- Optimizing Your Human Capital, Part 3: Assets That Matter
- A little reading material for a volatile market week
- Optimizing Your Human Capital, Part 2: Assets That You Can Control
- Investing Requires Discipline and Long-Term Focus
- Lobbyists fight the fiduciary standard, Barry Ritholtz describes every FinTV interview, and we discuss setting investing goals
- An Investment Topic Few Talk About: Optimizing Your Human Capital (Part 1)
- To Plan for Early Retirement, Tweak Your Strategy for Longer-Term Portfolio Growth
- Assets in ETFs exceed assets in hedge funds, Daniel Kahneman, and the value of good rules of thumb
- What Investors Need to Know About Tax Loss Harvesting
- Learning about personal finance, tweaks to improve retirement, Apple, and China
Editor’s note: This is the third article in a three-part series by SigFig Advisor Dean A. Junkans, CFA, discussing how investing in your human capital is just as important as your portfolio mix. With 30 years of investing experience, Dean served as Chief Investment Officer of Wells Fargo Private Bank and is a published author.In the first two installments of our three-part series on Optimizing Your Human Capital, we defined human capital and how to optimize it. We then discussed some of the human capital assets that define you, as well as assets that you can control, and the important role they play in optimizing your own human capital. In the third article in the series, we will discuss some of the assets that matter on your journey to optimizing your human capital. Those are:1. Reputation2. Communication 3. Leadership
Assets That Matter
1. ReputationReputation matters more than almost any other characteristic you will bring to the workplace, yet it is something that many people never stop to think about, especially early in their careers. There is often a belief that your incredible skill or ability in some area will conquer all, but if your reputation is tainted in some way, your skill will not matter.You establish your reputation early in your new place of employment. How you “show up” the first few weeks on a new job will largely define your reputation at that company. So start well! In today’s work environment, reputations seems to be developed rather quickly — and lost even more quickly. If you are leaving a job, or leaving a company, how you leave and what you say as you are leaving will be another moment of great impact on your reputation. So end well!If you are not sure what your reputation is in the company where you work, find out! Most companies have many ways to figure that out. One of them is the 360 degree feedback process, where you receive specific feedback from people at all levels in your work team. Alternatively, you may simply ask trusted colleagues that you know will give you the straight answer.A good question to ask is, “What do you see as my personal brand?” It is open-ended enough that you will get a wide range of feedback, and in the process you will get a good sense of your reputation in the company. If you find out that your reputation is strong, great; that is an excellent confirmation that you are on the right track. If you find that your reputation is weak, try not to be defensive, but take positive action to change it and to improve the value of your human capital!
2. CommunicationOne of the most important and impactful ways to differentiate yourself in the workplace, and thereby enhance your human capital, is to be an effective communicator. What is an effective communicator? Let’s first define what it is not. It is not simply being able to stand in front of a group and deliver the speech of the century. This is one element of being an effective communicator, but it is by no means the only thing that matters in effective communication.By all means, if you are shy about getting in front of a group and giving a speech, or if you do not believe you are good at it, please take advantage of every opportunity to practice and learn. Whether that means joining Toastmasters or taking a presentations skills class, or simply agreeing to deliver a speech — the more confidence you have that you can do this, the more valuable you will be as a communicator.Effective communication is often knowing how your audience, your team, your boss, your friends, want to communicate. Some people are great at face-to-face meetings, but rarely return emails. Some people are great at emails, but would prefer not to meet face to face, unless absolutely necessary. For some, voicemail is a communication tool of the past, and leaving a voicemail is like not communicating with them at all. Learn the preferences of key people you will be communicating with and try to adapt to their preference.Work on developing a good style in the following methods of communication:1. Face to Face, either one-on-one or small group,2. Conference call, either one-on-one or small group,3. Email, 4. Voicemail,5. PowerPoint or spreadsheet driven presentations, and6. Large group presentations.This sounds like a lot – doesn’t even cover all types of interaction – but it is not as daunting as it seems. For example, if you stand up while on a conference call, your voice will have more energy any your message will come across as more compelling, than if you are sitting down. Just making that one change can make you a more effective communicator. In all of these situations, there is no substitute for preparation, knowing the two or three key points you want to get across, and following the ‘less is more’ approach.
3. LeadershipIf you are reading this and thinking to yourself “I am not in a manager role, so this does not apply to me,” you are missing the point. Plenty of non-managers are leaders, and some managers are not leaders. In my entire 30-year work career, I never applied for a manager role, yet I was regularly moved into these positions with greater levels of responsibility. The reason is simple; I always tried to lead in whatever job I had at the time. You can, too!If you are a cube dweller in a cube city work environment, you can be a leader and look for ways to do things better, and you can be the positive force in your work team who looks at problems as opportunities, who helps the new team member learn their job, and who volunteers for the tough assignments. This is leadership, and it can be a critical factor in spring-boarding your career and increasing the value of your human capital.
What a week:1. CNBC shared SigFig data on how timing the market or panicking can cost investors:
Investors who try to time market highs and lows almost always hurt their performance over time. An analysis of investor behavior from SigFig, an investment planning and tracking firm, found that during the market correction in October 2014 roughly one in five investors reduced their exposure to equities, mutual funds and ETFs, with 0.6 percent selling 90 percent or more. That may have seemed smart at the time, but SigFig’s analysis found that the more people sold, the worse their investments performed.
“Those who appeared to panic the most—for example, those who trimmed their holdings by 90 percent or more—had the worst 12-month-trailing performance of all groups,” the researchers concluded. Their portfolios delivered a trailing 12-month return of -19.3 percent as of Aug. 21, compared with -3.7 percent for the people who did nothing during that October correction.
2. At SigFig, we believe that good investing means following a diversified strategy with discipline and long-term focus.Along similar lines, Ron Lieber of the New York Times writes:
The impulse when the stock market falls hard for a few days in a row is to do something. Anything. Our life savings are often on the line, after all.
But that’s just the thing: Stocks are most useful for long-term goals. So unless those goals have changed in the last few days, it probably doesn’t make much sense to overhaul an investment strategy based on a blip of market activity.
So pour yourself a drink, or sit down with a pint of ice cream, and consider the following six things.
Here are his six things.Lieber also profiles some pension fund managers and the folly of trying to beat the market, and a perhaps unusual method they use to stay on course:
On days like Thursday and Friday, when the stock market is declining, it’s hard to sit calmly and do nothing, especially when commentators are yelling on television. So when the two men are feeling itchy, they make for the hills, literally, running on trails near Reno for 10 or 15 miles at a time.
They can’t trade while they are in motion, but that’s probably a good thing. “We spend a lot of time up there talking each other out of stuff,” Mr. Lambert said. “In investing, the answer 90 percent of the time is to do nothing.”
3. Ben Casselman of fivethirtyeight.com tells us when to pay attention to the market and when not to:
We don’t write much about financial markets here at FiveThirtyEight. That’s intentional. Markets are important, but there’s already lots of good coverage out there. There’s also lots of really bad coverage — the deluge of minute-by-minute market data makes it incredibly tempting to see signals in what is really just noise. We don’t follow every up and down of the market because, unless you’re a trader, it just doesn’t matter.
But there are times when even non-traders should pay attention to the markets, either because they’re so bad they’re affecting the rest of the economy (think Lehman Brothers in 2008), or because they’re sending a signal about bad news around the corner. How do you know when to do that? You can’t, at least not perfectly. But by following a few simple guidelines, you can avoid getting caught up in the hype and stay focused on what really matters.
4. Published August 19th, James Osborne’s piece on “the worst question of them all” happened to be quite timely:
It’s summer, or at least it was recently until our oldest went back to preschool. Summer means family gatherings and kid’s birthday parties and BBQs and a pretty jammed social calendar for us. I try pretty hard to avoid the “professional” talk at social events, but I’m never 100% successful. Inevitably, somebody asks the question. I really hate the question. You know the question.
“So what do you think of the market right now?”
This is the part where I try really hard not to let out an exasperated sigh and shrug my shoulders. But first I’ll break down what drives me nuts.
5. And now, for something completely different.
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Editor’s note: This is the second article in a three-part series by SigFig Advisor Dean A. Junkans, CFA, discussing how investing in your human capital is just as important as your portfolio mix. With 30 years of investing experience, Dean served as Chief Investment Officer of Wells Fargo Private Bank and is a published author.
Assets that you can control
In the first installment of our “Optimizing your human capital” series, we defined human capital and discussed what it means to “optimize” it in the context of things that define you. While those assets can perhaps be improved upon, they are often intrinsic traits. We then gave a few examples of how to optimize your human capital around some critical defining characteristics that have incredible value in the workplace.In this second article, we will discuss the things that you can control. A lot happens in life and at work that we cannot control, but there are many things you can control which can make a substantial difference in the value of your human capital.
One of the most important things you can control in your job and in your career is your attitude. Your co-workers want to work with people who have a positive, can-do attitude because it is infectious and motivating! Bosses want can-do people on their teams because they are fun to work with and they know they can count on them to see the opportunities, not just the challenges. You will differentiate yourself from the masses of often really smart people who have glass half-empty attitudes that no one wants to work with, promote, or hire.
Another important thing you can control is your work ethic. I have seen a lot of people do the bare minimum and then wonder why they do not get promoted! So many workers today are fast, efficient, and focused to the point where they can get their “required” duties done in less time than is allocated. Rather than bolt for the door, ask around for other projects you can get involved with and help out. Most people will not do this, so be the one who does and differentiate yourself in the process!
Work ethics can be described generally as doing the right thing and it is arguably the most important thing that you can control. Your work ethics relate to your co-workers, clients, vendors, and any of the relationships you have at the job or at home as ethics transcends place. If you are challenged in controlling ethics at work, it will likely be a problem at home, as well.
Work ethics are often explained with words like trust and integrity. Are you someone who others trust? Are you seen as having integrity? You can control doing the right thing, being trustworthy and having unimpeachable integrity. And if you do, people will seek your counsel, trust you with important information, bring you in on sensitive matters, look to you as a leader, and likely look to give you even greater responsibility, thereby improving you human capital stock.
One last thing you can control is preparation. How many times have you heard someone say they are going to “wing it”? Probably too many. Sometimes you will have no choice but to wing it if something comes up that needs your attention and decision right away. However, in many cases we have at least some control over being prepared. Lack of preparation stands out, and consistent lack of preparation can be a career derailer, or a detractor to your human capital. If you do you whatever it takes to be well-prepared on a consistent basis, people in the workplace will know that they can count on you, and that will usually be recognized in the value of your human capital.
There are, fortunately, many things you can control that will enhance and optimize your human capital. As you go through your day and week, think about what you can do to control your attitude, your work ethic, your work ethic and your preparation, and see what this does for you human capital, as well as your enjoyment of work.
Editorial DirectorAleks runs content at SigFig. Before joining the company, she ran the editorial teams at Visually and Mint.com. Her work has appeared on SmartMoney.com and the Wall Street Journal, among others. At lunchtime and on weekends, you'll find her swimming, biking or running -- or all three, in that order.
Data Science and AnalyticsBenny does all things data and science at SigFig. He was Director of Product Analytics at TinyCo and a Principal at Applied Predictive Technologies, where he helped companies run smarter experiments. He studied Economics at Harvard, is an avid cook, and loves running.