In the spring of the every year, people are graduating from post secondary institutions with dreams of landing their first job in the workplace and hopefully have a long association with work. Many years ago, having very few employers was a good thing and people tended to stay within a company although their jobs likely changed every 2 to 5 years. If you were not changing jobs in an effort to move up, your career was likely to stagnate. Whether that was good or bad, was an individual choice. Now days, if you have not worked for a variety of companies, there might be something amiss, till you find the correct one. One of the prime jobs has been a consultant with the large consultant companies McKinsey, Bain, Monitor, LEK, AT Kearney and Oliver Wyman. How do you pass the interview and work for the company and then for its clients directly?

One method is to understand how the interview process works and how to succeed at it. Recently read a book called Case Interview Secrets written by Victor Cheng published by Innovation Press, Seattle, 2012. You can also view http://www.caseinterview.com.

When you are evaluating a company to buy or not, there are processes to go through and they do not change. Profits = revenues – costs does not change no matter the size of the company. Sometimes asset values increase and that can make up for revenues not being higher than costs, but that is rare. For example, a business maybe in an area that went into decline and now 20 years later the real estate is worth more because of a decision by a government agency to build a convention center type building, but that was likely 10 years of hope to make a profit.

In Mr. Cheng’s book, various decision trees are made available and how to make assumptions. If you listen to Aswath Damodaran on stock valuation, what assumptions you make are the key to the answer. The important aspect is defending your assumption, what is the growth rate and why? what the comparable and why? Since we do not know what will happen, what your assumptions are will be a key to projection in the future.

What you can do is breakdown how the company makes money? what is the competition? and can the company raise prices?

In Mr. Cheng’s book starting off with a hypothesis and having the ability to make changes or recognize changes in the hypothesis is a key. In the corporate world, asset allocation is important, does the company spend money on A or B or C? what growth rate is best? what growth needs to be achieved? can the company do a better job than the competition? should we buy the competition? is it better to do it internally? There are always multiple questions that can lead to a decision or deciding not to do something. Only in hindsight do you know the true answer, based on what has happened in the marketplace however decisions need to be made.

Linking to dividend paying stocks, there are many people who analyze stocks and the wonderful thing is people come to different conclusions. The market says who is correct. For the average person, it is best to start with and try to stay with profitable companies than can pay a dividend. The reason is overtime the market will value profitable companies with higher multiples or you will be worth more, in addition you will be paid a dividend along the way. Which industry you should start with generally depends on your source of income for it that industry you can easily watch the players. As your wealth increases, you can easily diversify.

There are more questions than answers, till the next time – to raising questions.