Business School: The Econ Final PART I

I just realized that in my busyness of the early part of this month I failed to describe to you a noteworthy experience… The Econ Final Exam.

First, I should back up a day. Fresh off the Accounting Final, 3 of my group members including myself gathered at a downtown office to spend 7 hours or so studying accounting. We started the meeting off the way every good Business School meeting starts… with food.
The 3 of us met at an Indian restaurant in the building. They had fantastic Naan. After a few drinks, the naan, and some curry we headed up stairs and got to work. 2.5 hours later with a full white board and a haggard look on all three of our faces, we took a detour to a local restaurant for some appetizers and drinks. The place was actually having trivia night. The winner won a discount on their final bill equal to the total number of points they earned during the competition. We just watched.

After about 40 minutes, we returned to the conference room and proceeded to mark up the white board again. By the end of the night, we made it through 2 practice exams… every question. We actually took turns graphing, explaining, and discussing the questions. We all headed home for the night with minor headaches.
The next day I was off of work so I slept in until I woke up naturally (11AM). The weight of the exam to take place that evening loomed over me from the time I rolled out of bed, but I didn’t spend any time studying that day. I figured out a long time ago that my cutoff for studying is the night before at around 3AM.

So, I enjoyed my day off and then headed to campus. I met my group members in the MBA lounge where they were studying again. I guess they don’t have the same cutoff. I participated for a few minutes and actually got an explanation on one of the graphs that I didn’t fully understand. That was good, but I was done after just a few minutes.
After a short while, we all headed up to class. As the room filled up, the chatter began to pick up in volume. Most of us were smiling nervously in our chairs awaiting an exam that we had been dreading for the entire quarter. There we sat… Business School lambs to the slaughter.

The First Grades of my MBA Degree

I know you all have been waiting so I will get right to the point. Last night I finally received my grades!

In Economics I received "better than a B" (I'll explain this in a second). In Accounting I received something between a B+ and an A- (this is due to the University using a point grading scale instead of letter grades).

The reason why I say "better than a B" in Economics is because of a late grade situation. The story is that the professor had a conference to go to and would be submitting our grades late as a result. However, many of us have a deadline to receive reimbursement from our employers, so we needed our grades sooner. As a compromise the professor gave us all the lowest grade he expected us to get, which in my case was a B. He will later change my grade to whatever I actually earned. In the meantime, I have 5K coming from my employer. No dead-weight loss on that transaction.

So, I am breathing huge sighs of relief. I know I said it before, but now I really feel like I am 1/9 of the way to an MBA degree. I am also relatively happy with my grades, which are icing on the networking/learning cake. In case you don't remember, networking and learning are are my two major priorities. I should actually say that learning how to network is my first priority, but I am improving here so I will leave it as "networking".

Well, that's it for tonight. I am headed home for Christmas, so I hope to be writing a lot over the next week or two. So, stay tuned for more market banter, interesting thoughts on random books, and flash backs to my first quarter.

Until then...

Business School Takes a Break

It's Saturday night and I just got home from my second Christmas party of the week. I've been sleeping in on my days off of work and doing, well nothing much at all.

That's right. One of the best parts about being a student is all of the vacations. Since my school is on the quarter system, I have a month off until I have to start classes again. I was exaggerating a bit when I said that I have been doing nothing. In fact, today I finally got a work out in- desperately needed from all of the sitting and eating I've done over the last 3 months. I also finally went through the mail that had been piling up. I recycled a 15 gallon bag full of papers and shredded another one. I honestly can't believe how much mail we get!

I've got other B-School vacation projects planned including cleaning the garage, selling a record player, paying lots of bills, and sleeping in every chance I get. This should be a pretty stress free couple of weeks... except one thing. Grades.

Grades will be reported next week and I am a little nervous. Although this is Business School, and learning is the important thing, I can't deny my competitive or achiever nature. I want to learn a lot and get high marks. I'll settle for decent grades and a lot of learning though, I guess.

So yes, the stock market is sinking into the abyss, 3 of the largest US companies are on the verge of collapse, the USA is becoming the USSA, and I am worried about how I did in Econ and Accounting.

I will keep you posted, because I am just certain that you are worried as well. Stay tuned!

Business School: Finishing up, Fighting Back

It is 3:00PM and I will be sitting for my last final exam in approximately 3 hours and 30 minutes. I will be finishing in approximately 5 hours and 20 minutes... not that I am counting. Not that I am so excited to have a break from classes, assignments, group meetings, conference calls, study sessions, textbooks, cases, and the chaotic pace that has defined my last few months. Nope, not excited a bit.

OK, I am very excited. Although this is sort of an odd time right now. I spent last night studying with two of the guys in my group until 1AM, and now have a few hours before the final. I am starting to feel the stress melt sway, while at the same time, increase.

So what's the big deal right? One little final left. I didn't miss a day of class and have put in several hours studying. Piece of cake, right? 

Well, not exactly. This final is in Economics. Remember, the time when the professor announced during the third week of class that the "principles" part of the class was over. That is this one. This is the class that has introduced concepts including , but not limited to, the perfect competition model, indifference curves/map, income elasticity, price elasticity, consumption price path, deriving a demand curve, isoquants and isocosts, Natural Monopoly, Cartels, the Kos theorem, the equimarginal principle, and so much more.

And each one of the above items has a graph that goes with it. Do I know these graphs well? Mostly, I guess.

So yeah Business School, you've kicked my butt a little bit this quarter with this economics stuff, but I'm fighting back. I will come tonight with a four colored pen (the clicky kind), graph paper, and a twinkle in my eye. I will do well (remember the goal is 2/3 of 2/3) and I will smile as I turn my test in, swing the door open and bring the first quarter of business school to a close. 

So look for me to be riding off in the sunset later tonight. I'll see you on the other side.

Business School Returns: The Calm is Over

Well, it is the beginning of the very end of the very beginning. Translation... it is finals week of my first quarter. The quarter has gone fairly well up until this point. I scored in the top 1/2 of the class on my Accounting Midterm and 12% beyond the average on my Econ midterm. More importantly I surpassed the 2/3 of 2/3 mark that the professor set as an expectation. Tomorrow the studying begins. (I'm off work tomorrow)

The plan is as follows:

09:00 AM Wake Up
09:45 Plan studying for the week
10:30 Economics
11:30 Lunch with my Grandma (visiting from out of town)
3:00 Accounting
4:30 Tutor
5:30 More Accounting
7:00 Group Meeting to discuss an Econ group question
10:00 Home and some decompression

After tomorrow, I have 3 more days to hit the books before the first Final (Accounting). This one is going to be a take home test again. As I discussed before, I loathe the take-home, because I end up spending 10-12 hours and losing probably 30 days from my life.

Then, next Tuesday is the quick and dirty Econ Final. One hour and fifty minutes of head pounding, room shrinking, swetty eyes torture.

And then... freedom. Vacation for an entire month... no class, no group meetings, no assignments, and no required reading. I can already see myself going for a run, staring at the wall, watching hours of television, and even tackling a home improvement project or two. I can't wait.

But for now, eyes are on the prize. The Business School experience is hitting me head on this week and I need to be ready for it. So, here goes nothing, a few class sessions and tests away from freedom - er, I mean accomplishing the first part of Business School... did I mention learning?

Almost 1/9 of the way to getting my MBA Degree

Well, I officially have one and a half weeks left until being 1/9 of the way through my MBA degree program.

Strangely enough, the idea that the final exams are the last hurtle is very comforting - if I was in my right mind, I would be panicking right now. But I'm not panicking, I am hanging out with my 5 lb. yorkie (pictured above) listening to s

ome sort of Christmas reggae music. I am procrastinating with a 

plan - a plan to study on Monday. Yep, for now I am just going to relax...

relax... yeah, relax. I'm not thinking about the practice test I could be working on for either accounting or economics. Not thinking about how I should be reviewing deferred taxes, bonds, and leases. Definitely not thinking about monopolies, price discrimination, or dead weight loss...

That stuff would be very stressful. No, I am just taking deep breaths on my soft couch and hanging out with my tiny little dog.

OK, so I'm not in complete denial. I know I have at least 20 hours of study time ahead of me, but I really do need some decompression time. I plan on going to bed early tonight so that I am rested for the coming 12 days of madness. I really will start studying on Monday. Really... come on, I'm going for my MBA degree... I am a serious student... super serious.

I will check in by Sunday with a game plan so you don't worry, but for now, it's me, the dog, and the Christmas Reggae. Goodnight.

Business School Blues: Is it really just about points and winning?

As a first year Business School Student, I am still a bit naive. I still think that most businesses were started and continue based on an individual's passion for what they do. I believe that the ethics scandals that have plagued this decade are all outliers and that most business people are honest... well, that's what I use to believe. Now those ideas are on shaky ground.

Let me explain...

This last week we covered a case in my Financial accounting class that was centered on Enron, ZZZZ Best, and other companies that had trouble with right and wrong when it comes to accounting.

Here is a 1 sentence synopsis of each:

Enron: Executive creates several shell companies to hide Enron's losses and manipulate financial statement numbers - a few people make lots of money and many people lose their life savings as Enron implodes.

ZZZZ Best: Teenage business prodigy raises millions of dollars in capital and gets his company on the NYSE - the catch is that the business is 90% fake... he makes out like a bandit for a while and all of his investors, including some friends, are duped (he eventually landed in prison)

Other heartless Companies: Similar to the above.

So, the question is... are the above examples unique? Or are successful business people that evil? I think the answer is most often the latter of the two.

The conclusion that I am beginning to come to is that the big players are just playing a giant game of chess. Money really isn't all that important in and of itself, but it is an important indicator of who is winning. You see, it's points. The world is a giant sim city and these guys are building, destroying, and tweaking the game to see how many points they can get. They'll lay off workers, manipulate income numbers, lie to the public, or worse, to win. No one is accountable because this is the game, the rules are known. People are liabilities, quality is secondary, and selling the product at any cost is the goal. 

It is sickening. These guys stand up in front of a camera and describe why a number was this way or that way, what there plans are for the future, and how well the company is doing under their leadership... lies and more lies. CEOs speak to the public to win them over so they can get more points.

This is super depressing and has me wanting to find the exit. I mean, I want to be a player in business because I have a passion for it. However, its not worth selling my soul in the process. So what's the solution? Do I bite the bullet and become a playe?. Do I forget my humanity for the sake of seeing how rich I can become? Do I step on anyone and everyone I have to in order to make it to the top? Do I lie, cheat, and steal in order to win?

I say no. I say we start a revolution! I want to be an ethical MBA. And not just because ethics are in Vogue. No, I actually give a crap. I want my work to make some sort of a difference in people's lives, and I don't need to have my own corporate jet. I want my integrity to remain my most valuable asset. So, is there room for me in the game? Can I play by my own rules with passion and purpose?

The truth is that I'm really not sure if I can do it. I don't think I'll sell out, but I  do think a moral compass may be debilitating in the business world. But here I go with my naiveness, energy, and a crazy ideas. 8.1 more quarters and I can enter the world. Watch Out!

Business Education Continues: Has Everyone Just Gone Mad?

I have recently been getting into the bailout drama with the big three auto makers and boy has there been some drama. From congress asking each one of them if they flew in a corporate jet to request the billions in bailout funds, to the CEO of GM saying that it isn't his fault the economy is in the tank, to the insane statistics surrounding the potential demise of the American auto industry.

I just have to say that this entire situation is ridiculous. Really, how did we get here? The bailout was supposed to be for financial institutions - an injection of capital in the arm of the system that supplies money to the entire economy. The idea was that if these guys could be saved, then they would save every one else. At least everyone else worth saving, i.e. they would provide capital in the form of loans to businesses that were worth the risk. But somehow, we are now considering $25 Billion + to keep the automakers alive. 

Who is next? Circuit City? Starbucks? Joes Smoke Shop? Really, where does it end? Last time I checked, bankruptcy and failure were part of the free market. If there is no chance of failure, than what is there to motivate businesses to earn a profit and be productive. Specifically, why do the automakers think that they are exempt from the rules?

The reality is that the automakers have massively debilitating contracts and extremely inefficient manufacturing facilities that vary drastically from one location to the next. So do we continue to keep building the same mouse trap? Do we really think it will work? Or do we let them all die? 

Here's what I say... this country isn't big enough for the three of them. Let one die and let the other two declare bankruptcy. After they have declared bankruptcy, and have the ability to re-negotiate all of their debt and contracts, then the government could step in. It is here that we could provide a conditional loan with debt covenants that include heavy mandates to manufacture alternative energy vehicles, and require the CEOs to step down. Obviously these guys have not given us any evidence that they understand how to run a profitable business. This solution would shrink the supply and force the American car industry into the only business model they have a chance at succeeding in - Innovation and highly skilled manufacturing. 

I know, it's not entirely a free market solution, but I'm afraid that the industry is just too squeaky for us all to ignore. They have the ears of congress, and in some cases they are large contributors that are owed a favor or two. Translation: I don't think perpetuating a "let them die strategy" will work. So the above is the best version of a compromise I can come up with. 

Oh... I think we should force the CEOs to get a new business education too. Did you know that the CEO of Ford was proud of the fact that his company has enough cash to make it until February. Is he serious? Congrats Alan Mulally, your company won't die for 4 more months. Gosh, that must be why he made 22 mil from the company last year.

What a crock!

Business School Rocks the Real World

Since I started Business School I have had a few occasions where the lectures, cases, and discussions have lit up in my brain during a real world experience. I thought I would share one of these extremely nerdy thought processes with you.

Ite has to do with one of my favorite burger joints. The cook/owner of this place used to be a chef at some fancy restaurant in the west coast city I live in. After getting Gastric Bypass surgery, he decided to leave his job as a respected chef and open up a gourmet burger shack. However, he chose to form his burger menu using fine ingredients including grass fed beef, duck, chicken, and prime rib.

Anyway, the place is sort of a hole, but they have some very fun decorations, including lunch-boxes, a velvet (really its velvet) covered communal dining table, and a hostess that rivals the soup nazi (when its busy) - she's also the chef's wife... co-owner.

Here's the one thing about this place though... the burgers are $14.00. So what economic concept did this click for me? Opportunity cost. I am willing to forgo the other options of the $14.oo for the 15 minute enjoyment of a cheeseburger. This really surprises me about myself. I didn't think I was willing to give up a movie and popcorn, 7 gallons of gas (now that prices have dropped), 2 games of laser tag, or most of a haircut for a cheeseburger. But the truth is that I am. I have a huge preference for excellent cheeseburgers

I was further impressed when I overheard the co-owner talking about a customer that drives two hours to them every weekend for just one burger. What is his opportunity cost when you include time, money, gas, insurance, wear and tear, etc. ? Either he really likes those burgers or he is a guy who has free use of a car and a ton of time on his hands with minimal alternatives.

Yes, business school has made me this nerdy.

MBA School: The Home Stretch

So, it has been about two months since I started MBA school and finally the lull. Midterms are over, finals are three weeks away, and I am in the middle of a deep breath.

...better hold that breath.

On Thursday, my accounting professor addressed the break that we are currently experiencing by releasing the practice final. How could he do that? Don't we deserve this break? 

Apparently not. 

Apparently this is the way it works. As in life, when there is free time, that time needs to be used for preparation. So, yes I am going to hit the books over this "break"... starting tomorrow. I will review bonds, leases, deferred taxes, and pensions in a hard chair. 

I chose this path, that is being a full time student, a full time employee, a husband, and a dog owner. It could be worse. There is a guy in my section who had his first child last week. I don't know when he is going to have any time to, say, sleep... But in any case, I am going to stop sulking, buck up, and finish this quarter out strong. I began this journey with aspirations of making the dean's list, participating in a business plan competition, and ENJOYING the journey.

So welcome to the stress free blog about a guy, somewhere on the west coast, who is going to MBA school at a top 50 ranked institution. Stay tuned for positive comments, jokes, and stories of other FUN times as I journey through Business School. I would start now, but I'm all tapped out :)

Pausing Business School: A Weekend Trip to Portland

If you have been reading my posts for any amount of time, you know that these last several weeks have been quite taxing (no accounting pun intended). Well, I am not sure if I have mentioned this, but I am married, so you can imagine that my wife has been missing me a great deal. 

In genius anticipation of this problem, I recently planned an entire weekend trip to Portland, OR that we would go on this weekend (the weekend after the last midterm). It seemed like a perfect destination, still on the west coast, but different and far enough away to feel like a vacation. It also happened to be my wife's birthday on Sunday, so it seemed like a good plan.

We arrived at Hotel Lucia on Saturday night for a 2 night stay. We filled the weekend with wonderful food, several walks, shopping, and a fantastic 90 minutes at Barefoot Sage (an entire spa dedicated to foot massages and treatments).

Here are some of the restaurants we went to:

Apizza Scholls (The best Pizza ever!)

Mothers Bistro

Oba

Kenny and Zukes

This was a fantastic break from Business School, work, and just life in general. It was great to reconnect with my wife and to reward ourselves for some real sacrifices over the last several weeks.

On a slightly less relevant note, there is no sales tax in Oregon. I can't help but wonder what the economic implications of that are. I can tell you for sure that waiters/waitresses get bigger tips. Certainly, it must attract tourists and shoppers. Do you know what it's like to see a restaurant bill with a subtotal of $30.03 and a final total of $30.03? It's like a discount.

I mean, take Vancouver, BC, where an American dollar buys $1.20 Canadian dollars (as of last week). This translates to 0.83 American dollars per Canadian dollar. However, Vancouver has a 14% sales tax, which makes it equivalent to 0.95. Combine this with the price index in Vancouver, much higher than Portland, and Portland is looking pretty good.

...sorry about that, the wheels are always turning. It was a truly wonderful weekend. And in case my wife is reading this, I wasn't thinking about the sales tax thing while we were there sweetie.

Stay tuned for more entries as I get back to Business School this week.

Business School attacks again... not sure I survived this time.

If you are thinking about going to business school, don't let this post scare you... 

So, the long awaited Econ test finally arrived last night. I finished up my 11 hour day at work at 4:50PM and hit the road for my 35 mile commute to school. It usually takes about 45 minutes to get there, but yesterday it took 1 hour and 20 minutes. I arrived on campus at 6:10PM... the midterm started at 6:00 - ah, the joy of evening Business School.

Tired from my sprint to class, I exchanged awkward glances with the professor, grabbed a test, and sat down. This was not a good start (1 hour and 29 minutes on the clock).

It was right about here that I began to appreciate my 11 hour take-home Accounting exam...

The first question (Income price elasticity and indifference curves) took me 40 minutes (49 minutes remaining). I erased and redrew graphs with my 3 colored pencils several times as I answered the question. 

The next question was on firm supply costs and it took me about twenty minutes. I was put in the place of a KFC owner losing money and had to decide whether to advertise to get more business or shut down (29 minutes remaining). 

The third and fourth questions are a blurr, but I remember something about a taxi cab shortage, limited licenses for sale, fixed prices, and a mayor who wanted to increase the number of cab rides offered. I finished the fourth question with 9 minutes remaining.

The  last question was a "special" multiple choice. The directions said that there could be one, several, or zero right answers given. It also said that you could show your work for an opportunity at partial credit, but if your answer was right and the work didn't fully support it, you could lose credit too.

Finally, I skimmed the test answers, labeled some axes, panicked, and listened for the, "time's up".

I left the classroom in a daze. My ears where red and burning, my scalp tingling, and my back in knots. This was one of the worst feelings I've had on a test in a long time. I either did well, OK, or horrible. 

Stay tuned for the results. 

By the way, I received a 91/103 on my Accounting midterm. Not as good as I hoped, but nothing to complain about.

...the living room is repainted and new curtains hung, but we are still waiting on the new sofa.

Business Education: How its Going

I was looking through my last several blogs and realized that my tone has been a bit, well… doom and gloom. I wanted to take this opportunity to tell you that it’s actually going really well. Yes I am tired, yes Business School is full throttle and completely overwhelming. Yes it is hard, but it has been really enjoyable too.

I have moments like during my Accounting midterm when I realized that I am now able to read financial statements and know something as a result. I have epiphanies in Economics where I understand concepts that didn’t even occur to me… like when demand decreases the quantity sold goes down and so does the price. This seems counterintuitive, but now I get it.

Overall, the business education that I am receiving has been tremendous and I wouldn’t trade it for anything. In addition to the classroom experience, there are the extracurricular activities like a possible business plan competition in Beijing in the spring, a VC meet and greet next week, and mentorship program. These experiences are only possible at this stage in life by having the “student” pass.

So, am I happy I am here? Yes. Is it worth the GMAT, the application, the essays, the letters of recommendation, etc? Yes.

When I look over the last 5 weeks (it seems so much longer) and think about how much I have learned, I am so excited to see where I will be when the program is complete. It is an amazing thing to be on this path, and it’s great to have you with me.

…the living room is painted. On to the crown molding!

The Second Half of the 400

Last night in class, my Accounting professor shared a philosophy that his high-school track coach had about the 400m dash. It goes something like this, 

"Run the first 200 as fast as you can. When you get to the last 200... run faster."

He said that this mantra is applicable to our Financial Accounting course...

He then went on to explain how what we had done so far (Assets) was really pretty easy. He said that what we were about to get into (liabilities and Owner's Equity) was the hard stuff. We all just stared at him in disbelief.

...rewind to justt 1 hour before this proclamation of things to come in the Accounting class. It was at this moment that I had another "oh, no" (not to be confused with aha) moment in my Economics class. The Professor said these exact words, 

"Do you understand these short run and long run cost curves? :::blank stares::: Because if you don't get this your really in trouble. It's about to get really hard, and this is basic."

I wish I had taken a picture of the white board to show you. The diagrams behind him might as well have been pictures of spider-webs with random x and y axis' placed in different spots on the board.

And then to boot, he gives us a homework assignment that is due the day of the midterm. 

Already demoralized from the Economics class, I went to my Accounting class and got the second half was harder than the first speech. So, I am wondering about something. Do professors get together and talk about what they could collectively say to depress their students. Is the second half always harder than the first? Because, honestly I usually find the second half easier. 

I'm not sure what is going on, but I am sure of something... my last final is on December 9. That final is followed by 3 weeks of splendid vacation, and I am starting a countdown.

The Business School attacked... and I survived

For those of you who are regular readers, let me start by asking for your forgiveness for leaving you in the dark the last week. 

You see, it's been a whirlwind since my last entry. I studied for my accounting midterm, took my accounting midterm, began studying for my Econ midterm, and did the prep work (taping, spackling, etc. in order to paint my living room).

Let me start with the midterm...

Well, we had been warned from the first day of the quarter that the only way to learn accounting was to put lots of time in reading and studying (preferably in a hard chair). And I did put that time in throughout the semester, so I felt pretty good going into the midterm exam. In fact, I really didn't cram for it at all. I just did the practice test, stayed for the after class study session, and skimmed over my notes. 

Now remember this exam was a take home test. It was open book and open note, but the kicker was that it was fifteen pages of questions (about 40 questions). All of them were "short" answer. I had 48 hours to complete the exam and e-mail it back o the professor.  Welcome to Business School.

Thursday evening rolls around... After a full day of work and an Econ class, I have enough energy to outline the financial statements and do the first 3 pages. Friday I went to work (left home at 5:30 AM) and waited to work on the exam until I got home. After about 3 hours or so I finished the exam... in pencil. I then typed up my answers inserting graphs and correcting along the way. So I went into Saturday with a completed typed exam, but here is where the curse of the take-home reared it's head, the "re-check". Over the course of my "work" day I checked the exam 3 times. This took me 8 hours off and on in between doing work stuff. I finally sent the exam off to the professor at 4:00 PM.

After sending it off, I talked to one of the other guys in my group about the test and then decided to recheck my answers (I had already turned it in mind you). I found a mistake, but wrestling with my conscience I decided that I would not have found the error had it not been for my conversation with another student, I decided to let the submitted exam be the final one. Score one for the Business School honor code.

After that I enjoyed a nice dinner out with my wife (Ramen Noodle Bowls) and slowly came down from the exam high. Unwinding from a 3 day, 11 hour test wasn't easy. 

So that was Saturday night. Today is Monday and my group is gearing up for an exciting 10 day countdown until the next exam, ECON. And believe me it's much scarier than the capital letters I just used to describe it. I'll try and keep you updated as I prepare for this one. So stay tuned as we move from unearned revenue to shifts in demand. Oh yeah... I'll let you know how the living room comes out too.

Goodnight!

Business Education : Meet Joe the Plumber

First, check out this video...

Am I the only one who thinks this Joe the Plummer guy has gained way too much celebrity? Well, I think its because the facts have been mixed up. I'm going to attempt to use my business eduction to evaluate the situation. Here are the assumptions I think people are making about Joe the Plummer and Obama's tax plan:

1. As the business owner, he would be part of the middle class

2. Obama would raise the tax rate on all of his income

3. Obama's tax is assessed on revenue

4. Joe's income tax will increase significantly

I am assessing this from a purely economic standpoint.

Here we go...

1. As the business owner, Joe would be among the top 2% of earners in the nation.

2. The additional tax for Joe would be on the amount over 250K/ year. In the video, Joe estimates that the business would make 250K to 280K. Therefore the additional tax would be on 0-30K/year.

3. Obama says that the tax is based on Revenue. This is actually not correct. All businesses, like people are taxed on Revenue - qualified expenses (write offs). For Joe's business this means "net income" or "profit". Joe got it right when he said the business "makes about...", he was talking about net income.

4. Based on our answer to number 2, Joe's income that will be taxed at the new rate (39% instead of 36%) is 0-30K. That means that the additional tax that Joe will be responsible for is 3% of 0-30K or $0.00-$900.00. This will be on top of the $78,000 in taxes he would currently be responsible for assuming a net income of $280,000.00

So, is Joe an "average Joe"? Is the additional tax significant? Should Joe refuse the additional 30k in business because of an additional $900 in tax liability? Should Joe not buy the business because of the higher tax rates?

I say who cares. Shame on the media for blowing this so far out of proportion (i.e. follow up interviews with Joe, videos, fan sites, etc.). Shame on the Obama campaign for mixing up revenue with net income and saying things like, "spread the wealth around" - C'mon Obama, it's time for a business education. Shame on the McCain campaign for making a guy who will be financially elite (statistically) their champion for the middle class - C'mon McCain, what happened to the straight talk express. And shame on me, you, and the rest of us for paying attention to it.

Attack of the Business School: First Midterm

If you have noticed my entries occurring more and more on the weekends, it’s because my weeks have become completely squashed. Sometimes remembering them is like trying to remember what you saw while zoning out during a drive that you have taken 100 times before.

This week was just like that, and included the following evening activities:

Monday: Group Meeting

Tuesday: Class

Wednesday: Mentor Meeting and Group Meeting

Thursday: Class and Sleep (Finally)

This brings us to Friday... I settled down to start studying for the Financial Accounting mid-term. The test is next week on Thursday.

The professor was kind enough to provide us with a practice test from a past class to study from. He posted the practice test, supplemental materials, and solutions on an online education site called Blackboard.

I printed the practice test on Friday and spent about 2 ½ hours working the problems. I scored about a mid C without consulting my notes. I feel like this is a pretty good starting place. The plan now is to study all of the material (Revenue, Acc. Receivable, Inventory, Long Lived Assets, Intangibles, and general info) in the first part of next week. Then I’ll rework any of the practice test problems I missed or was iffy on.

…and actually while studying for this accounting midterm, I became very encouraged. Here I was flipping through the cash flows statement, the income statement, the balance sheet and other addendums, and the numbers actually meant something to me. I am beginning to understand which figures are solid and which ones can be manipulated by company management. The numbers are beginning to have life. 6 weeks ago I had little, if any, knowledge of what the financial statements really meant, now I am beginning to feel literate.

So, here I go… T-6 days and counting until my first mid-term in Business School. I’ll let you know how it goes.

Business School Returns: The 500 Level Course

For the first few weeks of this quarter (my first quarter in Business School) I have been under the impression that I was taking one relatively easy course and one difficult course-Economics 500 and Financial Accounting 500 respectively. But during the last Economics class, the professor said something that was a little bit scary... 

"That ends the principle's portion of the class. Now we are going to move on to what is commonly referred to as Intermediate Economics and we will dive in even further in the last part of the quarter"

After the professor made this statement he proceeded to explain indifference curves and the indifference map using calculus (not a required prerequisite). This was a far cry from the shifting of supply and demand curves, which we were talking about just ten minutes earlier!

At this point in the class, my face and the faces of most of my classmates went blank and we all began to slowly slink into our chairs. Although, it is comforting to know I wasn't falling down the black hole alone, I began to get very worried about the course. 

The problem was that I didn't have the right expectations of core Business School cirriculum. 

The core classes (i.e. accounting, econ, stats, etc.) end with 500. But what 500 really means is... everything you would learn in 101/201 jammed into the first 3 weeks, everything you would learn in 301 in the next 3 weeks, and 401+ in the last 3. These courses are not designed to be "refreshers" or to "cover the basics", they are designed to ramp up someone who has no business background in rather short order.

Here I was feeling great about having a business undergrad, but in 3 weeks I'm even with someone who majored in computer science or psychology. So much for the headstart.

So, what I do with my newly discovered wisdom? Study... hard, for both classes and count down the days until the quarter ends.

I'll let you know how it goes...

Watching Rome Burn: Taking a Break from Business School to Gather My Thoughts

Well, if you have a pulse, you have probably heard the news about the U.S. economy and the broader world economy this week. So what does it mean when the DOW loses 23% of its value in one week? (I picked a great time to go to business school)

I think this depends on your situation...

First, the DOW 30 aren't the only stocks to lose there value. The S&P 500 and most major mutual funds have also been hacked. The only index that hasn't taken a huge hit yet is the NASDAQ which is down about 3%, but tech earnings are coming in today. We'll see how long it lasts.

Here are two examples of some real life impact of all of this...

My Father who retired two years ago is in dire straights right now. He is 66 and is making small draws on his 401K. In 4 years he will be required to withdraw a higher percentage each month to comply with the 401K laws. So what's the problem with that? The problem is that the shares are undervalued. What he is drawing today may be worth twice as much in a few years (and was worth twice as much a few weeks ago). Since he is in very good health he is wondering if he might outlive his retirement. He's lost about 40% of his portfolio value. The bottom line is he is now selling about twice as many shares to collect the same income from his 401K.

I am in my late 20's and had about 30K in the market going into the last few weeks of turmoil. My new value is about 19K. I am invested in a range of mutual funds inlcuding emerging market funds. The one key difference for me is that my retirement horizon is at least 30 years. This means that while the shares I own are worth less, I get to buy new shares at the low price. If my monthly contribution used to buy 10 shares, it now buys about 20. So essentially, I am buying shares on sale- or at least that's what I tell myself. When the market returns, the average price I paid should be quite low, and I will realize a huge gain.

...yes I am trying to find the silver lining, but the fact of the matter is this is depressing. No one likes watching their or their parent's retirement halve in a matter of months, and recssion is a scary thought. What if I lose my job? What if my house is worth even less? What if I have to foreclose?

So, for my part, I'm going to try not to be affected. I've already turned off the news and I am beginning to think happy thoughts. Maybe this is the real cure. If we all fight the histeria, we could tip confidence (Malcolm Gladwell Style) and see a rebound in the markets. If the government can solve the credit crisis in the mean time we will be high flying again.

Sound like a plan?

Business School Begins: Meanwhile Back at the Office

Well, I am 9 days into business school and already fitting that profile of the fully exhausted Grad student. But, unlike some of my peers I still have that good old day job to go to, and this week the day job was more interesting than usual...

This past week, in the midst of slaving away at work, an all-day meeting was scheduled. It turns out that our regional VP and HR guy wanted to come talk to all of us about a recent employee survey that was conducted. 

Rewind... This was a basic anonymous survey with questions like, "do you have the tools you need to do your job?", "does your manager support you?", "would you recommend your company to a friend?", etc. etc. Well, I took the opportunity to inject some truth including a full page of comments about all of the issues that bothered me. In fairness I included some of the more recent positive changes as well.

OK, back to the meeting... We split into two groups... senior and junior managers- I am the latter. When the powerpoint fired up with the response graphs and comments I quickly discovered that I was one of the only people that had left comments. In fact, 70%-80% of the comments on the screen were mine. This was a little concerning at first, but as the HR guy (our moderator) started walking through them, people began to open up. 

One person agreed with my comment about upward opportunity. Another one began to elaborate on the micromanagement we all endure. A third person echoed my thoughts on the desire to get involved outside the operation (side projects). A fourth person discussed the centralized decision making - and the lack of junior level manager involvement. This went on for two hours! We went through the negative and the positive - I felt such a huge amount of relief. I wasn't crazy... I was just the only one speaking up.

After our productive discussion, the two groups came back together. The next step was to present a summarized version of our comments to the senior managers and vice-versa.  As expected, the senior managers began to ask for specifics and this is where the conversation broke down. No one was about to stand up and say, "yeah, so last week when you were micromanaging me...". It just isn't realistic.  So, our Senior Director, who is very intuitive, brought the meeting to a close and thanked everyone for their time. 

A strange ending to the day, but early this week (a week later) an e-mail came out from the senior director outlining the formation of teams to breakthrough the issues the junior managers brought up. What an amazing thing. We were listened to and changes are already starting to occur.

I feel like this is an important sequence of events that I will remember long into my career. I guess you don't learn everything in business school.