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IN THE MONEY

World Markets Plunge; Real Estate Woes; Dress for Success

Aired July 29, 2007 - 12:59   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FREDRICKA WHITFIELD, CNN ANCHOR: And here are the top stories. Hello, again, I'm Fredricka Whitfield.
In Washington, Vice President Dick Cheney undergoes surgery to replace a defibrillator. The implanted device monitor's Cheney's heartbeat. Just last week, Cheney served briefly as acting president while President Bush went under a colon exam. All is fine for the vice president today.

In Iraq, some optimistic words from a top U.S. commander, Lieutenant General Raymond Odierno. He says if positive security trends continue over the next year, a U.S. troop drawdown could begin in the spring. He says some clear trends have emerged, including a drop in improvised explosive device attacks.

Federal aviation experts head to Phoenix to investigate a deadly aircraft collision. Two TV news helicopters collided and then crash in a ball of fire. All four people on board the helicopters were killed. Both crews were covering a police chase in downtown Phoenix at the time.

Mourners gather in Connecticut to remember the victims of a deadly home invasion. A woman and her two daughters were killed. The father, who is a doctor, was beaten but survived the attack. Two convicted burglars out on parole are now charged with the crimes. Prosecutors plan to seek the death penalty. After the attacks, state officials are reviewing parole policies now.

And parts of Texas wondering if the sun will ever shine again there. Much of the state is expecting more heavy rain this weekend with a threat of more flooding. Search and rescue teams are already in place in some parts of Texas.

An update on the top stories at the bottom of the hour. Now time for YOUR MONEY.

CHRISTINE ROMANS, CO-HOST: Welcome to YOUR MONEY. I'm Christine Romans.

ALI VELSHI, CO-HOST: And I'm Ali Velshi. This is the show that shows you how the news of the week has an impact on your wallet. Coming up on today's program, why living paycheck to paycheck doesn't have to be as bad as it seems.

ROMANS: And then find out exactly what you need to know to protect your investments.

VELSHI: And we'll take a look at why women are not getting many of the top jobs in corporate America.

ROMANS: But we begin with a wild week on Wall Street, after several record-setting weeks, the markets and likely your portfolio went downhill.

VELSHI: Now a lot factored into this slide. There were disappointing earnings, a weak housing report -- another weak housing report, the prospect of higher oil prices. But whatever the reason, the chances are, if you look at your portfolio, you're wondering what you should do now.

ROMANS: So Shawn Tully follows all of this very closely as a senior writer for Fortune magazine. He's going to help us sort of walk through it.

You know, for the average he average investor who is watching what happened this week -- the average homeowner investor who is watching what happened this week, what does it mean? What does it mean for me and my money?

SHAWN TULLY, SENIOR WRITER, FORTUNE: Well, anyone who tells you what the stock market is going to do tomorrow or next week or next month doesn't know what they're talking about. Turn off the tube, because market fluctuations from day to day, week to week, month to month are completely unpredictable.

What happened was not really triggered by horrible news, although you can always find a priori reasons why it happened.

VELSHI: But none of that news that we just talked about was brand new or just happened yesterday. We've known there is a housing problem. We know there are high oil prices. We know all of these things already.

TULLY: Yes, we know that the private equity deals are getting stuck in the pipeline, for example. All of that is not new. The drop was fairly inexplicable. But we've also had enormous increases in prices from day to day as well. These fluctuations are getting more volatile, we have to live with it.

They don't necessarily mean a lot. And you constantly have market strategists coming on, telling you what's going to happen next week or next month or in six months. Don't listen to them. They don't know. What we do know, however, is that stocks are still relatively expensive. At 18 times earnings, that's a big number.

ROMANS: And that's the price-to-earnings ratio, when you are talking about 18 times earnings.

TULLY: Yes. Yes, and the historic number is about 14. So stocks are pricey. And we're also -- which is very important, at the peak of an earnings cycle. Everybody is saying, oh, earnings are going to bail us out, earnings are going to come in very strong. They can't.

They were already at an enormous proportion of gross national product. They can't go beyond that. Therefore they can't even grow as fast probably as GDP, which doesn't grow too fast, grows about 3 percent a year. So you are at the top of the earning cycle with a high P/E. Therefore stocks are relatively risky.

VELSHI: And these are all things, by the way, that the do-it- yourselfer investor can actually look -- things like the P/E are on every financial Web site.

TULLY: Yes, absolutely. And the worse P/Es, the highest ones, where the riskiest stocks, which are being recommended all the time, are tech stocks. The market is not horrendously overvalued in general but it is very overvalued on the Nasdaq. And I would stay away from tech stocks. There P/Es, on the average, are in the 30s. That's much too high.

Their growth rates can't possibly match that to get you to have good gains on top of very high prices. So I would stick with very high dividend-paying value stocks. The banks, for example, are getting very badly hit the last few days, have 5 percent dividend yields.

VELSHI: And nobody wants to buy the stocks that are getting beaten.

ROMANS: Right, right, right, right. But let's talk about a little bit of perspective though here. Because we still had -- the Dow was down last week some, what, 2.5 percent, I think -- not more than 2.5 percent. But over the past 52 weeks, was up some 20 percent. So a little bit of perspective in that the Dow came off but for somebody who...

VELSHI: You're still up 8 percent on the year or something.

ROMANS: Right. It has still been a pretty good year so far. The question is, what happens next? Or whether you are dollar-cost averaging in your account, or whether your account is balanced and right where you want before retirement. All of these come into play.

TULLY: Right. But stocks, again, because of this run-up, they're expensive and earnings are not going to keep increasing at the rates that we've seen. So you want to be very diversified. You want to have a very small percentage of your assets in tech stocks.

You want to have a higher than normal percentage in bonds, not corporates. That's what's getting killed now. And it's going to get worse because these spreads are going out, right?

And when that happens, when the interest rates on corporate bonds go up, the prices have to go down because they're inversely related. So you want to stay away from corporates.

You want to be in Treasuries or CDs. And you want to be on the short end, because you get almost as much, 5 percent yield on the very short end with very little risk as you do on the 30-year end.

VELSHI: You're saying there's no particular benefit right now to locking into long-term bonds?

TULLY: No, because they fluctuate a lot in price, whereas if you buy a two-year Treasury, the Treasury has got to redeem that bond at face value in two years so the fluctuations in price are minimal.

So we are in a fairly risky period now. Whatever happens day to day, which is irrelevant, you've got to get beyond it. But stocks are not cheap. Tech stocks are very expensive. Short-term rates are extremely favorable now.

And people have to, again, I would say, have a higher than normal allocation in short-term bonds right now and stay away from corporates.

ROMANS: All right. Shawn Tully of Fortune. Thank you so much, Shawn.

TULLY: Sure.

ROMANS: All right. Coming up on YOUR MONEY, how to disaster- proof your portfolio. Then, why the value of your home may not go up for another two years.

And later, why living paycheck to paycheck doesn't have to be such a strain.

(COMMERCIAL BREAK)

ROMANS: Back now to that story that likely means something for every single person out there.

VELSHI: We're talking about housing obviously. It started out as a slump that would last through the end of the year, and then some people started talking about it going into mid 2008.

ROMANS: And now the CEO of Countrywide, the largest mortgage lender in the country, is saying this housing downturn could last until 2009. That's right, 2009.

VELSHI: Chris Mayer deals with this stuff for a living. He is the director of the Palm Milstein Center for Real Estate at Columbia Business School.

What do we need to take away from this? This -- I mean, really, is this line about when this housing slump ends just moving forward or is this really serious and we don't know?

CHRISTOPHER MAYER, COLUMBIA BUSINESS SCHOOL: Well, I think at this point it is a significant issue. I think my response might be the same as Shawn's earlier, which is, anyone who says they know when this thing is really going to slow down may be clairvoyant, but the rest of us don't. But that doesn't mean it's not going to be a real issue.

VELSHI: You know, Chris makes an interesting point that I had read about. And that is that it's -- you're saying it's not a national problem.

ROMANS: Well, real estate is a local issue, so it's hard to say the national market is going to recover in 2009 because some places are going to continue to get hurt, some places are still going to be good.

MAYER: Yes. I mean, I think if you look at certain parts of the country: South Florida, Phoenix, Las Vegas, you know, parts of Southern California, I think those markets are going to be in a decline for a long time, much more serious than the national economy.

And I think if you want to buy a condo in Miami, you're going to have great options for probably the next five, six, seven years.

ROMANS: But if you're trying to sell a condo in Miami to buy another condo in Miami, then you have got a problem.

MAYER: I think flipping condos is a time of the past.

(LAUGHTER)

VELSHI: You know, what Shawn was saying earlier was that -- and we have heard this, this week, that if you want an investment opportunity, financials are an opportunity. I've heard others saying real estate now becomes an investment opportunity, whether on individual level or investing in stocks in companies that invest in real estate.

Are we close enough to what you might think is a bottom?

MAYER: Unfortunately from an investor's perspective, I don't think so. Again, Shawn was talking about the P/E ratio of tech companies, real estate investment trusts that are trading in the public markets are often trading at similarly large premiums on a P/E basis.

So, you know, even with the declines in the stock market, the P/E ratio of REITs is still a good 30 percent or more above this S&P 500.

ROMANS: Let's talk about the value of my home. Let's talk about whether that has...

MAYER: Do you have an address for me?

(LAUGHTER)

ROMANS: Exactly. Actually I'm not a homeowner at the current moment, so I guess for me -- in a buyer's market that's good for me. But if I own a home and I'm trying to trade up, it can be a little tricky in a market like this.

MAYER: I think it is. I think the problem for trading up is that you really need to be confident that you're going to sell your house. And it's a bit of a catch-22. When houses are selling really quickly, people are quite confident to go put an offer on another house because they don't have to worry about selling their property. Today I think many sellers are starting to think, you know what, I might wait until I've actually sold my house before I start making an offer on another property. And that does lead to sort of a bit of a slowdown in transactions. And I think that's part of what we're seeing in the market today.

VELSHI: Is there anything abnormal about where we are in this house price trend? Or did we just enjoy so many years of unusual run- ups that this is normal, it's going to sort of get back to where it's supposed to be and then we'll see price increases again in a few years?

MAYER: I do think that there's an element to which what's going on in the housing market is a bit overblown. You know, if you go back to the 1980s, early 1990s, going around the country, we saw many markets where houses fell 20, 30, even 40 percent.

I did my dissertation looking at condominiums in Texas, among other things. Those things were being auctioned. They sold at discounts of 60 percent. Ninety percent of state-chartered banks in Texas failed.

So if we think back in history, people have been saying this is the worst decline since the Great Depression. A little bit of history says that that's just hyperbole.

ROMANS: All right. Thanks so much.

VELSHI: So not so bad. The sky is not falling.

MAYER: Yes.

ROMANS: Chris Mayer, thanks so much, Columbia Business School. Thank you, sir.

MAYER: Thank you for having me.

VELSHI: Well, coming up after the break, how to make the most of your paycheck week to week and how to make sure your money is safe and sound if the bottom does fall out of the markets.

(COMMERCIAL BREAK)

ROMANS: So Congress this week raised the minimum wage. It went into effect this week, $5.85 an hour now.

VELSHI: The first of three hikes. One is going to happen and then another one is going to happen a year later and then the year after that.

ROMANS: We did a little bit of math, and we found out if you're earning the federal minimum wage and you're working full-time in this country, we're still sorry. You used to make $10,712 a year, assuming you have one minimum wage job at full time. Now you're making about $12,000 a year. And by the time it goes into $7.25 an hour in 2009, it will be about $15,000. Now who does this affect? It affects about -- according to the Economic Policy Institute, what, about 800,000 people will get a federal minimum wage hike, that's because a lot of the states already have higher minimum wages.

VELSHI: Right, 30 states and the District of Columbia have a higher than the federal wage, so you get a better wage. But 20 states will be affected by this. It really is -- I did the math on this, $5.85, assuming you work one job, 40-hour work week, to just see how much you end up earning.

It's very, very tough. We used a lot of the averages people use to calculate how much you should pay for health care and food and things like that. I mean, using those averages, you'd have to pay $350 a month for rent, which in major metropolitan areas is not going to happen.

ROMANS: So this is a paycheck to paycheck lifestyle. And for many folks in this country, it's not about making the minimum wage, it's about living on that paycheck, whatever that paycheck it is, just to keep running your life.

VELSHI: Yes, and thankfully, so many people don't have to do it on a minimum wage but so many of us, because we don't save, do live paycheck to paycheck. Louis Barajas (ph) is an author, in addition to his work as a wealth and business planner, and he joins us now from Los Angeles.

Thanks for being with us.

: It's my pleasure to be here with you.

VELSHI: You have an interesting approach to helping people who can't save effectively, sort of get to their financial future or make sure they've got enough for retirement. And here's the interesting thing I've found. You don't think they should budget.

LOUIS BARAJAS, PERSONAL FINANCE EXPERT: No, I -- you know, the problem is that when you really focus on financial literacy or you buy any financial planning book, they are going to tell you, put 10 percent of what you earn for the future.

You just talked about the people who are earning minimum wage. There is no 10 percent to put away.

VELSHI: There is nothing in there. There is nothing there.

BARAJAS: Yes, there's nothing. And so what happens is that as -- I think in the financial planning industry or anybody who is helping people save for the future is you've got to get them to figure out that they've got to start investing in themselves, in more education, figuring out how to become more valuable, and earn a better wage, because at $15,000 a year, it's going to be just a misery.

It's going to be poverty for the rest of their lives. So when we talk about -- and if somebody's listening to another planner saying, save 10 percent for the future, stop drinking your lattes or doing this and whatever, what -- they don't have the money for that. So we have to figure out a different way to help people out.

ROMANS: Let's talk a little bit, Louis, about -- say you're talking to somebody who is making -- I mean, there are people who make $100,000 a year who are living paycheck to paycheck. There are people making $50,000 a year who are saving and there are people who are making $25,000 a year who somehow are putting their kids through college. So get -- for all of those people, how do they pay themselves and pay their future first?

BARAJAS: Right. Well, that's an interesting phenomenon, and something I've been doing for 20 years. I work with the really poor and I work with the really wealthy. And I will tell you, it's not about income.

There are people who are making a little bit of money and saving. There are people who make a ton of money, a couple hundred thousand dollars a year or more and are living paycheck to paycheck.

In fact, they come in my office and they say, Louis, I don't know what I'm doing. I can't survive off my income. And I go, how much money do you make? They are making $200,000 a year. It's never going to be about the income. It's going to be about how you focus on what kind of life you want and the future.

They need to set things, what I call, on automatic pilot. There are people who are living on $20,000 a year. I have got clients who earn $30,000 a year, husband and wife with three kids in Southern California, who have money and are putting money away in their 401(k)s, putting money away in their kids' education.

But you know what, they have decided that they have a certain lifestyle they can only live and they don't go above that lifestyle. And then what we do is we set things on all the automatic pilot. I have people take money from their checking account and it goes into a savings account, where it is automatically deducted from their payroll account into their 401(k).

And to be quite honest with you, after working with clients over 20 years, I think that's pretty much the only way people are really saving these days.

VELSHI: Interesting point, because -- and I'm exactly the same way. If something comes out of the paycheck before I get to touch it, there's a whole lot less likelihood that I'm going to spend it. And I'm also less likely to -- I don't love the expression, but pay myself first. It's just not going to happen. It's...

ROMANS: You don't love that expression?

VELSHI: I don't love it, because I don't really always know what it means. But I can -- I'm OK with making your deductions first, or something like that.

BARAJAS: You know, it always goes back to human nature. We have to follow human nature. Human nature is, if you have got a dollar in your hands, you're going to spend it. And the goal is that we need to put it away, we need to create what I call practical systems.

And, also, we also have to sit down and talk about what's important in our life. What is it that we want to achieve? And the problem is most people don't have an idea of how money works. And it's all based on time value of money.

The sooner you start, the more the money is going to really affect and leverage and get you to the level of prosperity. The longer you wait, the harder it is. My problem is that I have got people who are in their 20s who aren't saving. Well, I've got time to work with them on -- work on their mindset to have them change.

The situation goes, what if you're in your 50s and your 60s and you haven't saved a dime yet? That's when we have got to get really serious and we have got to -- sometimes I say, I have got to crack that whip to make sure that people understand what are the consequences that are coming up in their future?

ROMANS: Louis, one of the things that I really think is cool about your practice and what you've done is the way you've gone from the Bentley and yacht crowd, representing people with $2 million to invest, to working with people who have $25 a month that they can invest. Did you have to turn your entire kind of education and mindset upside down?

BARAJAS: Absolutely. What happened is, you know, I was a certified financial planner, had an MBA, was working with the really super wealthy, then come back to work with what I call the underserved market. And I started reading all the financial literature out there and it really wasn't helping the underserved market because what we have to do is we have to change their mindset about building wealth.

And sometimes it's about taking that $15,000 a year income earner and focusing on making them earn $30,000 or $40,000 a year or changing the way they look at things or what their focus is on.

Most people that are earning a little built of money are just focused on what I call the survival or struggle mode, the today mode. We have to get them to think about the long-term consequences of their life and have them start saving. So I really work on the mindset with the underserved.

The wealthier people, sometimes it depends. Again, we're such a materialistic society that everybody is spending every single dime. I've got to work on them as well.

VELSHI: That, in fact, is a perfect way to end this because we're going to actually be talking about that. Louis, thank you so much for being with us. It's great advice.

BARAJAS: My pleasure. Thank you very much.

VELSHI: I think the idea that if you're stuck in this low income trap, that if you can better yourself and get yourself to a higher level of income rather than hoping that that minimum wage is going to kick in next year, because it really -- these numbers are appalling.

ROMANS: And fascinating paycheck to paycheck spans the income...

VELSHI: The range, yes.

ROMANS: Range as well. All right. Great.

Now coming up on YOUR MONEY, steps you should be taking right now to disaster-proof your portfolio.

And why you should be worried, Ali, about the clothes you wear to the office.

(COMMERCIAL BREAK)

WHITFIELD: Hello, I'm Fredricka Whitfield. "Now in the News," Vice President Dick Cheney checking out of a Washington hospital just a short time ago with a new defibrillator implanted in his chest. Cheney underwent surgery this morning to replace his heart monitor. He has a history of heart problems, including four heart attacks and a quadruple bypass.

Federal investigators trying to determine why two TV news helicopters collided over Phoenix. All four on board, one pilot and one photographer on each, were killed. They were covering a high speed police chase on live television when the accident happened.

Cautious optimism from the number two U.S. commander in Iraq, Lieutenant General Raymond Odierno tells CNN a deliberate troop drawdown could begin in the spring if positive security trends in Iraq continue over the next year.

One of the co-defendants in the Michael Vick dogfighting case is apparently seeking a plea deal. Tony Taylor is due in a Virginia court on Monday morning. He and two others appeared in court with Vick Thursday pleading not guilty to federal dogfighting charges.

Coming up at the top of the hour, the case against a suspected child rapist dismissed because the courts couldn't find a translator. We'll talk to our legal experts.

Now back to YOUR MONEY.

ROMANS: Welcome back to YOUR MONEY, the show that tells you the news of the week and how it impacts your wallet, what it means for your money.

VELSHI: Well, you know, despite this week, the markets have done well lately. The Dow broke 14,000, I guess about a week ago. And as a result, a lot of folks have made a lot of money.

ROMANS: But you know the saying, what goes up must come down. And you need to take action to protect your money in case it keeps going down, I guess.

VELSHI: Yes. And it's a good thing to know how to do. Jack Otter, from Best Life magazine, a good friend of our show, is here with six steps to disaster-proof your portfolio.

Good article. Is that a little extreme, disaster-proofing your portfolio? There is no disaster going on.

JACK OTTER, DEPUTY EDITOR, BEST LIFE: Well, but it caught people's attention. Now they're watching the television very carefully.

VELSHI: Because when you see several hundred-point drops in the Dow in a week, it feels to some people like disaster.

OTTER: And when I assigned this story three months ago, I knew that the fourth week in July was going to be a disaster in the market.

ROMANS: Wow. Well, let's talk about invest in reliable U.S. companies, that's number one disaster-proofing tip.

OTTER: Absolutely. For seven years now, small cap stocks have been crushing their bigger brethren. And we've all been saying this has got to change. Well, it has finally changed. The Dow is up about 8 percent on the year, but small stocks have barely broken even.

And we think this is the beginning of a pretty substantial trend where large cap stocks, the great big GEs and IBMs of the world, are going to do a bit better than the tiny companies.

But one key point here is that people ought to realize they take a big loss in the stock market, it sounds like a big loss, 300 points. What it does is it takes us back to last month. It's not that big a deal. What they want to do is make sure that they do a gut check and if we have a really bad week, month, year, they're able to sit tight and not sell.

And if they think, you know what, I'm going to sell if it falls 10 percent then, this is when they really need to take those steps so that they can get themselves to the point where they know they can sleep at night and they won't do something rash and panic.

ROMANS: That's a good idea.

VELSHI: Now folks can sleep at night typically when they have cash. And Shawn Tully was saying earlier that bonds have become a good investment. Your -- one of your tips is to have some cash on hand.

OTTER: Absolutely, for two reasons. One, cash is yielding 5 percent. Money markets look pretty attractive right now. But more importantly, it's dry powder. So instead, oh my gosh, my nest egg is plummeting, you think of yourself as a buyer. And the more stocks that go down, the more you see opportunity.

ROMANS: Also you say if you don't have foreign exposure, you should now.

OTTER: Very important. Foreign stocks have been doing better than U.S. stocks. And normally I wouldn't say, go chase winners. But most Americans are underinvested abroad. So really about 20 percent of your portfolio really should be invested abroad and now is as good a time as any to start trickling in.

ROMANS: In some of those big companies you're talking about, the big reliable U.S. companies, a lot of their earnings are coming from overseas earnings as well, so that's telling us something about the climate, I guess.

OTTER: The bulk of Coca-Cola's earnings, for example, come from overseas.

VELSHI: The absolute favorite tip of mine, this is a personal favorite, is the ability for the average investor to actually hedge, like only the biggest investors could years ago. You can now buy a mutual fund that actually mitigates your risk.

OTTER: Absolutely. And these are the strategies. Everyone has heard about these hedge funds, these billionaires and so forth. It's generally the same thing that they're doing. The difference is, retail investors don't have to pay those huge fees.

So what the mutual fund does is it has hold stock, like any normal mutual fund, but then they find stocks that they don't like, that they think deserve a pounding, and they sell those short. In other words, they bet that they're going to go down.

So when the market does go down, they tend to be right on those. And that way, even if their long positions fall a little bit, they're hedged and you don't lose as much money.

VELSHI: So you're making money coming and going in some ways. There -- some of them are called market-neutral.

OTTER: Exactly. And if you're really good at it, what happens is the bad stocks do fall, you make money on that. The good stocks go up, you make money at that. And some of these funds have done really well.

ROMANS: Let's talk about Treasury inflation-protected securities. TIPS they're called. You think that there is a place in the portfolio for these.

OTTER: Absolutely. These are interesting bonds. What they do is they give you two different returns. One is the interest on the bond, like a normal bond. But also they add to your principal every year by the amount that inflation has gone up. So these are great in the market right now because one of the biggest fears out there is inflation.

So if inflation really should spike, that probably would pound stocks, and you'll be sitting pretty with your TIPS.

ROMANS: How do you buy one of these? I mean, I just walk into the Fed and say, I want to buy a TIP, please?

OTTER: Exactly. Use your press pass. ROMANS: Yes, exactly.

OTTER: Two ways, one, you can do it online through the federal government. The other way is they are actual mutual funds that invest in TIPS. Vanguard has one, for example.

VELSHI: And finally, we have sort of hedged on this a few times during this show. What about real estate? This is apparently the cause of all the ills right now. How should you take advantage of this? If there is really somewhere coming to a bottom of a real estate market, how do you take advantage of that?

OTTER: Sure. I wouldn't certainly call a bottom in the real estate market right now. And people don't sell their house in a panic. So it takes a long time for the bubble in real estate to ease, to let air out.

However, most people should have some exposure, especially if you don't own property. And REITs are a good way to go. Now REITs have been on a tear in recent years. So again, I wouldn't throw all my savings in there, but trickle in over the next year.

Yields are probably going to go up as their prices go down. So it will be a nice income generator and it's a great diversifier. There are now international REITs. While again, I wouldn't start speculating...

VELSHI: You can invest in property elsewhere.

OTTER: Abroad, yes. I wouldn't speculate on property in Vietnam, but if you have got a smart fund manager who has got 5 percent of his portfolio in Vietnam, it could be interesting over the long term.

VELSHI: When you talk about REITs, these are real estate investment trusts, they invest in properties and you invest in these companies that invest in the properties. There are commercial ones. There are residential ones. What do you recommend?

OTTER: Exactly. Well, right now commercial real estate looks a little better. I mean, the residential housing market, we all know the story there. Commercial investors understand how real estate investing really works, which is you don't invest because you want it to go up. You invest for the income that your tenants pay you.

That's really why people invest in real estate. Commercial landlords understand this. And therefore, I really don't expect that we're going to see quite the pain in the commercial market that we've seen in the residential market.

ROMANS: All right. Jack, we have got to leave it there. Jack Otter, Best Life magazine. Thank you so much for joining us. Thank you for all the tips.

VELSHI: Great tips to disaster-proof your portfolio. Straight ahead on YOUR MONEY, why women are not taking over the top spots in corporate America, and the reason you should really think twice about your choices before getting dressed in the morning.

(COMMERCIAL BREAK)

ROMANS: A little common sense here. There are 500 CEOs in the Fortune 500 companies, so how is it that there are only 13 women in that elite group of 500?

VELSHI: The problem apparently is about perception. Cynthia Good is the founding editor of Pink magazine.

Welcome to the show, Cynthia. What's the perception problem?

CYNTHIA GOOD, FOUNDING EDITOR, PINK: Well, I mean, I think that, you know, corporate America was created by men and they're comfortable with that leadership style. So it has been really difficult for women to break through, especially at the highest levels of business, which you're talking about now.

ROMANS: We talk about the best companies for women to work for or the best women-friendly companies. And a lot of times it means how many lactation rooms they have. And it's not exactly that. It's something else entirely, isn't it?

GOOD: You're absolutely right. And in fact, Christine, we're just releasing our issue naming the best companies for women in business. And we really didn't look at those soft issues. We looked at things like, how many women are among the top five earners in the company, in the top 20 percent of earners at the company; how many women report directly to the CEO; how many women handle operating budgets in excess of $100 million.

So it's looking at those hard-core issues. And the women that really have the power and authority to influence decisions.

ROMANS: Do those women have to be more like men to hold those positions today in corporate America?

GOOD: Unfortunately, I think still today at the highest levels of the top 500 companies in the land, the women who get to that level oftentimes are one of the boys. I mean, you really have to do that to some degree. And that's frustrating because ultimately women can only be successful -- any of us can only be successful if we're really true to ourselves and being authentic as leaders in business.

VELSHI: Cynthia, here's something else that I was reading last week, and that is a study that indicated the less -- the fewer women there are in senior leadership in a company, sort of the worse it is for the prospects of women across that company in terms of promotion.

GOOD: Well, certainly, because I think it says a lot about the culture. If you have more women in the higher ranks, it's obvious to the other women that it is possible, and their value system I think is valued and their skill set is something that is valued if more women are being promoted.

I think the culture fit is the big issue there. We're seeing so many women leaving corporate America, starting their own companies, two-and-half times as fast as the general population. And that's one of the reasons why.

ROMANS: But there's this middle level of all these women who are graduating with MBAs and graduating from business school and engineers. And there's a bubble, if you will, that maybe is that going to start moving up the ranks and it's just a matter of time?

GOOD: Absolutely, without a doubt. And that's great news for us. There are more than 21 million women today in professional and managerial positions. But you have to remember, it has taken three decades to double the number and to get that many women into those positions. But certainly they're going to rise up through the ranks. And that's the positive part of all of this.

VELSHI: All right. So what does somebody who is watching this, who is perhaps not in line to be the CEO of a Fortune 500 company, but wants to move up the ladder in a company? Is there anything anybody can do about this or do we just have to hope as a society this continues to change? Because frankly I think this discussion has been going on for a long time.

GOOD: It really has.

VELSHI: And what can a woman who is watching this do?

GOOD: You're right. I mean, it's the 21st Century. Certainly we've got to see an approach toward equity here. And there are some really specific things. I think three things that women can do very easily. One thing is to be an advocate for yourself and ask for a raise.

We hold conferences every fall across the country and we poll 2,700 very ambitious women in six cities. Nearly half had not asked for a raise in a full year. Now, Ali, of those who did ask for a raise, 72 percent got the raise. So the women who are taking initiative and asking for what they want are more likely to get it.

So number one, ask for a raise. Number two, tout your own accomplishments. Men are so good at that. We need to get better about that ourselves. And number three, network. Not just with each other but also with the boss, because once the boss feels more comfortable with you, your leadership style and as a person, he's more likely to give you the promotion.

ROMANS: All right. Cynthia Good, Pink. Thank you so much, Cynthia.

GOOD: My pleasure.

VELSHI: I can't believe that, 72 percent of the women who ask for a raise got the raise.

ROMANS: And we have heard this so many times. Three or four different guests we have had have said women need to step up, ask their boss for a raise, and that will help maybe narrow the wage gap as well.

VELSHI: Do it, take a shot of Christine on the camera.

ROMANS: OK. Coming up next on YOUR MONEY...

VELSHI: Ask for the raise.

(LAUGHTER)

ROMANS: Can I have a raise? I need a raise. Thanks, Ali.

OK. Why what you have wear could determine how big your paycheck is.

(COMMERCIAL BREAK)

VELSHI: I think I'm well-dressed. Do you think I'm well- dressed? Wait, hold on, don't say anything.

Christine and I have been friends for a long time and she has never had to say anything that would upset me and she's from the Midwest, so she's not likely to. There is a new study out there and it means that I should be getting promoted faster than someone perhaps who doesn't focus as much on their dressing as I do.

VELSHI: That's right. There actually might be something to that old saying, dress for success. Marc Cenedella is CEO of theladders.com and he is going to tell us how dressing in the office matters, it matters for your career, it matters for the perception of you. And it matters right down to a promotion, I bet.

VELSHI: And that you would know, because theladders.com is like a job site for people who want to make a lot of money.

MARC CENEDELLA, CEO, THELADDER.COM: We are the largest job site for jobs that pay $100,000 a year or more. And we interviewed 2,000 of our subscribers and asked them about the impact of dress on promotion and your perception of the office.

ROMANS: And it's big, isn't it?

CENEDELLA: It's pretty big. Seventy percent of respondents said that how you dress really has an impact on your chances for success in promotions and in getting your projects through at work.

VELSHI: Positive impact?

CENEDELLA: A positive impact. But it can go the other way.

VELSHI: As in?

CENEDELLA: So if folks are showing up in inappropriate clothing, your Strawberry Shortcake tank top and your flip-flops, that really doesn't send the message to people that you're serious and you're ready to come to work. So sending the proper image to people relative to your position is really awfully important for getting ahead at your job and in your career.

ROMANS: It's so subjective because people who dress horribly might look at themselves on the mirror on the way out the door and say, hey, I look terrific and they don't.

VELSHI: Or, I'm really smart.

ROMANS: Right, exactly. But let's look at the five clothing no- nos. OK. If you do this, folks, Marc is here to tell you, you don't ever do this at work.

VELSHI: You mentioned the first one, flip-flops.

CENEDELLA: Flip-flops are right out in 2007 here. Concert T- shirts, keep your Grateful Dead '77 T-shirt in the closet or for the weekend. Caribbean tourist clothing, wearing your Tommy Bahama silk shirt at the office might keep you nice and cool and give you a very relaxed attitude, not the way to get ahead.

ROMANS: No brown shoes with a black belt.

CENEDELLA: Actually that took me a few years to learn.

(LAUGHTER)

CENEDELLA: I mean, I didn't pick that one up for a while. So that's kind of -- that was number five on the list. That's advanced degree in clothing.

VELSHI: It's interesting, because you know, there's some sense of dressing for the job you want, not necessarily looking over- sophisticated or overdressing, but that's a basic. Pants have got -- shoes have got to match the belt.

CENEDELLA: That's true. And it is important that you have your dress match how -- your level at the office. When we asked our executives at theladders.com, they said that if you're dressed formally, you're in formal business attire, you're more likely to be taken seriously and seen as more senior level, but you're also likely to be viewed as more rigid and maybe a little bit less creative.

ROMANS: Right. That's why you ever should leave the ascot at home. That was also...

(CROSSTALK)

VELSHI: I think that was designed for me.

ROMANS: Right. Well, look...

VELSHI: Do I look rigid and unfriendly or...

ROMANS: No, I think you look fantastic. VELSHI: All right. Thank you.

ROMANS: But I do want to...

CENEDELLA: The three-piece suit is going to come back any day now.

ROMANS: Any day now or maybe by 2015. Let's take a look at some examples we brought for you, Marc. Because we want you just to tell us, do you think that some of these examples are maybe someone who is trying to -- well, I don't know, you tell me. I mean, you can see right there.

The vest with the multiple -- hmm, which one is that, Ali?

VELSHI: There are a bunch of checks going on in the shirt.

ROMANS: There's another one. There's another one.

CENEDELLA: I think the vest was perfect for a windmill farm.

(LAUGHTER)

ROMANS: Appropriate, of course. A couple of weeks ago we had the checks...

(CROSSTALK)

VELSHI: That's the auto show, that's my auto show tie.

ROMANS: The checks, the polka dots and the stripes all in one day. That was -- that's what I thought was...

(CROSSTALK)

VELSHI: There you go.

ROMANS: There it is. Now, I'm not asking you to really pass judgment on Ali.

CENEDELLA: I'm predicting imminent promotion.

VELSHI: Marc Cenedella, thank you for the good advice. We'll take some of it.

ROMANS: All right. So wearing the right clothes can you get more promoted, you get promoted, you get more money. You make more money, you get to spend more money. You get the idea.

VELSHI: I get the idea. Have you ever heard of the Burj Al Arab, that fancy hotel in Dubai?

ROMANS: It's the real tall one...

(CROSSTALK)

VELSHI: ... it looks like a sail.

ROMANS: Yes.

VELSHI: Right. That's apparently a seven-star hotel. It's said to be one of the finest hotels in the world. I spoke with the CEO of Jumeirah, who is the -- that's the company that owns the hotel. And I wanted to know how he built this successful brand.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Jumeirah is very different. So we're saying that each of our hotels is different. Celebrate that, embrace that difference, because it's nice to know that you can stay in different places. You will always have very high Jumeirah standards for wherever you stay in. That's the guarantee that we would give.

And then we're really committed to being five-star deluxe, that is very much at the top end of the market in terms of our luxury and of our product.

VELSHI: Or in the case of the Burj, seven star.

UNIDENTIFIED MALE: Well, the case of the Burj, we actually never called it seven star. The market called it that, which is a much better endorsement, I think, of what we are as a hotel. And the Burj Al Arab, well, we have said it is the most luxurious hotel in the world. And we stand by that.

VELSHI: You've got a beautiful property here in New York, the venerable old Essex House on Central Park South. Tell me a little bit about that hotel, how you came to acquire it and what you're doing with it.

UNIDENTIFIED MALE: Well, I mean, it was a great moment, very proud moment for Jumeirah to actually put its name over the canopy and have it called Jumeirah Essex House in January of 2006. What a location and what a great atmosphere in the hotel. So we really felt that Jumeirah could do something special with the Essex House.

VELSHI: What's the service offering that Jumeirah promises?

UNIDENTIFIED MALE: To really offer luxury, you have to offer the efficient service. You've got to be in touch with your guests. You've got to understand what they want.

VELSHI: Yes. The hotels are grand and they're beautiful. But it's the interactions that are really going to put the customer's experience over the top.

UNIDENTIFIED MALE: We have what we call our Jumeirah hallmarks, and they are three very basic points that we get across to all of our employees. The first hallmark is that I will always greet the guest before the guest greets me. And to me that is so important.

And our second hallmark is that as the first response to a guest request, we will never say no. So we try to really force our people to say, look, even if you think no is the right answer, you have got to think of a way out, you've got to think of a compromise, something that is not saying no.

And finally, we say we treat each other with respect and with integrity, which is really important as well if we're going to get our employees through the first two hallmarks.

So they're the hallmarks of Jumeirah.

VELSHI: So if I'm staying at a Jumeirah hotel and I go to the front and say, I want a bigger room.

UNIDENTIFIED MALE: Yes.

VELSHI: Somebody is not going to no?

UNIDENTIFIED MALE: I just answered yes.

(LAUGHTER)

(END VIDEOTAPE)

VELSHI: Well, good luck. If you win the lottery, that will be a fun hotel to stay in.

ROMANS: All right. Up next, how hot dogs are big business for one former teacher.

(COMMERCIAL BREAK)

ROMANS: Americans consume 20 billion hot dogs a year. That's if you listen to the National Hot Dog and Sausage Council, which I do.

VELSHI: The what?

ROMANS: Periodically, I look at the...

(CROSSTALK)

VELSHI: The National what?

ROMANS: ... National Hot Dog and Sausage Council. That's their statistic.

VELSHI: There's no such thing.

ROMANS: There is.

VELSHI: I mean, I've always heard of a statistic that we eat a lot of hot dogs. I eat a lot of hot dogs. I would love to go to that convention.

ROMANS: The National Hot Dog and Sausage Council.

VELSHI: Yes. They're not biased at all.

Well, whatever the number is, it's good news for one former educator who is cashing in on his hot dog business.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): Mark Reitman holds court over this hot dog cart in Racine, Wisconsin. Instructing students is nothing new for Reitman, who was a teacher and counselor in Illinois and Wisconsin for 35 years before retiring in 2005.

And running a successful hot dog cart is old hat, too. He has had his own since 2003. So last year Reitman decided he should share his eatery expertise with others and he opened Hot Dog University, a $300 two-day course where would-be vendors learn the art of the cart.

MARK REITMAN, FOUNDER, HOT DOG UNIVERSITY: I've always romanticized with the idea of owning my own business, particularly the hot dog business. I grew up in the area where the hot dogs came from, which is the West Side of Chicago.

It was just like the next step of my life to be able to combine education and training and sales and my love of food all into one thing.

VELSHI: On day one at Hot Dog U., Reitman gives lessons in marketing, licensing and all the details on what makes a lucrative hot dog cart, like keeping the perfect pickle in stock, and using fresh poppy seed buns.

REITMAN: That's the trick to this business.

VELSHI: And Reitman takes his students behind the cart on day two for some on the job training.

UNIDENTIFIED FEMALE: That's my first hot dog.

VELSHI: So far Reitman's business school for hot dog enthusiasts has produced 24 graduates.

REITMAN: I'm like an expectant father. Every time one of my students goes out and opens up a cart after they've taken the training. It's just very, very gratifying.

(END VIDEOTAPE)

ROMANS: Hot dog.

VELSHI: I am a sucker for a hot dog. Walk down a street in New York and there's a hot dog cart -- I mean, I really a sucker for it. It's a...

ROMANS: New York water dog. I could go for it every time.

VELSHI: It is a trend. Another trend that we've talked about a lot on this show, and I think it's going to be a big deal this year generally, is this whole going green, what you can do to go green and carbon offsets, doing things to offset your carbon footprint, the energy you burn. ROMANS: It's getting pretty mainstream. I mean, you see big companies trying to find out ways that they can appeal to the consumer who wants to be a little more green. And Ali pointed out this credit card.

VELSHI: They don't get a lot bigger than General Electric. GE Money has come out with this Earth Rewards Card.

ROMANS: So instead of, like, getting airline miles, you are actually, I guess, in theory, giving back.

VELSHI: You know, interesting, I mean, the carbon offset is very hard to calculate. If you go on one of the Web sites to figure out what your carbon offset is, it's very loosey-goosey, it's hard to know but it's becoming mainstream.

ROMANS: All right. So not an endorsement, just letting you know.

VELSHI: Just letting you know it's out there.

ROMANS: OK.

VELSHI: I still like my airline miles.

ROMANS: Me too.

VELSHI: Thank you for joining us for this edition of YOUR MONEY. You can catch Christine later today at 6:00 p.m. Eastern on "LOU DOBBS THIS WEEK."

ROMANS: And you can see what Ali is wearing every weekday morning on "AMERICAN MORNING." We'll see you back here next week.

VELSHI: Saturday at 1:00 and Sunday at 3:00. See you then, have a great week.

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