Monthly Archives: May 2016

The Catch 22 For Recent Graduates

1236May 31, 2016

Collegiate graduations occur at a fast and furious pace. The end of college life creates much anxiety in many newly-minted graduates. The four (or more) years of work and play inevitably culminate in having to face the real world.

Students who have taken out student loans simultaneously feel the relief of no longer using debt to finance their education and the fear of knowing their first debt repayment is due in only six months. Other more fortunate students can only vicariously appreciate the joy in their parents’ eyes once the tuition bills cease.

Commencement speakers across the nation are offering words of wisdom and posing challenging questions for graduates to ponder. However, the nagging question on the minds of many is simply “will I find a job?”

You can cite all the metrics you want about the current state of hiring and job creation in the US, but the job market for most graduates is daunting. Frankly, it is hard to get a job. Most job seekers will testify that the most common phrase offered in entry level position descriptions is “candidate should have two or more years work experience in order to apply.” So to start your career you need to already have career experience. Joseph Heller could not have put it better!

How novel would it be if entry level meant entry level. What about posting a job description along the lines of “no experience, but please contact us immediately.” Now that situation would be refreshing.

The approach to getting a job straight out of college has changed. For some, internships are the path to job offers. For others, social networking might be one of the most useful career tools for graduates. For some young workers, word of mouth with one friend helping another is a really effective tool. Rather than having your resume stuck at the bottom of a stack, the single best method cited for obtaining that first job is having someone on the inside helping the applicant.

Social networking works at the speed of light. By the time a position has been posted to the outside world, odds are that the young people in the company have already lined up their friends or former classmates for the coveted interviews. Companies may have a tendency to be lazy about recruiting for entry level employees and many seem to be happy to rely on their younger employees to do the first round of screening for them.

Both of my daughters have been instrumental in helping several recent graduates get through the corporate door of what became their first job. One daughter has set up two hires by her former boss at a New York City publishing company. So, our advice to the new graduate is to leverage your social networking to drum up some help in getting face time with your first potential employer.

Carl Gambrell


The State of Liquidity


May 23, 2016

So how much liquidity do you need? I ask this question because the global market’s definition of liquidity has been changing dramatically. This change has been particularly troubling over the last ten years.

Liquidity is defined as the ability to convert an asset to cash, which is then available for new opportunities in the market, or to take care of the cash flow needs of a company or family. One of the most critical functions businesses perform is managing cash flow and this starts with the assessment of when money will come in and when obligations are due.  In today’s environment every investor should understand the state of liquidity in the marketplace and make certain that they are planning accordingly. Market liquidity is not what it used to be.

For years the most liquid of all securities were U.S. treasuries. The Federal Reserve, recognizing the need for a liquid treasury market, long ago established a group of firms designated as “primary dealers”. Their role was to provide a market and therefore liquidity, for any seller of a U.S. government-issued security. Regardless of the amount or size of the trade, these dealers were required to provide liquidity to sellers. In the last forty years, the number of primary dealers has fallen from thirty-six to twenty-three. Of the remaining twenty-three, only eight are U.S. firms, so currently the U.S. has placed a key dependence on fifteen foreign firms to provide the liquidity for our government debt. With fewer firms providing the liquidity needed for the largest bond market in the world, it should not surprise you that liquidity is more limited.

We saw recently that when the oil market came under stress, the liquidity of the debt of pipeline companies and oil and gas exploration firms went pretty much to zero. The old fallback of being able to get out of a position at will no longer applies. Dealers and fund managers have been forced to rethink the definition of liquidity. Prudential’s head of fixed income trading commented this week that investors cannot count on the liquidity of the past and that all investors should think about their portfolios with a longer-term view.

It can be almost painful for investors to hold cash these days. In most markets, cash is earning nothing and in some markets, yields are negative. Currently we are in an environment where the cost of liquidity has risen. Investors must weigh the desire to earn something on their money against the risk of not being able to raise cash due to the lack of liquidity. This new worry will require investors to look at cash management with the same attentive eye as they look at the rest of their financial world. In these times, we should make certain that in addition to retirement planning and estate planning, cash management planning is central to the management of your wealth.

Carl Gambrell