Professor Elam
Accounting & Investing Info for San Antonio A & M
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Professor Elam
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Professor Elam
Tuesday Oct 18, 2011
The PCAOB ( now what does that stand for) released a May 2008 report critical of DeLoitte. It suggests the auditor is not skeptical enough and relies too much on management assurances.
We reported on the DeLoitte University in this post. Indeed the firm's response was that they had built a $300 M training facility. Well that didn't help Arthur Andersen, the tone at the top sets the pace, not the price of the building.
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Professor Elam
Tuesday Oct 18, 2011
On page A 17 in today's WSJ, David Skeel, a University of PA las professor, argues that bailing out Bear Stearns was the big mistake in 2008. That sent the wrong message to Lehman, which failed to clean up its balance sheet.
I would argue that it was way too late by 2008 to start sending messages. The mistake was the 1998 bailout of Long Term Capital Management by Greenspan and company. LTCM was a relatively small player compared to what happened in 2008. But as the Time Magazine cover said, Three Who Saved the World (Greenspan, Rubin, Summers) that was the wrong message. If LTCM had been allowed to fail, the message would be that one can go broke. And the message to buyers of such risky derivatives would be, caveat emptor, you are on your own.
And so Merrill Lehman Bear et al piled on leveraged debt to buy risky mortgages. All had become public companies so the partners weren't at risk, the shareholders were. And of course they all went to the government begging for a bail out when things blew up.
At any rate, I do agree with Mr. Skeel, that letting Greece and its bondholders fail would send the only successful message to Spain and Italy, fix it.
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Professor Elam
Sunday Oct 16, 2011
There are plenty of study guides available. I suggest you write your own, that way you will learn the material. Staring at something someone else wrote is second best but…
The Quickstudy Guides are available at Amazon. These are two page laminated quick reference.
Schaums is listed on the syllabus and has books for several business courses.
Say what you will about the title, the Dummies series grows larger by the week and has spawned a host of imitators.
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Professor Elam
Cycling Through History
How Social Mood Determines Your Career Success
October 25, 2011 / 3 PM CST / Main Campus One University Way / Room to be AnnouncedSocionomics is a new predictive social science. It holds that mood is developed endogenously, outside and separate from other factors like the news. This is both contrary to conventional wisdom (bad news makes people unhapppy) but correct (unhappy people create bad news).
Social Mood has been forming regular eighteen year cycles for over one hundred years in this country. We will present both qualitative and quantitative evidence to support this assertion. The US is now half way through an eighteen year down cycle of economic stagnation, don't believe me, just pick up a newspaper and scan the headlines! Understanding these cycles and the moods that create them will help students and faculty understand why things happen they way they do in their own lives.
Demonstrations will be presented on how social mood affects politics, entertainment, and business as well as the presence of absence of social protest. Understanding socionomics, where we are in the cycle, and how this affects your probable career future is of great immediate value.
This will be both a fun and informative presentation. We hope to attract professionals in sociology, psychology, and education.
Dennis Elam and Dr. Sam Rock presented a paper using socionomic concepts at the last SWTLC conference.
Dennis Elam Phd CPA
Learn more about socionomics at http://www.socionomics.net/index.aspx -
Professor Elam
Wed Oct 12, 2011
One student noted it had been a long time from Edison to Jobs. Another wonders if Apple stock will go down now that Jobs is gone.
An op ed by Holman Jenkins in today's WSJ makes the point that Jobs made the decisions at Apple, not a committee. He was able to force deals on companies like Sprint that made a lot of money for Apple.
This would be a good time to check out Bob Lutz comments on Authoritative Leaders.
That was a good post. Lutz makes the point that someone has to make the tough decisions. And if you think about it, that was the hallmark of Edison or Henry Ford (not a nice guy but an authoritative one).
Without Jobs, Apple is quite likely to fall into Group Think, this is what Lutz is referencing, we had a great time and respected one another but did anything get done.
As I said in that previous post, Carroll Shelby observed that Enzo Ferrari was the only person who ever got to run his own car company, no shareholders, no committees.
A committee did not plan the Sistine Chapel, and I am sure the cost dept would never have approved a vour year time frame to finish it.
Ross Perot ran EDS that way and George Patton did the same thing with Third Army racing to Berlin.
As the saying goes,
the giraffe and the zebra are committee creations.
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Professor Elam
Wed Oct 12, 2011
Barcharts offers a variety of laminated summary (cheat sheets) on a variety of topics. This one happens to be on Finance but others are available for Accounting or Anatomy or Reflexology. Students often ask if they can bring such an item to class for use on a test. Those students usually expect me or someone else to construct the summary guide.
The process of high school testing with Principals and Superintendents frantic to show passing grades has gotten us to this point. The point in college is not just passing the test only to move on to the next summary sheet, with no real meaning or insight occurring.
We could easily purchase a series of these things, put them in a box and bingo, for $99.95 you have
College in a Box! Yes friends don't leave the dorm or apartment without your quick and easy guide to a major topic.
I constructed many of these outlines in my college classes, but that is the POINT, by constructing them myself I learned the material as opposed to memorizing it.
My point here is that once one completes college, what do you know, what insight do you bring to the table, what is the reason someone should hire you?
Satire is the process of taking a foolish idea to its logical conclusion. Imagine a Saturday Night Live skit, or in another day, Laugh In skit or even earlier a Show of Shows skit. The college graduate arrives on the job, armed with her College in a Box templates. We might rotate through a few examples…..
Scene-a courtroom murder trial, the DA has just knocked a big hole in the defense witness proving he was not at the card game where your client claimed to be at the time of the murder,
Judge: Counselor, your turn with the witness
You: Uh, Judge we sure ah er ah need a recess here
Judge: why it is only 10:15 AM
You: I'm a bit rusty on oh you know that confusing stuff about the difference between Manslaughter and Murder One, I mean it was three years ago when I took that class and…..
Defense Client: Faints at the table…..
Scene: Operating Room
You are on the gurney but wake up under a spinal to discover that
Surgeon: Gee this orthoscopic stuff is great but remind me, is that pancreas above or below the liver, I never can find that darned thing, hand me the diagram will ya
Nurse: Rolling her eyes, It's over there on the wall, didn't we go through this last week, here, let me hold that incision open, you got about 20 seconds before we have to close other wise
Surgeon: Ah, now wait, is that a pancreas or a gall bladder, you would think they could label these things
One of Woody Allen's first comedies was Sleeper. In the final scene he attempts to portray a surgeon with about this much skill….
My point is, you have to bring knowledge to the table to get hired and to stay working and get promoted
When you finish college what will your skill set be?
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Professor Elam
Sat Oct 8, 2011
Mr. Jobs was by no means the firstr person to articiulate this vision of a meaningful life, Socrates, the Buddha, and Emerson come to mind. To be sure fully embracing the secular gospel required an austerity of spirit that few have been able to muster..
The Secular Prophet, Weekend WSJ page C1
We began our semester reading an essay by Emerson on Self Reliance. I noticed Andy Crouch referenced Emerson in this article and decided to bring it to your attention.
Emerson would no doubt have been uncomfortable with Jobs the Buddhist, but not with the concept of the meaningful life. The article notes that the first iPod came on the heels of 9/11 and the iPad came amid the depths of the 2010 recession-both were stellar success where others had failed miserably. Even Apple had failed with its first table, Newton. Other articles had made the point that Jobs was fortunate to be away from Apple in the 1990s, high tech caught up with his ideas in the meantime.
By the way has anyone noticed that Asia is great on manufacturing but has yet to spawn a creative digital company? Walt Mossberg asked why Jobs went into music after all Apple was a computer company. Jobs replied it was a Digital Company, big difference which has been lost on Dell and HPQ.
But Jobs was not focused on market share or being a philanthropist. He was focused on
delivering things people would want once they saw them
profitability
the elegance of design, that elusive thing Sony had and lost (Sony invented the Walkman using casette tapes and then CDs but never conquered digital)
He learned from failure, the LISA, I had a couple I bought used, was an expensive flop but led to the wildly successful Mac. His idea was that the original Mac should remind consumers of the elegance of a Cuisinart food processor. And so it had a small footprint.Ironically the first IBM, actually an Italian Olivetti computer, was the size of a small suitcase. Seeing the larger computer and the IBM name, most people assumed it was a more powerful computer.
Jobs bought the rights to a Xerox computer and released as his own-the MAC. Here is the Wiki description.
In the mid 1980s, Apple considered buying Xerox; however, a deal was never reached. Apple instead bought rights to the Alto GUI and adapted it into to a more affordable personal computer, aimed towards the business and education markets. The Apple Macintosh was released in 1984, and was the first personal computer to popularize the GUI and mouse amongst the public
The original MS DOS Microsoft Disk Operating System was just awful. If Apple has used MS DOS and IBM the Mac interface, Apple would have gone out in a matter of months. IBM only endured due to the IBM name. Mac was point and click, DOS was mmeorizing mind numbing code phrases and key strokes; as you can tell I did not care for it. Indeed i another article Jobs was asked what it was like to be a Windows developer when Apple put iTunes on PCs. Jobs replied it was like givng a person in Hell ice water. Gates was not amused, Jobs offered him a bottle of water.
But as I say Jobs was smart enough to go for return on sales and assets rather than market share. You will never meet anyone who switched from PC to Mac who wants to go back. Period. There is no such thing as HP or Dell fanatic, any more than one prefers a potato from North rather than South Idaho, the potatoes are the same after all.
Dell gave up on the idea of stores about the time Apple embraced them. Jobs was told he did not have enough product to stock a store. Now there are 327 world wide. The design was tested before the first on opened.
Famously Mike Dell said in about 1999 that Apple might as well sell the assets and distribute them to the shareholders. Today AAPl's market cap is $342 B, Dell is $27 B, less than one tenth the size of AAPL.INdeed the first time I mentioned that quote o this blog Dell Inc made a post on my blog that of course Mike Dell had nto meant that, yeah right….
I have suggested that Texas A & M San Antonio embrace a philosophy of Design in its business classes. I may well post my Design Essay to that end. The students who have read it have reacted in a positive fashion. So far I have not had any takers form the Administration. But San Antonio is chok a block awash in design from the elegant Rose Window at Mission San Jose (not far from Brooks campus by
the way) to the McNay Museum to the HemisFair Needle to the Arts District in King Wiliam, not 
to mention scores of art deco homes in Olmos Park.Other articles speculate on who the next Steve Jobs will be. Well the last one was Tom Edison and it took a while to come up with even one person that could compare to Edison.
I don't know if we can teach design but we can certainly make students aware of its importance. I mean that's what Steve and his designers did, from scratch in 1999, in ten short years, right?
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Professor Elam
Sat Oct 8, 2011
David Hendricks wrote a good piece on the San Antonio Symphony. Can we combine your marketing and accoaunting courses to analyze what is going on here, you bet we can.
Oh, remember my saying
It is quite difficult to stop a bad idea cloaked in Good Intentions….
Now with that thought in mind, consider the $195 M re make of the Municipal Auditorium to become
The Tobin Center. SA A & M had a few graduations as did other area universities there until it was closed for the, now how much did you say, $195 M make over. The idea is to create a Center for the Performing Arts that befits ( and you see this next phrase a lot in such projects ) a World Class Center to establish San Antonio as the true Seventh Largest CIty in the US with the culture and arts commitment such a city 'should' reflect.
Well that's wonderful. Now to the Symphony, presumably one of the groups that will be showcased at Tobin.$100 M will come from
1987 SA Orchestra and Symphony salary negotiations break down, both groups finally merge
2003 Symphony season closes early and symphony takes Chapter 22 bankruptcy (class, this is a clue…)
Fourth drector since 1987 resigns
2004 New director leads until Nov 2004
2006 David Green from the beverage industry becomes CEO
2008 Jack Fishman from the Long Beach Symphony becomes CEO
Meanwhile the symphony fnished in the red last season even with musicians taking a pay cut. The current deal calls for base pay of $23, 218 for the season, the official US poverty line by the way is $22,250.
The article finishes with a classic 'bad idea wrapped in good intentions phrase' The question is not how can San Antonio afford a symphony but how can the community afford not to have a great symphony orchestra?
At this point, hmm, I was going to finish the story and anlysis but this is such a good idea, I think we will move forward with a class discussion. So do some research how about it on
trends in classic music
trends in symphonies in US Cities – hint, google symphony bankruptcy ( not for San Antonio just that phras alone and see what comes up)
hint, is there a classical music radio station in San Antonio?
If you were on the Symphony Board what would be your recommendation?
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Professor Elam
Saturday Oct 8, 2011
Jean Shepherd's Chirstmmas Story has become the 'new classic' Christmas Video displacing Miracle on 334th Street and It's a Wonderful LIfe. The movie recounts Shepherd's youth in the mid West. The time is pre WW II and radio is the dominant technology. Ralphie responds to the Little Orphan Annie broadcast by requesting his own 'Secret Decoder Ring.' Finally it arrives via the mail.Anxious to find out what Little Orphan Annie has to tell, he retreats to the bathroom where he begins decoding the message. Of course his little brother starts banging on the door, the tension mounts, will Ralphie decode the message or be tossed out before he is done.
And the message is -Drink Your Ovaltine, the shows' sponsor, as Ralphie observes, hte secret message is just a crummy commercial.
Well, whether it's training for Mr./Miss Olympia or accounting, there is NO secret decoder ring that will somehow relieve one of the necessity of 'working out.' There's only one way, hit the gym, either physically in the first instance or mentally in the second.
In ACCT 3301 I have volunteered to hold some study sessions. A time and date have NOT BEEN SET YET!
I will be glad to do this and did so for Acct 3312 this past spring.Lots of folks showed up but frankly the results did not dramatically improve, I did have several people drop the course.
My point is that participants will have to participate. I don't know what you don't know. One student did come by my office for an hour and I was able to get some insight into what I suspect is the overall level of confusion about accounting.
I do plan to offer a quiz on the second day of the week for each class. By offer I mean this is the chance for both of us to gauge your progress, and for you to learn what it is that is giving you difficulty. So if we are going to have successful study sessions, participants will need to do the following.
Now here is the To Do List.
1. As the Eagles so well put it, Get Over It. This attitude that 'I hate accounting' is not serving any of you well, and yes I realize that is the general attitude. (Thath is not unique to these classes or this school, it is universal among non acct majors). Accounting is a mechanical organization system, not that different from the Dewey Deciamal system in the library. It is not some sort of repressive force like Communist East Germany that ruined people's lives, Get Over It.
The grade I was the most proud of in college was my B in
Poetry and Prose reading English 314K I think it was. Listening to the teacher explain what the poet meant, was to me, considerably more difficult that discerning accounting. After all the assets always have a left side balance, I never did quite know what those poets were trying to tell me! And the source of her opinions was always a mystery to the class. I recall hearing that back then one class actually contacted one of the poets and he reported a different meaning. But my point is this, If I had taken the attitude that the class was a waste, and the teacher was some incomprehensible weirdo, I doubt I would have made a good grade.
This might be a good time to review my post on Point of View, the Six Blind Men view the Elephant.
One friend once told me that most students hate math and arithmetic because their third grade teacher hated it and said so. Hence a dislike for things quantitative was planted early, and has only festered over the years. Time wasted in arcane stuidies of factoring polynomials in algebra only results in a 'what would I ever do wtih this attitude'. Most students canot work my simple word problem and solve backwards for what they pay for merchandise at the store. Factoriong polynomials and struggling over problems like – Your brother is 2/3 yorur age and your cousin is 1 3/16 as old as he is, how old is your dog, only makes it worse.
All of which is to say, you have been poorly served by the quantitative education community to this point. I pepper my presentations with lots , perhaps too many, examples of real world companies and why they are succeedig or failing. That is the whole point of learning accounting, it helps us analyze success or failure.
So, the world is not going to abandon accounting and replace it with zernog or some other new invention for trackig money. So, make friends, relax, and let me lead you where you need to go.
2. It's a simple concept. Assets and expenses ahave left side normal balances, revenue, liabilities, and equity have nominal right side balances, and that is all there is to double entry accounting, it is just that simple.
3. During the summer of my college years I worked as a lifeguard and taught swim lessons. You have to get in the pool, get your face wet, and learn to float. Grasping number 2 above is the equivalent of learning to float.
4. It has been said that the way to learn to play basketball is to watch someone else first, and then try to dribble the ball. You will learn a lot by examinging fiancial information. I have listed several links on this blog, try them out, start reading, look at the statements of your favorite company, what do they say, why is AMR a bust and RL a rousing success? This is why I assigned your look up on SARBOX this weekend, you will learn that SARBOX is near universally despised by the users ( just like your dislike of accounting in general) but of course the CPA firms love it as they tote up the audit fees.
How many of you turn to CNBC in the morning as you get ready for work. The discussions are good, you will learn something listening, try it.
Okay, now try the weekend assignment, google Sarbanes Oxley and learn what people say. If you think you are unhappy with accounting, wait till you read what Steve Forbes says about SARBOX!
Professor Elam 