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"Veni, vidi, vici veni, vidi, vici

Caesar’s dispatch describing his subjugation of Pharnaces (47 B.C.). [Rom. Hist.: Brewer Note-Book, 923]

See : Arrogance
. Had the decisive Roman general been alive in today's business Today's Business is a show on CNBC that aired in the early morning, 5 to 7AM ET timeslot, hosted by Liz Claman and Bob Sellers, and it was replaced by Wake Up Call on Feb 4, 2002.  climate, his famous quote might have read somewhat differently: "I came, I saw, I conquered - and then I paid up the ying-yang in capital gains taxes."

The business of conquering, at least in the corporate world, is still good - but naturally, the larger the fortune you amass, the more trying it is to manage. By the time a CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  has reached the corner office, his or her portfolio has likely already grown to proportions that make managing it a full-time occupation. And as salaries rise, compensation packages grow in complexity, and as stock options stockpile stock·pile  
A supply stored for future use, usually carefully accrued and maintained.

tr.v. stock·piled, stock·pil·ing, stock·piles
To accumulate and maintain a supply of for future use.
, that portfolio begins to resemble an unwieldy mass of diversified holdings, off-shore accounts, and steep, onerous tax traps lurking See lurk.

(messaging, jargon) lurking - The activity of one of the "silent majority" in a electronic forum such as Usenet; posting occasionally or not at all but reading the group's postings regularly.
 on every page.

Hiring a professional to manage this may seem like a no-brainer, but many CEOs are quite comfortable with the hands-on management style; they actively and closely monitor the progress of their own companies' financials - and they are no less eager to do so for their own personal coffers. "A former senior executive of one of the top five companies in the world bought stocks at the top of the market and sold them at the bottom. Then he forgot to get back in," says David Elias, CEO of Elias Asset Management. "He was travelling all the time and did not have the time to manage his money. It took his wife a year and a half to talk him into going to an investment advisor Investment Advisor

1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission.

2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and

But though there are exceptions, most wealthy CEOs have found soon after accumulating their first round of sizable assets, that the requirements for managing their own financials have swelled beyond the scope of their personal finance expertise - including those CEOs with a penchant for investing.

"Even savvy investors can be bamboozled," says John A. Van Raalte, financial consultant at securities firm Fahnestock & Co. "Some very famous CEOs were taken in by a scheme where a so-called financial planner Financial Planner

A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals.
 promised to send a percentage of the returns from their investments to charity. Instead, it was a Ponzi scheme A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time. , and they lost all of the money they had invested with this swindler SWINDLER, criminal law. A cheat; one guilty of defrauding divers persons. 1 Term Rep. 748; 2 H. Blackst. 531; Stark. on Sland. 135.
     2. Swindling is usually applied to a transaction, where the guilty party procures the delivery to him, under a pretended

While it's true some very good financial planners have at times been mistaken in their recommendations, good reasons abound for letting the experts manage your personal financial headaches, not the least of which is the fact that you're paying them to think of everything - just as your company's shareholders hire you to do that for them.

While no planner can claim to be an expert on everything, a good financial advisor should have a sound handle on the big picture regarding investments, tax planning Tax planning

Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer.
, insurance, real estate, complicated compensation and benefits plans, and estate planning Estate Planning

The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death.

Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the
. "Also, the planner must be well-versed in sophisticated charitable strategies and SEC guidelines for buying and selling stock throughout the year, including stock options and deferred compensation," says Bradley E. Comp, counseling VP at the AYCO Co. "Many CEOs sit on the boards of other companies and need help with board compensation and benefits. If a client is on the board of three companies and each offers retirement benefits, the plans must be coordinated and optimized so the CEO does not get all of the money when he or she retires, but spreads it out."

If you've divvied up your assets to different advisors or experts (you may have left your retirement planning Retirement financial planning refers to a collection of systems, methods, and processes which, in their aggregate, support a family unit's (client's) desire to achieve a state of financial independence, such that the need to be gainfully employed is optional.  to an expert in that field, but hired a real estate expert to handle the management of various properties) you'll rely on your financial planner to help monitor and coordinate these disparate areas of your total portfolio. "The planner should be able to review what investments the CEO already has and see how the accounts overlap, where there are investment holes, or perhaps too much concentration by industry," says William Webber
For the Anglican bishop of Brisbane, see William Thomas Thornhill Webber
Louis William "Bridgie" Webber (1877 – July 30, 1936) was an underworld figure in New York and a former associate of gang leader Monk Eastman who later testified against police
, president and CEO of asset management firm Carret & Co.


In many cases, a CEO's financial planner may function as an added investment advisor to an already assembled and trusted team of professionals. However, those executives who don't currently have a team in place - or who have recently found their present financial situation to be expanding beyond the expertise of their chosen team of experts - may decide to head straight to a private banker. The private banker already has a team in place, the members of which will be used according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 the CEO's need.

"A private banker is a much more comprehensive role than a financial planner," says Robert Elliott Robert Elliott may refer to:
  • Robert William Elliott, Baron Elliott of Morpeth (born 1920), British Conservative party politician, MP 1957–1983
  • Robert B. Elliott (1842–1884), African-American member of the United States House of Representatives from South
, senior executive VP of client services at Bessemer Trust Bessemer Trust is a wealth management and investment advisory firm established in 1907 by Henry Phipps, a partner of Andrew Carnegie in the Carnegie Steel Company. From 1907 to 1974 the private company managed the substantial assets of the Phipps family and was headed by a family  Co. "In addition to financial planning Financial planning

Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against
, a private banker is a client's trusted advisor on financial and/or family affairs Family Affairs is a British soap opera. The flagship soap on five, it was the first programme to air on the channel on March 30, 1997, the channel's launch night. The serial was broadcast in half-hour episodes, screening each weeknight. . A private banker provides lending services, estate planning, traditional banking roles, and investing. A private bank will have credit cards, bill-paying services, insurance analysis, services as trustee and executor executor n. the person appointed to administer the estate of a person who has died leaving a will which nominates that person. Unless there is a valid objection, the judge will appoint the person named in the will to be executor. , and income tax preparation."

Essentially, the private banker is the one-stop financial shop for the busy CEO, says Karlheinz Muhr, managing director of UBS UBS Union Bank of Switzerland
UBS United Bible Societies
UBS United Blood Services
UBS United Buying Service
UBS Used Bookstore
UBS University Business Services
UBS Universal Building Society (UK)
UBS Ulaanbaatar Broadcasting System
 private banking and head of the global executive group in the Americas. "In addition to other services, it is important to be international and able to provide a continuation of service around the world. Bundling of services, global asset allocation Asset Allocation

The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio.
, and understanding industry segments in a multi-currency environment are also essential."

But while some experts extol ex·tol also ex·toll  
tr.v. ex·tolled also ex·tolled, ex·tol·ling also ex·toll·ing, ex·tols also ex·tolls
To praise highly; exalt. See Synonyms at praise.
 the virtues of private banking, critics say the role of the private banker, in its most basic form, could represent a potential conflict of interest. "The private banker tries to be a conduit into other services; he wants you to be involved in as many banking products as possible," says Webber.

Typically, aggressive investors have found private bankers to be a bit too rigid and conservative for their tastes. But Michael Busse, senior VP and market executive for the Investor Center at Harris Bank argues, "Competition being what it is, no banker wants to appear to be too rigid. However, he or she will ultimately need to do what is in the best interest of the client relationship, and the bank."


Strong credentials are a must, but personality fit can be a deal-breaker. You wouldn't hire a CFO See Chief Financial Officer.  based solely on his or her credentials; you would make certain his or her personality fits in with your team. Likewise, your potential advisor may have years of experience dealing with multi-million dollar portfolios, but if he or she rubs you the wrong way, you're not going to get the most out of the relationship. "Make sure the chemistry and even the body language is good," says Elias. "You have used your intuition in successfully running your corporation; don't second guess yourself elsewhere. And if you lose your trust in the planner, you must fire him or her."

Trust, too, is of the essence if you're going to feel comfortable calling your advisor for every big business decision you make. That may seem like a bit much - particularly for CEOs used to making decisions unilaterally - but not consulting your advisor can leave you blindsided. "One client's worst mistake was quitting one publicly traded company publicly traded company

A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market.
 to become CEO of another without advising me or his accountant before he quit," said John Henry Low, president of Knickerbocker Advisors. "His failure to pick up the phone cost him several hundred thousand dollars."

Generally speaking, it's tough to measure your financial planners' performance; you can only compare what he or she has done with what you both determined were the best goals at the outset of the relationship. "A financial planner by job description is generally less quantifiable than someone running funds," says Michael C. Dailey, president and CEO of Dailey Capital Management. "Performance is measured quarterly and annually, but it is an ambiguous task, because it is difficult to compare track records."

The goals you set to measure your planner or private banker's performance will depend largely on your own investment philosophy. If your comfort zone is a strategy that's relatively risk-averse, but you're looking for Looking for

In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with.
 more of a return than T-bills can offer, you might not care whether you beat the S&P 500. But if you're an aggressive investor, more interested in strong and immediate returns, the planner has a different standard to reach.

Specifically, says Muhr, "the planner should be measured on the level of service delivered, dialog, new ideas "New Ideas" is the debut single by Scottish New Wave/Indie Rock act The Dykeenies. It was first released as a Double A-side with "Will It Happen Tonight?" on July 17, 2006. The band also recorded a video for the track. , ease of dealing, speed of response, tax optimization, performance against a market benchmark, and efficient trust structure. All of this has to be optimized against the CEO's needs and risk preference."

Questions to ask a Financial Planner

We know you're busy. And it may seem easier to run with the first intelligent planner to whom you're referred by a fellow CEO. But, as is true when finding a good surgeon or attorney, taking the time to find the most suitable match is as important as any business decision you'll ever make. So if you're thinking of making a move to a new planner (but perhaps haven't interviewed one in years), here are a few questions to bring to the table:

What experience do you have? Look for a minimum of 10 years experience. Says David Elias, CEO of Elias Asset Management: "Someone who has seen tough times is less likely to get carried away with exuberant markets."

What is your educational background? What licenses do you have? If the planner is not a referral, get the rundown Rundown

A summary of the amount and prices of a serial bond issue that is still available for purchase.


A list of available bonds in a municipal issue of serial bonds.
 on credentials. "Hiring a financial planner is equivalent to hiring a CFO to run your company, except he is running your money," says Elias.

What is your specialty? What technical skills do you have? Challenge your candidate to impress you. Can you cover investment taxes, income taxes, estate planning? Do you understand complex compensations and benefits plans? What are your strategies for exercising options?

Is there a real or potential conflict of interest? "A CEO of a publicly traded company should not use a private banker from the same firm as his company's investment bank," advises Knickerbocker Advisors' president John Henry Low. "The banker could stretch matters for the CEO's personal interest to keep the corporate account. It diminishes objectivity."

What is your investment philosophy? "If a financial planner is too aggressive, the CEO has to be concerned about tax planning," warns Elias. "There are gray areas, which can put the account in jeopardy, and Uncle Sam Uncle Sam, name used to designate the U.S. government. The term arose in the War of 1812 and seems at first to have been used derisively by those opposed to the war. Possibly it was an expansion of the letters "U.S.  will come knocking on the door."

Do you charge a fee, are you fee-based, or are you on commission? Clearly, selling a product for commission can easily be a conflict of interest. Experts agree that a fee-only relationship helps maintain objectivity. Some planners are paid on an hourly basis and some prefer flat fees, rather than open-ended fees such as wraps. Fees - how much and the type - should be disclosed up front, generally at the first meeting. Fee-based is not the same as fee-only; a fee-based relationship means 10 percent or more of compensation is from commission.

RELATED ARTICLE: Hedge Funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long"

What's the downside of a roaring bull market, other than a bigger tax bill in April? For many CEOs, it's the task of figuring out how to lock in profits without sacrificing further gains should the stock market continue higher.

Hedge funds can help. Usually structured as private partnerships available only to high-net-worth individuals and institutions, hedge funds employ a wide range of investment strategies that run the gamut from highly speculative to staunchly conservative. Many of the latter have been designed to earn money whether the market is up or down.

One popular strategy for doing that involves holding both long and short positions simultaneously. If the market goes up, the long portion [TABULAR DATA OMITTED] of the portfolio earns money. If the market falls, the short portion earns.

Through careful stock selection, long-short funds try to ensure that their stock picks don't cancel each other out completely. Many have done this, and so have attracted investor interest. "We're seeing a number of high-net-worth individuals and institutional investors Institutional Investor

A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions.
 moving some of their long equity exposure to equity-hedged investments," says Joseph Nicholas, CEO of Chicago-based Hedge Fund Research and author of Investing in Hedge Funds (Bloomberg Press). The rationale? "They have a large portion of the upside in many of these vehicles, but also a short exposure that provides cushioning on the downside On the Downside is an EP by the San Diego, California band Counterfit, released by Alphabet Records in 2000. It was the band's first EP, recorded shortly after the members had relocated to San Diego from Fairfield County, Connecticut. ."

In a typical long-short fund, the manager weights the long portion of the portfolio more heavily than the short portion, recognizing that over time, the stock market has a pronounced upward bias. In more extreme variations of the model, known as equity market-neutral funds, the portfolio is carefully designed to be dollar neutral, and, in many cases, sector neutral.

Of the 11,800 portfolios BARRA BARRA Bangladesh Rural Reconstruction Association  Inc. tracks for its institutional clients, two equity market-neutral funds ranked near the top of the low-risk screen: AXA AXA Anguilla, Anguilla (Airport Code)
AXA Alpha Chi Alpha
AXA Animal Crossing Ahead (online forum community/guide to the game Animal Crossing)
AXA Auxiliary Artery
 Rosenberg Investment Management's Market Neutral Fund L.P., and Zacks' Market Neutral Fund.

But be prepared to pay if you want to play: the minimum investment for the AXA fund is $1 million, and $10 million for the Zacks fund.

- Randy Myers
    Randall Kirk Myers (born September 19, 1962 in Vancouver, Washington, U.S.) is a former Major League Baseball relief pitcher who pitched from 1985-1998, with the New York Mets, Cincinnati Reds, San Diego Padres, Chicago Cubs, Baltimore Orioles, and Toronto Blue Jays.

    RELATED ARTICLE: Private Equity

    Leonard M. Harlan buys and sells companies for a living, but occasionally the president of New York-based private equity group Castle Harlan participates in other firms' buyout funds. His advice is a valuable asset to these limited partnerships, which acquire companies and grow then over several years with an eye to an IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard.  or a higher-priced sale. Likewise, Harlan appreciates having investors "who, if they spotted an investment opportunity, would suggest it to us."
    In total, the Private Equity Analyst reports a jump in partner
    commitments to private equity funds from $55.8 billion in 1997 to
    $85.3 billion.
                              1998 Funds        1997 Funds
                          Number   Capital   Number   Capital
    Corporate Finance       107    $54,809     101    $35,952
    Mezzanine                10     $2,072      13     $3,492
    Venture Capital         139    $17,260     136    $11,699
    Fund of Funds            30     $9,594      16     $4,028
    Other                     3     $1,557       5       $599
    Source: The Private Equity Analyst, January 1999

    Referrals and relationships are the building blocks of private equity funds. Investment returns can be astronomical - for example, Castle Harlan's Partners II fund, which raised $275 million in 1992, has enjoyed average annual gains of 71 percent before fees through the end of 1998. Private funds buy companies in virtually all industries and at every stage of fiscal health. Some invest along a broad spectrum; others are more specialized. But admission to this red-carpet club isn't cheap. Because the number of investors in any single fund is often not more than 50, investment minimums are large, often $5 million or $10 million.

    But private equity funds frequently waive investment minimums to accommodate corporate leaders who bring knowledge, analysis, and marquee value to a fund. A $500,000 investment might do in some cases, says Harlan, but whatever the figure, "it should be a meaningful amount to the CEO so he is interested in helping the fund be successful."

    Individual investors typically are not partners with the big institutions, endowments, and pensions in the main fund. Rather, portfolio managers assemble what's called a "side-by-side" fund that tracks the larger entity. Private equity funds usually take 20 percent of any profits after a specified minimum return, or "hurdle rate Hurdle Rate

    The minimum amount of return that a person requires before they will make an investment in something.

    This is the rate of return that will get someone "over the hurdle" and invest their money.
    ," in addition to an annual management fee of between 1.5 percent and 2 percent. Side-by-side funds reduce these charges or dispense with them. "They're put together on terms favorable to investors," says Lawrence Graev, CEO of legal firm O'Sullivan Graev & Karabell. "They're giving friends of the general partners an opportunity to invest a relatively small amount of money into a fund - enough so there's a reason for them to be helpful."

    To be sure, everybody wants a piece of this pie - a record $88.4 billion flowed into 364 private equity funds in '98 alone, a 25 percent increase over the year before, according to Securities Data Co. But there's good reason to be cautious and diligent. This alternative investment is a five- to 10-year mission, with no escape. Buyout funds are illiquid Illiquid

    An asset or security that cannot be converted into cash very quickly (or near prevailing market prices).

    A house is a good example of an illiquid asset.
    See also: Cash, Liquidity


    In the context of finance.
    ; unlike a standard mutual fund, you can't withdraw cash whenever you want, but you may be asked for cash when you least expect it. "On two weeks' notice, you have to be prepared to put up as much money as we call from you, up to the limit," says Robert Shields This article is about the soldier. For the mime, see Shields and Yarnell.
    Robert Shields VC (1827 – 23 December 1864) was a Welsh recipient of the Victoria Cross, the highest and most prestigious award for gallantry in the face of the enemy that can be
    , a principal at turnaround specialist Questor Management Co.

    CEOs with plenty of will but not much wallet also might look into a private equity "fund of funds Fund of Funds

    A mutual fund that invests in other mutual funds.

    For example, an investor would select a general risk profile and the fund-of-funds manager would pick underlying investments from a range of products managed by external managers.
    " that takes money from individuals and smaller institutions and allocates the investment among several different private funds. Fees are somewhat higher, but you get the benefits of diversification and skirt those stiff investment minimums.

    - Jonathan Burton

    RELATED ARTICLE: Mutual Funds

    For chief executives accustomed to solving problems by throwing money and brainpower brain·pow·er  
    1. Intellectual capacity.

    2. People of well-developed mental abilities: a country that doesn't value its brainpower.

    Noun 1.
     of them, investing in an mutual fund that merely mimics a stock index might seem rather provincial. But Michael Stolper, president of San Diego-based Stolper & Co., an investment advisory firm that counsels high-net-worth individuals and foundations, couldn't disagree more. "The most important thing for anybody to remember, regardless of who you are in the corporate food chain, is that there is a positive upward slope in the equity markets," says Stolper. "It's a wonderfully benevolent environment, and the principal contribution an investor can make is to show up and stay put. Beyond that, you're fiddling on the margin."

    Index funds are especially appealing to investors in high tax brackets Tax Bracket

    The rate at which an individual is taxed due to a particular income level.

    Each income class is taxed at a different level. Generally, the more you make the more you are taxed.
     because they're tax efficient; their buy-and-hold strategy Buy-and-hold strategy

    A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon. Opposite of active strategy.
     minimizes trading and hence onerous capital gains. They're also cost efficient, generally operating for one-half to one-third the price of actively managed stock funds. The less you spend on management fees, trading costs Trading costs

    Costs of buying and selling marketable securities and borrowing. Trading costs include commissions, slippage, and the bid/ask spread. See: Transactions costs.
    , and taxes, the more you get to keep of your fund's earnings.

    What's more, index funds work. Of 2,933 domestic stock funds tracked by Morningstar, a stunning 2,735 failed to beat the S&P 500 stock index for the three-year period ended March 31. By contrast, virtually every S&P 500 index fund matched the index within one percentage point.

    While the S&P 500 has been outperforming virtually every other major stock index for the past several years, Stolper warns that won't always be the case. "Inevitably, that will end and something else will assert itself."

    Accordingly, he suggests Vanguard's Total Stock Market Index Fund as a fine anchor for almost any investment portfolio. The fund seeks to mirror the performance of the entire U.S. stock market as presented by the Wilshire 5000 index. For the three years ended March 31, the fund posted a total return of 24.3 percent vs. 24.5 percent for the Wilshire 5000. Some of the credit goes to its rock-bottom costs; while the average domestic stock fund charges 1.4 percent in management fees, this Vanguard offering levies a miserly mi·ser·ly  
    Of, relating to, or characteristic of a miser; avaricious or penurious.

    miser·li·ness n.

    Adj. 1.
     0.2 percent.

    Although the Vanguard Total Market Index Fund invests in stocks of all sizes, it will still enjoy exposure to the S&P 500 if large caps stay in favor a while longer, since stocks in the S&P 500 account for about three-quarters of the fund's capitalization. But this fund will also provide exposure to small-cap issues when market sentiment Market Sentiment

    The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of the securities.

    For example, rising prices would indicate a bullish market sentiment.
     finally does change.


    If you'd like to augment your index fund with something that takes advantage of today's hot market for Internet stocks Internet stock

    The equity security of a company engaged primarily in a business associated with the Internet. Also called dot-com.
    , you may be considering one of the newer mutual funds focused on that sector of the market. Stolper has another suggestion. Instead of buying a fund with such a narrow charter, he advises selecting a broad-based technology fund along the lines of T. Rowe Price T. Rowe Price (NASDAQ: TROW) is an independent global investment management firm and mutual fund manager based in Baltimore, Maryland. It was founded in 1937 by Thomas Rowe Price, Jr..

     Science & Technology (total return of 39.2 percent last year) or the new Janus Global Technology, both of which have exposure to Internet stocks but aren't tied exclusively to their fate.

    "With these funds, you're paying somebody who knows what they're doing - somebody who's sorting through the business models of these companies and assessing their risks," Stolper says. "Over the long run, you'll probably do a lot better."

    - Randy Myers

    RELATED ARTICLE: Advice From the Experts

    * "Phantom stock Phantom stock is essentially a cash bonus plan, although some plans pay out the benefits in the form of shares. Phantom stock provides a cash or stock bonus based on the value of a stated number of shares, to be paid out at the end of a specified period of time. , used as a 'golden handcuff,' is an excellent way for companies (especially private firms) to compensate the CEO and hold onto them without giving away a piece of the company. The CEO gets a chock at the end of five years for the amount the phantom stock is worth under some formula. Phantom stock are hypothetical units with no tax at the time of the grant. They can be structured to fit many varied situations." - Tim Smith Tim Smith is a common name. Notable people with the name Tim Smith include:
    • Tim Smith (rugby league) (born 1985), Australian rugby league player
    • Tim Smith (American football) (born 1957), former NFL wide receiver
    , president of Comprehensive Asset Management and Servicing.

    * "Conventional wisdom is to hold options until expiration, but some executives should exercise earlier for diversification. Our executive stock option model includes strike price, risk/reword parameters, and reinvestment Reinvestment

    Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash.

    1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares.
    , as well as such variables as age, how far the CEO is from retirement, gifts to charity, and other liquidity needs. Whether the CEO exercises options and holds stocks or exercises and sells the options, he or she should understand the income tax consequences, casts, and implications for the broader estate and financial plan. Also, the CEO must consider the possible imposition of the Alternative Minimum Tax in the year of the option exercise." - Craig Smith For the rugby player, see .
    Craig Smith (born November 10, 1983 in Inglewood, California) is an American professional basketball player. After playing for Boston College from 2002-2006, he was selected by the Minnesota Timberwolves in the 2006 NBA Draft.
    , J.P. Morgan & Co. 's Wealth Advisory Group

    * "To be a successful investor, you mast make a plan and have the discipline to stick to it. But some investors get antsy ant·sy  
    adj. ant·si·er, ant·si·est Slang
    1. Restless or impatient; fidgety: The long wait made the children antsy.

     to buy and sell, and some are looking for cocktail fodder. For them, I suggest taking a small part of assets, about 10 percent - and no more than 20 percent - on amount that if they lost it, it would not affect their lifestyle, and they can trade this amount any way they wont to." - William E. Mayer, managing member, Development Capital LLC (Logical Link Control) See "LANs" under data link protocol.

    LLC - Logical Link Control

    * "A CEO wanted to invest in his competitors' stock to receive their annual reports and monitor what his competition was doing. I recommended only using 3 percent of his assets for this endeavor. I suggest clients use up to 10 percent of their assets as 'Vegas Money,' if they want to speculate. For instance, a CEO was in the locker room of his club and overheard a conversation that XYZ XYZ  
    interj. Informal
    Used to indicate to someone that the zipper of his or her pants is open.

    [ex(amine) y(our) z(ipper).]
     company was 'going to the moon.' He chased the latest hot tip and got into hot water." - David Elias, CEO, Elias Asset Management

    * "If a CEO has a large concentration in one stock, he should invest with inverse ramifications ramifications nplAuswirkungen pl . For example, a CEO of an oil company with a lot of stock in that company must restructure his portfolio to include another industry with on inverse correlation, such as on airline. When oil prices drop, the cost of airline operations should fall as well, and the airline stock should rise." - Skip Gianopulos, Harris Bank's head of financial planning

    * "If a client has not redone re·done  
    Past participle of redo.
     her will since being named CEO, it is an indication that she needs help in assembling o financial planning team. If however, the CEO is very organized and up-to-date with her finances, it is likely she will have already assembled a financial team." - Robert S Robert, Henry Martyn 1837-1923.

    American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876).

    Noun 1.
    . Abramson, managing director, Sanford Bernstein

    RELATED ARTICLE: Real Estate

    Afraid the stock market is overdue for a correction? Bored with bands? Consider diversifying your portfolio with real estate.

    Plenty of other investors already have, driving the Morgan Stanley To comply with Wikipedia's , the introduction of this article needs a complete rewrite.  Real Estate Investment Trust Index up 16.7 percent from its September low through mid-April. That erased much of the 26 percent loss the index had sustained in the prior 12 months. But Samuel Lieber, CEO and portfolio manager at Alpine Management & Research in New York New York, state, United States
    New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
    , which runs three real estate mutual funds, says there are still bargains to be found.

    "The way to really make money in this group is to buy stocks that are out of favor," Lieber says. "One interesting play is Meditrust Cos., in which you get the benefit not only of its current depressed valuation and hence its high dividend yield, but also the opportunity for appreciation as the stock rebounds."
    As the data show, returns on real estate and stocks. as measured by
    two popular indices, have shown little correlation over the past 10
    years, with real estate outperforming stocks in three of those
                 S&P 500     Wilshire REIT Index
    1989          31.68              2.72
    1990          -3.12            -23.44
    1991          30.48             23.84
    1992           7.62             15.28
    1993          10.06             15.46
    1994           1.32              0.79
    1995          37.53             12.24
    1996          22.95             37.04
    1997          33.35             19.54
    1998          28.58            -16.96

    Meditrust is a real estate investment trust, or REIT REIT

    See: Real Estate Investment Trust


    See real estate investment trust (REIT).
    , which divides its business between health care and lodging. Its shares peaked at $39 7/8 in late '97 and have since fallen to about $12 1/2, principally as punishment for the company having taken on too much debt for too many acquisitions.

    But Meditrust today isn't the company it was even several months ago. It has sold some of its properties, and just since the end of '98, has pared its long-term debt Long-Term Debt

    Loans and financial obligations lasting over one year.

    For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt.
     to about $1.4 billion from $3.3 billion. With its improved balance sheet, Meditrust's cash flow is more than sufficient to meet dividend requirements, Lieber says, adding that analysts expect Meditrust to generate funds from operations Funds From Operations (FFO)

    Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back.
     of $2.30 a share this year, well above its $1.84 dividend.

    "From our view, the company as a whole is worth $20 a share," he adds. "Even allowing for some uncertainty in the market, this stock should be trading around $16, which would still give you a double-digit dividend yield. If investors can see $16 on a $12 1/2 stock, plus this dividend, we're talking about a 40 percent-plus return in 12 months time."

    Lieber is also bullish on Miami-based Lennar Corp., one of the nation's largest homebuilders and land owners. It builds about 10,700 homes a year and has a large inventory of land acquired at favorable prices during past market downturns. Lieber charges Wall St. with failing to recognize that big homebuilders like Lennar are run much more professionally run today than decades ago, when speculative building was rampant. He suggests they are now less susceptible, though certainly not immune, to economic cycles.

    The popular view is evident in Lennar's stock price, which at a recent $25 is only about 10 times the company's trailing 12-month earnings of $2.49 a share. By contrast, the stocks in the S&P 500 index are trading at about 30 times earnings on average.

    Lieber expects Lennar to earn about $3 a share this year and up to $3.30 in 2000. And that's not the only plus working in Lennar's favor. "Their underlying real estate is probably worth $28 a share or more," observes Lieber. "You're buying the business for nothing."

    - Randy Myers

    RELATED ARTICLE: Tax Relief With Munis

    Like most investors, CEOs pay close attention to their stock portfolio. For many, in fact, their companies are the bulk of their portfolios. Others diversify stock holdings across industries and companies, trading away some potential gains for a less-volatile ride. But for true diversification, current income, and attractive tax advantages, consider tax-free municipal bonds.
    As the chart below illustrates, the yield on a taxable corporate
    bond may start out higher than a tax-exempt bond, but the tax bite
    puts the municipal bond out in front.
                                          6% Tax        8% Taxable
                                        Exempt Bond     Investment
    Cash Investment                       $30,000         $30,000
    Interest                               $1,800          $2,400
    Federal Income Tax
    in the 36% Marginal Tax Bracket             0            $864
    Net Return                             $1,800          $1,536
    Yield on Investment After Taxes         6.00%           5.10%
    Source: Legg Mason, Inc.

    Muni bonds are issued by state and local governments to cover everything from expenses to expressways. And for high net-worth individuals in the top tax brackets, munis are gift-wrapped presents, especially for residents of tax-burdened states such as New York, Massachusetts, and California. Unlike U.S. Treasury U.S. Treasury

    Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S.
     bonds, which are free from state and local taxes but subject to federal tax, munis are completely tax-free.

    "It's hard for an upper-bracket investor to ignore munis," says James Tesone, a managing director and fixed-income specialist at Carret and Co., a New York-based money management firm. "Munis are under-recognized for the substantial advantages that they give investors in terms of liquidity and safety."

    Wealthier investors with at least $500,000 to put into munis can rely on brokers or money managers, and their own research, to construct a custom portfolio. Figure on investing $100,000 in a single security, Tesone says. Currently he likes intermediate-term munis - a class of bond that will repay principal, or "mature," in seven to 15 years. The yield, or dividend income, from these bonds is unusually close to comparable Treasuries, and their tax benefit sweetens the deal. To create a steady cash flow, Tesone staggers staggers /stag·gers/ (stag´erz) a form of vertigo occurring in decompression sickness.


    incoordination of any kind, including a tendency to fall, and recumbency if harassed.
     maturities within a portfolio in a "ladder" fashion. A $500,000 portfolio might be spread among bonds maturing in seven, nine 11, 13, and 15 years.

    For all others, Tesone recommends a single-state muni-bond mutual fund. Choose a fund with below-average annual operation expenses. Recently, the typical muni fund charged 1.04 percent of assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , according to fund-rating service Morningstar.

    At certain times, like now, muni bonds are more attractive than Treasuries, and nearly as safe. For added security, buy insured muni bonds that guarantee principal in the unlikely event that the issuer defaults.

    To see if a muni bond works for your situation, compare its yield to a Treasury with a similar maturity. Suppose a 10-year Treasury yields 5 percent, while a 10-year, AAA AAA: see American Automobile Association.

    (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied.
    , fully insured muni yields roughly 4.3 percent. The Treasury offers more current income, but remember that the muni interest equates to after-tax dollars. Here's how to calculate the taxable equivalent yield Taxable equivalent yield

    The return from a higher-paying but taxable investment that would equal the return from a tax-free investment. This depends on the investor's tax bracket.
     of that 4.3 percent dividend: First, subtract your federal tax rate from. If you're in a 36 percent tax bracket, for example, then 1 minus .36 equals .64. Then divide 4.3 by .64. This equals a yield of 6.7 percent - an attractive 1.7 percentage points above the Treasury. Even in the 31 percent tax bracket, the muni yield equates to a richer 6.1 percent.

    Be aware that as cities and states enjoy huge tax revenues and budget surpluses, their need to issue munis has diminished at the same time that demand is growing. The result: bond prices are up, and yields are down. But don't look to munis for a big score. "There's no thrills, chills, or potential spills," says Marilyn Cohen cohen
     or kohen

    (Hebrew: “priest”) Jewish priest descended from Zadok (a descendant of Aaron), priest at the First Temple of Jerusalem. The biblical priesthood was hereditary and male.
    , president of Envision Capital Management, a Los Angeles-based fixed-income investment manager. "They stand like a rock and pump out income."

    - Jonathan Burton
    COPYRIGHT 1999 Chief Executive Publishing
    No portion of this article can be reproduced without the express written permission from the copyright holder.
    Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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    Title Annotation:portfolio investment management for CEOs; includes related articles on financial planning and investment vehicles
    Author:Prince, C.J.
    Publication:Chief Executive (U.S.)
    Date:Jun 1, 1999
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