The Importance of First Impressions

The first impression a CEO gives, even based solely on certain facial characteristics, could predict how successful his company will be, a new study suggests. First impressions (what others think of a person at a glance) can tell us a lot about another person, and several psychological studies have shown that they can predict success in areas such as running for elected office or teaching. But how well a teacher teaches and how much a candidate appeals to voters are both subjective ideas.

Psychologists Nicholas Rule and Nalini Ambady of Tufts University set out to study whether first impressions could predict performance in a more objective evaluation: how successful a CEO’s company was. In their experiment, the researchers had college students rate the faces of the CEOs of the highest and lowest ranking Fortune 1000 companies according to their perceived leadership abilities. Certain personality traits associated with leadership, including competence, dominance, likeability, facial maturity and trustworthiness, can be judged from a person’s face, previous studies have shown.

The researchers grouped these traits into two factors influencing leadership. Competence, dominance and facial maturity were combined to represent “power,” while likeability and trustworthiness represented “warmth.” The CEOs who were rated as more powerful by the students turned out to be running more successful companies.

Warning To The Bulls

Managers of Government-run Chinese mutual funds keep coming up with the same can’t-miss moneymaking opportunity for Lin Rongshi–and for themselves. The messenger might be a low-level functionary or a trusted middleman. Lin, a private fund manager, said the message sometimes would be delivered in his high-rise office overlooking Shanghai’s financial district or, more discreetly, by mobile phone. “They notify us first, and they would buy a few days later [for the fund], then they would come back to us to split the profit I make from buying at a lower price,” says Lin.

This front-running scheme would net an almost guaranteed haul for Lin and for the state-sector employees. Some others, –insiders all, would profit, too. The only outsiders in the transaction would be the mutual funds’ customers, average Chinese investors who have little idea how routinely their money is abused on the Shanghai and Shenzhen stock exchanges. They come to this man to cheat a fortune from the stock market because he was once an expert at it.

Lin says he made his first $100,000 from a trade made on inside information ten years ago, at age 23. He clocked close to a million dollars by the time he was 25, on insider trading, front-running and stock manipulation in the last Chinese bull market, before losing it all and more in 2001 on his last and biggest play.

Rich shareholders, fund managers, even the top management of listed companies–all have approached Lin in the last year, he says. Chinese investors often suspect manipulation behind the sudden, sharp rises in share prices, but their typical reaction is not outrage. Few stock cheaters get caught, and those who do are rarely jailed. The regulator, the CSRC, China Securities Regulatory Commision, is lacking in staff to hunt down cheats, lacking in legal power to punish them severely and sometimes lacking in political clout to take on some of the well-connected state-owned companies it is supposed to watch. Lawsuits are even less effective. The Communist Party, wary of any organized group of malcontents, essentially does not permit class actions.

So, how do you short Chinese stocks when shorting the Chinese mainland market is not allowed? There are several work-arounds, but none are perfect:

• Go through one of China’s Qualified Foreign Institutional Investors. QFII’s—including Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch, HSBC, UBS and several dozen others—are allowed to buy A shares on the Shanghai and Shenzhen exchanges, the playground of domestic Chinese investors. A QFII can offer investors short positions through derivatives. The downside: More middlemen means more transaction costs.
• Short-sell exchange-traded funds that are comprised of Shanghai and Shenzhen A shares. The WISE CSI 300 China Tracker and the iShares FTSE/Xinhua A50 China Tracker are both listed in Hong Kong. The downside: You can’t bet against individual stocks.
• Short-sell a QFII’s closed-end A share fund, like Morgan Stanley’s China A Share Fund. The downside: Even if the value of the fund’s assets falls, that doesn’t mean the fund’s share price also has to fall.
• Bet against Chinese companies listed in Hong Kong. Direxion offers a China Bear 2X Fund and ProFunds Group offers ProShares UltraShort FTSE Xinhua China 25, both betting against the same 25 Hong Kong-traded stocks. If you’re betting on an all-China slump, these funds will rise 2% for every 1% that the 25-company index falls. The downside: Valuations on the Hong Kong “H share” market are not as sky high as on the A share market.
• Wait until China opens its own futures market, which has been expected for some time. The downside: You might miss your chance while you’re waiting. China might not want people betting against their stocks until at least after the Beijing Olympics.

It’s weird and irrational, but it’s the way it is.

Would you rather earn $50,000 a year while other people make $25,000, or would you rather earn $100,000 a year while other people get $250,000? Assume for the moment that prices of goods and services will stay the same. Surprisingly — stunningly, in fact — research shows that the majority of people select the first option; they would rather make twice as much as others even if that meant earning half as much as they could otherwise have.

This result is one among thousands of experiments in behavioral economics, neuroeconomics and evolutionary economics conclusively demonstrating that we are every bit as irrational when it comes to money as we are in most other aspects of our lives. In this case, relative social ranking trumps absolute financial status. Here’s a related thought experiment. Would you rather be A or B?

A is waiting in line at a movie theater. When he gets to the ticket window, he is told that as he is the 100,000th customer of the theater, he has just won $100.

B is waiting in line at a different theater. The man in front of him wins $1,000 for being the 1-millionth customer of the theater. Mr. B wins $150.

Amazingly, most people said that they would prefer to be A. In other words, they would rather forgo $50 in order to alleviate the feeling of regret that comes with not winning the thousand bucks. Regret falls under a psychological effect known as loss aversion. Research shows that before we risk an investment, we need to feel assured that the potential gain is twice what the possible loss might be because a loss feels twice as bad as a gain feels good.

Hunter vs. Gatherer: According to research, men and women are as different as Target and Tiffany when they shop.

Men, who have often been accused of being merely replacement shoppers, tend to be more utilitarian when they hit the malls and shopping centers. It’s a mission. Get in. Get what’s needed. Get out. Quickly. Women, on the other hand, generally like to look around, talk to sales associates and experience the shopping. They walk around, smell perfume, touch clothes, dab on cosmetics.

Men are very task oriented while women are very much more about the relationship and the engagement and the interaction with the people at the stores. Women told surveyors that they liked it when associates showed them different styles and new items. This isn’t terribly surprising: Women run into more problems when shopping than men. On the tribulations scale, women’s No. 1 issue was not being able to find help when they needed it. One in three women who were so miffed by the issue that they said they would never go back to the store again. Men’s biggest headache: Parking. One in three said they hated not finding parking close to the store entrance.

Men ditch stores, too, but their biggest reason to do so is when products are out of stock. Men complained they experienced that when shopping 24% of the time compared with it happening to women 21% of the time.

Age made a difference, too, in shopper loyalty. The younger the shopper, the more likely he or she was to pooh-pooh a store for poor service. The pickiest of all groups were men 18 years old to 35 years old.

Women and men both are four times more likely to relay a good-news experience than a bad one. Still, when all is said and done, women are the shopping queens. They spend an eye-popping $4 trillion annually, which accounts for 83% of U.S. consumer spending

Sell Your Soul For $1.5 Million

With the wealth boom creating unprecedented riches and greater opportunities for gold-digging by both genders, price-tag partnerships and checkbook breakups are increasingly making headlines. Even more surprising, according to a new survey, are the going rates for today’s mercenary unions. Yet even among the workaday (or wannabe) wealthy, marrying for money has become a popular pursuit.  In an infamous personal ad posted on Craigslist this summer, a twentysomething New Yorker who described herself as “spectacularly beautiful” wrote that she was looking for a man who made at least $500,000 a year. You can read her ad here.

According to a survey by Prince & Associates, a Connecticut-based wealth-research firm, the average “price” that men and women demand to marry for money these days is $1.5 million. The survey polled 1,134 people nationwide with incomes ranging between $30,000 to $60,000 (squarely in the median range for nationwide incomes). The survey asked: “How willing are you to marry an average-looking person that you liked, if they had money?”

Fully two-thirds of women and half of the men said they were “very” or “extremely” willing to marry for money. The answers varied by age: Women in their 30s were the most likely to say they would marry for money (74%) while men in their 20s were the least likely (41%).  Women aren’t the only ones with the gold-digging impulse. In the Prince & Associates study, 61% of men in their 40s said they would marry for money. As men get older, they become more comfortable with women being the bread-winners.

The Matrimonial Price Tag Varies By Gender and Age

Asked how much a potential spouse would need to have to be money-marriage material, women in their 20s said $2.5 million. The going rate fell to $1.1 million for women in their 30s, and rose again to $2.2 million for women in their 40s. Men are cheaper! Their asking price overall was $1.2 million, with men in their 20s asking $1 million and men in their 40s asking $1.4 million. Why so low? Men’s numbers are lower because they would feel threatened by women worth several million dollars. The men aren’t going to say they want $10 million, because they wouldn’t be comfortable with a woman who’s worth so much more than they are.

Whatever the case, the prices for both men and women seem surprisingly low, given the new landscape of wealth. While $1 million or $2 million may sound like a lot to people making $30,000, it’s hardly enough to transform someone’s life or make them “rich” by contemporary billionaire standards. No one in the survey quoted a price of more than $3 million. Of course, when the mercenary marriage proves disappointing, there’s always divorce. Among the women in their twenties who said they would marry for money, 71% said they expected to get divorced — the highest of any demographic. Only 27% of men in their 40s expected to divorce.

When Marriage Is A Risk 

In this Web-friendly age, billionaires, politicians, and others who live in the public eye have a hard time keeping information about their lives private. Yes, the rich really are different from you and me. For most people, a wedding is a simple, joyous occasion. Family and friends gather to celebrate the ceremonial joining of you and your true love. For billionaires it’s more complicated, with stresses and strains that others don’t bear. They don’t just have to choose a florist and a band; they usually need a good lawyer, too. Attorneys familiar with billionaire marriages urge their clients to proceed with care and caution. A billionaire has to treat an upcoming marriage as a merger. But it’s a merger with a potential enemy. Prenuptial agreements are important, but they’re no guarantee of a satisfactory split if things go south.

Another issue that comes with prenups is privacy. Agreements can include confidentiality clauses to prevent one of the parties involved from giving out information about a marriage in case of divorce. That can mean barring anything from TV interviews about the ex to writing a book.

Consider the divorce of Steven Spielberg, now at DreamWorks Animation, and his first wife Amy Irving. She claimed their prenup was invalid because it had been written on a napkin and she hadn’t had legal representation. A judge tossed it out; Irving got $100 million. The prenup of Bob Johnson, the founder of Black Entertainment Television, held up, but it still cost him plenty. He agreed to a deal with his wife, Sheila Johnson, in which she would receive half of their assets if they split up. By the time they did get divorced in 2002, his media empire was worth billions — and she got her half.

Dyslexia Forces People To Master Verbal Communication 

It has long been known that dyslexics are drawn to running their own businesses, where they can get around their weaknesses in reading and writing and play on their strengths. A new study of entrepreneurs in the United States suggests that dyslexia is much more common among small-business owners than even the experts had thought. Julie Logan, a professor of entrepreneurship at the Cass Business School in London, found that more than a third of the entrepreneurs she had surveyed — 35%— identified themselves as dyslexic. The study also concluded that dyslexics were more likely than nondyslexics to delegate authority, to excel in oral communication and problem solving and were twice as likely to own two or more businesses.

“We found that dyslexics who succeed had overcome an awful lot in their lives by developing compensatory skills,” Professor Logan said. One reason that dyslexics are drawn to entrepreneurship, Professor Logan said, is that strategies they have used since childhood to offset their weaknesses in written communication and organizational ability — identifying trustworthy people and handing over major responsibilities to them — can be applied to businesses. Entrepreneurs are hands-on people who push a minimum of paper, do lots of stuff orally instead of reading and writing, and delegate authority, all of which suggests a high verbal facility. Compare that with corporate managers who read, read, read. Only 1% of corporate managers in the United States have dyslexia.

Individuals who have difficulty reading and writing tend to deploy other strengths. They rely on mentors, and as a result, become very good at reading other people and delegating duties to them. They become adept at using visual strengths to solve problems.

Parallel Lessons

• Let Them Cry   Sometimes, no matter how hard it may be, you need to let them cry it out. Whether it’s an employee who wants more of something but hasn’t quite earned it yet or a baby who is overtired and needs to sleep, you can’t always get what you want. As a parent and a CEO, you can’t always give them what they ask for.
• Count to 10   Losing your temper is not a good way to show that you are in charge and worthy of respect. It’s also not a good way to help your staff/child improve. Count to 10 before you react, and think about how a measured response will get you much better results. I’ve found that in most cases when I’m really angry, it’s a very temporary thing.
• Let Them Fail   There are many times when you just need to sit back and watch people fail for their own good. Employees need to botch a sale, sometimes, in order to learn how to do it correctly. Kids have to fall down when trying to stand, walk or ride a bike. If you save either from the mistakes before they happen, you’ll deprive them of the chance to learn important lessons firsthand.
• Carrots, Not Sticks   This is a wonderful lesson that really works with kids. Rewarding good behavior creates a desire to behave well without all the trauma of avoiding pain.
• Be the Boss/Parent   There is a desire among bosses to be friendly with your staff. When push comes to shove, you have to be able to separate as a friend and be the boss. There is a huge difference between being friendly and being friends. Parents are in the same boat — you can love your kids, but you are not their friend. You need to have that separation for times when you need to use your authority.

 How Well Are You Dealing With Stress?

One-third of Americans are living with extreme stress and nearly half of Americans (48%) believe that their stress has increased over the past five years. Stress is taking a toll on people — contributing to health problems, poor relationships and lost productivity at work, according to a new national survey released today by the American Psychological Association (APA).

Money and work continue as the leading causes of stress for three quarters of Americans. Nearly half of all Americans report that stress has a negative impact on both their personal and professional lives. Stress causes more than half of Americans (54%) to fight with people close to them. One in four people report that they have been alienated from a friend or family member because of stress, with 8% connecting stress to divorce or separation.

Stress in America continues to escalate and is affecting every aspect of people’s lives — from work to personal relationships to sleep patterns and eating habits, as well as their health. Physical symptoms of stress include: fatigue); headache; upset stomach; muscle tension; change in appetite; teeth grinding; change in sex drive and feeling dizzy.  Psychological symptoms of stress include: experiencing irritability or anger,  feeling nervous, lack of energy and feeling as though you could cry.  In addition, almost half (48%) of Americans report lying awake at night due to stress.

While many Americans recognize that stress has a negative impact on their health, they may lack the motivation to make lifestyle and behavior changes. Only 35% report that they would modify their behavior following the diagnosis of a chronic condition. Encouragement from a spouse or partner would motivate 38% to make behavioral changes.

The First Thanksgiving, 1621, painting by J.L.G. Ferris (1863–1930)

Here are 10 possible reasons you aren’t a millionaire:  

Take a hard look at the list, and do some reflecting. If you want to be a millionaire, it’s well within your power, but you’ll have to face the issues that are currently keeping you from creating that wealth before you will have a chance to call yourself one.

1. You Care What Your Neighbors Think: If you’re competing against them and their material possessions, you’re wasting your hard-earned money on toys to impress them instead of building your wealth and self-esteem.

2. You Aren’t Patient: Until the era of credit cards, it was difficult to spend more than you had. That is not the case today. If you have credit card debt because you couldn’t wait until you had enough money to purchase something in cash, you are making others wealthy while keeping yourself in debt.

3. You Have Bad Habits: Whether it’s smoking, drinking, gambling or some other bad habit, the habit is using up a lot of money that could go toward building wealth. Most people don’t realize that the cost of their bad habits extends far beyond the immediate cost.

4. You Have No Goals: It’s difficult to build wealth if you haven’t taken the time to know what you want. If you haven’t set wealth goals, you aren’t likely to attain them. You need to do more than state, “I want to be a millionaire.” You need to take the time to set saving and investing goals on a yearly basis and come up with a plan for how to achieve those goals.

5. You Haven’t Prepared: Bad things happen to the best of people from time to time, and if you haven’t prepared for such a thing to happen to you through insurance, any wealth that you might have built can be gone in an instant.

6. You Try to Make a Quick Buck: For the vast majority of us, wealth doesn’t come instantly. You may believe that people winning the lottery are a dime a dozen, but the truth is you’re far more likely to get struck by lightning than win the lottery.

7. You Rely on Others to Take Care of Your Money: You believe that others have more knowledge about money matters, and you rely exclusively on their judgment when deciding where you should invest your money. Unfortunately, most people want to make money themselves, and this is their primary objective when they tell you how to invest your money.

8. You Invest in Things You Don’t Understand: Your hear that Bob has made a lot of money doing it, and you want to get in on the gravy train. If Bob really did make money, he did so because he understood how the investment worked. Throwing in your money because someone else has made money without fully understanding how the investment works will keep you from being wealthy.

9. You’re Financially Afraid: You are so scared of risk that you keep all your money in a savings account that is actually losing money when inflation is put into the equation, yet you refuse to move it to a place where higher rates of return are possible because you’re afraid that you will lose money.

10. You Ignore Your Finances: You take the attitude that if you make enough, the finances will take care of themselves. If you currently have debt, it will somehow resolve itself in the future. Unfortunately, it takes planning to become wealthy. It doesn’t magically happen to the vast majority of people.

If it’s done anything, it’s made me never, ever want to buy a Chevy.

Who hates those Chevy commercials because of their song “Our Country,” by John Mellencamp? According to Newsweek, everybody hates it. Mellencamp’s melancholy anthem have become so ubiquitous that they’re driving sports fans to distraction. Chevy thinks the campaign has been a success, and are actually making more “Our Country” commercials, despite heavy criticism from people who are sick of the song.

The company used Bob Seger’s “Like a Rock” for 11 years, helping drive up truck sales 61%. Chevy spokesman Terry Rhadigan is aware of the negative buzz but has no plans to throttle back.  When it comes to building awareness, experts say, nothing succeeds like excess—even at the risk of overkill. Just great!

A busy workload means less time at home and therefore less time for housework, regardless of income.

A new University of Massachusetts Amherst study finds married women do about one less hour of housework per week for every $7,500 they earn as full-time workers outside the home, regardless of the husband’s income. Married women who work full time may be looking largely at their own salaries — not those of their husbands — when deciding which routine chores can or should get done in their home. So why does the wives’ higher income translated into less time on housework? The reasons could include the financial freedom to hire a housekeeper; the time demands of some higher-paying jobs; different standards of tidiness; more outside activities and therefore less wear and tear to clean up in the house; or other factors.

How Could You NOT Judge This Guy? 10 Popular Myths About Wealth and Luxury

1. The Wealthy made their money easily and spend their money easily. Most wealthy individuals spend far more hours working, embrace far more risk, and create far more value for society than their mainstream counterparts. Even today, for most, it still takes years of immense sacrifice to achieve wealth. Wealthy consumers are therefore very value conscious and discerning when they buy luxury goods and services.

2. The Wealthy are conspicuous consumption machines living in another reality. The minority of wealthy individuals who live ostentatious, opulent lifestyles are often portrayed as stereotypical wealthy consumers. In reality, most wealthy consumers are value creators, who seek quality and value, including authentic prestige, in luxury goods and services. Like many of us, some of their biggest concerns include taking care of aging parents and raising well-educated, generous children. When marketing to them, acknowledge their basic human values and show you understand them as the well rounded and balanced individuals they really are.

3. The Wealthy can’t really define luxury. Put a list of brands in front of the typical wealthy consumer and she, or he, will not only be able to articulate the attributes that constitute a luxury brand, but will also discern differences between brands better than any luxury marketer. The ability of wealthy consumers to define true luxury, individually, and as a group, is laser-accurate.

4. Luxury goods are a far larger industry than luxury services. Luxury goods such as couture fashion, watches and jewelry, get all the attention, yet, are dwarfed by the size of luxury services such as wealth management, travel and leisure, security, etc. Innovative services, including those as basic as nanny services, concierge services, and medical services, aimed at the wealthy, will grow faster and more profitably in the future. Many luxury goods firms are busy transforming themselves into services, or adding services to add value.

5. The Wealthy don’t participate in consumer satisfaction surveys. Wealthy consumers provide feedback and respond to surveys, sometimes more that the general population. Most wealthy consumers are highly educated businesspeople. They recognize the value of feedback and will provide theirs candidly to brands they trust. No metric is more highly correlated with financial success than customer satisfaction. Brands that fail to solicit and measure their customers’ feedback and continuously seek to improve customer satisfaction will become extinct.

6. The Wealthy don’t go online. A recent survey by the Luxury Institute found that the vast majority of wealthy consumers are regularly online. The wealthy work long hours, are more time-starved than the general population, and use the internet more heavily for researching luxury goods and services, and conducting transactions.

7. The Wealthy don’t use ratings and reviews to make purchasing decisions. A recent survey by the Luxury Institute found that over 80% of wealthy consumers use ratings and reviews sites to facilitate purchasing decisions. While the wealthiest may rely on a few trusted experts, many have middle class values and lead regular lives that include seeking information from ratings and reviews sites and publications. The difference is that these savvy consumers steer clear of biased websites and publications and “Best of” lists that pretend to provide non-conflicted advice.

8. Luxury marketers should be targeting only the wealthiest clients. Luxury brands that seek to serve only the $100 million plus net-worth consumer are usually small and often have fairly low profit margins. The truly under-served wealthy, in luxury goods, and, especially in luxury services, are households with a net worth from $ 1 million to $50 million. Their lives are busy, and often complex, and require many types of trusted advice. There are far more of these individuals globally, and growing in numbers.

9. Wealthy clients do not give referrals. Research with wealthy and ultra-wealthy consumers indicates that the vast majority are willing to refer trusted brands to friends and family. Yet, ask luxury goods and services CEOs what their client referral rates are, and the answer is usually well below 50%. This disconnect is due to the fact that most luxury goods and services firms rely on individual salespeople for referrals rather than creating a company-wide referral program. It is one of the greatest revenue opportunities in luxury today.

10. Wealthy consumers are not very loyal since they can go anywhere. The majority of wealthy consumers are among the most loyal customers. Their loyalty must be earned with great service. Ratings show that most luxury goods and services firms have yet to internalize what brands such as Ritz-Carlton, Nordstrom, Neiman Marcus, and Bessemer Trust inherently know: That the entire customer experience, from A to Z, must be at a level that makes customers happy to do business with the brand. This is the greatest, and easiest to implement, opportunity for luxury goods and services brands globally today.