WSJ 2
SUNDAY, AUGUST 18, 2013
THE JUGGLE ON SUNDAY
It’s a Home. It’s an Office. It’s Confusing. BY LAURA KREUTZER
Not long ago, we had an unexpected guest for dinner: my job. Well, to be honest, it wasn’t all that unexpected. My job pops in fairly frequently at the dinner hour. And although it doesn’t eat any food, there’s no question that it’s intrusive, disruptive— and annoys my husband greatly. “I’m just going to take this one call,” I told Clay that night, getting up from the table. Cue the eye roll from Clay, as he continued to quietly chew his chicken. “It’s from the West Coast,” I countered, as if that somehow made a difference. As I headed upstairs to the home office, I called back: “I’ll make it quick.” In many ways, of course, the luxury of a home office is the working parent’s brass ring. I am extraordinarily blessed to have the option of working from home when I am not traveling. It gives me the flexibility to pop down into the basement and toss the wet laundry into the dryer or take a few minutes to welcome my daughter home from school in the afternoon or catch up on her day in between calls. It is a privilege, and one that I am grateful to have. But that privilege comes with a price. i i i Clay has long griped about the downside of working from home. Yes, he appreciates the flexibility that a home office affords our family, and loves having me around. But he often feels that I allow the office part to seep too much into our home life—emotionally and physically. He gets annoyed when work keeps me from fully engaging in family activities. And he sometimes is irritated when I bring my laptop downstairs to work from the chaise longue, getting in his way as he goes about doing the daily house-
Steve Adams
work. To me, the frustration of a home office is that, basically, you’re perpetually in the office. You step out of your office door right into the rest of the house, and sometimes the work doesn’t get the message that it shouldn’t come along. Too often, it follows me around like a clerk hawking perfume at a departmentstore cosmetics counter. My family ends up losing my attention; I’m there, but I’m not there. And it means I can’t fully enjoy the pleasure of family events as well. Work always seems to beckon, just a few feet away. Part of the problem, of course, is that I have a lot of work to do. But face it: So do most people. The bigger part is that I often feel compelled to make sure that I am consistently available so no one at the mother ship in New York thinks that I’m slacking off (which, if my bosses are reading this, I’m not). I also feel that it isn’t fair to ask one of my team members who work in the office to take on a particularly late-breaking story, when most of them have a 30to-45 minute commute to get home. But I hit my wall one night not long ago, as I put our seven-year-old to bed.
“When I grow up, I’m going to be rich,” she said to me sleepily. “Then you won’t have to work so much.” As I thought about it more, I realized that I have been the architect of my own problems. It has been far too easy to justify quickly checking one’s email or spending an extra hour or two to work on a project in the office when the office is only a few feet away. I need to try to set better boundaries between my work life and home life. i i i Much of the challenge lies in learning when to turn things off. After chatting with a few others who work from home, I have decided to make a few simple (I hope) changes. First, barring an emergency or a particularly important story or deadline, I am setting a strict evening cutoff time for responding to work-related emails or calls. I realize that it’s probably something I should have done a long time ago. If it isn’t absolutely pressing, my horse and carriage turns back into a pumpkin by 7 p.m., and I’m calling it a night. I realize that I may not be able to hit that goal every day, but at this point, I’m not doing it at all, so I’m going to try my best. Also, I plan to restrict work
A Buy—Post Co. Without the Post
Washington Post Co.’s recent move to sell its flagship newspaper to Amazon.com CEO Jeff Bezos for $250 million signals a more investor-friendly approach by the low-profile company. The deal surprised Wall Street, where the widespread view was the controlling Graham family was too emotionally attached to the newspaper to part with it. The paper operated at a slight profit in recent years before restructuring charges. In disposing of its prized newspaper asset, which has been under family control for 80 years, the company showed it may be open to further asset dispositions or perhaps even an outright sale of the company. A logical buyer for Post Co. is Berkshire Hathaway, which has been a large Post shareholder for 40 years. Berkshire Hathaway’s CEO, Warren Buffett, was a longtime Post director before retiring in 2011, and he is close to Post CEO Don Graham. The company’s market value of $4.3 billion makes it very digestible for Berkshire, whose market capitalization is almost $300 billion. Even without a sale, the company, which now plans a name change, looks appealing at the recent share price of about $570.
Washington Post (WPO) Daily share price As of Friday, 1 p.m.: $569.50 $700 600 500 400 300 200
2012
’13
Source: WSJ Market Data Group The Wall Street Journal
Barron’s estimates that the company’s asset value is around $700 a share, roughly 20% above the current price. Our estimate is in line with that of independent research analyst Craig Huber, who has covered the company for years, as well as three investors familiar with the company. The high absolute price on Post shares reflects the Graham family’s unwillingness to split the stock. Post owns three main assets: a cable-TV business with nearly 600,000 basic subscribers, a lucrative group of six broadcast TV stations and Kaplan, an education business that includes an online university, campus-based
degree programs and significant operations outside the U.S. Cable and broadcast TV are both hot areas with investors. The strength in those sectors of the stock market probably accounts for the 60% gain in Post’s stock price this year. Post also has an excellent balance sheet with estimated net cash and investments (after subtracting debt) of about $600 million following the Post newspaper sale. Unlike many other newspaper publishers, the Post has an overfunded pension plan. Barron’s estimates the total value of Post Co. at $5.1 billion. Investors tend to value Post based on its net asset value rather than reported earnings mostly because profits at Kaplan have been depressed. The company’s operating profits from continuing operations were about $7 a share in the first half. Post has been an active buyer of its stock in the past few years. Post now amounts to a media and education conglomerate with a strong balance sheet. This could lead to nice returns for investors whether the company remains independent or not. Andrew Bary is an associate editor for Barron’s. For more stories, see barrons.com.
ASK DOW JONES
Filing Time Doesn’t Affect Audits BY TOM HERMAN
Q:
If I got an extension to file my federal income-tax return and file it before the Oct. 15 deadline, is that likely to make a difference in my chances of getting audited compared to filing by the April 15 deadline? D.A., West Chesterfield, N.H.
A:
No, replies a spokesman for the Internal Revenue Service. “Extensions have no impact on your chances of being audited,” he says. Several private-sector tax experts agree. “In my experience, the simple answer to your reader’s question is that filing in April or October does not affect the chances of being ‘audited,’ ” says David A. Lifson, a certified public accountant at Crowe Horwath LLP in New York.
Laura Kreutzer is assistant managing editor of private equity in the newsletter group at Dow Jones. Write to her at SundayJuggle @wsj.com.
Another Flighty Deal BY AL LEWIS
Try to keep this straight: American Airlines— which has already merged with Trans Caribbean Airways, Air California, Reno Air and TWA—wants to merge with US Airways—which has already merged with Lake Central Airlines, Mohawk Airlines, Pacific Southwest Airlines, Piedmont Airlines and America West. They want to merge because: United Airlines—which had already merged with Capital Airlines and part of Pan Am—merged with Continental Airlines—which had already merged with People’s Express, New York Air and the original Frontier Airlines. Delta Air Lines—which had already acquired the Chicago and Southern Air Lines, Northeast Airlines, Western Airlines and Pan Am’s shuttle airline—merged with Northwest Airlines—which had once swallowed Republic Airlines. And Southwest Airlines—which had acquired Muse Air, Morris Air and ATA Airlines—recently took over AirTran Airways—which had merged with ValueJet. The U.S. Justice Department, which rarely intervenes in airline mergers, last week sued to block the $11 billion merger of American and US Airways. The deal, it complained, would reduce the industry to just four big carriers controlling more than 80% of the market, which means higher airfares and less air service for consumers. The airlines, and a chorus of critics, immediately complained a) hey, this isn’t fair, you already let everyone else merge, b) American is in bankruptcy and needs this deal to compete, c) one less major airline will actually increase competition by creating a stronger competitor and d) let the free market decide. These arguments are as old as the industry. There has never been a free market in the airline business. The in-
dustry has always been federally subsidized in one form or another. It also has been subsidized by the bankruptcy process. Airlines battle each other for market share and lose money until the day that they can’t. Then they file for bankruptcy and glue their pieces together. Creditors, investors and employees take the financial hit while top executives walk away with grandiose pay packages. American wants to pay its chieftain Tom Horton $20 million for taking the carrier through the bankruptcy it filed in November 2011—but the bankruptcy judge has scoffed at the plan. The Justice Department notes that executives from both airlines have bragged that they could operate without the deal—so why not hold them to their words? No, it’s not easy running an airline. Beyond complex logistics and fending off competitors who’ve slashed their operating costs in bankruptcy court first, there are spiking jet-fuel costs, terrorist attacks and economic meltdowns to circumnavigate. The solution always comes down to yet another bankruptcy and yet another merger. Over time, planes become filthy, airline employees get grumpy, service gets spotty and innovation is reduced to how to charge customers more fees. What’s left is an industry of bureaucratic, too-big-to-fail corporations that will live to file bankruptcy again. American and US Airways vow to fight. They’ll likely bring enough corporate lobbying power to bear, and offer just enough concessions, to put together some kind of deal. And everyone will forget what American advertised when it bought what was left of TWA in 2001: “Two great airlines, one great future.” Al Lewis is a columnist based in Denver. He blogs at tellittoal.com; his email address is al.lewis@tellitoal.com
INVESTING BASICS
BARRON’S INSIGHT
BY ANDREW BARY
papers and other work-related materials to the home office. Too often, research reports or copies of our publications seep into the living room, our bedroom or the kitchen. If it isn’t there, I can’t read it. At the end of each workday, I also plan to spend 10 to 15 minutes just organizing my desk and pulling together a to-do list for the following morning. By doing so, I hope that I can bring a sense of closure to my day but also feel more relaxed and organized about my game plan for the next day. One friend also suggested that I spend a few weeks documenting my hours and what I do each day. If I step away for an extra hour or 30 minutes to tackle a personal task, then I should make sure I add that time back into the end of the day or later in the week. “You’ll get a better sense of how much time you actually spend working,” she said. It may not be easy, but with a few small changes I think I can do a better job of keeping work in the office, where it belongs.
AL’S EMPORIUM
Just be sure to file on time. “I have also noticed that filing a tax return late almost always attracts extra attention,” he says. “So I wouldn’t consider missing the Oct. 15 extended due date.” The IRS typically audits about 1% of all the individual returns it receives each year. There are several different types of audits. Most are “correspondence” audits, done by mail. Typically, these occur when you report something on your return that differs from what the IRS has received from employers, investment firms and other sources. In these cases, you would be instructed to send supporting documents to the IRS, says Stephen W. DeFilippis of DeFilippis Financial Group in Wheaton, Ill. “If your return contains something that would trigger the IRS matching program ‘correspon-
dence audit,’ I don’t believe it matters when you file,” says Mr. DeFilippis, who is an enrolled agent, a tax expert authorized to represent taxpayers at all levels of the IRS. “The computer will pick up on the mismatch whether you file in February or October.” Many other factors can lead to an audit. For example, as the IRS says, your return may be selected on the basis of “computer scoring.” The IRS scores returns based on a secret formula designed to spot those where “the potential is high that examination of your return will result in a change to your income tax liability.”
Send your questions to us at askdowjones.sunday03@wsj.com and include your name, address and telephone number. Questions may be edited; we regret that we cannot answer every letter.
Going Global With Your Nest Egg BY CAROLYN T. GEER
Traveling abroad this summer? Don’t forget to give your stock portfolio some foreign exposure, too. “As a long-term investor, you want to bet on global capitalism, wherever it’s going to occur,” says Mitch Tuchman, founder of Rebalance IRA, which provides asset allocation and ongoing portfolio management for individual retirement accounts. Having a globally diversified portfolio allows you to benefit from the performance of whichever regional market is leading at a given time, he says. The U.S. stock market has outperformed most foreign markets over the last several years, leading many investors to question the benefits of international investing, says Paul Jacobs, chief investment officer of Palisades Hudson Financial Group, an independent investment advisory firm that manages $1.2 billion in assets. But where others see risk, Mr. Jacobs sees opportunity. “The U.S. can’t outperform forever,” he says. “Just 10 years ago, foreign stocks were outperforming. These things really do move in cycles.” U.S. stocks account for just under half of the global stock market, as measured by market value, or share price times the number of shares outstanding. Studies have shown that you can get the benefits of global diversification by devoting 20% to 40% of your stock portfolio to international equities. Others suggest a mix that more closely resembles the actual weightings of U.S. and foreign stocks in the world economy. Vanguard Total World Stock ETF (VT), which seeks to track the performance of the FTSE Global All Cap Index, had 49.2% of its assets invested in U.S. stocks as of July 31. T. Rowe Price’s new Global Allocation Fund (RPGAX), the firm’s first global multi-asset fund, aims to have about 50% of its stock investments outside of the U.S. At Rebalance IRA, a portfolio for someone at least five years from retirement also would have its stock portion evenly split between U.S. and foreign equities, with the for-
Tim Bower
eign portion divided equally among developed and developing markets. Given that U.S. stocks today are considered by many to be fully valued while foreign stocks are still relatively cheap, it wouldn’t be unreasonable to devote slightly more of your holdings to foreign stocks now than you typically would. In any case, the relative outperformance of U.S. equities in recent years probably means your portfolio needs rebalancing. Mr. Jacobs has been busy selling U.S. equities and buying foreign equities just to maintain the 35% allocation to international stocks he typically targets in clients’ stock portfolios. “We don’t use a one-sizefits-all approach for foreign investing,” he explains. “For some markets, we prefer actively managed mutual funds and for other markets we prefer low-cost index funds.” For Europe—which, at 40%, represents the biggest piece of Palisades Hudson Financial’s international equity allocation—Mr. Jacobs is comfortable using index funds “because of the quality and transparency of the markets,” he says. One favorite: Vanguard European Stock Index Fund (VEURX). The same goes for Japan and Australia. “A lot of international funds will not allocate a meaningful amount to Australia, which is rich in natural re-
sources,” Mr. Jacobs says. So a few years ago, the firm added iShares MSCI Australia ETF (EWA), for exposure to large Australian stocks. For the more than 30% of the international stock portfolio that it devotes to the Pacific Rim (not including Japan), Palisades Hudson Financial uses T. Rowe Price New Asia Fund (PRASX) and Matthews Pacific Tiger Fund (MAPTX). For the 5% it allocates to Latin America, it often uses T. Rowe Price Latin America Fund (PRLAX). As for international smallcap stocks, the firm likes actively managed Oakmark International Small Cap Fund (OAKEX) and Matthews Asia Small Companies Fund (MSMLX)—for both the higher expected returns and diversification of small-cap stocks. It’s a lot of moving parts, Mr. Jacobs admits, but holding different funds for different regions can produce better aftertax returns. If some markets are up and others are down, the firm can sell a fund that has declined in value to realize a tax loss, which can offset a gain elsewhere in the portfolio. For investors with equity portfolios under $100,000, Mr. Jacobs sometimes uses just one actively managed mutual fund for the international portion: American Funds’ EuroPacific Growth Fund (AEPGX). investing.basics@gmail.com