Sell in May and Go Away

With Developed Economies still on a slow road to recovery and stock markets hitting all-time highs, now may be a wise time to get out of domestic stocks and invest abroad.

What is a deleveraging?  The term refers to countries reducing their debt-to-income ratios when they are too high.  It is generally accomplished through debt restructurings (writing off some of the country’s debt by saying “Sorry, I can only pay 50% of this”), austerity (raising taxes/cutting public spending), and/or debt monetization (printing money essentially).

These three things all have different benefits and consequences:

The United States and Europe have both been deleveraging for the past few years, and the issue they face is this: how do they pay down the excessive debt without hindering the growth of the economy or causing inflation?  The key may be in finding the right balance between the various deleveraging tactics.  However, this is tough to do.  If you want a mini- breakdown of how this is going, you can look into the original article attached below, but the point is that deleveraging is taking a serious toll on both the US and Europe.  In the US, the economy still has a high unemployment rate of 7.7% (well above the Federal Reserve’s Target of 6.5%) and other tough economic factors, but stock markets are hitting all-time highs.  This is leading many people to think that stocks are currently overvalued-meaning there should ideally be a correction in markets.  In Europe, there has already been heavy austerity, and it is expected that there will be more.  Stock markets have been depressed and are forecasted to continue to do poorly there as well.  So the question becomes, where should you invest for stocks?  A good idea may be to look into Emerging Markets.  This will be topic of my next article, but for now as the saying goes-“Sell in May and Go Away,” for both yourself and your stock portfolio.

“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”

–          Bruce Lee

Can you think of anything you’ve actually done ten thousand times? Maybe it would be easier to identify something you feel like you’ve done ten thousand times (or more). Most likely, it’s easy for any one of us to think of an activity or skill we “practice” on a regular, consistent basis. Here’s the caveat though: how many of those things are we doing deliberately?  There’s a vast difference between merely jamming to “Rolling in the Deep” over one hundred times and painstakingly analyzing every second of the same piece even five times: one provides enjoyment, the other yields a greater understanding of what makes the song enjoyable. The same can be said for almost any activity; there is a fine distinction between consumption and engagement.

For example, have you ever been introduced to a person, only to forget their name less than a minute later? Often, the reason that we “forget” such things is not because we’re bad at remembering names, it’s that we weren’t truly paying attention in the first place! This is a concept that can be linked directly to mindfulness. The more awareness we cultivate, the greater mental resources we’ll have available to dedicate to passionate, pointed focus at any given time. Maybe that’s why we tend to describe some endeavors as “labors of love”; yes, they are intense and time consuming, but ultimately they are rewarding. When it comes to steadily improving in activities that we are invested in – be it as an individual, team, or business – our needs and priorities will shift endlessly, and sometimes this happens without us even realizing it. What typically determines whether or not there is a “Disney ending” to our quests is how much we are actively focused on the activity, monitoring the process, and measuring our results yearly, monthly, and maybe even weekly if necessary.

Maybe you’ve heard of Malcolm Gladwell, the celebrated author of “Outliers?” In Outliers, Gladwell discusses the common threads between expert groups and individuals. He traces the success of experts to something he terms the “10,000 Hour-Rule,” i.e. a belief that amassing the skills required to perform at an extraordinary level generally requires a similar amount of time for most people, roughly 10,000 hours or about 10 years (at 2.8 hours a day). This finding hinges on a multiple authored and exhaustive study of over 900 pages of peer reviewed research on the development of expertise. The information was synthesized into a handbook (The Cambridge Handbook of Expertise and Expert Performance).

If there’s anything to be taken from this finding, it’s the idea that it is entirely possible to reach a superlative level of performance in the arts, academics, sport, and/ or workplace if practice is approached in a deliberate and consistent manner. 10,000 hours of practice won’t guarantee that you’ll be among the most skilled in the world but 10,000 hours of deliberate practice just might. And that may be another reason to just keep on trying.

To see a few interesting examples of deliberate practice in action, get an idea of what practice is “deliberate enough”, and read a funny story about wine check out: http://www.uvm.edu/~pdodds/files/papers/others/everything/ericsson2007a.pdf

Article by Jeff Lue (Q16)

Maybe this is what Dr. Bailey feels every year, a sense of satisfaction and pride when the QUEST cycle comes full circle. I know that’s how I felt this year. From first saying hello to new sophomores on a crowded bus on our way to Camp Horizons 2 years ago, to seeing them present on the QUEST Big Stage: the 490 Conference.

This year’s conference highlighted Cohort 18, the group of students I had the privilege of TA-ing two years ago in 190. Twelve teams working with nine different clients, this year’s conference provided a variety of problems spanned across several different industries. Starting with a storyboard presentation giving a brief synopsis of the projects, the night moved onto each team presenting to friends, family, and the QUEST community the projects they have been working on all semester.

The night concluded with thanks from and for the Quality Guild, and the Project of the Year. This year’s project was Tulkoff’s Speedy Spices.  Team Speedy Spices was tasked with the challenge of increasing the efficiency one of Tulkoff’s production lines. After a long semester, the team was able to develop an algorithm increasing efficiency by 12%. (This writer may be a bit biased, being on the first Tulkoff team 2 years ago).

But make no mistake, while only one project is named Project of the Year, every team should be extremely proud of their project.  And it has been a pleasure seeing how far each one of you has come over the past 2 years.

As a recent alum of the program, it’s always great to come back. We get to enjoy the conference without any stress of presenting, eat food, chat with friends and other alums, and of course, say hi to the Quality Guild. It’s also refreshing to step away from the workplace and back to our alma mater, watching our favorite honors program continue to produce Quality students and soon to be professionals. I look forward to coming back and seeing future cohorts strut their stuff.

Team Speedy Spices with project champions Phil Tulkoff and Brent Guyton & faculty advisor Dr. Jeffrey Herrmann.

Article by Jacob Wilkowsky (Q19)

I don’t know about you, but I’m not such a huge fan of cliffs. In fact, the cliff is probably my least favorite geographical formation after the hill. The sheer image reeks of danger and conjures up memories of Wile E. Coyote plummeting in a cloud of smoke. That’s why when I first heard about this “fiscal cliff” I started to worry. I knew no cliff could be good news, and decided to do some research.

It turns out the term “fiscal cliff” is just a popularized metaphor for automatic spending cuts and tax increases that were supposed to occur on January 1st, 2013. The result of past legislation- the Collective Budget Agreement of 2011 and Bush-era Tax Cuts-most experts believe the fiscal cliff held the capacity to bring the U.S economy back into a recession. By one account, economists from Barclays Capital estimated the fiscal cliff could have shaved off 2.8 percentage points from GDP in 2013. So first and foremost the fiscal cliff was a threat to economic prosperity. Furthermore, the fiscal cliff also played a minor role in a much larger drama relating to the U.S’s deficit.

Today the U.S deficit is hovering around $16.4 trillion dollars, equivalent to a debt load of $52,000 per American. Increasing at a rate of $3.84 billion dollars per day since September 28th, 2007, the deficit has long been an issue of serious concern for Congress. The accelerating deficit, as is, risks the U.S government defaulting on its obligations, which would be disastrous for the world economy. And since the fiscal cliff encompassed tax and spending policy issues that greatly influenced the deficit, it served as a stark event in a greater story of the U.S deficit. As such, it became a battleground for political parties debating the country’s deficit issue in Congress. So while at its core the fiscal cliff was an economic dilemma, it was also a political drama, subject to competing parties fighting for power.

Gridlock characterized the political conversation on the fiscal cliff. Only in the 11th hour of the fiscal cliff drama were Vice President Joe Biden and Senate Minority Leader Mitch McConnell able to get a deal done to prevent an economic disaster. The deal made on January 1st 2013 by Republicans and Democrats was passed as the American Taxpayer Relief Act of 2012. It addressed the expiring Bush-tax cuts immediately, while delaying $110 billion dollars in spending cuts from the Collective Budget Agreement of 2011 for 2 months.

New tax policy propelled by the American Taxpayer Relief Act of 2012 strongly mirrors that which President Obama campaigned on during the presidential race. Most notably from the legislation, 98% of Americans will enjoy the continuation of Bush-era tax cuts. 2% of the wealthiest Americans making $450,000 or more as couples or $400,000 as individuals saw their taxes raised. Congress also helped out the American middle class by adjusting the alternative minimum tax to inflation, greatly reducing their potential tax liability. Also notably, the estate tax was raised 5% for amounts over $5 million dollars (indexed to inflation). Overall, the American Taxpayer Relief Act of 2012 addressed half of the fiscal cliff, leaving the issue of spending cuts still on the table. These cuts are now schedules to kick in on March 2nd.

So the question remains, “What was the fiscal cliff?” Earlier we defined the fiscal cliff as a metaphor for automatic spending cuts and tax increases, but that definition seems a bit haphazard now. Through the efforts of political pundits, the term seems to have taken a life of its own. The fiscal cliff narrative now reflects much of the tumultuous environment in which it materialized. It serves as a stark reminder of our economic fragility, deficit crisis, and political acrimony. However, while history probably won’t deem the fiscal cliff a shining moment in American politics, at least we were able to get through it and we still have a shot at resolving our nation’s problems again tomorrow.

Article by Daniel-Jason Minzie (Q20)

Many of us are effectively sprinting our own personal mental marathons at a suicide pace – and we don’t even recognize it. Frequently we are assaulted by incessant thoughts, worries, and demands and it’s these frustrations that we dash away from. Unfortunately these maladies of the mind can remain quite…determined to catch us. Such sustained effort against their assaults becomes exhausting. To avoid their stresses we become hyperopic:  that is, we focus exclusively on what must be done in the future as method of mental escape from our sorrow. We ask ourselves, “What needs be achieved tomorrow, in a week, an hour from now? How much time can I save today so that I may do x, y, and z tomorrow?” With each leap forward in time for our frame of reference, it becomes nearly impossible to pause and embrace our gift, the present, which is unfortunate, because this is where optimal experience and its rewards lie. It’s no wonder that many of us report that our happiest experiences occur during quality time with our friends and family or even a well- functioning team; usually when we’re surrounded by our significant others, the focus is on the here and now – not the report we need to have on the boss’ or our professors’ desk by the end of next week.

A future focus is indeed often a necessary element of success. However, too much emphasis on the future at the expense of engaging in and enjoying the present ultimately leads to train wrecks: i.e.  neglected relationships, excessive stress, and disrupted emotional regulation – all of which are killer for performance in professional world and our personal life alike. The key to reclaiming our vitality and restoring the natural zest we lose under such undue stress is a reconnection with the now, the present.

Mindfulness meditation is that key. Think of your mind as an elaborate computer. Sometimes our circuits are overloaded by a sea of information or overuse, so the solution is the reset the system. This, metaphorically speaking, is the effect of mindfulness meditation. It’s a sort of system re-boot. I’m sure you heard that every journey starts with a single step – consider this yours. A vast amount of information is increasingly suggesting that the benefits of this simple exercise extend beyond just the mental realm; they also reach into the physical and actively change the structure of our brains.

For text on Mindfulness Meditation, I would highly recommend “Re-wiring Your Brain for Love” by neuropsychologist Dr. Marsha Lucas. She explains the nitty-gritty of the science in an easy to understand and quite straight forward way and provides relevant exercises to help you develop a fully functional and well-integrated brain. Don’t be shy about the title; the usefulness of the material transcends romantic relations alone. Also, I’m sure that most of us know our cross-functional teams could use a little more love during those storming sessions!

For a reliable source(s) on Mindfulness Meditation Check Out:

http://marc.ucla.edu/

http://www.investigatinghealthyminds.org/

Article by Jacob Wilkowsky (Q19)

Waking up on the morning of November 7^th, I quickly grabbed my laptop and went online. Although out of the country, I followed the election race closely. Depending on whom you asked, President Obama was an 86% favorite or Governor Romney was a point ahead. But as we now know, the former was the truth. President Obama won the race by a very safe margin. In addition to the president’s reelection, gay marriage ballots passed in Maine and Maryland, and ballots on the legalization of marijuana for recreational use passed in Washington and Colorado.

In retrospect, we will always remember November 6^th, 2012 as a celebration of our most fundamental democratic liberty. However, the day will not be remembered for its bipartisanship. In fact, many have claimed, with merit or without, that America has been more divided these past years than any other time since the civil war. Now I hope that is an exaggeration, but in past years we have clearly witnessed a blaring lack of bipartisanship in our government. In recent years, Congressmen refused to pass widely supported job bills during a crippling recession because, by admission, their number one goal was to get President Obama out of office. Senators were unable, or more likely unwilling, to pass budgets so that our government and economy could work most efficiently, and most importantly, leaders from neither side were able to break the a extended gridlock in the legislature and create compromise. This extreme partisanship has real costs on our government, economy, and the confidence of Americans. It should be noted that this incompetence is not limited to elected officials. More and more Americans have seemed to assume a polarized point of view.

As partisan as our elected officials acted, it is difficult to discern whether our elected officials have been feeding the fire or just representing their constituents. Partisanship has no more a pronounced form than deeming the President of the United States a terrorist, claiming he is an illegal alien, or labeling him a radical Muslim.  Let alone making all three of those claims the foundation of your political party. These beliefs took roots and grew. In response, many citizens badgered fellow Americans about their personal faith. These attacks were equally as repugnant, and further divided our country. Whether we can discern the cause of the partisanship, I am not certain. We can however recognize that the ideal of compromise has long abated the national political conversation.

So now we face the question stands, “How does partisanship affect this country?”

Luckily, this election offered Americans a window into a changing United States and its future. While the sight might not be fully visible, hopefully there is a discernible image that can help us answer this question.

• The first black president elected to his second term.
• The Gay Civil Rights movement making its most significant gains against conservative America to date.
• The long controversial War on Drugs finally in the spotlight.

We find that the United States is pursuing a more liberal agenda. Older generations say they never thought they would see a black president. Well, he is on his second term now, and I never thought I would see POT LEGALIZED FOR RECREATIONAL USE. American liberals are making gains. Has the base grown? Certainly, in coming decades minorities will replaces whites as the majority of this country—demographics are changing. Maybe the increased presence of college students in politics is playing a role? There are many factors to consider, however, to truly understand this growth maybe we should look backwards about 40 years.

Peering through the lens of history, we see these current “radical” changes emanating from social tensions that have existed for decades. It was 44 years ago that Martin Luther King Jr. was assassinated, fighting for the rights of blacks to drink from the same water fountains as whites.  It was 35 years ago that Anita Bryant launched her gay crusade to remove homosexuals from their jobs in every state. It has been 41 years since President Nixon started the War on Drugs, which has turned a multibillion-dollar industry into a black market, fueled Mexican cartel violence, and has incarcerated American minorities overwhelmingly disproportionately. Today doesn’t seem so radical now. These tensions between “liberals” and “conservatives” have existed for decades. And through the natural push and pull of American politics we have reached where we are today.

And that’s democracy. It’s push and pull. If we want change, we can throw everything and the kitchen sink to get it. That’s where our partisanship has grown from. However the ones who were truly great, the legends like Harvey Milk and Martin Luther King Jr., they weren’t the sink throwing types. The ones who created generation-defining change, they rose above the sink throwing. The great leaders elevated the conversation, because they knew it isn’t as simple as liberal and conservative. They knew how to make progress by strengthening our union, not diminishing it. They led their country by uniting its people, and provided an example for us to do the same.

Finally let’s get back to that question, “How does partisanship affect this country?”

The short answer is not well. Because a government of the people, by the people, for the people is only as unified and effective as its parts. The problems we face today are descendants of the problems we faced yesterday. How we face those problems is what defines our success or failure. And the burden we leave to future generations is how history will remember us. It’s the natural course of things, and we need to make sure that every citizen is focusing on process innovation.

Editor’s Note: Inspired by the spirit of giving that defines this wonderful holiday, QUEST students have shared some of their favorite Thanksgiving recipes with the QUEST community to try.

Cranberry Walnut Scone

Recipe Submitted by Mercedes Valero (Q19)

For the morning after Thanksgiving

Makes 16

• 2 cups flour
• 1 ½ tablespoon baking powder
• 1/3 cup sugar
• ½ teaspoon salt
• 10 tablespoons butter-diced and chilled
• Grated rind of 1 large orange (optional)
• 1/3 cup fresh or dried cranberries
• 1/3 cup walnut pieces
• 1/2 cup buttermilk
• Any amount of the following spices to taste (optional)
  • nutmeg
  • allspice
  • pumpkin spice
  • cinnamon
  • ground ginger

1. Preheat the oven to 425°F. Grease and flour a large baking sheet.

2. Combine the dry ingredients in a large bowl. Add in the butter cut in with a pastry blender until the mixture resembles coarse crumbs.

3. Add the orange rind and cranberries

4. Gradually stir in the buttermilk to form a soft dough.

5. Roll out the dough about ¾ inch thick, stamp out circles with a cookie cutter or cut into triangles.

6. Place on the prepared sheet ½ in. to and inch apart

7. Bake until golden, 12-15 minutes. Serve hot or warm.

~Cook’s Tips~

• For light tender scones, handle the dough as little as possible.
• More butter is ok, and makes for softer scones
• The key to light and fluffy scones is cold butter in a hot oven. I like to put my dough in the freezer for 10-15 minutes before I add the buttermilk to ensure that the butter is still cold (and not room temperature) when it goes in the oven

Sweet Potato Pasta

Recipe submitted by Audrey Morris (Q18)

Ingredients

• Large onion
• Olive Oil
• 1 14oz can of chickpeas
• 3 teaspoons of minced garlic
• 1 tsp of dried parsley
• 1 tsp of dried basil
• 1 14oz can of diced tomatoes
• Vegetable stock
• Large sweet potato
• Whole wheat pasta
• Shredded Parmesan

Directions

1. In a large pot, fry chopped onion on medium-low heat in olive oil for five minutes.

2. Add chickpeas, garlic, sweet potato, ginger, chopped sweet potato, parsley, basil, salt & pepper, and tomatoes. Increase heat and cook for five minutes.

3. Add the amount of pasta you want (I would recommend a standard box of rotini for 4 people if you would like leftovers) and add vegetable stock until pasta is just covered by liquid. Cook until pasta is ready (usually 15 minutes).

4. Plate the pasta and have each person add parmesan.

This is a really yummy, hearty dish that is always a hit in the fall and winter seasons. Enjoy!

Corn Bread Stuffing with Shrimp and Andouille

Recipe Submitted by Melanie Ashton (QUEST Program Manager)

Ingredients

• Buttermilk Corn Bread,  broken into 1-inch pieces
• 1 pound andouille sausage, quartered lengthwise and sliced crosswise 1/2 inch thick
• 3 tablespoons unsalted butter
• 2 medium onions, coarsely chopped
• One 2-pound bunch of celery, coarsely chopped
• 8 scallions, white and tender green parts only, coarsely chopped
• 1 pound large shrimp—shelled, deveined and halved crosswise
• 1 tablespoon minced garlic
• 1 tablespoon chopped sage
• 1 tablespoon chopped thyme
• 3 cups chicken stock or canned low-sodium broth
• 1/2 cup coarsely chopped flat-leaf parsley
• Salt and freshly ground pepper
• Tabasco sauce

Directions

1. Preheat the oven to 350°. Generously butter a 10-by-15-inch glass or ceramic baking dish.
2. Put the corn bread in a bowl. In a large, deep skillet, cook the andouille over moderate heat until lightly browned and the fat is rendered, about 10 minutes. Add to the corn bread.
3. Melt the butter in the skillet. Stir in the onions, celery and half of the scallions and cook over low heat until softened, about 10 minutes. Add the shrimp, garlic, sage and thyme and cook, stirring, until the shrimp are just cooked through, about 3 minutes. Add the shrimp to the corn bread.
4. In the same skillet, bring the stock to a boil. Pour the stock over the corn bread and stir well. Add the parsley and the remaining scallions and season the stuffing with salt, pepper and Tabasco. Spread the stuffing in the prepared baking dish and bake for 1 hour, or until crisp and browned on top.

Book Review by Daniel-Jason Minzie (Q20)

An exploration of Dr. Carol Dweck’s book, Mindset: The New Psychology of Success, which centers on a simple idea that makes all the difference.

Iteration. That verb represents a key philosophy of the QUEST initiative; how can we improve a process, perfect a product, revolutionize an industry? Each step in the iterative tango leads to something bigger, better, and ultimately more efficient – we are all in the pursuit of absolute quality.

But every quest has its dangers. One of the most dangerous traps lying in wait, especially for those of us focused on success – current students, faculty, and alumni included – is the ever looming specter of doubt: a fear of failure. Sometimes, this fear is so ingrained that we are not consciously aware of it and are thus limited by its constraints. We step on one another’s toes, skip a few beats, and lose our rhythm because we focus more on the ruckus of the inner critic than the sweet tones of possibility.

What’s the solution you ask? The answer, according to Dr. Carol Dweck, is a simple one: the key is to exchange perspectives. The solution is adopting a new mindset – a growth mindset, rather than a fixed one.

Dr. Dweck defines a fixed mindset as a fundamental belief that intelligence (linguistic, logical/mathematical, visual/spatial, bodily/kinesthetic, music, interpersonal, and intrapersonal) is fixed upon birth and that success is the result of inherent talent. And in contrast, a growth mindset is defined as the fundamental belief that intelligence is fluid and subject to change with concentrated effort.

She suggests that in order to escape our comfort zones and adopt more realistic and practical views of the nature of success, it is crucial for us to change from a fixed mindset to a growth mindset; we must become fixed to grow.

Dr. Dweck has observed that society frequently regards “The Natural” as of greater inherent worth than the diligent, tireless worker: i.e. “The Try-Hard.” She believes it’s that very philosophy that lies at the heart of the fixed mindset. It is important to realize that regardless of initial aptitude at a particular skill, those at the upper echelon of performance are often the ones who have worked the hardest while grumbling the least. These high achievers have steadily developed the mental fortitude to withstand the many losses that they have unquestionably faced.

If you’re the type of person that thrives on success (and I know you are!), I would definitely suggest that you pick up Mindset: The New Psychology of Success for a read. The advice written in its pages is worth its weight in gold. Your mindset can be your most valuable asset or your greatest liability; what’s it for you?