Analyzing the top news stories across the web

Aug. 13 2014 7:38 AM

How Levi’s Standardized “Business Casual”

This story originally appeared in Business Insider.

If you’re wearing khakis or jeans instead of a suit in an office right now, you have clothing giant Levi Strauss & Co. to thank for that.

Before it promoted its jeans and Dockers brand khakis in a casual dress code guide in 1992, “the idea of casual wear existed but was not necessarily defined and focused in such a way a consumer could understand,” Dockers chief marketing officer Adrienne Lofton tells Business Insider.

The idea of ditching a suit for more comfortable clothes can be traced back to Hewlett-Packard’s “casual Fridays,” which were introduced in the 1950s, Metroactive reports in an October 2000 article. Levi’s also credits the Hawaiian Fashion Guild for promoting a relaxed dress code with the 1966 “Aloha Fridays” campaign that got people around the state to celebrate their culture by wearing Hawaiian shirts to work.

Then in the early 1990s, when the American apparel industry was doing poorly, Levi’s noticed a huge opportunity. Casual work attire had spread far beyond Silicon Valley and Hawaii on the growing assumption that a relaxed dress code would lead to happier and more productive employees. But, whether companies allowed employees to ditch a suit just on Friday or every day, many workers interpreted “casual” as a chance to get sloppy and inappropriate. Levi’s executives got to work on a solution.

“We did not create casual business wear. What we did was identify a trend and see a business opportunity,” Daniel M. Chew, Levi’s former consumer marketing director for North America, tells Bloomberg Businessweek in a March 1996 article.

So in 1992, Levi’s marketing team crafted “A Guide to Casual Businesswear,” a pamphlet that showed professionals smartly dressed in Levi’s products, notably its Dockers khakis, a young brand that had been mostly confined to the golf course. The company sent the pamphlet to 25,000 human resources departments across the country.


Courtesy of Levi Strauss & Co. via

We found the full pamphlet on Marketplace’s site, and have included scans of its pages below. Here’s the page of text included in the guide:

Whether dressing casually every day or for a special event, determine what is acceptable for different business situations. Although each company develops its own dress guidelines, many companies with existing casual policies find general agreement on the following tips for wearing casual businesswear:
• Casual does not mean sloppy. You can dress casually and look professional.
• Keep wrinkled, stained or dirty clothing out of the workplace.
• Avoid ripped jeans and “distressed” clothes.
• Sleeveless shirts and tank tops are inappropriate for most offices; cover bare shoulders with a blazer or cardigan if necessary.
• Leave flashy, “loud” clothing (including T-shirts with printed messages) at home.
• Avoid lingerie looks or too revealing outfits in the office. Be sure to check that garments are not too transparent.
• Accessories can make or break a casual outfit; consider the style and tone of the outfit when choosing belts, scarves, ties and jewelry.
• Save athletic clothing, workout wear, beachwear and sweats for after work.
• Don’t forget to check footwear; open-toe sandals and sneakers may not be appropriate. Bare legs can also be considered too casual.

HR reps would hand out the guide to employees, and Levi’s would have a hotline available for advice on how to adjust to a company’s relaxed dress code.


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via

The campaign, which Businessweek notes markets clothes without blatant logos or product names, became a tremendous success. After the guide, Levi’s got to work consulting with thousands of companies like IBM and Aetna.

Companies even came to them for help. In the summer of ’95, Charles Schwab & Co.’s leadership became distressed over the fact that its employees were abusing its new casual dress code policy, showing up to work in “everything from sweat suits to torn jeans,” Businessweek reports. After learning about Levi’s campaign, Charles Schwab & Co. distributed Levi’s dress code guide to employees and had showings of an instructional video that the clothing company had produced.


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via

In 1995, 90 percent of companies surveyed by Evans Research had either a full-time or part-time casual dress code, up from around 66 percent in 1992, Levi’s states. And in 1995, Levi’s had record sales of $6.2 billion, up 10 percent from the previous year, reports Businessweek, and today Dockers is the No. 1 brand of khaki pants.


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via


Courtesy of Levi Strauss & Co. via

It’s sufficient to say that the flood of guides, videos, seminars, and hotline advice had a real impact. Levi’s figured out a way to define a dress code, turning an entire country of professionals into its consumers.

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Aug. 11 2014 1:04 PM

Rich Kinder Made $1.5 Billion Just by Rearranging His Companies

This story originally appeared in Business Insider.

Billionaire energy tycoon Rich Kinder, the CEO/co-founder of the pipeline giant Kinder Morgan, made $1.5 billion on Monday morning, Bloomberg News reported.

Kinder Morgan announced a $70 billion megadeal that would streamline all of its publicly traded entities into one company.

The stocks—Kinder Morgan, Kinder Morgan Energy Partners, El Paso Pipeline Partners, and Kinder Morgan Management—are all higher on the news. The general view is that investors like the streamlined corporate structure and that the company will now have a lower cost of capital.

Kinder is the largest shareholder of Kinder Morgan. He owns 243.1 million shares, or about a 24 percent stake, according to data from Bloomberg News.

Following the deal’s announcement, Kinder Morgan’s stock was up $6.23 at the opening bell, Bloomberg News reported. That means Kinder made an additional $1.5 billion on his stake. 

Kinder accepts a $1 per year base salary. The 69-year-old Texan already has an estimated net worth of $10.1 billion, according to Forbes.

Adding $1.5 billion to your net worth is not a bad way to start a Monday. 

Aug. 8 2014 4:53 PM

Who Else, Besides Americans, Are Flying Fighter Jets in Iraq?

This article originally appeared in Business Insider.

U.S. airstrikes on Islamic State positions have begun. Fighter jets also bombed Islamic State militants in northwest Iraq on Thursday night. But it's not clear who the pilots were.

The Pentagon immediately denied a New York Times report that the U.S. carried out Thursday's strikes. Iraqi military officials told CNN and the Wall Street Journal that the Iraqi Air Force had struck ISIS targets near Erbil, which is the regional capital of Iraqi Kurdistan and host to hundreds of U.S. military advisers.

The Iraqi Air Force is poorly equipped, consisting of several Cessna planes carrying American-supplied Hellfire missiles, some American- and Russian-supplied helicopters, and Russian-made Su-25 aircraft. 

Last month a Pentagon official told the Hill that the U.S. believed Iranian pilots were in the air in Iraq while denying that Russian personnel were operating in the area. But diplomatic sources told the Daily Beast that "Russian pilots will fly the planes due to a lack of Iraqi pilots with the proper training."

(Fittingly, geopolitical expert Ian Bremmer of the Eurasia group told Bloomberg TV this morning that the U.S. was "fighting shoulder-to-shoulder, as it were, with the Russians and the Iranians.")

Garrett Khoury, the director of research at The Eastern Project, explained that the Iraqi Air Force "recently acquired around a dozen SU-25 ground attack aircraft from Russia (with more possibly coming from Belarus) ... [which] give them the ability to conduct serious ground-support operations.

Thursday's attack came two days after Iraqi jets struck an ISIS convoy near the northern city of Mosul.

"[The Su-25s] are Russian jets bearing Iraqi insignia, but possibly piloted by Russians," Khoury continued. "Iraq did use the SU-25 during the Saddam Hussein era, and there are probably former Iraqi pilots who flew them, but it has been at best 12 years since any Iraqi pilot got any significant flying time with the plane."

So who bombed ISIS on Thursday night?

The most probable answer is Iraqi Su-25s, manned by Russian or Iranians—or maybe Iraqis. 

"The Iraqi government was just as quick to take credit for the strikes as other governments were to deny their involvement, and so, combined with the fact that the IAF can launch such operations, it actually looks like they managed to do it on their own," Khoury told BI.

In any case, Iraq's skies are crowded. A former high-ranking CIA official in Baghdad told Jeff Stein of Newsweek that Turkish jets carried out the airstrikes. “There’s no question about it,” he said, adding that "certainly we are giving them targeting data.” 

Stein notes that Turkish F-16s were reportedly patrolling the skies over the area near Sinjar in northern Iraq, where about 50,000 Yezidis are starving after fleeing ISIS militants. 

"Iran has used its own Air Force to attack ISIS since the beginning of the group's offensive, but mostly to keep them away from the Iranian border," Khoury said. "Syria has likewise conducted air strikes on ISIS targets on the Iraqi side of their shared border." 

Even U.S. President Barack Obama, while announcing the authorization of airstrikes and humanitarian aid in Iraq, allowed for ambiguity about Thursday night's strike. In any case, ISIS is now getting hit from the sky to push it back from Iraqi Kurdistan. Iraqi Air Force Commander Lt. General Anwar Amin told WSJ that Iraqi forces and American advisers were coordinating in joint command centers in Baghdad and Erbil as the Kurds continue to fight on the ground.

Aug. 8 2014 1:13 PM

A Google Street View Car Accident

This article originally appeared in Business Insider.

A Google Street View car hit another vehicle in Little Rock, Arkansas, earlier this week after driving in the wrong direction on a one-way street, the Smoking Gun reports.  

Alexander Spurr, 28, the driver of the Google car, realized he had turned onto a one-way street, started to turn around, and hit the second vehicle in the side, spinning it around, according to the accident report

The driver of the second car, 22-year-old Dylan Case, told police he had a green-light and that Spurr must have run a red-light.

In the accident report, police note Spurr's "careless prohibited driving." 

Case later visited the hospital for a cat scan and X-rays, and told Smoking Gun that he had bruised ribs and whiplash. He said he expects to miss upwards of three weeks of work.  

"Something better come out of Google's pocket for this," Case told Arkansas Online.

Aug. 8 2014 11:47 AM

"I Was Scared to Death"

This article originally appeared in Business Insider.

After 30 years as an ear surgeon and a short-lived retirement, William Wright replied to an ad for a physician position at the Colorado State Penitentiary (CSP), the state's maximum security prison housing the most violent and dangerous adult male offenders. 

His eight-year experience as a general medicine doctor at CSP is now the basis of a book called Maximum Insecurity: A Doctor In The Supermax. Business Insider spoke with Wright recently about what the prison is like from a doctor's perspective. 

Wright sought the position at CSP because it was different from anything he'd done before, and he even thought it would be fun.

But that wasn't how he felt on his first day. “I was scared to death," he told Business Insider. "I had never been inside a prison, let alone worked in one.” 

Wright felt claustrophobic and particularly intimidated by one of his first patients, young death row inmate Nathan Dunlap. In 1993, a 19-year-old Dunlap murdered four employees and seriously injured a fifth at the Aurora, Colorado Chuck E. Cheese where he formerly worked, before stealing cash and game tokens.

"He kind of smiled at me and he said, 'You’re scared of me, aren't you, Doc,'" Wright recalled of the moment he began his checkup. "I said, 'Well, you know, I'm just here doing an exam.' And he said, 'I be the baddest guy you’ve ever seen.' And he was.”

Gradually, Wright became more familiar with his surroundings and the characteristics of his patients. They were always escorted into his office shackled by their arms and feet, with at least two guards no more than five feet away. Some inmates tried to bribe Wright by offering to get him expensive contraband, like a Rolex watch, in exchange for helping them smuggle letters past censors or haul drugs.

Others pestered him with requests for things they didn't need, like painkillers, sleeping medications, and special shoes and diets. Such efforts were typically their only reason for being nice.

"Many of them are extremely charismatic. They're your best buddy. They'll just be so nice and helpful and respectful, until you say no," Wright said. "And then it's all over. They can turn on a dime and it's like flame comes out of their eyes."

The prisoners in CSP were "almost universally" sociopaths devoid of feeling empathy for anyone else, Wright said. “These guys aren’t ashamed of what they’ve done. They’re pissed that they got caught, but they don't really have much understanding about why they’re in prison, because to them they're just doing what they should be doing.”

Nonetheless, they were human just like anyone else when it came to the physical conditions Wright treated them for, ranging from warts to heart attacks. 

That was even the case for Marvin Gray, an inmate so massive that six guards accompanied him to Wright's office, rather than the usual two. Fastened with extra shackles, Gray was intimidating to the other hardened convicts at CSP. The 3o0-pound Gray was a serial killer, leader of a white supremacist gang at CSP, and had a reputation for multiple rapes against fellow inmates, according to the Denver Post.

But Wright treated him like any other patient. “We got along great ... He was a big guy and because of that he had bad knees," Wright said. "I would see him and inject steroids into his knees, and he’d feel better. It’s kind of like pulling a thorn out of a lion’s paw.” 

In order to perform his duties as best he could, Wright remained professional toward the inmates, avoiding discussing anything beyond their medical conditions. "I think probably the thing that helps the most is I treat them with respect. It's always 'Mr. So-and-So' and I never give them any grief about anything," Wright said. "It's just strictly professional, and if I show them respect, they show respect back, and that works out pretty well.”

He also didn't seek to learn the crimes his patients had committed, although some voluntarily told him. "It's really none of my business in the first place, and I'm afraid that it would change my attitude toward them,” Wright said.

To maintain his safety, Wright remembered never to let the inmates come between him and the door or allow them to pick up something as a weapon. Only one inmate tried to attack him. “I was telling him something he didn't want to hear, and he was pissed off about it," Wright recalled. "He's sitting on the gurney shackled hand and foot and yet he took a dive at me and all I did was sort of step back and push him down. He didn't get very far and the correctional officers were on him like white on rice.”

Wright was able to find subtle humor in his surroundings. When he took one muscular, six-and-a-half-foot inmate off seizure medication because he didn't need it, the prisoner began faking epileptic fits whenever he visited the clinic. "It got to be kind of comical," Wright laughed. "I'd just step over him and tell him not to trip anybody." 

That prisoner claimed he wanted to become a preacher when he was released. "When he got out, darned if there weren’t a dozen people who picked him up at the bus stop, and they were all 'Kumbaya' down to Texas together to start a church," Wright recalled.

The inmates weren't the only source of humor. When he couldn't fit his legs underneath his desk because his chair was too tall, maintenance staff improvised by cutting a 2x4 piece of wood and placing the slabs under the desk legs. 

Wright details that humor in his book.

“I wanted to show them what it was really like to function inside a supermax prison," Wright said. "Nobody knows what happens behind the walls, and it's not like what you see on TV. I think think it's funny as hell the stuff that goes on there.”

Nowadays, Wright runs the infirmary at the Colorado Territorial Correctional Facility housing medium security inmates, but he says he's willing to return to CSP if the state needs him there.

Aug. 7 2014 11:11 AM

Why Alaska Is So Dangerous

This article originally appeared in Business Insider.

For many remote Alaskan communities only accessible by plane, the biggest danger isn't nature. Rather, it's the villagers themselves and the unavailability of any law enforcement to protect victims.

There are at least 75 Native American Alaskan villages that don't have any law enforcement, reports the Washington Post. Isolated by long distances and difficult terrain, those residents must report crimes and wait for Alaska State Troopers to arrive in the village after hours of traveling.

Alaska has one of the highest violent crime rates in the U.S., at 603.2 violent crimes per 100,000 compared to a national average of 386.9, according to the FBI's 2012 crime report. That includes nearly 80 rapes per 100,000 residents in 2012 compared to a national average of 26.9, more than any other state

“Unfortunately, there are places in rural Alaska that if a woman is raped or a child is beaten, that victim might not get any help whatsoever,” Associate Attorney General Tony West told The Washington Post. “It can take a day and a half before responders show up to the scene of a crime or to a call for help. Imagine if you were a victim of violence and you can’t get help because weather conditions don’t allow you to get out of your village. Where are you supposed to go? You have nowhere to go.”

Native Alaskans make up 61 percent of sexual assault victims in the state even though they make up just 15 percent of the population, the New York Times reported in 2012. Nobody knows for sure why Native American women are so vulnerable to rape. Some experts blame alcoholism and the breakdown of the Native American family.

The danger of crime facing Native Americans, especially women, in remote Alaska villages without law enforcement was demonstrated with last year's murder of 13-year-old Native Alaskan Mackenzie Howard in the community of Kake, as reported by the Washington Post.

Like similar communities, Kake struggles with drug and alcohol abuse and domestic violence. Only accessible by boat or plane, Kake suffers 80 percent unemployment, a declining fishing industry, and a dead logging industry. A one-man police department closed 35 years ago due to lack of funding.

Even in rural areas where there is a tiny police presence, quick and effective help isn't guaranteed. One 19-year-old Native Alaska woman who lived in a village of 800 called the police after a stranger broke into her home and raped her in the middle of the night, the New York Times reported in 2012. The police didn't answer, so she left a message. They never returned her call.

Aug. 5 2014 12:22 PM

Matteo Achilli, the "Italian Mark Zuckerberg"

This story originally appeared in Business Insider.

When the popular, reputable Italian financial magazine Panorama Economy placed then-20-year-old college student Matteo Achilli on its cover in March 2012 with the headline "Italian Zuckerberg," he became a media sensation. Soon every major Italian news outlet wanted to cover the kid who'd started a professional networking website called Egomnia. Their interest, along with that of national politicians and business executives, expressed the hope that this young entrepreneur could become Italy's version of an American hotshot tech CEO, one who could rub shoulders with the real Mark Zuckerberg. Outlets outside of Italy have caught on to the hype as well, including the BBC, which just included Achilli in its new documentary The Next Billionaires.

Achilli, whose site won't be available to an international market until October, already has a dramatic biopic scheduled to premiere on Italian television next year and has made deals with Microsoft and Google. All of this was over the beta version of Egomnia—its name a portmanteau of ego, "self," and omnia, "everything"—a site that arranges users' online resumes, much like LinkedIn does. It also assigns them a grade and directly connects them with potential employers. These companies can search for a specific kind of employee and find a ranked list of candidates.

The hype may have been inflated and premature, but Achilli is now in a position to leverage it. Achilli tells us over video chat from his office in Formello, which is just north of Rome, that when Egomnia launches internationally this fall, it will have an interface as good as major sites like Facebook and LinkedIn. He explains that even though he can't yet reveal specific details of his business arrangements with Google and Microsoft, both companies have invested in upcoming marketing for the company, and Microsoft will also be providing cloud-based services for Egomnia.

Microsoft's Anders Nilsson tells the BBC that Achilli is the type of entrepreneur his company looks for, and Microsoft wants to accelerate Egomnia's growth while the time is ripe.

Achilli also says that he is in talks with well-known, powerful venture capitalists from the U.K. and U.S., but can't reveal more. He says his site currently has over 700 Italian companies, including multinationals like Vodafone and Generali, and 330,000 job seekers registered. It had 500,000 euros (the equivalent of about $700,000) in revenue last year. The numbers are notable, but nothing yet suggests Egomnia is the next big thing in the international tech world.

If Achilli were just another 22-year-old American with a social networking startup, few would have noticed him. But because he lives in a country with an unemployment rate of 12.6 percent —twice that of the U.S.—where over 40 percent of people ages 24 to 35 struggle to find jobs, the fact that he's a charismatic young guy with a job-search platform has made him a symbol of growth for Italy's lagging tech startup scene.

And Achilli recognizes this, at least to a certain extent. He tells us that when he visited Silicon Valley last summer he felt "normal" instead of like a celebrity, since everyone was young and pushing a startup. "I wasn't happy," he says, smiling. "In the United States, everyone has a startup. If you have one in Italy, you are special."

Achilli first got the idea for Egomnia during his final year of high school while applying to colleges and looking at their rankings. He wondered what it would look like if this method, through a process similar to Google's page ranking system, was applied to job candidates based on how impressive their resumes were. Companies could search for the type of employee they were looking for and select them from a ranked list, and employees could do the same for employers.

Matteo Achilli
Matteo Achilli (R) works with one of his assistants in his office in Formello, north of Rome July 25, 2013.

Photo by Tony Gentile/Reuters

He says he wrote the algorithm and then searched for a site developer. He wasn't able to afford a full-fledged team of professional coders, but he found a young coder named Giuseppe Iacobucci who was willing to freelance for 10,000 euros. Achilli's dad, who is a partner in a small telecommunications company, helped him pay this developer, marking the only investment Egomnia had before it launched. In March 2012, after a year, Iacobucci finally got the first version of the site running. Achilli, who was then attending the prestigious Bocconi University in Milan, struggled to find any company willing to join a 19-year-old student's new project, and so he tried his luck pitching to Bocconi students directly.

Antonio Aloisi, a student liaison to the school's board—which includes power players like former Italian prime minister Mario Monti and Pirelli CEO Marco Tronchetti Provera — became excited with the project and wrote about Achilli's site for the Italian blog Linkiesta. The post went viral, largely because the story of an ambitious young entrepreneur wanting to help his peers get jobs was so appealing during the severe recession. Egomnia crashed because one server wasn't enough to handle the flood of traffic as thousands of job seekers signed up, Achilli says. In a couple of months, he got the Panorama cover and was dubbed the "Italian Zuckerberg."

Achilli has also benefited from political support. Recently, he was awarded the gold medal of the President of the Italian Republic for his service to Italy's economy, and the province of Milan is using Egomnia as an employment portal. Since he first caught the media's attention, Achilli's been focused on growing his team (now 20 employees) and planning how he would expand beyond Italy, which he is almost ready to do. Come October, Egomnia will open an office in São Paulo, Brazil, and expand in Europe and select markets in Asia and the U.S. Achilli says that the upcoming version of Egomnia will have a premium look and feel that will make it stand up to American sites likes LinkedIn. It plans to make money from advertising and charging companies for job postings beyond a set allotment.

Achilli has a ways to go before he lives up to the nickname that's brought him so much attention in Italy, but now, with the support of two of the most powerful tech companies in the world and potentially some big investors, he'll soon have an opportunity to make a name for himself.

Aug. 4 2014 10:49 AM

Here's a Map of Where the CDC Would Quarantine Possible Ebola Cases

This story originally appeared in Business Insider.

As the largest-ever outbreak of Ebola rages on in a cluster of West African nations, the planned evacuation of at least one infected American to the United States raises the question: Are we equipped to deal with the disease here?

The answer, in short, is yes—very well. A widespread Ebola outbreak here is "not in the cards," the CDC director recently told reporters.

That's partially because the United States has excellent infection control procedures and facilities. Among those facilities is a network of quarantine stations, where the CDC can legally detain anyone who may have been exposed to cholera, diphtheria, infectious tuberculosis, plague, smallpox, yellow fever, SARS, new strains of flu, or—relevantly—viral hemorrhagic fevers like Ebola.

Here's a map showing where those quarantine stations are:



A Brief History Of Our Quarantine System

A yellow fever outbreak led to the country's first quarantine center and hospital, set up in Philadelphia in 1799. In 1944, a new law gave the federal government the authority to quarantine people, a responsibility formally taken over by the CDC in 1967. 

In the 1970s, according to the CDC, the number of quarantine stations was reduced "from 55 to 8 because infectious diseases were thought to be a thing of the past."

But within the past decade, fears of bioterrorism after September 11 and the 2003 SARS epidemic prompted the U.S. to more than double the number of quarantine stations. There are now 20 scattered across the U.S., primarily at "ports of entry and land-border crossings where international travelers arrive."

Aug. 2 2014 10:16 AM

How to Become a Lawyer Without a Law Degree

This story originally appeared in Business Insider.

A small minority of the thousands of people who take state bar exams each year to practice law don't have a law degree and haven't even stepped foot in a law school, the New York Times pointed out in an article Wednesday.

These lucky few complete legal apprenticeships rather than obtain costly J.D.s.

The apprenticeships, available as an option in only several states, are referred to as law office study and the participants called law readers. Those who choose law office study avoid the debt burdening their counterparts who pay law school tuition to receive law degrees, reports The Times. They also gain valuable experience as members of law offices, where they get to work in courtrooms and with clients rather than studying in classrooms. 

But the few who take that alternative route also face their own difficulties, like searching on their own for a supervisor willing to mentor them and competing for top jobs with those who have graduated from law schools where students are ranked. 

Law office study remains very rare. Law office readers comprised only 60 of the 83,986 people who took state and multi-state bar exams last year, according to the New York Times. They are also less likely to pass those exams. Only 28 percent of the tiny minority of law office readers passed their bar exams last year, compared to 78 percent of students who attended American Bar Association-approved law schools, reports The Times.

In Virginia, Vermont, Washington, and California, aspiring lawyers can complete law apprenticeships, receiving on-the-job training under the guidance of mentors instead of studying law at a university for three years. New York, Maine, and Wyoming require apprenticeships to be combined with law school.

Below are the general rules they have set for these apprenticeships, according to the Sustainable Economies Law Center blog LikeLincoln:


Study in a law office for four years under the supervision of an attorney with at least five years of active law practice in California. The study must involve 18 hours per week, with five hours directly supervised, in addition to monthly exams and bi-annual progress reports submitted to the California State Bar.


Four years of study in a law office under the supervision of an attorney with at least three years of experience.


Law office study for three years, each year consisting of at least 40 weeks, with a minimum of 25 hours of study each week. At least 18 hours each week must take place in the supervising attorney's office, who must provide at least three hours of personal supervision over the law reader each week. 

The supervising attorney must have at least a year of experience, and the apprentice is not allowed to be employed or compensated by the supervisor.


Here the apprentice must be employed by the supervising attorney for four years in a law office, with at least 30 hours of work/study and three hours of direct supervision each week. The supervising attorney has at least 10 years of experience. Apprentices are required to pay a $1,500 annual fee.


At least two years of study at a law school is required, and then one year of law office study.

New York

Law office study can follow at least one year of law school, with the combination of law school and law office study totaling four years. 


A combination of one to two years of law school with one to two years of a law study program.

July 31 2014 2:15 PM

Why Stocks Could Fall by 50 Percent

This story originally appeared in Business Insider. 

After meandering higher for most of the year, the stock market is now sputtering.

That's triggering chatter about a minor "correction," which many people believe is long overdue.

And maybe that's what we're at the start of — a minor "correction." Or maybe this is just a blip and the brilliant and prudent Jeremy Grantham is right that we're on the cusp of a new bubble that will take the S&P 500 up another 10 percent to 15 percent over the next year to 2,250. (As a stockholder, I sure hope so!) Or maybe we'll get both—a minor "correction" and a new bubble spike. Or maybe we're just in the middle years of a fantastic bull market.

I don't know.  (Neither does anyone else, by the way.) I'm also not predicting a crash.

One thing I do know, though, is that stocks are extremely expensive on every valid historical measure I know of. In the past, this level of overvaluation has presaged poor long-term returns. So I'm not expecting my retirement account to do well from this level over the next 7-10 years.

The other thing that this level of valuation has also often preceded is something much worse than a "minor correction"—a crash. And there are other things that are happening now that have also preceded crashes.

So I would not be surprised to see stocks fall ~50 percent from this level in the next few years. And, if that happens, you shouldn't be surprised, either.

A crash of that magnitude wouldn't even make stocks "cheap." It would merely take them back to their long-term average. And to deny the possibility that stocks might someday drop back to their long-term average seems the height of delusion to me.

Yes, maybe it's "different this time." Maybe, this time, stocks really have "reached a permanently high plateau."

But I doubt it.

And it's not just price that concerns me.

There are three basic reasons I keep warning you that I think future stock performance will be lousy:

  • Stocks are very expensive
  • Corporate profit margins are still near record highs
  • The Fed is now tightening

Below, I'll address those one at a time.

Lest you be concerned that I'm just "talking my book," I should be clear about one thing: I own stocks, and I'm not selling them. (For many reasons, including that I'm a long-term investor). From a personal finance perspective, I would like nothing more than for the market to keep going up. 

I also want to point out one new thing that is worrying me lately: The rise of investor margin debt. Money is cheap right now, and the stock market has been going up for 5 years. As a result, lots of investors are borrowing money to buy stocks. This, in turn, is making stocks go up more, which encourages more investors to borrow more money to buy stocks. And so on. As you can see in this chart from Doug Short, investor margin debt (red) is now higher than it was just before each of the two recent crashes, both of which took stocks down ~50 percent.


Short via Gartman

The problem with margin debt is that the cycle is just as self-reinforcing on the downside. Once stocks drop, investors are forced to sell stocks to meet margin demands. That selling causes stocks to drop more. And so on. Basically, if and when stocks reverse course, conditions are ripe for them to fall a long, long way before anything begins to prop them up.

Anyway, on to the broader concerns...

Price: Stocks are very expensive

In the past year or two, stocks have moved from being "expensive" to "very expensive." In fact, according to one historically valid measure, stocks are now more expensive than they have been at any time in the past 130 years with the exception of 1929 and 2000 (and we know what happened in those years). 

The chart below is from Yale professor Robert Shiller. It shows the cyclically adjusted price-earnings ratio of the S&P 500 for the last 130 years. As you can see, today's PE ratio of 26X is miles above the long-term average of 15X. In fact, it's higher than at any point in the 20th century with the exception of the months that preceded the two biggest stock-market crashes in history.

Does a high PE mean the market is going to crash? No. Sometimes, as in 2000, the PE just keeps getting higher. For a while. But, eventually, gravity takes hold. And in the past, without exception, a PE as high as today's has foreshadowed lousy returns for the next 7-10 years.

While we're at it, please note something else in the chart above. Please note that, sometimes—as in the entire first 70 years of the last century—PEs (blue line) can be low even when interest rates (red line) are low. That's worth noting because, today, you often hear bulls say that today's high PEs are totally justified by today's low interest rates. Even if this were true—even if history did not clearly show that you can have low PEs with low rates—this argument would not protect you from future losses, because today's low rates could eventually regress upwards to normal. But it's also just not true that low rates always mean high PEs.

And in case some of your bullish friends have convinced you that Professor Shiller's P/E analysis is otherwise flawed, check out the chart below. It's from fund manager John Hussman. It shows six valuation measures in addition to the Shiller PE that have been highly predictive of future returns. The left scale shows the predicted 10-year return for stocks according to each valuation measure. The colored lines (except green) show the predicted return for each measure at any given time. The green line is the actual return over the 10 years from that point (it ends 10 years ago).  Today, the average expected return for the next 10 years is slightly positive — just under 2 percent a year. That's not horrible. But it's a far cry from the 10 percent long-term average.

And, lastly, lest you're tempted to dismiss both Shiller and Hussman as party-pooping idiots, here's one more chart. This one's from James Montier at GMO. Montier, one of Wall Street's smartest strategists, is also very concerned about today's valuations. He does not think it's "different this time."

Montier's chart shows that another of the common arguments used to debunk Professor Shiller's PE chart is bogus. Bulls often say that Professor Shiller's PE is flawed because it includes the crappy earnings year during the financial crisis. Montier shows that this criticism is misplaced. Even when you include 2009 earnings (purple), Montier observes, 10-year average corporate earnings (blue) are well above trend (orange). This suggests that, far from overstating how expensive stocks are, Prof. Shiller's chart might be understating it.


James Montier, GMO

In short, Montier thinks that all the arguments you hear about why today's stock prices are actually cheap are just the same kinds of bogus arguments you always hear in the years leading up to market peaks: Seemingly sophisticated attempts to justify more buying by those who have a vested interest in more buying.

So, by all means, go ahead and tell yourself that stocks aren't expensive. But be aware of what you're likely doing. What you're likely doing is what others who persuaded themselves to buy stocks near previous market peaks (as I did in 2000) were doing: Saying, "it's different this time."

That's price. Next comes profit margins.

Today's profit margins are extremely, abnormally high

One reason many investors think stocks are reasonably priced is that they are comparing today's stock prices to this year's earnings and next year's expected earnings. In some years, when profit margins are normal, this valuation measure is meaningful. In other years, however — at the peak or trough of the business cycle — comparing prices to one year's earnings can produce a very misleading sense of value.

Profit margins tend to be "mean-reverting," meaning that they go through periods of being above or below average but eventually—sometimes violently—regress toward the mean. As a result, it is dangerous to conclude that one year of earnings is a fair measure of long-term "earning power." If you look at a year of high earnings and conclude these high earnings will go on forever, for example, you can get clobbered.

(It works the other way, too. In years with depressed earnings, stocks can look artificially expensive. That's one reason a lot of investors missed the buying opportunity during the financial crisis. Measured on 2009's clobbered earnings, stocks looked expensive. But they weren't. They were actually undervalued.)

Have a glance at this recent chart of profits as a percent of the economy. Today's profit margins are the highest in history, by a mile. Note that, in every previous instance in which profit margins have reached extreme levels like today's—high and low — they have subsequently reverted to (or beyond) the mean. And when profit margins have reverted, so have stock prices.

After-tax profits as a percent of GDP.

Business Insider/ St. Louis Fed

Now, again, you can tell yourself stories about why, this time, profit margins have reached a "permanently high plateau," as a famous economist remarked about stock prices just before the crash in 1929. And, unlike that economist, you might be right. But as you are telling yourself these stories, please recognize that what you are really saying is "It's different this time." And "it's different this time" are described as "the four most expensive words in the English language."

And then there's Fed tightening...

For the last five years, the Fed has been frantically pumping more and more money into Wall Street, keeping interest rates low to encourage hedge funds and other investors to borrow and speculate. This free money, and the resulting speculation, has helped drive stocks to their current very expensive levels.

But now the Fed is starting to "take away the punch bowl," as Wall Street is fond of saying.

Specifically, the Fed is beginning to reduce the amount of money that it is pumping into Wall Street.

To be sure, for now, the Fed is still pumping oceans of money into Wall Street. But, in the past, it has been the change in direction of Fed money-pumping that has been important to the stock market, not the absolute level. 

In the past, major changes in direction of Fed money-pumping have often been followed by changes in direction of stock prices. Not immediately. And not always. But often.

Let's go to the history ...

Here's a look at the last 50 years. The blue line is the Fed Funds rate (a proxy for the level of Fed money-pumping.) The red line is the S&P 500. We'll zoom in on specific periods in a moment. But just note that Fed policy goes through "tightening" and "easing" phases, just as stocks go through bull and bear markets. And sometimes these phases are correlated.

Now, lets zoom in. In many of these time periods, you'll see that sustained Fed tightening has often been followed by a decline in stock prices. Again, not immediately, and not always, but often. You'll also see that most major declines in stock prices over this period have been preceded by Fed tightening. 

Here's the first period, 1964 to 1980. There were three big tightening phases during this period (blue line) ... and three big stock drops (red line). Good correlation!

Now 1975 to 1982. The Fed started tightening in 1976, at which point the market declined and then flattened for four years. Steeper tightening cycles in 1979 and 1980 were also followed by price drops.

From 1978 to 1990, we see the two drawdowns described above, as well as another tightening cycle followed by flattening stock prices in the late 1980s. Again, tightening precedes crashes.

And, lastly, 1990 to 2014. For those who want to believe that Fed tightening is irrelevant, there's good news here: A sharp tightening cycle in the mid-1990s did not lead to a crash! Alas, two other tightening cycles, one in 1999 to 2000 and the other from 2004 to 2007 were followed by major stock market crashes.

One of the oldest sayings on Wall Street is "Don't fight the Fed." This saying has meaning in both directions, when the Fed is easing and when it is tightening. A glance at these charts shows why.

On the positive side, the Fed's tightening phases have often lasted a year or two before stock prices peaked and began to drop. So even if you're convinced that sustained Fed tightening now will likely lead to a sharp stock-price pullback at some point, the bull market might still have a ways to run.

In conclusion...

So those are three reasons why I'm still nervous about stock prices and think stocks will likely deliver lousy returns over the next 7-10 years — price, profit margins, and Fed tightening. I also would not be surprised to see the stock market drop sharply from this level, perhaps as much as 50 percent over a couple of years.

None of this means for sure that the market will crash or that you should sell stocks (I own stocks, and I'm not selling them.) It does mean, however, that you should be mentally prepared for the possibility of a major pullback and lousy long-term returns.

Because unless it's "different this time," that's what we're likely to get.