Eric Schurenberg Talks Shop - Dividends, Personal Finance, and the Death of Print

Eric Schurenberg is the Editor-in-Chief of BNET.com and the Editorial Director of CBS Moneywatch. He has worked for years in the financial media and currently writes a column for The Fiscal Times.

Eric had a conversation with Benzinga’s Alex Schiff about dividends, the future of journalism and why you should tip your taxi driver in New York City.

This interview is available as an episode of the Benzinga Podcast:

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Could you start off by telling our listeners a little about yourself and what you do at BNET and CBS Moneywatch?

I am where the buck stops for BNET which is a management oriented general business site, and for Moneywatch, which is a personal finance oriented site.

Sounds impressive. How were you able to get into these roles?

When I applied for the job they were looking for somebody who had a lot of experience in personal finance and I had just come from Money Magazine. I had been in that position for many years. One of the elements was media experience so I had that and a business report and radio experience in New York and so on. I think that outside experience was attractive to my employers and they were also looking to start Moneywatch and take advantage of what they saw as an opportunity in the marketplace.

What makes these sites stand out from their peers? What do you do differently?

Moneywatch is different because it is so obviously multimedia; there is a great video player when you enter the site and we take advantage of all of the great video coming over from CBS broadcast. In philosophy we’re different from a lot of sites because we don’t focus so much on stock ticking and trying to beat the market on a daily basis. By taking a long term approach to financial planning, where we see that investing is only one piece of the puzzle, and that the most important part of earning a secure financial future is securing your earning power and planning well on the day to day decisions. You might think of CBS Moneywatch as a sort of soup to nuts financial planning site with a heavy dose of world class video content.

BNET differs in that it is a business site with a management component. The audience of BNET is made up of a lot of managers of small to medium sized businesses. A lot of the content is aimed at helping them do better at their jobs. We aim to help “you” the user do your job and get ahead.

These aren't your first media ventures. You have a very long resume when it comes to that field. What does it take to run a media outlet?

t takes people who are passionate about the subject matter and have a lot of contacts in the business and care about good writing. On the web it’s a lot easier to have experts post articles themselves which is a distinct advantage. The way you stand out is by saying something new and provocative and something that sticks out.

How do you get such big name writers to contribute to your site?

That comes over time having worked with people in the past and made contacts with them and being known. People will not work with you if you call them out of the blue and they don’t know if they can trust you. It helps to have CBS in the tagline of both of these programs. 

A lot of stuff on BNET is unique perspectives on news and current events. Where do you get the ideas for pieces like The Nascarization of Soccer or How to Jailbreak Your iPhone? Is it just a lot of really creative people or do you have a system for coordinating your content strategy?

Thank God I don’t have to come up with these ideas myself and neither do the skeleton crew of editors that work for me! The heart of BNET is our columnists who have a great deal of expertise in the business that they currently work in or have experience in.

I would imagine that makes things a little easier for you; not having to come up with all of this on your own.

Well, no editor ever possibly could. BNET and CBS Moneywatch publish 1100 original pieces of content every month including video, columns, and editorials. When I worked at money magazine we published 80 pages of editorial content a month with about 50 pieces of content every month. So the two websites are obviously more complex and provide a richer experience.

What do you like better about working on electronic outlets as opposed to print?

I like not having to explain to various audiences that print isn't dead.

Do you think that print is in fact dead now that you are working in web media?

Yeah, print is in a lot of trouble and if you don’t believe me you can ask Mr. Harman who just bought Newsweek. At least it’s still alive but only at a very fair price.

What do you think it means for media and news coverage if there aren't print publications?

The generation of news consumers growing up now has never read newspapers. It’s not as if the editors have decided that print has to go; the consumers of news have decided that print is not relative for their lives anymore. There will still be a need for media gathering institutions and for editorial judgment and professionalism. It will just take place over a new medium.

I just saw a video you did on dividend stocks being a good investment in today's market more than any other time in recent history. Why is that?

Because of the competition for different investments. The question you have to ask when making any investment decision is what are the alternatives and what are my plans. Right now there are blue-chip U.S. corporations who are doing well and making good products that are not going away which are paying higher dividend yields than treasury bonds. That is a phenomenon that I haven’t seen before. Bonds are safer than stocks and stocks can cut their dividends and go down in price. Nevertheless, if you’re concerned about inflation down the road due to all the money being dumped into the economy by the Fed and through economic stimulus programs, then stocks are a much safer choice than bonds. Stocks can adapt to rising costs and inflation and bonds can not.

Do you have the same outlook on dividend ETFs?

A dividend paying ETF or a high dividend equity oriented mutual fund is a better choice than trying to pick the winners out of the blue-chip collection of individual stocks. You’ll get much more diversification and lower your risk that way. It is well worth the small fees you’ll pay.

Do you have any recommendations for specific ETFs?

In my blog that just went up this morning I recommended T. Rowe Price Equity Income which is a mutual fund. I have in the past recommended the Vanguard Dividend Growth ETF which invests in stocks that have a history of raising their dividends.

Should investors focus more on this or on the yield?

I think it depends on what you are looking for. If you aim for stocks that have been increasing their dividends over time then you'll get security that has a lower yield. Not every company with a growing dividend has an extremely high yield. If you aim for stocks that are trading below what managers feel is their fair value you'll be getting a stock that is being traded at a depressed price and as long as it maintains its dividend will end up with a higher yield.

Aside from these dividend plays, what else do you see as the best investments over the next year or so?

I recommend that most people put most of their money into index funds because I believe that few people have a good crystal ball. If you make a bet on a particular sector of the market, you could be wrong. If you invest in an index fund, on the other hand, you'll essentially be guaranteed the average return of the stock market and you'll beat most mutual funds or ETFs because you'll have lower expenses.

If you are particularly moved to make bets around the edges, because that is human nature, I would quote people like Jeremy Grantham or Jim Grant who are recommending high quality dividend paying stocks, which we just talked about. They also favor emerging markets in the long run, but you have to have a pretty strong stomach and be willing to stay with them long term.

Bill Gross and Mohamed el Erian of PIMCO, as well as Jeremy Grantham are recommending government bonds from Canada and Australia which have solid policies and growing economies that don't carry a lot of the debt that the U.S. and many European companies do.

Do you think people can find a good company with a good yield and stick with it or will the market and inflation just take those gains away?

The argument that "you need to trade a lot" is very convenient for traders and brokers who make commissions off of trades. The question you have to ask yourself is, "what is the alternative?" If you think that owning an index fund and participating in the collective wisdom of the market is not as good as you can do by yourself by reading the newspaper and watching Jim Kramer along with everyone else, then I would say you may be suffering form overconfidence.

What is the number one thing that you have learned managing major media outlets like BNET and CBS Moneywatch?

To quote a Hollywood mogul, "nobody knows anything." There are a number of brilliant people talking about the markets at any given moment, but they don't have any idea what's really going to come any more than anyone else. Standing away from the gravitational pole of eloquent, well dressed people, and sticking to your own plan and observing humble principles about preserving your wealth is the best thing you can do.

Now I've been reading your columns in The Fiscal Times lately and been a big fan, especially some of your writings on the national debt and deficit. Could you tell us a little bit about your ideas on the debt and how we can solve the problem?

The way to solve the problem, unfortunately, is to save more and spend less and to raise taxes. If you drill down a little deeper, the only way to solve the fiscal problem is by addressing entitlements, namely Social Security and Medicare. Medicare is, by far, the thornier. On social security I favor indexing benefits to prices rather than wages. Making this change will, overtime, go a long way in fixing the imbalance in the social security system and it’s so gradual that the people it will affect will have plenty of time to prepare for it.

Medicare is much tougher and it's clear that something has to be done to address the wasteful spending there. There has to be more cost/benefit analysis on how this nation spends it's wealth on healthcare, but I'm talking a little bit out of my depth here. That is a problem that will be addressed by people that are more expert than me.

Okay now that we've got the hard questions out of the way, here's a few less serious ones. What was your first, and what was your worst job?

My first job was at a gas station in Cincinnati, Ohio where I grew up. I was a student at a day school and the men I worked with definitely had not done that. They regarded me as a kind of curiosity and I learned a lot from them.

My worst job was driving a taxi in New York City. That's a really hard job. Remember that the next time you're in New York City in a can and make sure to give the guy a good tip.

You must have met a lot of interesting people, though.

It wasn't that easy to meet people through the bulletproof barrier; most people were otherwise engaged in the back seat.

What do you like to do outside of work?

I like to spend time with my family and I am a tennis addict. I play 3rd base for the softball team in my town and am a theatergoer; that about sops up the majority of my free time.

And this last one is our trademark question: What was the best, and what was the worst investment decision you've ever made?

The best decision I made was to put money aside and not pay attention to whether it was going up or down. I did this by having money deducted from my paycheck automatically and put directly into an IRA. Now anyone can do that with a 401k and I believe that's the best thing I ever did.

The worst decisions were any decisions I made based on something I saw on CNBC or read in the Wall Street Journal that day. There have been studies about how often you should look at news related to the stock market and it appears that people who don't look any more often that every 13 months tend to have better results than people who look more frequently.