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Today I release

A Puzzling Tale

and it falls under the category of Investing Tales.  A Puzzling Tale deals with what is called “.”  You’ll have to read the tale if you don’t know exactly what it is.  Nevertheless it has baffled investment theorists for decades and to this day has no resolution.  This tale speaks to the problem confronting every investor, namely, where do I put my money.  How do investors make a trade-off between risk and reward?   As we all know, the answer depends on your situation.  Of particular importance to this tale is the concept of “The Long Run.”  The Long Run is where your advisor, whether a , wants your attention focused.  But in the words of John Maynard Keynes, one of my favorite economists, “In the long run we’re all dead.”

What I interpret Keynes meant by this apparently flippant statement is that you need to focus on the present.  Averages are great as are statistics and probabilities but the Long Run is made up of a series of Short Runs.  Every investor must understand the consequences of their portfolios today, not tomorrow.  Remote possibilities or what are now commonly called must be factored into portfolio composition today because when these unlikely events happen they happen to you and you suffer.  As many of my readers know my father is a retired physician that brought an to the profession.  One of the greatest lessons he imparted on me is the notion of probabilities.  When asked by his patients on the probability of a successful outcome to a procedure he would always provide the medical response of 95% success rate or 98% success rate or whatever the case was for that procedure.  However, he was quick to point out that if that particular patient was in the 5% or 2% failure rate, it represented 100% failure to them.  Portfolios work the same way.  When they fail, even if they fail only 1% of the time, they fail 100% for you.  So, don’t get fooled by “The Long Run.”  Stay in the present.

A Tale of (What Should Have Been) Two Cities – Delta Airlines

By Alexandra Sera

As the daughter of the man who created this website with the sole intention of passing on his financial knowledge in a concise and easy to understand manner, one can imagine the constant stream of tales I have been exposed to since day one. I have always listened attentively, eager to soak up the knowledge my father has acquired so that I can avoid the mistakes, that as an investment advisor, he has watched countless others make. However, yesterday I learned a lesson that I had never been warned against—Airline Atrocities.

After traveling home to spend a weekend with my family, it was inevitably time for me to return to the city in which I work. As a 19 year old, I admit I am not the most seasoned of travelers; however, flying on my own has never been an issue—that is until I booked a flight with Delta Airlines.

I awoke at 6:30 am and began what should have been a quick jaunt back up north, leaving me with plenty of time to make my evening shift at work. My flight had a fairly extensive layover at the JFK International Airport but I was equipped with a book and an iPod so I wasn’t too concerned. I arrived at JFK at 10:30, ready to depart at 1:25 p.m. and arrive at my destination by 3:30.

Despite my persistent attempts to read my book and let the time pass quickly, I couldn’t help but take notice of the utter chaos in the Delta terminal. Despite the lovely weather outside, I watched in confusion as the airline continuously canceled flights throughout the day. They soon delayed my own flight until 2:30 (without any explanation to me or the other passengers) but I understand things go wrong sometimes and you must plan for delays. Still, when they delayed my flight again, this time until 3:15 p.m. I started to worry. I called my boss and told her about the delays and although she was not thrilled with the situation, she said she would excuse my lateness.

Delta soon delayed my flight, once again, until 4:00 and then 4:30 and, once again, failed to provide anyone with any explanation. Instead of taking responsibility for the delays, the staff instead chose to “” and dismissed my increasingly annoyed fellow-passengers with clichéd phrases such as, “it’s not our fault,” and my favorite, “we’ll let you know as soon as we know.” If only the latter phrase had proved to be true.

At 4:21, I rejoiced as they made an announcement with actual information: that our plane had finally touched down and simply needed to taxi at the gate, unload passengers and cargo, and then we would be on our way. You can imagine my surprise, when at 4:44 p.m. they somehow changed their minds and informed us that the flight was now canceled and the plane actually wasn’t there. How and why had the flight been canceled, especially after they had just made an announcement that the plane was nearly ready for our departure?

I wish I could answer that question definitively, yet after waiting in line for over an hour with dissatisfied customer after dissatisfied customer (since they had been inexplicably canceling flights all day), I received only the most evasive of responses from disinterested customer service workers. Once during my extended wait for an explanation of what was happening, I saw that the Delta Priority Members line was now open and naively assumed that since the Delta employee who had been helping them was now free, she would be more than happy to assist during this time of confusion. As someone who has always worked with customers myself, I attempted to be friendly with this woman, despite my inner annoyance. She responded to my polite question with another, not so polite question, “are you a Delta Priority Member?” I, of course, was not but answered that after having waited in the terminal for seven hours and experiencing repeated delays until my flight was mysteriously canceled altogether, I figured a quick explanation of the circumstances and my next move was a priority. She countered my simple request for information by blatantly covering her nametag and informing me that she was going on break anyways as she walked away. I cannot fathom any sort of business model that allows its employees, especially those that work in customer service, to behave so rudely and at this point, I was outraged.

So I again returned to my place in line and eventually received some answers from an equally rude, albeit informative employee. He explained that the several canceled flights throughout the day were not the cause of the Delta terminal; they were instead the faults of the eight other cities they were flying too. Because naturally, when the only common link between eight random airports is your airline, if you’re Delta, you’re still not required to take responsibility. He then claimed that the airport I was flying to had essentially shut down due to weather, which I knew to be untrue due to the constant barrage of calls from my boss wondering where I was. After telling the worker that he was mistaken and that was not the case, I was told there was nothing he could do besides reschedule my flight for noon the next day. I quickly explained that was not an option for me since my summer employment was now in peril and instead of giving me a hotel voucher, I would appreciate a flight voucher through a different airline. Again, I was shocked when he said that not only could he assist me in booking a different flight for the same day, but since it was “not the fault of Delta airlines”, they weren’t giving out hotel vouchers either! This man told me, a young teenage woman that there were many hotels in the extremely safe city of New York where I could take a cab to (on my own dime), sleep in (on my own dime), and then I would be able to return in the morning (of course, on my own dime).

At this point, I realized I was getting nowhere. I soon booked a flight through another airline and arrived at my final destination at 12:15 am. After analyzing my day of getting to know Delta Airlines on an intimate level, I have started to put together the pieces and have created a theory on the airline.
Delta delays flights in order to consolidate planes that are not fully booked, which, of course, saves them money. On other occasions they decide they’re simply going to reschedule a flight until the next day because it is more convenient for them and, of course, saves them money. But how do they hook people into waiting an extra day for their flight to a particular location? From my experience, I think it’s fairly obvious. They simply delay the flight by 30-90 minute increments all day long until there are no other airlines that can take you to said location. Then, they save even more money by not offering hotel vouchers to the customers that they have just conned. The key in Delta’s plan is to hire employees that are rude and uniformed so that they can unfalteringly repeat Delta’s main mantras, “I don’t know,” and, “there’s nothing I can do.”

I would refer to Delta Airlines as the Mobsters of Aviation, but that would imply some semblance of organization to their crimes against their customers. Is there a lesson to this tale? When dealing with travel, delays are to be expected but do not allow yourself to become a victim of sky-high shakedowns like I did. By not being more assertive after the 2nd delay, especially when my job was at risk, I pigeonholed myself into the position of the compliant customer with no options. The other lesson? Do not fly Delta and do some research beforehand and read customer reviews before you book a plane ticket. If I would have seen the countless reviews that repeated stories similar to my own sprinkled with phrases such as, “a total disappointment,” and, “what a horrible experience,” I would have saved myself a day of stress, several cab fees, not to mention a second airline ticket.

Oh, and incase you were wondering, the one thing Delta did not end up costing me was my job and the one and half months left of salary that goes with it. I finally arrived for my shift the next day, hoping that my boss would somehow understand and forgive my failure to arrive for work. After recounting my experiences, she said in between chuckles, “Wow, you must’ve flown Delta, huh!” Turns out, in the end, Delta Airlines is good for one thing: with a reputation like theirs, your boss might just take pity on your extortion!

Financial Tales is a fascinating blog because it harnesses the power of storytelling to convey information that is usually purveyed as “tips” or “advice”. After reading just a few of these tales, I felt as though I learned more about finance than in the hours I spent digging through the millions of finance blogs out there.

I was particularly mesmerized by the “Taco Tale“, as I have a rather embarrassing history of incurring these overdraft fees. However, upon reading the article, I was reminded of two instances in which I realized for myself the power inherent in telling stories.

In one instance, I had, true to form, incurred about $250 in overdraft fees. While usually, these overdraft fees are my fault, this one time there was a misunderstanding about when a check would be deposited, and so I was spending money that I thought I had but didn’t. Regardless of the reason, the fact still stood that I was $250 in the hole with no way out until payday, which was over a week away. In a panic, I told my boss I’d be late to work, and I decided to go to the bank and straighten things out.

As I approached the bank, I had a sudden flash of inspiration. My usual strategy in removing overdraft fees was confronting bank tellers with the injustice of the system, etc., etc. It goes without saying that this tactic never works. Nobody wants to help out an angry person, least of all a self-righteous angry person. So I thought I’d approach the situation with a story.

The details of the story now are irrelevant to the story I want to impart. But basically I went in, shook hands with the teller, framed my current situation as a story–with a plot, characters, and all the usual trappings that a story entails–and voila! The lady graciously removed every single one of my fees.

Empowered by the magic of storytelling, I used a similar approach in removing a parking ticket I got the week before. I did the same exact thing. I calmly and humbly explained my situation to the parking official. And my $200 parking fee was reduced to $15.

Both of these situations demonstrated to me in tangible terms the value of telling stories. While storytelling can be useful in entertaining guests or, as is done here on Financial Tales, teaching important life lessons, spinning a tale is a very effective way of solving problems. It works because people love stories, and they respond to them. So next time you have any sort of problem, think about it in terms of a story. And then find the right person who needs to listen to that story, and go out there and tell it.

By-line:

This guest post is contributed by Lauren Bailey, who writes on the topics of online colleges. She welcomes your comments at her email Id: blauren99 @gmail.com.

Today I release

A Competitive Tale .

My last release was A Martini Tale where I try to focus the reader into what I consider the most important aspect of investing; rate of return.  It is clear to me that if an investor determines that equities belong in their portfolio then they have only 3 choices.  They must become great investors, hire great investors or accept diversification as a default.  This tale deals with one of the many pitfalls associated with hiring and finding great investors.  The best minds on the planet haven’t come up with a methodology to rank investment expertise so don’t feel bad because you are not alone.  However, don’t do what these people did because you could self-destruct.  They got lucky but you might not.

Our article was published in The Journal of Financial Planning.  Linked with permission by the Financial Planning Association, , February, 2010, by Michael M. Garrison, CFP®; Carlos M. Sera; and Jeffrey G. Cribbs, CFP®, A Simple Dynamic Strategy for Portfolios Taking Withdrawals: Using a 12-Month Simple Moving Average.

The purpose of this website is to in the simplest way I know how. Every week or so I will release a tale or two from my library that seems appropriate for the time. Since many of my tales depend on lessons learned from other tales, whenever you see a reference I suggest you follow the link after you have completed the tale. If the link takes you nowhere, it’s because I haven’t released that tale yet.

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Financial Tales has been since September 29, 2008.

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