortel, has gone through one near-death experience and is just about to start another one.  I am running a fascinating business but cannot seem to get it positioned correctly in Nortel.

4A Getting Beaten by Startups

The mesh networking area in the early 2000's was hot, with a bunch of startups, but our product was pretty good.  Everyone who visited Nortel and got a demonstration (see the photo) loved the product, but our sales were miniscule.  Our R&D, Product Management/Marketing, and Operations team were excellent and I was very proud of the work they did.  We had one big success with a big network in Taipei but then sales stopped.  Meanwhile, our execs thought this would revolutionize the industry but I thought it was a more modest market opportunity.  The startups quickly passed us in sales and I realized that each of them had a small dedicated sales force and my business had to use the Nortel carrier sales force.  Our sales force was paid according to revenue generated and it was a lot easier to generate revenue with our big old products than new inexpensive products like mesh.  Therefore, the sales force loved to use our product as a "dancing bear" demonstration for their customers to demonstrate innovation but then sell them upgrades to digital switches.  Eventually, our product was surpassed and we could see that there was a bigger opportunity in the WIMAX area.

Meanwhile, our CEO was fired over an accusation of bad accounting, the board had hired a "Spanish Inquisition" legal firm to check this out and grill execs and employees, and our reputation was doing downhill.  Executives seemed to come and go at a rapid pace.

4B Transition to WIMAX

As the General Manager, I tried to pivot the Mesh R&D team to WIMAX and ran into all sorts of problems.  Companies are difficult places to work when sales are dropping and layoffs are happening.  Disputes over who designs hardware, who supports mesh, how much money could be spent, who reports to who, etc etc.

In the middle of this, we get a new CEO, Mike Zafirovski, and again there is disagreement over market size.  Is WIMAX a huge multi-billion market for infrastructure or a good few hundred million a year opportunity?  I think the latter and this does not seem to be well received, so I start looking for new opportunities outside Nortel.  At this point in my life and my career I am driven more by interesting work, good colleagues, and a good company than by ambition to climb the corporate ladder.  I think this is fairly common among people as they age, you go from blind ambition to rational measured ambition to satisfaction with your station in corporate life.

Tuesday, January 20, 2015

My Career Part 3

As they used to say on the Rocky and Bullwinkle show, when we last left our intrepid career builder, he was moving to Dallas for the money and opportunities.

3A Hot Hot Hot

Dallas in 1996 was an interesting place - hotter than Hades from a climate and career point of view.
 Telecom was really taking off, particularly wireless and data/internet.  I was the regional product manager for an important Nortel product, the S8000 GSM base station, and the market was booming.  Dallas from a personal point of view was not as great - little scenery, not many cultural things to do, don't honk your horn as everyone has a gun in their car, and a long way from home.  Due to the industry boom and my accomplishments (I assume), I was able to get to the director level and also moved from GSM to CDMA product management.  

Everyone was getting promoted and getting raises due to all the opportunities.  My colleagues and I are all stock option potential millionaires, if the stock stays up for a couple more years.  I cautioned a few of my employees to not jump into risky product areas like fixed wireless access just for the promotion and money.  John Roth, Nortel CEO announces proudly that he has bet the company on optical transmission for the Internet.

3B Dot com Bubble Bursts

Someone finally figured out that the Internet was not doubling in traffic every 6 months and the Dot Com (Telecom) bubble bursts.  Nortel finds out that John Roth really did bet the company and we nearly go bankrupt, our stock drops from about $90 to $0.50.  Lots of executives bail out or are fired as divisions are cut or chopped down to size. Tens of thousands of Nortel employees lose their jobs worldwide, starting with the folks who took risky jobs just for a promotion. Just before the bubble pops, I decided not to take a job in the optical group, which was a lucky break.  Luck has a bigger role in your career than you think - being in the right place at the right time counts for a lot.  Just ask the early employees at Apple, Microsoft, and Google.

A side effect of all the executives bailing out is that new executive opportunities are popping up and I get promoted to VP.  I cycle through jobs as a regional General Manager for GSM and the CTO for Wireless.  Our new CEO, Frank Dunn, is fascinated by a technology being developed in the Nortel wireless labs, which are part of my group.  He makes me the General Manager of Wireless Mesh Networks but someone forgets to tell me that I now report to the Wireline division, I find this out by accident about a month later when I get invited to the Wireline staff meeting.  The story was that Frank thought that the product was so revolutionary that the Wireless group would sabotage it.  I don't know if this is the reason.  My view was that the product was innovative but would not revolutionize the industry (I was right).  The conflict over this disagreement and other factors put me into a pessimistic mood, which did not help my career. The lesson: optimism, even if misplaced, is preferable to well justified pessimism, at least from a career advancement point of view.

Photo credit: FlickrFlickr

Sunday, January 18, 2015

My Career Part 2

In this continuing series, we cover my boring career:

2A Did I Make the Wrong Move?

Immediately upon arriving at my new job at Canada's most revered R&D company, BNR, I get second thoughts about moving back into Engineering.  Are my technical skills good enough?  Why did I spend time getting an MBA?  The section where I work does semiconductors, which is not in the mainstream of the company's telecom business.  Lesson Learned: You need to think clearly before making a radical career change.  However, I find my niche and get promoted to manager in about 2 years and to senior manager in about 2 years more.  Lesson learned: if you work at it and with some luck, even unusual career moves can be successful.

2B  Move to the Mainstream

After a few years in semiconductors, I realize that this is not the mainstream of the company's business (telecom equipment) and the career prospects are very limited.  This was a good lesson learned, but how to get out into the mainstream?  I enlist the help of an executive mentor to get into the wireless business and after about a year with his help, I make the jump to Northern Telecom, the equipment parent company of BNR.  I really believed in the product we were managing, the Companion wireless PBX, and my part of it, the wireless handset.  I quickly learn new skills like how to take a verbal beating in a big meeting, how to charge your drinks to a colleague's room when traveling, and the power of controlling the money.

2C Stuck in a Rut

While I like the work, I spend 8 years as a senior manager as the telecom market is stagnant and there are few opportunities in Ottawa.  I am stuck in a rut from a hierarchy point of view and want to become a director.  After flailing around looking for an opportunity, I am offered two choices: move to Calgary to work on wireless handsets or move to Dallas and work on GSM infrastructure.  Neither is a promotion but both have the possibility to advance.  I choose Dallas as it is monetarily more lucrative, there are more opportunities, and I know the company CEO does not like the handset product line made in Calgary. A big change, from the frigid North of Ottawa to the searing heat of Dallas!

Friday, January 16, 2015

My Career Part 1

In my last job, my colleagues were quite curious about my career, how did I get to that position in my 40 years of working?  If you are interested, I will recap what I told them.

1A Starting Out

In my late teens, I realized that I was more practice than theory driven, so I got an electrical engineering degree in 1979. Like my peers, I thought the ideal job would be designing something, so I took a job that seemed to involve design for the space shuttle.  After 3 weeks backpacking around Europe before starting work, I found out that they did not need people in space shuttle design so I ended up working on magnetic anomaly detectors for anti submarine warfare. First career lesson learned: jobs are rarely what you thought after the interviews. 

Moving around in my company, CAE Electronics, I gained 3 years experience in design, test, managing people, and drinking after work. But I was ambitious, so off to do my MBA at University of Toronto.

1B Business Career?

After finishing my MBA, I interviewed with a lot of companies and wanted to apply my business degree.  Therefore, I took a job with IBM, considered the best company in the world at the time, in their Toronto factory.  During the interview, they said that there were lots of career options in IBM.  It turned out that IBM managed your career for you, each step seemed to be decided for you.  I did not like that, Toronto was a long way from my fiancee in Montreal, and I did not like the pay which was less than I could make as an engineer.  I was 28, ambitious and did not think I was getting ahead fast enough, so I did the unthinkable (at the time) and left IBM for an Engineering job in BNR Ottawa.

Thursday, January 15, 2015

Keep A Bank Cash Stash in Retirement

If you are retired or semi-retired and pay attention to the stock market, I recommend that you keep a stash of cash in the bank, maybe 6 to 12 months of living expenses.

You should theoretically keep all of your assets in a well diversified portfolio, and bank accounts pay very little interest today.  However, if your anxiety level goes up whenever the news is filled with stories of the stock market tanking or the bond market doing something strange, you need to resist the temptation to do something silly.  If you start thinking irrational thoughts like "if I don't get the money out of the market, I could end up as a greeter at Walmart..", you need a bank cash cushion.

If you have cash in the bank for your needs over the next 6 to 12 months, and the rest of your assets in your well diversified portfolio, you will be less anxious.  So you may be able to withstand the temptation to buy gold coins, bury silver in the backyard, or move your money to that guaranteed investment fund run by your neighbor, Charlie D. Cheat, who drives a Ferrari and wears sleeveless muscle shirts.

Photo credit: Flickr

Sunday, January 11, 2015

Are Luxury Watches The Biggest Hustle?

I love luxury watches.  I longingly look in the display cabinets of high end jewelers at Rolex, Zenith, Omega, TAG.  I even own a couple of affordable models.  But my practical side keeps telling me that these watches are the biggest hustle out there.

Do these watches do more than the standard $100 Seiko or Citizen watch?  No.  They tell the date and time and maybe have a stopwatch function.

Are these watches more accurate?  No.  They usually use an automatic movement that winds with the movement of your wrist and need to be adjusted and cleaned.  The average Seiko quartz battery watch will keep more accurate time and the battery will last 5+ years.  Citizen Eco Drive watches will never need a battery as they charge from light and some read the atomic radio signal to give you super-accurate time forever.

Any special features?  No, not really.  Some luxury models have functions to tell you the phase of the moon or a few other functions, but you can get the same info from inexpensive standard watches, and better info from a smartphone.  Advanced $300 "smart watches" will tell you where you are, your heart rate, how many calories you expended, who is calling you, play music, play games..

Are they good investments?  Well, it depends.  A Rolex will retain a lot of its value (60-80%) over a long period of time, and may well appreciate if it becomes rare and collectible, but this is an exception, not the rule.  Other luxury watches will retain some value (30-50%), but they are not investments, they will never earn a positive return.

Do they look good?  Yes, they do.  They are really jewelery and should be considered as such.

Given all these factors, how do I stop this push and pull from my emotional and practical side?

Photo credit: Flickr

Saturday, January 10, 2015

Rejuvenating That Old Laptop With an SSD

If you have an old PC laptop that is slow to start up and slow to open files, but is otherwise fine, you don't have to junk it.  We have a four year old laptop with a 1.3 GHz i3-380M processor that was getting slow.  I expanded the memory to 6GB a few years ago, an inexpensive (under $75) and easy way to speed it up.  However, it was still slow and it would cost about $350-$500 to get an equivalent laptop today and I would have to get used to Windows 8.

So I replaced the 320GB hard drive with a $100 256GB Solid State Drive (SSD) and the performance has improved dramatically.  The replacement took about 20 minutes with a screwdriver to do the replacement and about 30 minutes to reload Windows 7.  There is a large choice of SSD brands and sizes, you can even get a 1TB drive for under $500 if you want.

The replaced hard drive can be used as a backup drive if you purchase an inexpensive hard drive enclosure for the old drive for about $10-$15.  Putting the drive in the enclosure will take about 5 minutes.  Voila, a 320GB USB-powered external drive.

If you have a MAC laptop, none of this applies.  Putting an SSD in a MACbook is possible, but is much more complicated due to the proprietary drive form factor and Apple's efforts to stop you from opening the case (special screws, complicated assembly..).

Friday, January 9, 2015

Should You Buy a Second Home in Florida?

With the terrible cold weather, thoughts turn to the sunny south.."wouldn't it be nice to go to our own house in Florida during the Winter?"  It is very tempting, but is it a good financial decision?

Let's consider a two bedroom condo in the Naples-Fort Myers area.  You could buy it, use it a couple of months a year, then rent it out for a few months.  You could also just rent a condo for two months.

Buy Option

If you buy, you will pay around $150,000 for a place away from the beach but in a nice community with golf, a clubhouse with fitness center, community pool, etc.  You will also incur taxes every year, HOA fees, utlities, upkeep.  Let's assume you keep Jan and Feb for yourself (high season), and rent it for 3 other months (medium season).  You buy it with cash, keep it 20 years, then sell it for the value which accounts for inflation.  The results are shown in the attached sheet and a partial copy is shown below.

Florida Condo Buy
Buy and sell unit-150000
Utilities 300/mo-3600-$3,708-$3,819-$3,934
HOA 200/mo-2400-$2,472-$2,546-$2,623
Upkeep 500/yr-500-$515-$530-$546
Taxes 3000/yr-3000-$3,090-$3,183-$3,278
Rental inc 3mo@2K6000$6,180$6,365$6,556
Rental costs&income tax-2000-$2,060-$2,122-$2,185
Cost in Todays Dollars-$103,685.55

Rent Option

If you rent, you will pay around $4000 per month for a place away from the beach but in a nice community with golf, a clubhouse with fitness center, community pool, etc.  You keep your cash and invest it.  The results are shown in the linked sheet and a partial copy is shown below.

Florida Condo Rent
Rent 2 mos@4K-8000-$8,240-$8,487-$8,742
Invest 150K@4%6000$6,240$6,490$6,749
Cost in Todays Dollars-$26,637.62


The conclusion is that on a purely financial basis, you are better off to rent, but not by a huge amount.  Another factor to consider is that you must rent out your purchased condo or the buying financials will be much worse.  There are still the intangible benefits of owning: go whenever you want, keep it the way you want, have family use it, etc and the intangible costs such as feeling that you must use it and the responsibilities of keeping it up.

Tuesday, January 6, 2015

Not Time to Panic

With the stock market going down, oil prices going down, and the Greek Exit GREXIT being discussed again, is now the time to panic and sell your stocks and mutual funds?  Should we buy gold and keep cash?  Is it time to take advantage of that buy-one-get-one-free offer on assault weapons at the gun store?

No, it is not time to panic in my opinion.  The US economy, still the world's largest, is expanding at a good rate, and the oil price decline will further improve business prospects outside the energy industry.  The US housing market has stabilized.  The Europeans will wait until the last minute and pull a compromise out of the hat for the third or fourth time.

Ask yourself the following questions:

  • Am I planning to use the money in my stocks and funds soon, in the next 2 years or so?  Probably not, you are likely saving for retirement or your child's college expenses.  So what does it matter if stock prices went down over the last month, you don't need the money now anyway.  In the unlikely event you do need the money in the next year or so, you should sell some stocks and bonds and move the cash to a high interest savings account.
  • Has the stock market ever gone down and never come back, even over a number of years?  No, it has always come back, even though it might take 2 to 10 years.  In 2009, some of my friends were moving to all cash in the great recession and they missed most of the upturn in the markets.  I continued to invest via my 401K and saving and those investments have more than doubled in the last 5 years.
  • Do you have a better long term investment opportunity than stocks and bonds and mutual funds?  Probably not, bank savings accounts pay less than 1%, real estate is unpredictable, and gold is not likely to rebound to its high levels.  If you have high interest debt, like credit cards, you might actually have a better place to put your money - into paying down this debt.  Check with your financial advisor.
Answer these questions for yourself, and you can then make an intelligent decision on what to do with your investments.  You can clearly see my opinion, but the decision is up to you.  Whatever decisions you make on your finances should allow you to sleep soundly at night.

Note that this is my opinion and you should not rely on it or any other blog/article/advertisement/dancing-hamsters site on the internet for financial advice.  Free information on a completely uncontrolled system like the internet is not a reliable way to plan your financial life.

Photo credit: Flickr link

Saturday, January 3, 2015

Roanoke, Civil Rights, and Leopard Onesies

We were recently on the road to Florida traveling down I95, with thousands of other people.  We stopped in Roanoke Virginia (Southern Virginia) for lunch and I saw something unusual. 

I also recognized Roanoke as the place where we had an accident back in 1973 on a family vacation. We were waiting at a stoplight in our rented 2 door chevelle and then boom, we were hit from behind. The car that hit us was immobilized and there were a group of black teens in the car. My father walks to a house and calls the police. When he gets back, there is only one teen left. The state trooper eventually arrives in his Stetson hat and puts my dad in the front seat and the teen in the back.

Remember we are 5 Canadians, white, and my father is a distinguished looking gentleman with an English accent. We naively think that race relations were fixed in the early sixties by the civil rights movement and laws. 

As told by my father (and remembered by me), he explained that we're on vacation from Canada and were hit.  The trooper says something like "Mr Whitton, I am very sorry this happened.."  Then he turns around and says "boy, what do you have to say fo yo self!"  "I smell liquor on yo breath!, you in a heap of trouble!"  He asked my father to follow him to the courthouse and give a statement and then he would help us get a hotel room, since we would not get to our destination with the delay. 

At the courthouse, my father relates what happened to a judge. The judge then turns to the teen and says "boy, you in a whole heap of trouble!  What is yo mammy going to say?"  My father by this time is in total shock thinking he is complicit in some KKK situation. We are escorted to a local motel, spend the night and continue on our way. Welcome to the South in 1973!

Back to our lunch stop. Everyone likes to be comfortable on long car rides. I notice a teenage girl walking by in leopard print onesie pajamas wearing UGG boots. Quite a show in 2015 Roanoke Va at the chick-fil-a, a lot has changed since 1973.

Friday, January 2, 2015

Check Your Portfolio Asset Allocation

Every six months, you should check your asset allocation in your portfolio and rebalance if necessary.  If you have Quicken, you can get your allocation easily.  You can also create a simple spreadsheet with 4 or 5 rows with your current holdings such as shown below.  If you have a financial advisor or broker (shown below), they can also do this for you.

Ideally, you should decide which asset classes to sell and buy, then sell the stocks or mutual funds in a way that:

  1. Minimizes taxes.  Buying and selling within your RRSPs or IRAs or 401K's will not generate any taxable income.
  2. Gets rid of funds and stocks you no longer want, like mutual funds with high expenses or stocks that you no longer favor.
  3. Keeps your bonds in tax deferred accounts as much as possible and keeps stocks and equity mutual funds in taxable accounts as much as possible to reduce taxes.
Right now I am over my target for small cap domestic and large cap domestic stocks.  I will sell a small cap index ETF and some of my large cap holdings.  The proceeds will be used for living expenses and to buy bond funds.

Asset ClassAllocation %Target %Difference
Domestic Bonds33.538-4.5
Large Stocks20200
Small Cap Stocks9.763.7
International Stocks20.1200.1
International Bonds3.54-0.5