Investing Wisdom from Howard Marks of Oaktree CapitalMy regular listeners probably heard one of my earlier segments where I spoke about Howard Marks, the 67-year old billionaire who co-founded investment management firm Oaktree Capital which now manages about $84 billion in assets and is a publicly-traded company with ticker symbol OAK.Oaktree focuses its investments on high-yield bonds, distressed debt and private equity, and has delivered a whopping 23% average annual return over the past 25 years… so Marks has rightly earned his fame and fortune. To give you an idea of just how much a 23% rate of return is: If you invested $10,000 25 years ago, it would be worth $1,769,000 today.And, like Buffett, Marks too sends out folksy memos to Oaktree clients where he outlines his views on investing, the markets and the economy that are insightful, direct and sharply written. And today, I’m going to share a few insights from Marks’ latest memo – morphing his thoughts so they apply to individual financial planning. I’ve decided to break this up into a two-part series – with the first half of Marks’ memo today, and the rest to follow next week.Key Questions to Ask FirstSo in this latest memo, Marks first addresses philosophical questions on what to consider in setting up your investment portfolio. Once you have a clear idea on what your investment goals are, based on your retirement needs, Marks says you should discuss the following questions with your advisor:- Is it possible to build a retirement portfolio that can beat the market? If yes, then how, and to what extent can we beat the market?- What’s the best way to manage risk?- How do we define success, and what risks are we willing to take to achieve investment success?Then, as you build your portfolio, you’d want to balance it out between index investments (where you should not expect market-beating returns), individual stocks such as dividend payers, and perhaps some alternative investments to a smaller extent. If you’re closer to retirement, you might also want the safety of inflation-protected bonds. And for the safety of bonds, index investments and dividend stocks, you should be willing to accept “average” performance. But for the alternative investment portion of your portfolio, you should expect above-average or superior returns, as Marks calls it.Pick Funds that Dare to be DifferentFor your alternative investments where you’re seeking superior returns, look for funds that are backed by a strong track record, and where fund managers dare to be different. You see, if you pick a mutual fund that’s run by a manager who is essentially following or mimicking what others are doing, you’ll just end up paying high fees without getting any real bang for your buck.So for this alternative portion of your portfolio, look for managers that are courageous enough to be different and open to being wrong… managers who assemble a portfolio that is different from those held by most other funds. As Marks puts it, to be a top performer, the fund manager has to “escape the crowd” by being active in unusual market niches, buying things others haven’t found, don’t like or consider too risky to touch. A good alternative fund manager avoids what the market considers to be a darling, or all the rage, and engages in contrarian cycle timing, and concentrates heavily in a small number of things that he thinks will deliver exceptional performance… everything that personifies great investors such as Howard Marks and Warren Buffett.As Marks puts it “the cautious seldom err or write great poetry” in referring to fund managers that follow the herd.So look for fund managers who dare to be different, have a consistent history of market-beating performance and are transparent with their investors. That said, you also need to recalibrate your expectations with such alternative funds because their investments often could take longer to bear fruit… so only invest a small portion of your funds that you’re not planning on touching till you reach retirement… because if you picked the right alternative investment fund, those superior returns could compound very nicely over time.Now I know that it’s near impossible for most individual investors to really evaluate alternative investment funds, so this is where a good, qualified advisor can offer advice and help kick some of your returns into high gear.And as I mentioned above, Marks’ company – Oaktree Capital – is publicly traded with ticker symbol OAK, so you can buy shares to participate in Oaktree’s success; When you invest shares in OAK, you are not buying into Marks’ portfolio, but rather participating the company’s profit from its portion of the investment it takes for itself and the fees that are generated from his clients. Oaktree shares also offer a pretty compelling 7.7% dividend yield at current levels… but this is not a recommendation so please do your own research should you consider buying Oaktree.Most great investments begin in discomfort.Most people feel good about making investments where the underlying premise is widely accepted, where recent performance has been positive and where the outlook is rosy – but such investments are high in demand and are unlikely to be available at bargain prices.Bargains are usually found among things that are controversial, that people are pessimistic about, and that have been performing badly of late – investments that generate discomfort for most people. And this is where good alternative funds excel. For example, Oaktree Capital focuses on distressed debt – bonds issued by companies that are on the ropes in some way or another, bonds that are priced at pennies-to-the-dollar… bonds that comfort-seeking investors would not even think about. This discomfort is what causes distressed debt to be priced cheaper than it is really worth, and it’s one sector that has helped fuel Oaktree’s outsize returns. This area of investing is practically impossible for the typical investor to get into and one has to have superior skills in order to avoid being burned badly if things don’t work out.Marks also says; Dare to Be WrongMarks also reminds us that with courageous, discomfort-generating investments, you must also be prepared for failure as an inescapable potential consequence of trying to do really well. In other words, be prepared to lose money on this alternative portion of your portfolio… it’s not something anyone wants, but get into alternative investments with the understanding that non-mainstream investments could be harder to liquidate and have greater risk, and while your fingers are crossed for the upside, be aware that you could also lose money. That said, a good alternative investment fund should protect you significantly on the downside too.So look for alternative funds that invest judiciously, have more successes than failures, and make more on their successes than lose on their failures.Alas… No Magic FormulaMarks also cautions us that there is no easy formula to produce superior risk-adjusted returns – because if there were, everyone with a positive IQ would be rich.Or, as good ol’ Charlie Munger, Warren Buffet’s Partner bluntly puts it, “Investing is not supposed to be easy. Anyone who finds it easy is stupid” and does not understand investing’s complex and competitive nature. Hardly the words of someone who wants to be politically correct, but he makes a good point. Why should successful investing be so easy that the uneducated and lazy investor achieves superior rate of return? It just doesn’t happen that way.Superior investment results can only come from a better-than-average ability to figure out when risk-taking will lead to gain and when it will end in loss. And this is not easy task. So it’s good to look for fund managers that ideally have a strong background in economics, financial math, accounting and investment analysis.Okay, I’ll wrap up here for today, and continue with more on Howard Marks’ thoughts on investing next week.
Get the Career You Want Through Online Education
Are you working in your dreamed career field? If you are one of those who can’ made your dreamed career comes true, online education will be your best path to earn a career degree to enter a career field that was your career goal when you were at college. With the available of online education programs, going back to study is easier than ever, you can even do it without the need to quit your current job or affecting your family and social commitments.With the growing trend of online education programs, you can find almost any career related online courses offered by accredited online schools. Many of these online education programs are designed for working adults who want to earn a certification or degree in their area of interest without having to stop life on its course. The key elements that make online education the best option for working individuals are flexible learning environment and remote log on to the online classes from any location have made easy for working adults to go for study in their favorite subjects while maintaining their current job and lifestyle.Here are a few steps to find an online education program that meets your career goals:1. Identify Education Requirements Before you start searching for an online education program, you need to identify what are the education requirements in order for you to get the career you want. For example, if you want to become an accountant, you need to earn at least of bachelor or master’s degree in finance; and you may need to have a forensic accounting degree if you want to become a forensic accountant. Then, identify the level of degree you want to pursue, such as bachelor, master or PhD.2. Search For Online Education ProgramsOnce you know what type of online education programs to look for, search for a list of online education programs offered by various accredited online schools that meet your goals. Usually, you will find many similar online education programs offered by different online schools. You may need to short list them with a few criteria such as the school reputation, program cost, and the courses of the online education programs that best fit your needs.3. Request Information From Online SchoolsThe information about the online education programs found at the school’s website may not be detailed enough for you to make your decision. Hence, you should request the schools to send you the details information about the education programs so that you can review and compare them before you make any decision. Most online schools are providing free information packs on their education programs, what you need to do is fill up a simple form to let the schools know what type of online education programs you are interested in and where to send you those information.4. Apply For Admission & Earn The DegreeOnce your have decided an online education program to go for, admission application is simple and it can be done online. You need to fulfill all the admission requirements in order to be accepted by the online school. Then, you should work hard and smart to complete the program to earn the degree that is required to make a career switch.SummaryOnline education has made easy for working adults to go back for study without the need to give up their current job. You can get the career you want by earning a career related degree through online education program without give up your monthly pay check.
How Do I Get Visitors to My Site? (The Truth About SEO)
Think of your site as a physical location. How would you get people to come and see you? Direct mail, newspapers, magazines, radio, TV, word of mouth, flyers, business cards, T-shirts, packaging, FaceBook, Twitter, email campaigns, banner ads on websites – traditional advertising works for websites too.Then there are those methods you can only use for websites: click through advertising and search engine optimization (SEO). Click through advertising costs either by the ad, like traditional advertising, or by the click – each time someone clicks on your ad to get to your site, you pay. As with other advertising channels, the more people who are known to view the page where your ad resides, the more you pay. Ads can appear on various web sites, or at the top of search engine pages. The most popular pay per click app is Google AdWords. Click through advertising may be a good option for you.This article will focus on the other online only method: Search Engine Optimization (SEO). SEO is all about getting your site to the top of the list when someone does a search in Google, Bing/Yahoo or another search engine.Watch out for Snake OilMany claim that search engine optimization (getting your site to the top of that list) is science or magic or some other sort of mystery that only a few very special people have the brains to understand. – NOT TRUE! Effective search engine optimization is a lot of work. And it does take some technical knowledge. But the basics are just that – basic.The purpose of this article is to demystify SEO so that you can select an honest SEO firm. Or if you have a bit of tech savvy you can see that it’s not impossible for you to do on your own. And even for those of you who love to browse, but aren’t so comfortable with the technical details, there is a lot of the SEO job that you are more qualified to do (or at least supervise) than any SEO firm.How much SEO do you need? Is your site for your school and everybody who will ever want to find it on Google already knows it exists and will look it up by typing in “Peoria Middle School”? Then you need just the tiniest bit of SEO.Is your site for your family car dealership and the tri-state area sees Uncle Joe on TV every spring hopping up and down in a bunny suit inviting “y’all” to “come on down to the Kalamazoo Kia Kangaroo Sale”? Yours is not the only car dealer in town and when people search for car dealers they will probably type in something like “Kalamazoo cars” rather than “Kalamazoo Kia”, although if they really like Uncle Joe’s bunny suit, well you never can tell. This situation calls for a little SEO.Is your business is entirely online? Say you sell remanufactured camera parts that you refurbish in your garage nights and weekends. Then pull out all the stops. You need lots of SEO.Put Yourself in Google’s ShoesLook at SEO from the perspective of the search engines. What’s their objective? The same as yours: lots of visitors. How do they attract all these visitors? They put the most useful sites at the top of the search results list. How do they decide which sites are most useful? They look for the most popular ones.That’s right. SEO is not rocket science. It’s a popularity contest.So then, how do you make your site more popular? First let’s define popularity in search terms – links from other sites to your site. Think high school. Popularity equals friends. So you want lots of friends, and not just any friends, you want popular friends. But well, when push comes to shove, not so popular friends are better than no friends at all. Translation – friends equals links and you want lots of links, but not just any links. You want links from sites that have lots of other sites linking to them. And those sites should have lots of sites linking to them and so on and so on and so on. A link from CNN.com is going to get you a lot more popularity points than a link from your local newspaper website. But then a hundred links from so-so sites might be better than one link from CNN. It’s hard to tell.And that’s where the mystery/science SEO legend takes hold. The search engines are not going to tell you exactly how they rank pages. If they gave away all their secrets the cheaters would fake everything necessary to get to the top of the list.There is a subculture of SEO gurus who spend their entire lives trying to unravel the precise algorithms the major search engines use to rank pages. And then they figure out how to use that information to their advantage. It’s a trial and error process. Eventually they get sites to rank high. Then the major search engines catch on and tweak things a bit so the SEO gurus have to start over again. It’s a never ending game of tug of war.Not all these gurus are bad guys. Most are honest business people working to get the edge on the competition. But how much careful tweaking does your site really need? And how much money do you want to spend? It’s one of those diminishing returns things. Up to a point spending more time and money will yield a greater and greater ranking, and then, boom, a huge amount more will yield almost nothing.Is there anything to SEO besides links?Yes. KEYWORDS. These are the words and phrases that are typed into the search bar. In order for the search engines to find your site these keywords must be coded into almost every page on your site.The nitty grittyI am going to show you:
How to pick keywords and
Where to find sites willing to link to yours.
That’s it. That’s the gist of the whole SEO thing. No big mystery.KeywordsThese are the words (and/or phrases) that people type in the search bar when they are looking for sites like yours. They also tell the search engines that your site exists and what it is all about.You need to pick words that people will use to find your site, but that will yield few enough results that you are more likely to appear near the top of the list.Let’s use the example of Kalamazoo KIA. You don’t want to use “car” for a keyword. I tried that and Google gave me 4.9 billion results. What’s the likelihood that Kalamazoo Kia is going to be anywhere near the top of that list? Zero. Kia” would be better, but still too broad. “Kalamazoo cars”, “kalamazoo kia”, “michigan kia”, “kalamazoo new cars”, these would all yield a smaller pool of results. So how many keywords do you need? 10 or 15 is good. Too many gets us to that diminishing returns thing again. So I’ve thought up four words on my own and now my imagination has run out. What other words might potential Kalamazoo Kia customers type in? I can’t read minds, but I can find out. There is this cool tool, Google AdWords, and it is free. Once you register you can type in various keywords, “Kalamazoo Kia” for instance, and find out what related searches people have used and how popular those search terms are. Da! Da! – more useful key words. I found “kalamazoo kia dealerships”. After doing a Google search for “kalamazoo kia” I found out why it was necessary to add the “dealerships”. Kalamazoo has “kia’s” that are not even cars. Who’d a thunk?So you’ve got your key words. What do you do with them? Use them in your url (site name – http://www.mykeywords.com ), have your web designer add them to the title and description tags on your web pages, and use them liberally, but not too liberally throughout your site copy.Now that you have your keywords entered on your site pages, the search engines can categorize you by these keywords. Next you want to make sure that people searching for your category find you and not your competition.LinksYou want to be popular. You have got to get links. It’s time to pound the cyber pavement. SEO professionals can do this work for you but if you’re on a budget you can do most of the work yourself.Get listed in industry directories. If you are selling necklaces you could search for “jewelry directory”.Pursue reciprocal links. Look for sites that may be willing to link to your site, so long as you link to theirs. Continuing with the necklace example you would search for “jewelry add url”.If you have a physical location, get your site listed on local directory/yellow page type sites.Participate in industry forums, and if the forum allows, work a link to your site into your advice.If there are any events associated with your site, list them on online community calendars.Get an article, listing or mention about your site on the sites of any industry associations you belong to.Write a press release and submit it to free press release sites like freepressrelease.com.Try to get the sites that link to yours to use your keywords in their link.BAD – Click here to find out about refurbished camera parts.GOOD – Click here to find out about refurbished camera parts.Don’t hide from the search enginesDO have your web designer generate sitemap.xml and robots.txt files add them to your site. The search engines look for these files when they are trolling the internet for sites.Do NOT expect the search engines to find your keywords in the sections of your site that use: keyword links in images or javascript, frames/iframes, Flash or dynamic pages.Don’t make the search engines madPlaying dirty tricks, in an attempt to make your site appear popular, can get you blacklisted. Yep, the Search engines will turn their heads and pretend you don’t exist. You will not appear anywhere in the listings. If this happens you can appeal but your chances are not good. Your best hope if you are blacklisted is to start over with a brand new site.So what are these dirty tricks? Some are simple, and some are complicated, but make sure your SEO firm doesn’t do any of them. They include repeating your keywords multiple times, keyword stuffing (hiding keywords by making the text the same color as the background), using keywords that don’t relate to your site’s content, automated programs that generate fake links just to make you look popular, robots that create zillions of pages for your site that are really just copies of your existing pages with a few changes here and there, to make you look important and popular. There are many others, but generally speaking, anything that attempts to make you look more popular than you really are is bad.Putting SEO to workLet’s go back to our 3 examples from the beginning of this article. How do we apply SEO to each one?Peoria Middle School – a few keywords – “peoria school” “peoria middle school” and for those who can’t seem to get it right “peoria intermediate school” should do it. That way people who look you up on Google rather than by typing in your url http://www.peoriamiddleschool.com will be able to find you.Kalamazoo Kia- most of your potential customers already know who you are. They’re “either looking for a new car or a new KIA car. They’re looking for deals, pictures of the latest models, or they want your phone number or customer service hours. There aren’t too many car dealers in town so you are popular among car dealers by default – not too much need to worry about links. You’ll need your keywords. Then you can list with the “local directory” sites and the car dealer and KIA directories. Are you participating in this year’s food drive? Make an announcement on your local online community calendars. A couple of popularity points won’t kill you but you don’t have to work too hard.Cal’s Re-engineered camera parts – you are a needle in a haystack. You need all the help you can get. You’ll need keywords of course. And a comprehensive linking campaign. You might not have much money to spend on an SEO firm so you must work like the tortoise: slow and steady. Do a few press releases, check out all the industry sites and camera buff sites and organizations. Respond on forums – become an expert. Find some reciprocal links. Get listed in directories. Do a little bit everyday. Eventually you will become known to those who are looking for refurbished camera parts.Who can help me get the job done?Help! You said SEO wasn’t rocket science. This is getting complicated. I can’t do this all on my own – who will help?Well it’s not rocket science and it’s not magic; neither is styling hair, but you won’t find me anywhere near anyone’s head with a pair of scissors. SEO does require specialized knowledge. If you have that knowledge, great, you can do this on your own if you choose, but for those who don’t the purpose of this article to get you to understand the basics, show you which parts you can do on your own (I can’t cut my own hair, but I do wash and brush it every day), and to help you find an honest vendor for the rest.SEO firm – as long as they have access to the back end of your site they can do it all for you. Refer to this article and ask questions. Make sure the firm is above board.Web designer – Your web designer should be able to put your keywords into your pages and create and upload your sitemap.xml and robots.txt files. Beyond that their ability and willingness to help with SEO will vary greatly. You may prefer a web designer who specializes or one that does it all.What you can do on your own if you choose – you know your business/project better than your web designer or SEO firm. You are in a better position than they are to figure out your keywords and to determine which sites you want to link back to yours. You can also do a lot of the leg work if you choose – contacting sites and asking for links, writing press releases, making announcements on community calendars, participating in forum discussions, etc.If you do all of the above, tailored to your specific situation of course, you will be ahead of the SEO game. Use common sense. Spend the time and money you need, but don’t go overboard and reach the point of diminishing returns. And remember, SEO takes time to yield results.