The most common New Year’s Resolution that people make is to lose weight. And while not everyone sticks to their resolutions, it is certain that many thousands of diets are launched each January as a result of repenting for unwanted holiday pounds. This can be a good thing and perhaps even the start of a healthier way of living for many but only if the diets people undergo are safe. Unfortunately, sensible diet and exercise plans seem to be losing in the popularity contest against “fad diets.” It seems that just about everyone has tried or knows someone that has tried one of the various weight loss plans outlined in popular books regularly cluttering the “best-seller” lists. Many times, these diets take a black and white approach throwing aside the notion of balanced diet and urging readers to eliminate crucial elements of their diets altogether, such as carbohydrates, sugar or protein. Warnings abound that many of these diets are unwise. But many people dismiss these cautions because they know someone who’s dropped significant weight, quickly, while on a fad diet. Inter Valley Health Plan, a non-profit health maintenance organization that routinely stresses health education, offers sound advice on how to lose weight and maintain the loss. Inter Valley’s wellness experts report that weight control is a particularly difficult issue because society is set up in a way that makes it easy to gain weight. We have very efficient transport systems, such as cars and elevators, and pastimes that promote inactivity, such as computers and TV. Also, high-calorie foods are widely available, and fatty foods taste good. To do something about it, you have to go against the grain. Applying the “eat-less-exercise-more” prescription is much more complicated than it seems. That’s one of the reasons why there are so many treatments promoting easy weight loss. People want an easy fix. It’s human nature. But sadly, these “easy fixes” often cause more harm than good depriving the body of essential nutrients. One problem with fad dieting is lack of research in most of the diet books out there. Inter valley also warns consumers to be skeptical regarding the way many fad diet books make or imply promises about weight loss , that it’s easy, that you can still eat all your favorite foods and lose weight. The promise of a quick fix is a problem, as is the misinterpretation of known biochemistry and physiology. Fad diets may help bring about some weight loss, but despite what the books say, it’s usually due to eating fewer calories and not anything magical about the diet. For example, diets which limit carbohydrates on the theory that they promote insulin production, which leads to weight gain recommended about 850 calories a day. Anyone who eats 850 calories is going to lose weight whether they’re avoiding carbohydrates or not. Creating an “unbalanced” diet is the least healthy way to achieve weight loss goals. It should be mentioned that not every aspect of fad diets is bad. For instance, Sugar Busters! recommends decreasing sugar intake. Inter Valley doesn’t argue with that because many high-sugar foods are high in calories and low in nutrients. However, cutting back on sugar is only one aspect of a healthy diet. In general, with fad diets, the negatives outweigh the positives. There are two main reasons for losing weight, both of which are valid: to improve your health and for cosmetic reasons. You can lose weight on different diets, but the approach may not be healthy in the long run. Diets shouldn’t go against what we know about improving long-term health. Many fad diets advise reducing carbohydrate intake, and they include very few grains, fruits and vegetables. There’s a tremendous amount of evidence that increasing grains, fruits and vegetables is good for health and for prevention of diseases like cancer. On fad diets, even if you lose weight, you may not improve your long-term health. Often, traditional recommendations for weight management may seem old and kind of boring, but those recommendations lead to many other health benefits. A less serious problem is the lack of long-term results. Most people can’t stick with these diets, and they end up back where they started. The vast majority go off the diet and gain their weight back rapidly. Once someone loses weight by eliminating a component of a balanced diet, it is far easier to put the weight back on compared to a person who cuts calories in a healthy way retaining a balanced diet and exercising. Inter Valley recognizes that trying to lose weight is more difficult for some people than for others, and recommends different tactics for different kinds of people. Most individuals underestimate the number of calories they eat by about 20 percent , more if they’re very overweight. On the other hand, they overestimate their physical activity. It’s not intentional, it’s just that we’re not good judges. Inter Valley recommends an individualized approach. For instance, a person may have physical problems that prevent him or her from doing much activity, so we have to look more at diet. Others think they have to overdo vigorous exercise. Instead, Inter Valley encourages them to look for ways to increase their daily activity, such as parking farther away when they go to the store. Individuals are encouraged to approach weight loss in a positive manner, looking at it as an opportunity to do something that can be enjoyable. Inter Valley suggests focusing on the process instead of the end result. People want to lose weight quickly, and they focus on the number on the scale. They need to focus on making lasting lifestyle changes. The pounds will come off as a result. Whatever changes people make, they need to be comfortable enough with them to make them permanent. If they feel restricted by something, they shouldn’t do it. Support can play a key role. Group support provided by personal trainers, and programs like Weight Watchers can help. The key is changing people’s attitudes. Finally, changing food choices to include foods that not only lead to fewer calories but also are healthy and tasty is important. There’s a tremendous amount of wonderful food that can be truly enjoyable. We underestimate our ability for our tastes to change. Surely such subtle lifestyle shifts can be less world changing than engaging in fad dieting and certainly healthier!! Information for this article was provided by Inter Valley Health Plan, a federally qualified, non-profit Health Maintenance Organization (HMO) which has served Southern California for twenty years.

Only a year ago, officials at WMC Mortgage Co. had envisioned a vast network of retail outlets to handle their lending business. Today, after a revolutionary change in WMC’s business model, clicks have replaced the bricks the company once intended to build. WMC now makes all of its loans over the Internet, using a proprietary technology it developed in-house. And it deals exclusively with mortgage brokers, rather than directly with borrowers. WMC’s business-to-business program is believed to be the only one of its kind for sub-prime lenders banks that lend to people with troubled credit histories and other problems. It has helped the Woodland Hills-based company slash in half the cost of supplying loans, and provided an important competitive edge. “Last month I got a loan approval back in five minutes,” said Jeff Dahlgren, president of Transcend Financial Corp., a Scottsdale, Ariz.-based home mortgage broker that has been working with WMC since the company went online about a year ago. “Their program is the best for transmitting data back and forth.” Limitations to the Web Other lenders have turned to the Internet to supplement their business, but few have gone online to the extent of WMC. That’s mainly because government regulations limit the kinds of transactions that can be conducted over the Internet, making it impossible to complete a mortgage loan without at least some face-to-face interaction. WMC avoids those limitations by working with mortgage brokers, who, in turn, interact with the actual borrowers. “Our industry really entered some tough times back in mid ’98,” said Scott McAfee, chief executive of WMC. “We decided back then it wasn’t going to be acceptable just to survive the tough times. So we invested very heavily in developing some unique technology.” WMC and other sub-prime lenders once found ample financing on Wall Street. They bundled and sold their loans to investors who were willing to pay handsomely for the high-yield packages. (Sub-prime loans charge interest rates averaging 2 to 5 percentage points above “A” quality loans because lenders run the risk that the loans may not be repaid.) But beginning around October 1998, severe losses in global financial markets dampened Wall Street’s enthusiasm for these high-risk investments. Many stopped buying the bundled loans altogether, and those who remained cut the prices they were willing to pay, squeezing profit margins for lenders. “When sources of funding became more expensive, a lot of these guys went out of business or they had to retool,” said Michael Sanchez, portfolio manager at Hotchkis & Wiley in L.A. Initially, WMC began building a retail channel in hopes of competing with much larger players like The Money Store. The company planned to install about 80 storefronts from which it would deal directly with borrowers. But to run a retail lending operation WMC had to brand its name, and the company estimated that would cost anywhere from $17 million to $70 million in marketing expenditures. “When they (consultants) started telling me how much I would have to spend on marketing to establish a brand name, I said, ‘This doesn’t make sense,'” said McAfee. “It doesn’t work to establish a brand name for a product people only use once every seven years.” Instead, WMC invested about $20 million to develop its Internet technology, a state-of-the-art system compatible with just about any computer system a broker might use. A WMC representative installs the software and shows the mortgage broker how to use it in less than a day. The broker can then use the company’s Web site for the entire transaction, and to check the status of the loan as it goes through the pipeline for approval. “It allows you to manage the process a lot better,” said Dahlgren. “You don’t have to call someone on the phone and wait for an answer.” Since the program went online in August, WMC has signed up 4,400 brokers and processed $1.5 billion in mortgage loan transactions, McAfee said. Getting by with less The company has also slashed its workforce from 800 to 200 employees, and is now able to operate from a 40,000-square-foot facility instead of the 120,000 square feet of space it once leased. “We’re able to do the same amount of business on one-fourth the staff,” McAfee said. In March, WMC began using its Web site exclusively for loan processing. WMC does have online competitors. Full Spectrum Lending Inc., the sub-prime lending division of Countrywide Credit Industries, in May launched a Web site that lets customers research and apply for a loan online. The company expects the site to help generate traffic and save some time and money, because customers can research loan guidelines, rates and even file an application without “live help.” “A lot of research studies have shown sub-prime customers appreciate anonymity and like to find out what they can afford before speaking to people,” said Paul Abbamonto, president of Full Spectrum Lending. “At the moment, it creates some efficiencies.” But while sites like the one Full Spectrum and WMC employ can save some time and manpower, they can’t actually be used to conduct the transaction online because government regulations require “live” signatures on disclosures and other lending documents. “It’s still a very paper-intensive process, and the Internet doesn’t lend itself to that,” Abbamonto said. “Clicks and bricks seem to be the way to go.” Large companies like Full Spectrum have better access to capital and can afford to build their business base through the Internet while using traditional methods to complete the loan transactions. But for smaller operations like WMC, the name of the game is not writing more loans, it’s making more profit on the loans they do write. Under the old system, it cost WMC an average of 4 points to write a loan, or about $4,000 for a $100,000 mortgage. Through the Internet, the cost of providing the same loan drops to $2,000. At the same time, mortgage brokers are more likely to funnel business to the WMC site, provided their customers meet the company’s lending criteria, because the Web site saves them time and money. “(WMC is) most likely to get the business because I can most easily get an answer (from it),” said Dahlgren.

For the last two years, the 2.4-square-mile city of San Fernando has been in an uphill battle to turn itself from a Latino small-business mecca into a center for big-name retail development. But the ambitious redevelopment plan has so far resulted in little more than some new entrance signs on the city borders. Virtually no new retail stores have agreed to relocate to San Fernando, though leaders say they are still in discussions with interested developers and business owners. “This program is at its infancy,” said City Administrator John Ornelas. “We’ll see a lot more happening now.” Last year, the city’s centerpiece project, a downtown retail/entertainment center with a 14-screen multiplex and 200,000 square feet of retail shops and entertainment venues, stalled amid infighting among the City Council, a questionable bidding process, complaints from local businesses about a lack of information on the plan and a pullout by the city’s chosen developer. More recently, plans for another key project to turn a 36-acre swap meet property into a big-box retail center were halted when the property owner decided not to sell (see story, page 6). Despite the setbacks, the city insists things are turning around. Next month, officials will put out a request for proposals seeking a new developer for the downtown theater project, which the city expects to award early next year. Ornelas said the yearlong delay was needed to refine the development process. And in what could be one of its first retail successes, the city has pledged $125,000 to bring a Starbucks Coffee outlet to town at the Truman/Mission Plaza Shopping Center. Ornelas said the company is in negotiations to build one of its signature drive-through outlets there. City leaders have also embarked on several other projects to try to spark retail revitalization, including a $1.6 million streetscape project to make Maclay Boulevard more pedestrian-friendly and attractive to businesses. Aggravated merchants The long delays have seriously frustrated San Fernando’s business community. Last summer, members of the San Fernando Downtown Business Association began attending City Council meetings as a way to pressure the city to move forward. “There was a period of time where there was no activity going on,” said Dennis Levine, co-owner of the People’s Store furniture outlet, and former president of the association. “We wanted to see, if we maintained our presence, if we could get the city to speed up.” That show of force, along with a string of complaints from business owners, have changed the way the city deals with the business community. City economic development staffers now meet weekly with business owners downtown. To show business owners how successful a downtown project could be, the city hosted the San Fernando Fiesta on Easter Sunday, a farmers market-type festival that brought 18,000 people to the downtown area last month. The city now plans to host a weekly fiesta throughout the summer. “It shows that a development could do the same thing,” said Mayor Silverio Robledo. Levine said business owners have noticed and appreciate the city’s effort. Looking for sales taxes Like most cities in California, San Fernando gets the majority of its revenue from sales taxes. Even a small presence by big retail stores could have a significant effect on the city’s annual budget of $4.3 million, meaning city services could be improved. City officials believe that a single big-box retail project could generate an additional $1 million a year in sales tax revenues for the city. Martha Diaz Aszkenazy, chairwoman of the San Fernando Chamber of Commerce and owner of Pueblo Construction, said she understands the city’s reasoning in seeking retail stores for the sake of sales taxes. But she said the chamber would like to see the city do more to attract industrial businesses that offer high-paying jobs. “Our thing is to keep this area stable,” Aszkenazy said. “We want it to be strong so the community can buy from the retailers.” The city has achieved some success at enticing manufacturers to relocate from neighboring parts of Los Angeles. Earlier this year, Earth Corp., a printing products maker, moved its 200 workers to a 50,000-square-foot property on Truman Street. In January, Hyper Cell, a maker of cell phone accessories, moved into a 40,000-square-foot facility on the southeast side of the city.

For scores of L.A.-area companies, the cost to pollute is skyrocketing. That jump in the price of pollution credits in the nation’s largest emissions trading program is forcing a number of firms to finally start making painful choices between buying those high-priced credits on the open market or installing expensive pollution-control equipment. Spot-market prices for credits made available through the South Coast Air Quality Management District’s RECLAIM program have gone up as much as 20-fold in the past 18 months, to about $5 a pound. And prices for longer-term credits have doubled in that same time frame, to about $2.25 a pound. “Prices have jumped so dramatically that if more credits don’t come on the market soon, we could have a panic on our hands,” said Jim Bellmore, an emissions credit broker with Boston-based National Offsets Corp. “Some of my clients are seriously looking at spending tens of thousands of dollars to install pollution-control equipment rather than spending that much or more to buy credits. Either way, it’s a sizeable expenditure.” The AQMD’s Regional Clean Air Incentives Market program, or RECLAIM, was set up in 1994 as an alternative to the enforcement of pollution regulations on specific pieces of equipment. The program, which covers some 330 factories in Los Angeles and Orange counties and the Inland Empire, requires facilities to reduce overall emissions by about 7 percent a year or to buy “emission reduction credits” from companies that earned them by cutting their own pollution beyond the minimum requirement. While many observers had long predicted the rise in credit prices, the speed and magnitude of the price jump has caught some off guard. “This is getting us to reevaluate our plans,” said Charlie Aarni, regulatory agency liaison for the Chevron Products Co. refinery in El Segundo. “It has changed the balance for us. Assuming the prices stay at these levels, we are probably going to install more pollution controls than we had planned over the next few years.” For the first four years of RECLAIM, spot-market credit prices were less than 50 cents a pound, presenting a cheap option for companies to comply with their emission reduction targets. The prices were low in part because companies were granted higher initial pollution allocations to allow them room to boost production as the economy came out of recession. But about 18 months ago, prices started rising as factories boosted their output and their emissions. At the same time, companies rushed to buy up the cheapest available credits rather than install pollution-control equipment, like scrubbers and cleaner boilers. “Eventually, the available credits became more limited and the demand for purchasing credits went up, which forced the price up,” said Moshen Nazemi, assistant deputy executive officer with the AQMD. Environmentalists rejoice While prices went up on both the spot market and the longer-term future credits market, the increase has been most pronounced on the spot market. The price for these so-called “expiring credits” jumped from about 20 cents a pound two years ago to between $4.50 and $5 this month, according to Bill Van Amburg, spokesman for Automated Credit Exchange, which operates a trading market that accounts for about two-thirds of all RECLAIM trades. Van Amburg said companies turn to the spot market when they need to buy credits in a hurry to make up for a shortfall in achieving their emission reduction targets. Companies using the longer-term market have more time to plan and may be able to wait to see if more credits come on the market. With the economy booming, some companies are exceeding their expected output and thus generating more pollution. “Some companies did not plan effectively and have been surprised at the (price) increases,” Van Amburg said. Environmental groups, which opposed the RECLAIM program from its start, welcome these developments, although they say they are long overdue. “This is the moment we’ve been waiting for,” said Gail Ruderman Feuer, senior attorney with the Natural Resources Defense Council. “It’s still a major problem that it took six years to get to this point. With the traditional regulations, the cuts in emissions would have been made long ago.” Environmentalists believe the initial pollution allocations for each facility were set too high, meaning that factories did not have to cut their emissions significantly for the first few years of the program. The AQMD says the high levels were necessary to account for the fact that Southern California was mired in a deep recession and factories weren’t running at full capacity. ‘Buying on the cheap’ “The bottom line was that companies weren’t making any emission reductions; they were just buying credits on the cheap,” said Tim Carmichel, executive director of the Coalition for Clean Air. Environmentalists are still somewhat skeptical that companies are going to actually spend the money to install pollution-control equipment. That’s because of an effort by large polluters to expand the types of credits that can be used for RECLAIM. Manufacturers want to take other emission-reduction credits, such as those granted for converting truck fleets to alternative fuels, and make them apply to factory emissions. “Companies are now frustrated because they have limited options for compliance,” said Bob Wyman, an environmental attorney with the downtown law firm Latham & Watkins who represents a group of major oil and aerospace firms in the RECLAIM program. “When RECLAIM was first adopted, the AQMD governing board intended companies to have access to credits from other sectors, like mobile sources.” But, Wyman said, the U.S. Environmental Protection Agency has not approved the AQMD’s plan to allow companies to apply credits from other sources to RECLAIM. After six years of operations, there is still no way to measure the effectiveness of the RECLAIM program. AQMD officials say it’s impossible to tell whether firms in the program reduce their emissions because of RECLAIM or because of other AQMD regulations that are still in force. “We do know that some of the largest RECLAIM emitters are adding and modifying equipment; we just can’t make the direct tie to RECLAIM itself,” Nazemi said.

Businesses small and large are desperate to find new ways to adapt to the changing marketplace and stay on the cutting edge. Companies have realized that they must have people in their organizations that think with a vision and are up to the challenge of breakthroughs, quality and exceptional service. “Entrepreneurial Thinking” can make this happen. The “Entrepreneurial Thinking” concept was designed to help individuals working within their organization to accomplish more and exceed their own expectations by taking ownership for results. It is based on research that identifies key entrepreneurial success factors that can benefit everyone at all levels within an organization. Whether it is healthcare, technology or real estate all industries strive to be more productive. However, companies don’t become more successful people do. After interviewing people from front line personnel to the CEO it is clear that the most successful companies place a high priority on employee development. Many of America’s largest and greatest corporations were founded by a single dedicated entrepreneur. Individuals have been responsible for building large organizations, yet as the company grows; too often the talent within the workplace gets stifled. The challenge is to get individuals within an organization to tap into their entrepreneurial talents for the benefit of their own success as well as the success of the organization. With the past and current trends of rightsizing and reorganizing, individuals often times live in fear of what is coming next. This fear has caused many workers to strike out on their own. But what about those who are still within the corporate environment feeling the brunt of more work with fewer people and leaving work each day less that satisfied. How do we motivate them toward the corporate vision? The truth is we don’t. They must learn to motivate themselves and create an entrepreneurial spirit for their own success and then be able to link it with the company vision and mission. In a survey of over 55,000 workers conducted by the Gallup Organization there were several attitudes that correlated strongly with higher profits. One of those attitudes was that the individuals made a direct connection between their work and the company’s mission. Focused vision is by far the key to getting individuals to take ownership. For years individuals in Corporate America were told here is who we are, what we believe and now here is how you need to think to be successful in this organization. The reality of course then led to a stifled environment that did not allow for future thinking. In many of the workshops that I conduct across the country I will ask the group “Who can tell me what the corporate mission statement is?” Almost always there are few if any hands up. One lady jumped up and said “Wait a minute, I think I have it on a plaque on my wall.” A gentleman said “Didn’t we get a coffee mug with the mission on it last year?” The bottom line is this: it doesn’t matter if it is on the wall or on a coffee mug if it is not linked in the hearts and minds of the individuals. How can organizations expect individuals to take ownership for results if the individuals don’t know where they fit into the corporate mission? Over the last decade organizations have tried to improve productivity through reorganizing and reengineering with little emphasis on the individual and the role they play in the future of the company. Many companies were left with low moral and flat productivity. The key is to allow individuals to define their personal bottom line, understand their personal mission and then learn to link it with the company mission and vision. The entrepreneur is the visionary in all of us. Knowledge and expertise are not enough to keep pace with today’s rapidly changing world. Today, you must find new ways to stay focused, maintain energy and relentlessly seek out ways to achieve your own personal mission and vision for your future. A number of “Entrepreneurial Thinking Factors” have been designed to assist organizations in developing their greatest resource,their people! Allowing individuals to further develop their talent, utilize their creativity, think with a vision and still see the value of contributing to the team makes accomplishment inevitable. Listed above are the “Entrepreneurial Thinking” success traits that make up the “E-T Factor:” Jodi Walker is president of Success Alliances, a professional training and development company. For more information email: [email protected].

The $300 billion Teachers Insurance and Annuity Association College Retirement Equities Fund has criticized mega-grants of stock options to chief executives. My research shows the fund is right to do so. In olden days, companies favored relatively modest annual option grants to top executives. Among other things, the annual grants allowed for a dollar averaging of strike prices, reducing the temptation to reprice the options later if the stock headed south for the winter. But then a new practice began whereby the CEO, on a single day, received a stock option of such size that carpenters had to be employed a week before the grant to shore up the floor of the executive suite. To those who believe people in the business world would do anything to make another buck, a mega-grant held the promise of releasing as much energy as a 1,000-milligram shot of testosterone. These folks argued that a CEO with an option mega-grant ought to be inspired to run circles around other CEOs who had to get along with your normal-sized option grants. As a way of testing this theory, I went back to a database I created for the year 1996 containing pay data on 856 major-company CEOs. I focused on the 10 largest option grants made that year to CEOs who, as of May 12 this year, were still in their jobs. The biggest grant of all went to Walt Disney Co.’s Michael Eisner. On Sept. 30, 1996, he received options on 24 million split-adjusted shares in four different segments. Options on 15 million shares carried a strike price equal to the then-market price. The remaining 9 million shares, in equal portions, carried strike prices that were 25 percent, 50 percent and 100 percent above the then-market price. I scored this option as having an estimated present value at the time of its grant of $180 million. Setting aside for the moment the theory that larger options motivate CEOs more than smaller options do, one might expect to see these 10 CEOs lap the field in total return of their stocks, for no other reason than that CEOs typically call the shots as to the timing of their own grants. If you figure your company’s stock price is going to drop in the near future, you don’t go to your board and ask for an option mega-grant. But if you think your stock is about to take off, that’s when you head to the boardroom as fast as your legs will carry you. So even if a pattern of superior performance were to be found, we still wouldn’t know for sure whether that was due to true motivation or simply good timing. By May 12, the average mega-grant given to the 10 CEOs had been in place for 3.91 years. At first glance, the theory that option mega-grants motivate would seem to have been proven by the results, given that the average company generated a 34 percent annual total return vs. a 23 percent annual return for the Standard & Poor’s 500 Index. But all of that extra gain is due to a single company, Dell Computer. Remove Dell and there is no significant difference between the returns of the remaining nine companies and the S & P; 500 Index. The median returns are also virtually the same as the S & P; 500. A number of other points emerge from this analysis. First, the average company in the group is more risky than companies generally, as evidenced by a median stock price beta of 1.19. So simply matching the S & P; 500 Index is evidence of under-performance, not normal performance. Second, in determining how much an executive will make from an option, the size of the grant is as important as the performance of the company. Witness Disney’s Eisner, who has racked up $366 million of paper profits from his 1996 grants, yet has under-performed the S & P; 500 Index. (In fairness to Eisner, he is not slated to get another option grant until 2006 at the earliest, so his mega-grant truly did come at the expense of future grants.) Second, just because you are already fabulously rich doesn’t mean that you will keep your hands out of the option till. Three of the 10 CEOs in the study Oracle Corp.’s Larry Ellison, Viacom Inc.’s Sumner Redstone and Dell’s Michael Dell are billionaires many times over. Third, CEOs who have learned the hard way that large option grants will not necessarily nudge them out of their torpor continue nonetheless to remain enthusiastic fans of large option grants. Advanced Micro Devices Inc.’s Jerry Sanders had earlier options repriced six different times over a six-year period before he finally hit pay dirt. And a significant part of the $177 million of paper profits he has accumulated from his 1996 option grant appears to be the product of excellent timing. In the 914 trading days since his option was granted, the stock closed below his strike price on only 10 occasions. Perhaps stock options do help a bit in motivating executive performance. But even if they do, the operative phrase is “a bit.” When the grant is of the size of the 10 biggest taken in 1996, the ultimate costs may very well overwhelm any benefits that might have been derived. And here’s a really sobering thought. In 1996, the 10th largest option mega-grant had a present value of $11 million. In 1999, based on my March 31 study of 439 CEOs, the 10th largest option mega-grant had a present value of $33 million. Al Jolson said it best. When it comes to mega-grants of stock options, “You ain’t seen nothin’ yet.” Graef Crystal is a columnist with Bloomberg News.

Now that all of us are married to the idea that stocks are the best long-term investment, we have a problem. Where can we invest when we are scared to death of what rising interest rates will do to our stocks and stock funds? Is there a simple tool for reducing risk? The answer, I think, is a cautious “yes.” Small-capitalization stocks have been so thoroughly ignored that they are now selling at a substantial discount to large-capitalization stocks. One way to see this is to make a comparison of small-cap, mid-size and large-capitalization equity funds using a tool like Morningstar Principia. While the average fund that specializes in a blend of large-cap growth and value stocks has a portfolio price-to-earnings ratio of 35, mid-cap funds have a P/E ratio of 30, and small-cap funds have a P/E ratio of 26. So small-cap stocks, as a group, are cheaper. Are they cheaper for a reason, like slower growth? No. The trailing earnings-per-share growth rate for the small-cap funds was very close to the growth rate for the large company funds, 18.5 percent vs. 19.9 percent. Basically, you pay less for growth in small-cap companies than in large-cap companies. Another thing we learn in the comparison is that while large-cap funds blew away small-cap funds over the last three years with an annualized return of 21.1 percent compared to 15.5 percent, the relationship has reversed in the last 12 months. Now the average small-cap fund is doing better than the average large-cap fund. One reason may be that the valuation difference may have gotten too large to ignore. The best ongoing source for this kind of information is the institutional research of the Leuthold Group, the Minneapolis-based investment think tank for Weeden and Co. For several decades, Steven Leuthold’s research crew has dissected the stock market, looking for sectors that offer good relative values. Question: Like many, we have “lost” a small fortune with our investments during the past few weeks. I would like your opinion. I believe that since our total investments are still above what we put in, we haven’t lost anything until we actually sell. My husband, however, honestly believes that since our portfolio was recently $100,000 larger in value than it is now, we have lost $100,000. Is this factual, or is it simply a matter of attitude? B.B., Dallas Answer: The value of your investments is the price they could fetch today. It isn’t what they were worth last month, what you originally paid for them, or what they might be worth in the future if everything goes well and the party of your choice is in the White House. Failing to focus on actual current market value is an invitation to wishful thinking and denial it’s a very effective way to avoid recognizing a loss and commits many people to holding a stock until it rises enough to “break even.” The primary issue in all buy/sell decisions is your estimation of the future for the new investment vs. the existing investment. It’s a change of horses, no more, and you want to have the best horse at any given moment. Whether you have a loss or a gain in the existing investment is only an issue when you can use a loss to offset a gain realized elsewhere, or when realizing a gain will bring a tax cost. Another consideration is the relative size of the loss. If your portfolio is off $100,000, down to $900,000, you’ve lost only 10 percent of your money. You should expect such fluctuations in value because they are entirely normal events. If, however, your portfolio is off $100,000 and is down to only $100,000, you’ve lost 50 percent of your money and should be worried. Q: Reading your column, I am usually depressed at how much money people have invested. I only recently realized that retirement is around the corner, and I am not prepared. Divorced and remarried three years ago, I am a 58-year-old legal secretary with annual income of about $50,000. My husband’s income is in the $70,000 range, with a company car, but I am more concerned about what I can do at this point. We live in a four-unit condo complex, where I purchased a unit when I was single for $87,000. I presently owe $79,000. The unit next door is in escrow for $132,500. We also have a cabin in East Texas that my husband pays for. We plan to add on to it and move there after we retire. We both contribute the maximum in our 401(k) plans at our companies. I have all of mine in Janus Mercury, balance $21,000. I also have $20,000 in an Equivest IRA. After April 2001 I can remove these funds without a penalty. I have sent $20,000 to E-Trade to open an account, and I have around $40,000 in a money market account at a credit union. I have no idea what stocks to buy. Any recommendations? J.P., via e-mail A: Examine your current expenses and make a budget for the future based on that spending but assuming changes such as selling the condo and moving to the East Texas cabin. Assume that you have no mortgage debt. This will give you an idea of your target future income. The first thing you will learn is that after you net out your savings, FICA taxes and income taxes, etc., your future income needs will drop sharply. Contact Social Security and get an estimate of your future retirement benefits at full retirement age. Your husband’s will be about 25 percent of his current earnings, and yours may be about 35 percent of your current earnings but get actual estimates. Make a plan to pay off one of the mortgages in the next six years. You should be in a position to own your home free and clear by the time you retire it will reduce your required retirement income substantially. The difference between your Social Security income and your projected spending (including taxes) is the amount that will have to come from money you save between now and retirement. At 10 percent, your current $100,000 will double to $200,000 in seven years. Saving $10,000 a year and earning 10 percent will produce almost $100,000 more. This means that you, personally, could have $300,000 in financial assets by the time you retire. If you withdraw at a 5 percent rate, that means $15,000 of income in addition to Social Security. If your husband does a similar exercise, you can estimate how much he will accumulate by retirement. My bet is that it won’t be so bad. Where to invest the money? Unless one of you has a defined-benefit pension, I suggest a Couch Potato portfolio that is no more than 60 percent stocks, 40 percent bonds. It won’t give you fairy-tale returns, but it will give you most of the growth you will need. Questions about personal finance and investments may be sent to Scott Burns, The Dallas Morning News, P.O. Box 655237, Dallas, TX 75265; or by fax: (214) 977-8776; or by e-mail: [email protected].

Those innocuous-looking phone equipment boxes you see on sidewalks throughout the city have suddenly become the center of fierce debate, as phone companies seek to install more of them to accommodate the burgeoning demand for high-speed Internet access lines. Spurred by complaints from homeowners groups concerned that the proliferation of these gray metal cabinets is creating visual blight in neighborhoods, the Los Angeles City Bureau of Engineering has come out with regulations limiting their size and number. “These boxes are springing up everywhere and there is absolutely no regulation,” said Tarzana Property Owners Association board member Kathy Delle Donne. “Not only are they a physical blight, they are also perfect targets for graffiti taggers.” But phone companies and their business allies are fighting back, saying the regulations are too burdensome and would cause delays in the deployment of digital subscriber lines (DSL), currently the cheapest alternative for high-speed Internet access. Their chief concern: the recommended size limit of 36 cubic feet per box is too small to accommodate the latest in data communications technology. “This is public policy gone mad,” said Rohit Shukla, president and chief executive of the Technology Alliance of Southern California. “If these regulations pass, people who can’t get DSL service now will have to wait longer and pay more for it. Los Angeles is already one of the lowest-rated major cities when it comes to wiring for high-speed Internet access; this will only make it worse.” Hearings slated On Wednesday, the two sides are scheduled to square off in a city Board of Public Works hearing, although there were some indications late last week that the hearing date might be postponed. A final set of regulations could come before the L.A. City Council later this year. At the center of the debate are the desk-sized phone equipment boxes, which contain the copper wires that connect residents and businesses to major phone trunk lines. These boxes have been around for decades on sidewalks and in front of homes. For most of that time, they have been seen as essential to the region’s phone infrastructure and have not drawn much opposition. That started to change as demand for additional phone lines surged over the last decade. To accommodate these additional lines, phone companies either made the boxes bigger or installed more of them. “In the old days, people had one or two phone lines going into their homes, so the boxes could be small and spaced reasonably apart,” said Kendrick Okuda, a civil engineer in the city’s Bureau of Engineering. “But with computers and then the Internet, you now can have five, six or even more lines going into a single home. That has driven up the demand for these boxes.” Another factor has been deregulation of the telecommunications industry, which has resulted in more telecommunications providers; each company either needs its own boxes or must lease them from one of the two local phone companies, GTE Corp. and Pacific Bell. Ultimately, Delle Donne said, the best solution is to have the boxes placed underground, though that would cause temporary inconveniences as streets are dug up. Delle Donne and other neighborhood activists took their complaints to Councilwoman Cindy Miscikowski, who in February 1999 got her colleagues on the council to approve a moratorium on the phone boxes and order city staff to come up with regulations. (The moratorium, still in effect, doesn’t prohibit the deployment of these boxes altogether; rather, it requires approval from individual council members for all new boxes.) “There needs to be a balance between the needs of technology and keeping neighborhoods where people live beautiful,” said Lisa Levy, San Fernando Valley deputy to Miscikowski. (The councilwoman was unavailable for comment last week.) Regulators demand smaller boxes The Bureau of Engineering released its proposed regulations earlier this month. They state that companies seeking to install phone wire boxes bigger than 36 cubic feet would need to get a variance from the Board of Public Works. The proposed regulations also would limit companies to a density of no more than four boxes for every 1,000 feet of curb length. But phone-company officials say the size limitation would make it much more difficult to install additional lines and the data cards needed for digital services. “Right now, our typical box is right about 36 cubic feet in size,” said Clare Ervin, area manager for Pacific Bell Construction and Engineering. “But we need additional space for more electronics inside the boxes, to enable the higher-speed transmissions that come with DSL and fiber technology.” Besides taking longer to get the variances for bigger boxes, phone-company officials are concerned that residential opposition could result in the applications being denied altogether. “This could result in our needing to install more boxes, which means more poles to connect to the boxes and more digging up of streets to get the wires to the boxes,” said George Kieffer, an attorney with Manatt, Phelps & Phillips LLP who is representing GTE. Business groups are concerned that the regulations could slow down the deployment of DSL and raise costs for consumers. “This goes counter to the city’s stated goal of bridging the digital divide, especially in the Latino community,” said Rebecca Barrantes, government relations representative for the Latin Business Association. “We don’t want to see anything that could slow down the spread of the Internet.”

Ergonomics can prevent musculoskeletal injury by reducing fatigue. Musculoskeletal injuries generally occur in two basic ways: 1) from manual handling (i.e. pushing, pulling, lifting) of objects that require near maximal effort, or 2) from frequent or sustained (held) efforts particularly when performed in awkward positions. Examples of the later would include postures and actions such as: using a computer with the screen too low resulting in a sustained forward head position, or using a screwdriver while reaching high overhead. Repetitive motion injuries (“frequent effort in an awkward position”), are currently receiving a lot of attention in the media. However, the musculoskeletal system is well suited to produce repeated motion at low levels of force. “What is a low level of force?” A low level of force has to do with muscle endurance time. Muscle endurance time is defined as the length of time you can maintain a contraction/effort without fatiguing. In turn, the length of time or duration depends on the amount of blood flow to the muscle. In order to function properly, the muscle must get nutrients and oxygen from the blood, but if flow is compromised, nutrition and oxygen supplies decrease and the muscle fatigues more quickly. Thus the harder and longer the contraction, the quicker the fatigue. Long-term muscle fatigue can lead to injury. In research done by Sjogaard, et al in 1988 and Lee in 1979, they discovered that if the muscle contraction occurred at 50-60% of its maximum, there was no blood flow through the muscle. However if the muscle contraction was less than 10% of its maximum there was little hindrance of blood flow and thus less fatigue and potential injury. How does this effect ergonomic decisions? Let’s return to the example of the low computer screen. With a forward head position, you are asking your neck to sustain a muscular contraction to hold up a head that weighs between 10-14 pounds. Studies show that a forward head position of more than 30 degrees results in decreased endurance time and thus increased muscle fatigue. At 30 degrees of forward head tilt, the contraction force of the neck muscles is greater than 10% and thus blood flow to those muscles is decreased and hence fatigue and possible long-term injury can occur. The ergonomic goal is to get the neck more erect thus returning blood flow to the muscles and decreasing fatigue. Ergonomically we might suggest raising the monitor to allow a horizontal viewing angle. Understanding the effect of sustained and frequent awkward postures and their potential for musculoskeletal injury is the first step toward setting goals and solutions for effective ergonomics. Patty Jorgensen is the Director of Operations for OzP, Inc./Ounce of Prevention, a health, wellness and injury prevention company based in Westlake Village.

The number of licensed beds at the 15 biggest hospitals in the San Fernando Valley declined slightly from last year’s 4,946 to 4,906. Statewide, there are more hospital beds available than needed, prompting many hospitals to downsize. That is because the length of the average hospital stay has been cut almost in half over the past 20 years and many procedures can now be done without requiring a hospital stay. There are two very real issues facing hospitals this year: a growing population of uninsured patients and a nursing shortage. Emergency rooms across the Valley are becoming more crowded with patients who are unable to pay for service, and although five of the hospitals on the list have reported an increase in nursing staffs, most of the others have reported a rather significant drop.