Tag Archives: Karen L. Johnson

Bob Doll: Financial Entertainment vs Financial Education

Around Town, Business, Guest Post, , , ,

Kudos to Karen L. Johnson CPA CGMA PMP for filling in for me to file this guest post. For more economic input, the Princeton Regional Chamber holds its economic and technical summit on Tuesday, March 8.   When he was still at BlackRock, Doll was the keynote speaker. 

bob doll A man of finance, family and faith spoke at the Princeton Chamber’s luncheon on March 3. Fresh from CNBC’s Squawk Box, Robert Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management,  sees one factor in the purpose identified by some media:  financial entertainment and not financial education, in an environment where bad news sells. What was wrong with the market?  A fear funk.

What’s really the biggest risk to the market? That we will import deflation from the rest of the world. Doll suggests we keep in mind that the US is the most isolated economy in the world, 87% domestic, and we’re letting the tail, 13%, wag the dog.  Consider first some positive tailwinds for the US consumer, such as the biggest generation of jobs in history over the last five calendar years, with 89% full-time, along with average earning up 2.5%, to be 3% by the end of 2016.

Look too at corporate balance sheets, where debt has been paid down, and the powerful impact of oil going from $100/barrel down to $30.  As of now, we’re spending a third and saving two-thirds.  Add up those gas savings and it’s “Time for vacation, honey.”

Hand-wringers are citing the decline of manufacturing.  We had Cassandras when we moved from agriculture to manufacturing, just as we do now as the economy has moved from manufacturing to technology. And keep in mind our 2.4% growth, last year and this.

What about Washington? There’s the good, bad and the ugly. [my phrase, not his]  The Good: over about the last 7 years, the Federal deficit has collapsed from $1.4 trillion to $0.4 trillion.  The Bad: Corporate America has the highest marginal tax rate in the world.  The Ugly?

Is this choir director (Doll is listed as such on the website of Stone Hill Church) preaching to the choir? Hard to tell.  What’s sure — it was education and entertainment as he captivated the full house at the Forrestal Marriott.

He wasn’t a funny guy but he did have amusing parts – and he did have the undivided attention of the audience — which puts into question CNBC Squawk Box’s contention that being entertaining means you can’t also have an educational purpose.

So get rid of the fear funk. Don’t confuse the stock market and the economy.

karen johnson
Karen L. Johnson

 

jon peter

Being early is not too different from being wrong, said Jon Gertner, speaking to the Princeton Regional Chamber at the August breakfast. The author of The Idea Factory: Bell Labs and the Great Age of American Innovation (Penguin Press, March 2012) gave glimpses of the clashes and collaboration that led to innovation at Bell Labs, the consolidated R&D center built at Murray Hill when AT&T was the largest company in the world in terms of revenue, assets, and employees.  A former New York Times Magazine  writer (2004-2011) Gertner is currently editor-at-large at Fast Company magazine. 

He illustrated the danger of being “early” with the enthralling story of vacuum tubes and transistors.  When the 101-D vacuum (or repeater) tubes (which enabled sound to be relayed from switch to switch across the country) was being hailed as “the great miracle device of our time,” Bell Labs CEO Kelly considered it an inherently flawed technology.  He was determined to find a technology based on silicone and germanium not susceptible to weardown and breakdown.

His mindset drove the “solid state” team to get rid of the relay switches and find an electronic solution: the first transistor in November, 1947. What happened next was that the transistor was basically abandoned by Bell:  It was costly to produce.  Only the US Military kept it alive until continued innovation led to lower cost.  At the same time, the press hailed solar, created to get electricity to remote areas.  Yet the fad for solar soon faded since there was no comparable drop in cost. 

The “Being early” mantra was just one of the takeaways. Others: 

  • First identify large, significant problems and then attack them to achieve breakthroughs
  • Innovations by definition have both scale and impact on society
  • There is no set way of making breakthroughs
  • Failure is an inherent part of innovation.
  • We don’t foresee the use and value of breakthroughs.
  • When inventions are not effectively commercialized, the inventors will scatter and create their own companies but the company that spawned them may die.

As several members of the Chamber observed, substantial governmental subsidies at every stage, combined with the backdrop of 23 operating companies providing capital, made it possible for Bell Labs to fund basically anything.  Bell Labs had the freedom to concentrate not on quarterly profits and consumer goods but rather to focus on the foundations of our live.  They changed our world and our lives.