Run With The Gold Bulls

As long as the cost of borrowing money is zero, gold will continue to strengthen and the dollar will continue to weaken.

Gold is going into strong hands like hedge funds managed by John Paulson, Paul Tudor Jones, David Einhorn, Eric Mindich, David Hayman--the cream of the crop. Public institutions like central banks in India and China are big buyers too. Momentum on gold is building now, as latecomers climb on the bandwagon.

We're seeing demand for gold all over the world. Pension funds allocate about 5% as protection against the weakening dollar. Chinese citizens are encouraged by their government to hold gold, not dollars. On Nov. 18, Russia's central bank announced it would buy any and all gold its sister organization, the State Depositary for Precious Metals and Gems, was willing to see. Now the Vietnamese central bank has granted quotas to import 10 tons of gold for use by its banking system and gold traders.

In Canada, there have been periodic shortages of gold to use in minting gold coins. Barrick Gold ( ABX - news - people ), one of Canada's giant mining concerns, raised several billion dollars to buy back its hedge on its gold production, an admission it expects gold prices to continue rising.

It will continue rising until there is a concerted move by central banks to defend the dollar, and that is not likely.

Demand for gold is growing faster than supply. In London, market makers trying to settle gold futures contracts with more contracts, not bullion, because there's not enough gold to deliver. Buyers who elect to forego payment in gold are offered cash premiums for doing so. If you really want the bullion, you can buy the ZKB Gold ETF on the Zurich Stock Exchange and take it to the Zurich Cantonal Bank, owned by the Canton of Zurich. There you are given the actual bullion, which can then be stored in Zurich.

The most common and direct way to invest in gold for the average Joe is the SPDR Gold Shares ( GLD - news - people). It's an exchange-traded fund listed on the NYSE that has more than $40 billion of bullion in custody and has sported a 20% annual rate of return since inception in 2004.

Einhorn's hedge fund, Greenlight Capital, owns an interest in Market Vectors Gold Miners ETF( GDX - news - people ), which tracks the shares of gold-mining companies. Einhorn has also bought call options on the metal directly, according to FUNDfire, an investment service of the Financial Times.

Gold also is the darling of the market technicians as it continues to make new highs whenever the dollar shows weakness.

The fundamental truth underscoring this investment is that you can borrow money at zero to hold an asset with no yield but that everybody wants to own right now. Gold is under owned as an investment asset.

As the price of gold nears $1,200 an ounce the shares of publicly owned gold mining companies with a low cost of production also go up. Take Eldorado Gold ( EGO - news -people ) which is a Vancouver-based gold producer operating in Brazil, China, Greece and Turkey. It is one of the lowest cost gold producers in the world, claiming its "cash operating cost" is $297 an ounce; that's more than $800 an ounce less than today's spot price. Eldorado, as well as Compania de Minas Buenaventura ( BVN - news - people ), a Peruvian gold and silver producer, Kinross Gold ( KGC - news - people ) andSilvercorp Metals ( SVM - news - people ), a low cost producer of silver, are among the top holdings of the Midas Fund (MIDSX), a fund focused on metals that has tripled in value since November of 2008. (See: "Picking Gold Stocks.")

What are your best buys right now in gold and silver mining companies? Pan American Silver? Yamana Gold? Click here for instant access to recommended buy prices for more than 20 junior and senior gold and silver miners in Curtis Hesler's Professional Timing Service.

Don't be frightened by talk of a gold bubble. There won't be a bubble unless the cost of money rises sharply, the dollar strengthens and the budget deficits are reduced--scenarios that seem remote. According to Frank Holmes, CEO of U.S. Global Investors ( GROW - news - people ), gold trades 80% of the time in an inverse relationship to the dollar.

"I hate predicting gold prices attached to specific dates, but my gut tells me this current part of the gold bull market, which should last a few more years, is far from over," says my gold guru, Frank Giustra, a Canadian mining entrepreneur from Vancouver. "There is a growing realization that the U.S. dollar and other currencies are not going to offer the safe harbor feature that gold and other hard assets will."

Giustra, who owns gold properties in Canada and Venezuela, holds one-third of his assets in gold bullion. He points out that the massive liquidity in the financial system is even pushing up the price of lumber, even though the housing industry won't recover fully for 18 months. Lumber prices have moved up 50% as from $165 per 1,000 board feet to $235 this week. Or try silver, gold's little brother. It could be a "catch-up" trade, suggests Richard Ross, an Auerbach Grayson technician who says silver could hit a new peak price of $23. It closed at $18.82 on Wednesday.

All that glitters may not be gold, but the metal sure is shining brightly. Put a little sparkle in your portfolio.

http://www.forbes.com/2009/11/25/newmont-kinross-vancouver-personal-finance-investing-ideas-eldorado-gold.html?feed=rss_news

The 10 Questions You Should Never Stop Asking

Marc Kramer, 11.20.09, 05:01 PM EST

Companies run aground for the same basket of reasons, so don't forget the fundamentals.

Marc Kramer

In the early 1990s, I was brought in as an interim president/CEO of two regional monthly magazines. Both are now out of business. It was a trying time--and also one of the great learning experiences of my life.

One magazine focused on business, and the other on the arts. What the two had in common were the investors, who forced them into a shotgun wedding and put them under one roof. These geniuses (including your intrepid columnist) thought they could squeeze pennies and boost margins by merging the back offices and the sales teams. The editorial staffs couldn't be combined because they required different expertise.

The only magazine experience the holding company's board members had was reading the publications. I knew the newspaper business, but as any media veteran knows, newspapers and magazines (especially monthly magazines) are entirely different beasts--and not just in terms of the physical products. (Just one example: Magazine ad revenue is booked earlier but collected much later; meanwhile, overhead gobbles cash.)

Smart, experienced, highly connected people were involved in this deal. It didn't matter. Why? No one bothered to examine the fundamental realities of the business; no one asked the right questions. Instead, everyone was consumed with generating revenue.

Here are the 10 questions we should have been asking--the same questions that any business owner shouldcontinue to ask, year in and year out:

What is our purpose for existing? A lot of businesses had a purpose when they started, but over time their product, service and market changed. The arts magazine was created to give the Philadelphia area its first publication that focused solely on the arts--theater, opera, ballet and the orchestra.

The business magazine was competing against a variety of daily and weekly business publications, so its purpose was unclear. Was it a local Forbes covering large companies? Was it a local Inc. highlighting small businesses? The editor decided it would be a combination of both approaches--and readers weren't sure what to make of it.

Who is our target customer? We knew the readers of the business magazine were business leaders because we bought lists and sent the magazine for free to C-suite executives--the audience that our advertisers wanted to reach.

Our arts magazine partnered with the local public broadcast station and used its listener base as the profile for its readers. Still, we hadn't truly pegged the age and income of the readers, and thus had a hard time convincing advertisers to support it. Needless to say, it's a lot easier to come up with great ideas and convince people to buy into them if it is clear who is purchasing your product, and why.

Why does anyone need what we're selling? All too often we fall into the trap that people want something because welike it. This is the road to perdition. In our case, there was never a formal survey done to determine if anyone cared whether our magazines existed. We never asked readers/potential readers what they wanted to read. In my 25 years of experience, I have rarely seen a company fail if management literally spoke to customers and gave them what they want.

If there is a need, is it enough to support a profitable business? Although Philadelphia has an orchestra, ballet, theaters, jazz clubs, etc, Philadelphians weren't interested in a magazine that just focused on the arts. When our agreement ended with public broadcast station, there wasn't enough reader interest to attract advertisers.

What were our competitors up to? If we had formally analyzed our competition, we would have seen that one competitor of the business magazine had come up with interesting advertising vehicles, such as paid-for question-and-answer series with profiles of accountants, lawyers and business consultants. These featured professionals were more than happy to pay for the privilege of raising their visibility. Whether you are selling a product or a service, you have to be constantly innovating.

Can you reduce expenses--without harming the product? I found out about six weeks after my arrival that if you lowered the weight of the paper and took the shine off the magazine, you could save a bucket-load of money. Of course, those moves also lowered the quality of the product. When I began my search for a new sales manager, one of the candidates asked me if I had spoken with our printers about ways to reduce costs. Amazingly, our vendors had lots of ideas on how to reduce cost without sacrificing quality, but no one had asked them.

Do we have the right leadership? As companies mature, they require managers with different skill sets. One of our publishers was very experienced at running start-ups at large, well-financed publishing companies; he wasn't used to running on a shoe string. The other publisher, who had never run a company, was used to selling air time, not space in a magazine; when she did sell air, it was for a top-rated established station, not a start-up. (We ended up replacing both publishers.)

Do we have the right employees? There are employees who know how to bring new products and services to life, while others know how to nurture an existing line. We had sales people who were very experienced at selling established publications, but none who had ever launched a title or worked with a small publication. Big mismatch.

How will we continue to drive revenue? The management and board never held a down-and-dirty strategic planning session. We never went to a bar and tossed around ideas with employees. We never invited readers to tell us what we could do better. Companies can't live in vacuums. Chances are, what works today won't work tomorrow--just ask anyone in the media business.

How are your employees holding up? I was so obsessed with finding ways to fix the business that I would walk by everyone as if they were pieces of furniture. I didn't observe their body language or solicit their input, even though was I playing around with their future. I was in my own little world and I didn't notice the anxiety they were dealing with. You have to check the temperature of your employees, let them vent and encourage their honest feedback. These stakeholders are the key to pleasing your customers--and your shareholders.

Marc Kramer is president of Kramer Communications, author of five books and instructor at the Wharton School at the University of Pennsylvania and the National University of Singapore. He can be reached at

marc@kramercommunications.com.

http://www.forbes.com/2009/11/20/ten-key-questions-entrepreneurs-management-kramer.html?feed=rss_news

Why Economists Love to Study Cellphone Pricing

By SAUL HANSELL

Have I tragically underestimated the ability of foreign cellphone companies to come up with devilishly complex pricing plans and the skill of economists to convert those schemes into pat theories that can be illustrated with neat charts and graphs?

The many people who have written me over the last two days about my Sunday article on the method behind the madness of cellphone pricing say I have.

The article began quoting Barry Nalebuff, a Yale economist, saying cellphone pricing plans were “weird.” Alex Kaufman, a doctoral candidate in economics at Harvard, wrote to chastise me for my “characterization of economists as throwing up their hands in confusion over this problem.”

Indeed, he pointed me to the work of Michael Grubb, now a professor at M.I.T.’s Sloan School of Business. I had spoken to Mr. Grubb for the article, in fact, on the recommendation of Mr. Nalebuff. His research seemed interesting, but a bit too involved to describe in the article, given how many other topics I had to cover.

Mr. Grubb told me that as a grad student he too was perplexed by pricing plans with big bundles of included minutes and high charges for extra minutes, what economists call three-part tariffs. After investigation, he wrote a paper arguing that phone companies were exploiting overconfidence by consumers about their ability to predict how many minutes they would use.He summarized this in an e-mail message to me:

Three-part tariffs optimally exploit overconfident consumers because overconfident consumers both underestimate the likelihood of very high usage, and the need to pay high overage charges, and underestimate the likelihood of very low usage, and the likelihood of not getting a refund for included “free” minutes.

Consumers certainly do make bad predictions about their own behavior. Studies show that people buy gym memberships, rather than paying per gym use, because they believe they will work out more than they really do. And when I wrote about the credit card industry, I saw studies that showed people thought they paid off their bills in full, and thus avoided interest charges, far more often than they actually did.

That’s not the only factor here, though. Andrew M. Odlyzko, a mathematics professor at the University of Minnesota, wrote me with a very interestingpaper he co-wrote in 1979 which argued that consumers often preferred flat-rate pricing to paying by usage even if it would save money. It cited data from phone companies that showed half the people who chose local phone plans with unlimited calling would have saved money choosing a pay-per-call plan. The paper listed three reasons:

(i) Insurance: It provides protection against sudden large bills. (What happens if my son comes back from college,and starts talking to his girlfriend around the clock?)
(ii) Overestimate of usage: Customers typically overestimate how much they use a service, with the ratio of their estimate to actual usage following a log-normal distribution.
(iii) Hassle factor: In a per-use situation, consumers keep worrying whether each call is worth the money it costs, and it has been observed that their usage goes down. A flat-rate plan allows them not to worry as to whether that call to their in-laws is really worth $0.05 per minute.

The second factor there matches up with Mr. Grubb’s idea that consumers are overconfident of their ability to predict how to save money. The cellphone executives I spoke to believed that the desire for stable prices, encouraged by their pain-inducing overage charges, was a better explanation for consumer behavior.

On another topic, several readers outside of the United States chastised me for oversimplifying cellphone pricing structures in the rest of the developed world. (And I didn’t even talk about emerging economies like India, where wireless service is much cheaper, mainly because of lower costs.)

One important difference is that in most other countries, the person who calls a cellphone pays the bill. Receiving wireless calls is free. This seems very attractive to consumers, especially when rates are high, and it helped explain the rapid deployment of cellphones in Europe and Asia.

But as it has developed, the caller-pays system has inhibited the use of cellphones. The rate to call a cellphone in many countries can be quite high and can vary depending on the carrier of the person you are calling (which you may not know). That means that calling one cellphone from another can lead to nasty charges. This, some say, explains why people in caller-pays countries talk on cellphones far less than people in the United States.

The article also didn’t make it clear that carriers in many countries offer subsidized handsets for people willing to commit to a service contract. Indeed, such plans are becoming more common in many countries as people try to afford expensive smartphones. But it is also true that it is far, far more common in many countries for people to buy phones at retail stores and then to buy prepaid blocks of minutes from carriers as they need them.

Spend a minute looking at the various options available in Britain, and you wouldn’t say that things are any less complicated there. Here is the page, from Carphone Warehouse, a large retailer, for the iPhone 3GS and for theBlackBerry Curve 8520.

One footnote I left out: A few people asked for citations for the effective average price of 5 cents a minute and 1 cent a text message I cited. The voice statistic came from the CTIA, a wireless industry trade group. The text figure came from a study of monthly cellphone bills conducted by Nielsen.

http://bits.blogs.nytimes.com/2009/11/17/why-economists-love-to-study-cellphone-pricing/?partner=rss&emc=rss

Judging Presidents

A reader asks a good question:

What are some useful and objective measures which we can use to judge the performance of President Obama and his new team? How would Greg Mankiw judge Obama four years from now?

Consider a related question: How would you judge the competence of a doctor if you could observe him treating only a single patient?

What you would not do is judge him by the outcome. Even the best physicians have patients die. And even witchdoctors can have patients recover. Randomness is a fact of life (and death). In the case of a medical doctor, the answer seems clear: Instead of looking at the outcome, you would judge him by the decisions he makes and treatments he prescribes. That is, you would examine whether he followed best practices for the circumstances he faced.

Similarly, randomness is a fact of economic life, and it would be a mistake to judge a president by the economic outcome during his administration. It is better to look at the decisions the president made, and to acknowledge that the outcome is a function of those decisions and many other factors not under his control. As an economist, I have views about what best practices are for economic policy, and I judge presidents by how closely they adhere to those principles.

Unfortunately, that evaluation process is not quite as simple and objective as the reader might have hoped for. But I don't think there is a better alternative.

Now some people may be tempted to read the above commentary and call it self-serving. After all, the economy looks pretty bad right now, so maybe I am trying to excuse President Bush and, indirectly, myself as one of his economic advisers.

Not so. If you want to judge presidents and their economic advisers by outcomes, that would be all to my benefit. I arrived in Washington to head the CEA in February 2003 and left in February 2005. (Harvard has a two-year rule for faculty leave). During that time, the economy grew at a healthy annualized rate of 3.6 percent, and the unemployment rate fell half a percentage point. As judged by outcomes, I look pretty good! But I will be the first to admit that this argument is deeply silly.

http://gregmankiw.blogspot.com/2009/01/judging-presidents.html

Cross my palm with euros

WORRIES about the dollar’s dominance of the global monetary system are not new. But debate about replacing the beleaguered dollar, whose trade-weighted value has dropped by 11.5% since its peak in March 2009, has resurfaced in the wake of a global financial and economic crisis that began in America. China and Russia, which have huge reserves that are mainly dollar denominated, have talked about shifting away from the greenback. India changed the composition of its reserves by buying 200 tonnes of gold from the IMF.

None of this threatens the dominance of the dollar yet, particularly as a dramatic shift out of the currency would be damaging to the countries (such as China) that hold a huge amount of dollar-denominated assets. But a new paper by economists at the IMF, released on Wednesday November 11th, acknowledges that the global crisis has reignited the debate about anchoring the world’s monetary system on one country’s currency.

Some say that America’s role as the principal issuer of the global reserve currency gives it an unfair advantage. America has a unique ability to borrow from foreigners in its own currency, and wins when the dollar depreciates, since its assets are mainly in foreign currency and its liabilities in dollars. By one estimate America enjoyed a net capital gain of around $1 trillion from the gradual depreciation of the dollar in the years before the crisis.

In a sense the world is hostage to America’s ability to maintain the value of the dollar. But as the IMF points out, the currency’s primacy arises at least partly because China and other emerging countries have chosen to accumulate dollar reserves. The depth of America’s financial markets and the country’s open capital account have made the dollar attractive. So some of the advantage has been earned.

But large and persistent surpluses in countries like China mean continued demand for American assets, reducing the need for fiscal adjustment by either country. This, in turn, has contributed to the build-up of the macroeconomic imbalances that many blame for the financial crisis.

Dealing with these imbalances could begin by finding ways to reduce reserve accumulation in emerging countries. The IMF reckons that about two-thirds of current reserves (about $4 trillion-$4.5 trillion) are held by countries as insurance against shocks, including sudden reversals of capital flows, banking crises and so on. In theory, groups of countries could pool reserves, so that a smaller amount would suffice than if countries each maintain their own buffers. Other alternatives include precautionary lines of credit, such as the American Federal Reserve’s with the central banks of Brazil and Mexico, or the IMF’s flexible credit line.

But what are the alternatives to relying on the dollar? One possibility is a system with several competing reserve currencies. Over time, the euro and China’s yuan (if it became convertible) could emerge as competitors. This would require a great deal of policy co-ordination among issuing countries. But by having several reserve currencies the “privilege” that America now enjoys would be available more widely, providing an incentive to compete to attract users to different currencies.

Another alternative is a greater reliance on SDRs, the IMF’s quasi-currency, which operates as a claim on a basket of currencies: the dollar, euro, sterling and yen. Because the SDR’s value depends on several currencies, it shares many of the benefits of a multiple-currency system. But even the IMF says that using SDRs seems “doubtful unless the system…fails in a major way”.

The most radical solution of all is a new global currency that could be used in international transactions and would float alongside domestic currencies. The fund argues that this would have to be issued by a new international monetary institution “disconnected from the economic problems of any individual country”. This currency could serve as a risk-free global asset.

Radical as this may sound, it is not a new idea. John Maynard Keynes had something similar in mind when he proposed an International Clearing Union. This global bank would issue its own currency, called the bancor, in which all trade accounts would be settled. In the absence of such a bank the world will have to make do with the current system. So worries about the dollar’s value aside, its global dominance is secure for now.

http://i-connectx.net/node/125

Chủ tịch HĐQT HAG Đoàn Nguyên Đức: Muốn thành tỉ phú đô la đầu tiên ở VN

Là người giàu nhất trên sàn chứng khoán VN nhưng trong túi thường không có tiền; sở hữu máy bay riêng với 2 phi công bay liên tục nhưng 20 năm nay chưa hề đi du lịch... Đó là chân dung Chủ tịch HĐQT CTCP Hoàng Anh Gia Lai (HAG) Đoàn Nguyên Đức

Không né tránh bất cứ câu hỏi nào trong cuộc trò chuyện với Thanh Niên, “Người giàu nhất trên sàn chứng khoán VN 2009” Đoàn Nguyên Đức tạo cho người đối diện cảm giác tin cậy dù không phải câu trả lời nào của ông cũng dễ nghe.

Sẽ là tỉ phú đô la vào năm 2010

* Ông biết tin mình dẫn đầu danh sách “Người giàu nhất trên sàn chứng khoán VN 2009” khi nào?

- Ông Đoàn Nguyên Đức: Khoảng nửa tháng trước, khi có một phóng viên Báo Đất Việt gọi điện phỏng vấn tôi về việc này.

* Cảm giác của ông lúc đó thế nào?

- Tôi chẳng có cảm giác gì cả.

* Tại sao vậy, tôi nghĩ đây là một thông tin đủ “nặng” với bất kỳ ai chứ?

- Chẳng tại sao cả. Đơn giản là việc này tôi đã biết trước rồi. Việc gì đột xuất thì mới gây bất ngờ, đúng không?

* Ông có vẻ rất tự tin về sự giàu có của mình?

- Đúng thế. Người ngoài có thể không biết. Nhưng trong giới doanh nghiệp chúng tôi, mình thế nào, người khác thế nào chúng tôi đều biết rất rõ. Vì thế tôi biết mình sẽ vẫn giữ vị trí đầu tiên trong bảng xếp hạng này.

* Nhiều tỉ phú trên thế giới đã nghèo đi do ảnh hưởng khủng hoảng kinh tế, chủ yếu do cổ phiếu mất giá, nhưng ông là một ngoại lệ. Giá trị tài sản của ông đã tăng rất mạnh so với trước đó. Ông có thể bật mí bí quyết của mình?

- So với năm 2008, giá trị tài sản của tôi đã tăng khoảng 6.200 tỉ đồng, hiện là 12.221 tỉ đồng. Quan điểm của tôi là xây dựng một công ty phải có chiến lược dài hạn, tầm nhìn xa và nền tảng vững chắc. Chúng tôi đã phát triển HAG theo tiêu chí đó nên cuộc khủng hoảng giữa đường không thể tác động đến chúng tôi. Công ty vẫn tăng trưởng và vì thế tài sản của tôi vẫn tăng mạnh như bạn thấy.

* Nhưng không lẽ cuộc khủng hoảng kinh tế lớn đến vậy lại không ảnh hưởng chút nào đến công ty của ông?

- Chúng tôi cũng bị ảnh hưởng nhưng không đến mức như các công ty khác vì như tôi đã nói, chúng tôi xây dựng chiến lược phát triển với tầm nhìn hàng chục năm, nghĩa là tốc độ phát triển bền vững lâu dài chứ không phải trong 1 hay 2 năm. Có thể nói thế này cho dễ hiểu, chúng tôi có tăng trưởng nhưng mức tăng trưởng chưa đáp ứng kỳ vọng. Đó là do ảnh hưởng từ cuộc khủng hoảng. Hay nói cách khác, nếu không có cuộc khủng hoảng kinh tế vừa qua, tôi đã là tỉ phú đô la trong năm nay rồi chứ không phải đợi đến năm sau.

* Nghĩa là nếu cuộc khủng hoảng kinh tế qua đi trong năm tới như dự đoán, ông sẽ trở thành tỉ phú đô la vào năm 2010?

- Dù khủng hoảng có qua hay không qua thì chắc chắn tôi sẽ trở thành tỉ phú đô la trong năm 2010. Tôi có những con số chứng minh rất rõ điều này. Theo kế hoạch thì lợi nhuận của HAG năm 2010 sẽ vào khoảng 2.000 - 3.000 tỉ đồng, tương đương với mức tăng trưởng lợi nhuận là 60%. Với mức tăng này, VN-Index chỉ cần như hiện nay thì tôi cũng đã trở thành tỉ phú đô la rồi.

* Ông nói rất thật và rất thẳng. Nhưng ông có ngại sự tự tin của mình sẽ khiến người khác ghét ông?

- Hiện tại cũng có không ít người ghét tôi. Họ tung đủ các thứ tin đồn. Nhưng tôi không sợ. Tôi làm ăn đàng hoàng, mỗi năm đóng thuế cho Nhà nước hàng ngàn tỉ đồng. Tôi không làm sai pháp luật và không có gì phải sợ khi nói sự thật cả. Nếu tài sản của tôi đạt 1 tỉ USD thì tài sản của công ty sẽ là 2 tỉ USD. Ở VN, các công ty có vốn 2 tỉ USD không phải là nhiều và đây là thực tế mà ai cũng biết.

* Ông nghĩ sao nếu mình trở thành tỉ phú đô la và có tên trong danh sách các tỉ phú trên thế giới?

- VN chưa từng có tỉ phú đô la, doanh nhân VN cũng chưa bao giờ có tên trong câu lạc bộ các doanh nhân thế giới. Vì vậy, việc trở thành tỉ phú đô la và được xếp trong danh sách các tỉ phú của thế giới là điều vinh dự với bất kỳ ai. Không chỉ vậy, các doanh nhân trên thế giới cũng sẽ nhìn VN khác đi nếu chúng ta đứng chung với họ trong danh sách này. Cũng có nghĩa là doanh nhân VN hoàn toàn có thể làm được những gì mà thế giới làm được. Đó là mục tiêu lớn nhất mà tôi muốn làm.

Tỉ phú không có tiền trong túi

* Là người giàu nhất sàn chứng khoán VN, tôi tò mò không biết thường khi ra đường, trong túi của ông có bao nhiêu tiền?

- Không có đồng nào.

* Hẳn là ông chỉ dùng thẻ tín dụng. Nhưng ở VN, không phải lúc nào, chỗ nào cũng thanh toán bằng thẻ tín dụng được. Ông đã bao giờ rơi vào trường hợp đang đi trên đường, bỗng muốn mua một món đồ gì đó mà không có tiền trong túi không?

- Tôi thực sự không có thời gian đi dạo hay nhìn ngó xung quanh để thích cái nọ, cái kia. Còn nếu cần mua một món đồ nào đó, ví dụ như điện thoại chẳng hạn, tôi sẽ gọi cho “lính” của tôi đi mua hộ. Cô biết đấy, Hoàng Anh Gia Lai giờ có mặt ở khắp nơi nên hầu như ở chỗ nào tôi cũng có thể “nhờ vả” kiểu này được.

* Ông có thói quen này lâu chưa?

- Khá lâu rồi. Đơn giản là tôi không có thời gian để nghĩ đến mua sắm hay bỏ tiền vào ví để xài. Tôi quá bận rộn. Cô có tin không, 20 năm nay tôi chưa hề đi du lịch...

* Sở hữu máy bay riêng và đi nhiều nơi trên thế giới. Nếu chỉ xét về điều này thôi, việc 20 năm rồi ông không đi du lịch thật khó tin. Tôi từng đọc một bài phỏng vấn, trong đó nói ông không có thời gian để thư giãn hay hưởng thụ bất cứ thứ gì. Ông có nghĩ đó là sự đánh đổi để có được sự giàu có ngày hôm nay không?

- Tôi không cho đấy là đánh đổi. Mỗi người có một sở thích, một niềm vui. Tôi vẫn biết mình đang làm việc nhiều quá mức và hy sinh nhiều vì công việc. Nhưng trong thời gian này tôi không có đủ thời gian. Chúng tôi đang nỗ lực hết mình cho các kế hoạch, chiến lược đã đề ra. Nói như vậy không có nghĩa là tôi không hài lòng với cuộc sống của mình hiện nay. Tôi làm việc gì đó thành công, tôi xem, chơi bóng đá, đó là niềm vui của tôi. Tôi hoàn toàn hài lòng và không hề so bì với người khác.

Xây dựng thương hiệu quốc tế là chiến lược

* Mở văn phòng đại diện ở Thái Lan, quảng bá thương hiệu trên sân của CLB Bóng đá Asernal, tiến sang thị trường Lào, có vẻ như ông đang đưa HAG vượt ra khỏi biên giới VN. Quan điểm của ông về việc xây dựng thương hiệu như thế nào?

- Tôi nghĩ việc đầu tiên của các công ty chính là xây dựng thương hiệu. Tại VN, cái tên Hoàng Anh Gia Lai đã quá nổi tiếng. Vì vậy, mục tiêu của chúng tôi là xây dựng thương hiệu quốc tế. Việc này chúng tôi đã làm cách đây 3 năm rồi chứ không phải bây giờ mới bắt đầu. Như bạn vừa nói, chúng tôi mở văn phòng đại diện ở Thái Lan, liên kết với CLB Asernal, sang Lào... Nói chung, tôi chọn những địa điểm phù hợp với ngành nghề kinh doanh của công ty.

* Ông đã tiến hành quốc tế hóa thương hiệu HAG 3 năm, vậy ông có thể cho biết, những kết quả đầu tiên của việc này?

- Đã có nhiều đối tác nước ngoài biết đến HAG. Hiện tại, có 13 quỹ đầu tư nước ngoài đang đầu tư vào HAG. Đó chính là kết quả mà chúng tôi đạt được.

* Cái tên Đoàn Nguyên Đức đã quá nổi tiếng tại VN. Liệu đến bao giờ ở ngoài biên giới VN, nói đến Đoàn Nguyên Đức người ta sẽ nghĩ ngay đến HAG?

- 10 năm trước tôi không bao giờ nghĩ tôi có được như ngày nay. Tôi cũng không bao giờ nghĩ mình có thể trở thành tỉ phú đô la trong năm sau. Ý tôi muốn nói là, không thể nói trước 10 năm nữa điều gì sẽ xảy ra. Vì vậy, tôi không thể trả lời câu hỏi này. Hãy để thời gian trả lời. Nhưng chúng ta có thể kỳ vọng điều đó. Nếu ta nỗ lực và có chiến lược bài bản, dài hạn, điều gì cũng có thể xảy ra.

http://www.thanhnien.com.vn/news/Pages/200942/20091017140222.aspx

A better way to cut costs

Cutting all parts of a company equally may seem fair, but it doesn’t make sense. Targeted cuts and efforts to build capabilities do.

This short essay is a Conversation Starter, one in a series of invited opinions on topical issues. Read what the authors have to say, then let us know what you think.

According to a recent McKinsey Quarterly survey, 79 percent of all companies have cut costs in response to the global economic crisis—but only 53 percent of executives think that doing so has helped their companies weather it. Yet organizations continue to cut. Cost reductions often go wrong, we believe, and our experience suggests that they can be done in a better way.

In the heat of a financial crisis, companies must focus on their financial viability, but they tend to cut about equally everywhere—without considering their strategic needs—because that seems more straightforward, and in some senses more fair, to all executives concerned. A second problem, with longer-term consequences, is that quick head count reductions often come at a price: missing the opportunities that crises can create to improve business systems or to strengthen parts of an organization selectively.

Here’s an example of how things can go wrong. An international energy company that needed to save money fast started by simply defining the amount of savings it needed and then required each department to cut costs by a similar amount, primarily through head count reductions, which varied from 17 to 22 percent. The reality, however, was that the company needed to invest more in certain technological areas that were changing quickly, as well as in operations, where performance was far below industry benchmarks. What’s more, the HR and IT departments substantially duplicated certain activities because different layers in the organization were doing similar things. Much deeper cuts could therefore be made in these functions, with little strategic risk. But the company cut costs across the board, and just six months later, technology and operations were lobbying hard to bring in new staff to take on an “uncontrollable workload,” while substantial duplication remained in HR and IT.

We suggest a better way: companies should start any cost-cutting initiative by thinking through whether they could restructure the business to take advantage of current and projected marketplace trends (for instance, by exiting relatively low-profit or low-growth businesses) or to mitigate threats, such as consolidating competitors. An important part of the analysis is to understand a company’s financial situation and the range of potential outcomes under a number of different external economic scenarios. Second, within the resulting strategy, take time to understand which activities drive value—in the public and nonprofit sectors, a good proxy might be mandated outcomes, such as the number of workers, health metrics, or school performance—and which activities do or could make the organization competitively distinctive. Organizations should invest in value-creating activities and cut costs in others while meeting clear financial goals in a set time frame (see sidebar, “Exploring three sources of value”).

The changes that result from this kind of thinking can be dramatic. A government-funded environmental organization, for example, spent a lot of time on monitoring individual species and campaigning against their extinction rather than on climate change, which the organization’s leaders actually regarded as more important and where they could have a greater impact. The organization took cost cutting as an opportunity to look intensely at what it did. It decided to stop the extinction-related lobbying and policy activities, undertaken by about 20 percent of its employees, and instead move the work of another 20 percent of its staff—along with some of the people undertaking that work—into other organizations with suitable mandates. The organization then reinvested a large portion of the savings to increase the number of staff members working on climate change. It also invested in building the capabilities of its relatively weak HR and finance functions.

When cost cutting in existing functions is appropriate, companies should explore both radical approaches to restructuring and more traditional tactics, as our recent work with a professional-services firm shows. For each support activity (such as IT, procurement, and finance), we identified ways to cut costs by working more economically and looked for entirely new ways to deliver support. In offices—representing almost 10 percent of support costs—this approach meant considering both a reduction in the amount of space allocated to each person in the present location and a more radical change to promote work at home or a hub-and-spoke office arrangement, with spokes in much lower-cost locations. In other cases, efforts to complete merger integration or to use the new economic situation as a spur to renegotiate supplier or other long-term contracts can yield substantial economies. In our experience, savings of up to 20 to 35 percent in selling, general, and administrative costs are possible with such measures if companies select the right tactics to support their strategies.

Finally, organizations shouldn’t overlook the substantial benefits that can come simply from identifying key activities and making them more effective. A global retailer, for example, has faced significantly reduced sales in the current downturn—more than 20 percent in some countries. Cutting costs was essential, but the retailer feared driving sales even lower if it cut in the wrong places. It began by working out which activities were essential for a distinctive retail experience and which would be most easily damaged by cost cutting. One critical activity was organizing in-store promotions (not just sales but also new-product promotions and seasonal events), from which the retailer derived more than 10 percent of its sales. Organizing these activities involved highly elaborate processes: every region of the business and a number of corporate functions had to sign off on each promotional program, so across-the-board cost cuts could easily remove the people who understood how in-store events worked. By identifying this process as both crucial and vulnerable, the retailer cut costs with minimal impact.

Over the following six months, the retailer undertook a full efficiency review that reduced the number of senior- and middle-management roles by 20 percent (the amount of individuals cut was closer to 15 percent). Throughout this process, special attention was paid to efficiencies that would affect promotional activities. Only clearly duplicative roles (the regional organizations, for example, had some that replicated those in the center) were removed. The company also invested to improve the returns from its promotions by increasing the number of people who tailor events to the needs of local markets and by building its capacity to forecast product sales in events.

Intelligent cost cutting need not reduce the overall scale of the savings that organizations can achieve. But by shifting the focus from organizational structure to current and future strategic needs, it makes for smarter savings, even at companies that have already started down another path.

https://www.mckinseyquarterly.com/Organization/Talent/A_better_way_to_cut_costs_2458?gp=1

Buffett Bets Big on Railroads’ Future

America’s best-known investor, Warren E. Buffett, is making his biggest bet yet on the nation’s economic future by buying, of all things, a railroad.

After deftly capitalizing on the financial crisis with a series of bold deals, Mr. Buffett on Tuesday agreed to buy the 131-year-old Burlington Northern Santa Fe Corporation.

A railroad might strike many people as a bit old-fashioned — more 19th century than 21st. But Mr. Buffett is wagering that as the economy revives, so will the demand for goods to be shipped by train. Burlington Northern carries coal and timber from the West, grain from the Midwest and imports arriving directly from Mexico and Canada, as well as through California ports.

And railroads, Mr. Buffett contends, are transportation for a fossil fuel-challenged future, since trains are generally more efficient and greener than trucks.

But for Mr. Buffett, the deal is also the fulfillment of a dream denied in childhood.

“This is all happening because my father didn’t buy me a train set as a kid,” Mr. Buffett joked in an interview.

His new toy will not come cheap. Berkshire Hathaway, the conglomerate he runs, will spend roughly $26 billion for the 77.4 percent of the railroad that it does not already own, paying $100 a share in cash and stock. As part of the bid, Mr. Buffett is splitting Berkshire’s class B shares 50-for-1 to pay Burlington Northern shareholders, breaking his rule of never splitting Berkshire’s stock. The split increases the total number of class B shares while avoiding fractional stock ownership for Burlington Northern shareholders.

“I stretched on this one," he said in an interview. “I went to the last nickel.”

Burlington Northern investors responded wildly to the news, pushing the company’s stock price up nearly 28 percent to $97 a share. While other transportation stocks also gained, the deal did not light a fire under the broader stock market. The Dow Jones industrial average fell 17.53 to 9,771.91.

Buying Burlington Northern is of a piece with the investments Mr. Buffett has made over the past year. He has positioned himself to profit from the mayhem in the markets and secure a legacy as one of the greatest investors of all time. While others were running scared last fall, Mr. Buffett invested billions in Goldman Sachs — and reached a far richer deal than Washington. He staked billions more in other blue-chip companies like General Electric and Wrigley.

The acquisition of Burlington Northern, based in Fort Worth, most likely concludes the investor’s search for an “elephant” acquisition, which he first described in one of his famed letters to Berkshire investors two years ago. His last major deal was in late 2007, when he agreed to buy a majority stake in Marmon Holdings, the conglomerate controlled by the Pritzker family.

“From my standpoint, it’s a lot easier to make a $32 billion investment than 10 $3 billion investments,” he said.

Even as the credit markets have improved and banks have become less skittish about lending, few companies can muster Mr. Buffett’s financial firepower. Berkshire will borrow $8 billion to supplement $8 billion in cash from its books, paying off the debt in three annual installments.

Investors big and small hang on Mr. Buffett’s pronouncements, and with good reason: if you had invested $1,000 in the stock of Berkshire in 1965, you would have amassed millions of dollars by 2007. He bases his philosophy on stable, reliable investments. “We’ll make a good return, not a great return,” he said of the Burlington Northern deal.

Mr. Buffett heeded his own rules of investing in making his latest acquisition.

One is to invest in companies that you understand. For Mr. Buffett, Burlington Northern fits the bill. He first bought a stake in the company in 2006, adding to shares held in two other railroad operators, Union Pacific and Norfolk Southern. Burlington Northern emerged as his choice, and he eventually built up a stake of 76 million shares in the company.

Another of his rules is to buy quality products at bargain prices. Burlington Northern’s stock price has stayed nearly flat over the past year, as its cargo load fell alongside the economy as a whole.

A third maxim is to move quickly — and Mr. Buffett did. On Oct. 22, Mr. Buffett arrived in Fort Worth as part of a visit to Berkshire’s portfolio companies. There, he met with Matthew K. Rose, the chairman and chief executive of Burlington Northern, who practiced an investor presentation with him.

Before he left, Mr. Buffett turned to Mr. Rose and said, “If you ever want a good home for Burlington, think of Berkshire.” Later, he spoke with Charles T. Munger, his trusted lieutenant at Berkshire, and began discussing a price for Burlington Northern.

The next night, Mr. Rose dropped by Mr. Buffett’s hotel, and within 15 minutes, the billionaire had delivered his bid. “There wasn’t much to say,” Mr. Buffett recalled on Tuesday.

By Sunday, Burlington Northern had retained advisers at Goldman Sachs and the boutique investment bank Evercore Partners, and the two sides began negotiating. Few issues emerged, other than Burlington Northern’s desire for a stock component to the bid, to allow its shareholders to choose a tax-free alternative to cash. By Thursday, lawyers from Munger, Tolles & Olson for Berkshire and from Cravath, Swaine & Moore for Burlington Northern began drafting deal documents.

Mr. Buffett said his goal was to have the deal sealed by Sunday at noon, when he was scheduled to have a root canal.

“I wanted to go into that with a mind that was at ease,” he said.

http://www.nytimes.com/2009/11/04/business/04deal.html?partner=rss&emc=rss