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Kiplinger's Personal Finance Magazine, Dec, 1998 by Kristin Davis, Robert Frick

The Highs and Lows of Personal Finance in 1998

FROM BEHEMOTH BANK MERGERS IN THE U.S. to economic collapse in Asia, it's been an interesting year for collectors of financial winners and sinners. Bill Gates was sued, the Beardstown Ladies were mortified, and another financial brain trust was done in by its own brilliance. Even as the big guys were getting their comeuppance, a lot of little guys were coming up in the world. The VW Beetle roared back, Pepsi employees got an unexpected bonus from the boss, and you-know-who spawned her own mini economy while nearly toppling a presidency. In our second annual retrospective, Kiplinger's editors award kudos for top performances in personal finance, sling a few shots at errant giants, and ferret out a few gems you may have missed.

A Cinderella Tale

The glass-slipper award for best customer-service story we've heard this year goes to Carolyn Miller of Alexandria, Va.

On the eve of a vacation trip, Miller purchased a pair of shoes at Nordstrom, only to discover once home that the shoes were mismatched. She called and asked the store to hold the correct shoe until she returned from vacation. The store did better than that. Within an hour, an employee showed up at her door and presented her with a matched pair.

The ugly-stepsister prize goes to this account from Customer Service Nightmares, by Nancy Friedman, a collection of wicked customer-service tales. A woman tried to return a pair of black high-heeled shoes that didn't fit. "I called the store and asked if they carried a larger size," said the woman. The clerk replied. "Lady, the only shoe we have bigger than that is a man's shoe. You must have giant feet."

`Chain Saw' Al Gets the Ax

Talk about poetic justice. "Chain Saw" Al Dunlap, the corporate turnaround specialist whose notorious cure for ailing companies is laying off thousands of workers, got a pink slip himself from the board of directors at Sunbeam. Dunlap was hired by the company in 1996. But after he had spent nearly two years on the job and cut half the company's work force, Sunbeam was still operating at a net loss.

The self-proclaimed "Rambo in pinstripes" cried foul when he was let go, and has continued to do so in retirement.

Instead of griping, however, perhaps he would do better to ask his PR firm to help him soften his image. For starters, a new sobriquet might be in order. How about "Blender" Al Dunlap, in deference to his last employer?

Dog of the Dow

A number of stocks that make up the Dow Jones industrial average spent 1998 scrapping to win the distinction of lowliest dog in the pack. The bowwow: Boeing, which fought its way to the bottom with a loss so far this year of 33%. The jet maker has had problems manufacturing its most modern planes quickly and efficiently, and has been stung by falling demand for its 747s in Asia. The bad news continued, at least from a PR standpoint, when a Boeing Delta III rocket blew up shortly after takeoff in August. The silver lining: The rocket was carrying a $50-million satellite from Hughes Space & Communications, a Boeing competitor.

Best of Show

Turns out that the only thing better, retailwise, than Wal-Mart's bargain-packed, spic-and-span stores is even bigger Wal-Mart stores. The company's "supercenters" have started adding to earnings in a serious way, helping to push the company's stock price up 55% so far this year. And Wal-Mart's international expansion, mainly into Canada and Latin America, is beginning to pay off. Sure, the economy is weak in those regions right now. But when times get tough, where you gonna shop?

Talk About Bad Timing ...

Foster Friess, manager of Brandywine fund, contracted a bad case of knocking knees when Asian markets began to slide in the fall of 1997, and radically turned his portfolio toward cash $9 billion out of $13 billion by March 1998. But with the market heading up again, Friess's case of nerves spread to his feet and he jumped back in again. Cash shrank to 5% of the fund's total portfolio just before the market took a nose dive over the summer. As a result, the fired is down about 21% so far this year, and bad timing has dragged the three-year total return down to an annualized 3.5%. Investors wish Friess had stuck with his own advice: "It is the long-term perspective that eventually wins out."

We Should Have Seen It Coming

WHEN THE DENVER BRONCOS won the Super Bowl, the Super Bowl stock-market theory kicked in. The theory holds that the marker will finish the year lower than it started if any team other than an original member of the National Football League wins the Super Bowl. The Denver franchise began with the now-defunct American Football League. The theory has proven correct 87% of the time--an accuracy rate even better than Bronco quarterback John Elway's competition rate.

You Never Know When You Might Need it

The National Center for Financial Education (619-232-8811) has come up with "credit card condoms"--paper-thin sleeves that slip over your cards to give you a moment's pause before consummating a purchase. As the label explains, "The few seconds it takes to get the credit card ready for use can reduce the urge to SPEND, SPEND, SPEND." You can order 20 or more--with your credit card.