Oct162017

money matters  10 16 17Taking PRIDE

I have been wanting to do an economic piece about people with disabilities for some time now and with the month of October being National Disability Employment Awareness Month (NDEAM), I couldn’t think of a more fitting opportunity to bring to light an incredible story about a local entity I discovered here in my home town of Grass Valley.

A recent conversation with a friend led me to PRIDE Industries, a multi-state, non-profit social enterprise that assists people with disabilities find employment.

Originally founded in 1966 by a group of parents in Auburn, California, its initial focus was to find meaningful employment for their adult children with disabilities. PRIDE has offices in 14 states and in Washington DC and is still growing. With one in every five Americans having a disability, the need for such an entity is more than obvious. People with disabilities want to contribute, yet finding gainful employment can be challenging. PRIDE Industries opens a whole new world of possibilities for people with disabilities while serving the needs of businesses and the community in the process.

PRIDE’s main goal is employment, its mission is “To create jobs for people with disabilities.” It accomplishes this in a win-win scenario synergistically with the community, government and the many companies they serve.

The PRIDE formula is a simple one: hire people with disabilities and give them jobs that complements their skill sets. From simple assembly to more complex employment, PRIDE matches the specific job to the employee. Since the requirements of business can be complex and varied, a workforce of people with different skillsets fits nicely into whatever job may be required.

On the day of my visit to our local PRIDE location, I witnessed workers doing different jobs of all levels of complexity including the simplest of assembly and packaging to the more complicated job of accurately shipping product to multiple locations for a national retailer.

The many supervisors present maintained a safe environment for the employees while insuring the highest level of quality control. From shipping umbrellas manufactured by a well-known national retailer to assembling medical test kits for a local company with products from Finland, the scope of customers and products was impressive.

The organization is truly an example of everybody wins. People with disabilities have an opportunity to learn new skills and hold employment they might otherwise not be able to. By earning their own paychecks, the assistance from public programs is minimized, their self-esteem is boosted and they get much needed mental stimulation. Their families and loved ones have time for themselves while their family members with disabilities are supervised by a loving and experienced staff at PRIDE.

The businesses they serve benefit by finding employees who are more than happy to perform jobs that others might find mundane all while maintaining the highest of quality due to the amount of supervision that PRIDE provides along each step of the process.

PRIDE’s outreach program places higher functioning adults in off-site employment and guides both the employee and employer through every step of the process. Job development, coaching, training and placement are an ongoing function of the organization. The Supported Employment Program provides additional training to help overcome barriers to employment in the community at large.

Although PRIDE focuses on employment, many offices go a step further. Some offer adult day services where people with more severe disabilities can have a safe yet entertaining place to go. Arts, crafts, games and daily outside excursions maintain a semblance of normalcy for those that otherwise may not experience such things due to their disability.

Outreach programs for self- sufficiency, improvement and education include the Independent Living Services programs which maintains an army of staff to navigate the community and make connections in a variety of capabilities and functions. Their goal is to enable an independent lifestyle for those that can, yet still have a resource to fall back on should the need arise.

With 51 years of experience under its belt in merging people with disabilities to employment of all kinds, PRIDE enables adults with disabilities to reach their full potential while providing the resources for businesses to bring their products and services to the marketplace. This is truly a win-win scenario for all parties involved with PRIDE Industries performing an invaluable service to the community.

You may view a video on PRIDE Industries here: (https://www.facebook.com/marc.cuniberti)

The local Nevada County Pride office is located at 12451 Loma Rica Drive in Grass Valley.

Their phone number is (530) 477-1832

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Toys "R" Us Files Chapter 11

Toys “R” Us became another in a long line of companies succumbing to one illness or another by filing reorganization and protection under Chapter 11 of the bankruptcy code late last week.

The toy retailer, which started back in 1948 with a single Washington D.C. store issued a statement by CEO David Brandon which summed up the move: “Today marks the dawn of a new era at Toys “R” Us where we expect financial constraints that have held us back will be addressed in a lasting and effective way”.

The statement illustrates both the positive and negatives in typical CEO fashion, politely indicating the company will continue on by somehow not meeting its financial obligations as originally promised. After all, that’s what chapter 11 is: renegotiating a company‘s debt while reneging on its original promises.

The company owes about 5 billion and said all of its 1600 stores would remain open going into the lucrative time of year, the holiday season, where toys under the tree boost most retailer’s balance sheets, especially the toy and gaming businesses.

The bankruptcy could indicate the rapidly changing retail landscape brought about by online competition. It wasn’t so long ago when Toys “R” Us bought out competitors FAO Schwartz and KB Toys, only to succumb to its debt load which obviously increased by such acquisitions.

Commentary from Forbes and new965.com indicate the obvious: pressure from online retails are causing tsunamis in traditional retail company balance sheets as consumers elect to buy from the comfort of their home instead of taking an arduous trip to the mall.

Other companies who have suffered similar fates include shoe store Payless and Gymboree, the children’s clothing outlet.

Highlighted in previous Money Matters articles entitled “Online Retail Wipe Out”

11/2017, “Another Retail Wipe Out” 12/2017 and Money Matters Show #138 entitled Retail Wipe Out, 2/2012, the pressure from other methods of shopping becoming available with the advent of the internet is becoming prevalent and mainstream. Toys “R” Us said as much in a comment at the time of filing which said it had to improve its online services and enhance the store experience (new965) which is a fancy way of saying they have to get better in the online market place while adding more value and therefore a reason for shoppers to get out of their chairs and drive to a store.

Meanwhile online goliath Amazon continues to cause havoc in the retail environment by making the shopping environment of a comfy chair at home with credit card in hand in front of a computer more desirable and less hassle then getting into a car only to spend hours parking, fighting crowds, and struggling with shopping bags. Added features such as free shipping programs and hassle free returns make a strong case for the staying home with a cup of coffee and comparing hundreds of prices in microseconds. Online reviews further enhance the experience.

Although Toys “R” Us will survive for now, the reverberations from its reorganization could cause additional damage to related sectors as 5 billion in debts are restructured. No doubt Toys “R” Us won’t be last retailer to hoist the white flag and cry uncle under the weight of a rapidly changing environment caused by a shift in shopping methodology brought on by an expanding internet.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Honoring Our Vets

War Veterans have put their life on the line and the saying goes “All gave some and some gave all”.

The quintessential act of giving one’s life for their country is an act of the utmost valor and selflessness.

Although all of us sleep, rise and live under the blanket of freedom provided by such men and women, we have often forgotten them once the guns are holstered and the uniforms are hung in some dusty closet somewhere.

What remains among us are the very men and women who wore those uniforms and shouldered the task of our protection.

In our personal lives, we pass vets daily, some of whom we will never know of their service. My 92 year old father is a WW2 vet, yet never volunteers that information unless asked. Other veterans work among us, or recreate with us, wait tables for us or do the myriad of jobs around us, never asking for anything but what is earned.

Still others hang out in alleys or on street corners, in homeless shelters or mental institutions, much of their plight likely caused by the horror they’ve seen or by the simple fact that they were little more than teens when integrated into the most sophisticated and largest military in the world, both in mechanism and regimen.

For a myriad of reasons, both obvious and others not so obvious, some vets have difficulty in adjusting to societal norms and therefore not living what some might call normal lives.

Some vets are homeless, institutionalized or living on the outer margins of society. At times it may seem the same government that called them into service has now forgotten many of their needs. Luckily we are fortunate to have those who care enough to reach out and try to help in whatever way they can.

“Welcome Home Vets” and the “Stand Down” organizations are two such entities.

Welcome Home Vets provide support and transitional services to vets and their families. This may include mental health therapy, assistance in navigating the various veteran support systems, and increasing public awareness.

The Stand Down Organization’s main focus is helping homeless vets by providing a broad range of basic services and items such as food, clothing, medical, dental, legal help, mental health assistance, job counseling and basic companionship when needed.

The local chapters of both recently held one of their many events to raise funds for providing these support services. The annual Welcome Home Vets motorcycle rally and BBQ was held on September 16, 2017 and the Stand Down event date is October 6th and 7th at the Nevada County Fairgrounds. At this two day event, veterans can access clothes and other basic necessities including medical, dental, 12 step addiction counseling, PTSD counseling and referrals, job counseling and other assistance.

Both entities accept public support and can be contacted through their local chapters found on any web browser or the national websites below:

Welcome Home Vets: Welcomehomevets.org

Stand Down: Standown.org

In conclusion, I attended the Welcome Home Vets BBQ event and early in the day spoke to many of the people who were prepping for the event. I found their dedication and conviction of cause both heartwarming and extremely moving.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Sep182017

Investing, One Size Does Not Fit All

There are many reasons to invest and they include saving for retirement, saving for the kids education, providing income now or in the future and passing along the estate to the heirs among others.

Although the term “investing” applies to all these reasons, the methods to accomplish each goal might be different. Considerations depending on why one is investing could involve preferences such as an all growth strategy (aimed solely at increasing the balance and might contain a higher degree of risk), a conservative strategy (that puts conserving principal first and foremost before gains), a target strategy for college funds (structured for moving from risk investments to more conservative holdings as college age approaches), an income strategy later in life, an immediate income strategy, or a tax minimizing strategy for trusts or non-IRA type accounts.

As shown above, in investing, not one size fits all. One of the most critical areas of discovery between clients and financial advisors is to get to know your client and find out exactly why they are investing.

For many, a conservative approach that attempts to conserve principal first and foremost before attempting to grow the portfolio is adequate. For others, particular situations require specific strategies and these strategies can be quite different in their construction.

I have reviewed literally thousands of portfolios over the years both managed by the client or an advisor and the similarities between portfolio holdings despite different individual situations has been somewhat disturbing.

It’s almost as if there is a standard belief that holding a basket of stocks and/or funds mixed with some bond funds fits all situations.

In my opinion, this structure may be good for some but definitely should not be used in all situations. In fact, I could think of half a dozen strategies one could implement depending on a particular situation.

The net worth of the individual, their age, how many kids they have, their level of perceived risk and what exactly they need from the investment all have a bearing on what strategy should be considered. Most investors might think their first and foremost desire is to make money but in truth, there is much more to investing than that one consideration.

What to hold, how much to hold, when to hold and what not to hold are all considerations for the client and his professional. Certain investments might be purchased that yield income now or in the future or both, while other investments might have a tendency to garner gains yet might also contain higher risk. Certain investments might have tax advantages such as deferral or lower rates while other strategies may have no tax implications at all.

If you are invested or are considering investing, you likely have a goal in the back of your mind somewhere. Distilling that thought into a concise and definable intention and then writing it down will go a long way in finding a strategy that best fits that need. I have always said you can’t hit the target unless you know what you’re aiming for. Once you know exactly why you are investing, the next step is implementing a plan which encompasses that goal and all its considerations. These considerations might include taxation, length of investment time, desired income stream, safety and timeframe, growth potential and other preferences and needs.

Mix all that into a big bowl and have it prepared by a knowledgeable and market educated financial advisor, or even doing it yourself if you’re brave enough, by becoming your own educated advisor. Spending the time to learn the ins and outs of the markets may be something some might consider and even enjoy.

To get good results in the kitchen you must not only know your ingredients but know how to prepare those ingredients. It then goes without saying that the first obvious step is knowing exactly what it is you’re trying to accomplish.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Women CEO's

Do women make better VP’s? It’s a tough question to answer and certainly a hotly debated one. Although the majority of company CEO’s are male, there are a number of women steering the rudders of large and small companies alike, and although we can’t know for sure how a private company is doing, public companies whose stock shares are available to retail investors have to publish their financials every quarter and by looking at these financials, we can discern whether the woman CEO is measuring up or even surpassing her male counterpart.

According to a 2016 survey by Fortune, only about 4% of Fortune 500 company CEO’s are women and that number actually decreased in that year. For those doing the math, it means a paltry 21 companies Fortune 500 companies were commandeered by women in 2016, down from 24 two years before. 2017 however is witness to a new record of women run companies with 29. The caveat being with women making up 50% of the population, only about 6% of notable companies are run by them.

Of the women heading up or used to head up these companies, some notable names and companies appear on the list, some with glowing results and some not so favorable.

Meg Whitman, former CEO of Hewlett Packard, GM’s Mary Barra, Pepico’s Indra Nooyi, Ginni Rometty of IBM, and Merissa Mayer of Yahoo are but a few of the well-known companies with women who held CEO positions. Lockheed, Xerox and Avon also can be added to this list. There are more of course.

The obvious question is do women perform any differently than men when it comes to calling the shots of such behemoths. The sample set is obviously limited with such a low percentage of female CEO’s but since all numbers can be crunched in some manner, we can at least draw some hints as to how well women have performed in the past when heading up large companies.

Investigating women’s intuition and judgement on handling money, a gender investor comparison study in the year 2000 by Terrance Odean of UC Berkeley and Brad Brad Barber of UC California entitled “Boys will be Boys: Gender Overconfidence and Common Stock Investment” determined that women investors outperform men by 1.44% annually. Extrapolating out on that study, Kristin Orman of Wealthy Retirement compared the performance of S&P 500 companies after women CEO’s replaced male counterparts and found the companies went on to outperform the broader markets by an average of 104% based on their stock price. The women run companies saw a price increase cumulatively rise 170% while the market increased only 67% during the same measuring period. Although the obvious observation is the sample size is very small, the results do spawn some questions.

Are women better managers than men? Why aren’t more women in the top positions at large public companies? Are the results of the few studies undertaken conclusive? Why do the statistics we currently have available to date seem to indicate women are indeed superior CEO’s based on stock price performance? Is stock price performance the only indicator of a successful manager and is it a valid indicator of a company’s success?

In time the answers to these questions will become clearer as the number of women who are put into CEO positions increase and the passage of time and greater sample size allows for better statistics to yield better conclusions. One thing is certain however: The number of women in top positions is woefully disproportional to the number of women in the general population. That certainty leads us to the obvious and most important question: why?

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

"The Stock Rental Income Strategy"

There are a variety of strategies for investing and many of these strategies don’t just entail buying a bunch of stock and funds and then waiting for the market to go up to make money. Some investors want retirement safety while others want explosive growth. One of the more common requests I get is the desire for a structured and dependable income. Although this may be accomplished through an income annuity or similar product, some investors shun annuities because of their possible time commitment some products may have as well as potential early withdrawal penalties. There are however other ways to accomplish the need for income. One such strategy is what I call the “The Stock Rental Income Strategy”.

The portfolio is structured holding about 20 or so large stocks that are scheduled to pay dividends. Dividends are payments by companies to shareholders. The companies held are not just any companies but the largest of the large with an emphasis not only on size but on dividend history, financial strength, product lineup and other factors. Companies that have been around a long time, sell products that many people use and are familiar with a long history of rewarding shareholders are sought out and then reviewed also for financial strength and strength of product.

Once selected, the aim is to hold these stocks as a basket with each paying dividends which would yield a variety of checks throughout the year. If all the companies continue to pay their dividends, a steady stream of checks is hoped for.

The work for the client and advisor does not stop there however. Both parties then sit down and discuss how the portfolio should be viewed as to how its balance may move and how advisor and client should regard those moves. This means we review what the name “stock rental portfolio” means and why it was named such.

The idea of this portfolio sprouted from discussions with many investors who had rental properties and from an idea a portion of my own holdings gave me.

When I meet a client who has rental property, when queried with they liked about owning such rental property, they usually responded “the rent checks that come every month”. When asked if they minded if their rental property dropped in value by 5% or so, the response also was a common one: “not if I get the rent checks”.

Since this mindset gave the property owner some sort of peace of mind, if a portfolio could be constructed in a similar fashion (furnishing dependable income checks every so often) and the investor could adopt the same mindset with this portfolio (not minding a possible reduction in over value), as long as the checks arrived the client would be happy.

Although there are many facets in setting up such a portfolio as the “Rental Stock Portfolio” the strategy may be an option for those looking for income yet wish not to worry so much about moving balances. As with any portfolio based in the markets, there are risks and they are as follows:

Dividends are not guaranteed and can be decreased, increased or eliminated at any time. Dividends do not guarantee against losses. Dividends may be taxable in certain types of accounts and stocks which pay dividends does not mean losses, either partial or total are not possible. Please review the prospectus of any company you are considering and consult with your investment professional before making any investment decisions. Investing involves risk. You can lose money. This is not a solicitation to buy or sell any security.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Aug282017

Can Book Burning be far Behind

An 85 year old statue of Robert E. Lee was vandalized at Duke University last week, another in a series of acts of vandalism on a host of other civil war monuments in Charlottesville, North Carolina in recent weeks. The vandalism started with the onset of protests spurred on by the apparent racial attacks that occurred there.

Racial discrimination is a violation not only against basic civil rights but also against the law nationwide and no one in their right mind should argue otherwise. That said, I have a real problem with people destroying national treasures such as century old art in the name of anything. The Nazi’s destroyed books and art under the lunacy of their purification of the species and it is now gone forever.

Although repulsive when they occur, there have been countless human right violations and atrocities committed by thousands of regimes and governments throughout mankind’s history. If we were to use the lunacy of madmen as excuse to destroy any and all representations of that particular time period the world would worse off for it.

The art and literature of man’s history through periods of both prosperity and despair should be retained and made available for all generations to assimilate.

Whether kept under the auspices of art, education, history, regret,, promise, hope or by simply making note of man’s progression through time is one of the many reasons to retain such items.

Destroying such artifacts as we progress from one generation to another for the sole reason of making protest is foolish and shortsighted. Having an artifact that gives representation of a view once held does not condone or support such a view forever, and destroying such artifacts does not in itself destroy the belief if man himself is not ready to change it.

The simple fact is man’s consciousness is the only determining factor of an idea, not the art or literature of such a belief. These artifacts are but snapshots in time, and in no way facilitate a current belief by their mere existence any more than watching an old war movie mean we are ready for war and support such action.

Just as displaying a photograph of Adolf Hitler in a museum does not mean that that museum believes as Hitler did or stand for his policies, neither does a beautifully made statue on display in a city park mean that the city fathers support or condone any actions of the representative figure or regime.

If a major TV network airs an old movie depicting slavery, does that mean the network condones it? If a library carries civil war books, does that mean the library condones or protests it? The Roman Empire had many practices that were beyond cruel yet we don’t go around smashing Roman statues. The U.S. Government wholeheartedly betrayed and massacred hundreds of thousands of Native Americans. Does that mean we should destroy all art and literature from that time period? The Egyptians also practiced inhumane and unthinkable transgressions against their fellow man. Should we destroy all the pyramids? Or President Harry Truman, who dropped the atomic bomb and incinerated hundreds of thousands? Should we purge the world of all likenesses of him? The same would hold true for thousands of examples of art or literature representing alternative beliefs, whether they may have been flawed or not.

It is said time heals all wounds and that seems to be indicated from the human standpoint as we view artifacts from at least long ago and let them stand, regardless of what and who those artifacts represented.

Its only in man kinds limited view of who he is and where he stands at any one point in time does he sometimes makes foolish and irreparable decisions such as destroying irreplaceable art or literature in the name of forwarding a cause or making protest. Yet rarely does the act of destruction actually further or illustrate anything but the idiocy of the willingness to destroy what shouldn’t be destroyed.

Destroying or defacing such things proves or disproves nothing. Their destruction no more means the ideology has been changed then not destroying it means it hasn’t. . Artifacts are not currently reality. They simply exist as artifacts, works of a person with a talent for display or literacy, or of historical precedence, nothing more. These precious artifacts should be taken as simply that.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Aug212017

Junk IOU's

The saga continues for many huge pension plans and state budgets as Illinois, a state budget we have covered before in Money Matters continues to bleed out in its hemorrhaging of cash versus debt. In plain English, Illinois is so underwater the concept of it surfacing and be able to financially breathe on its own is far from being anywhere near resolved. Years of making promises it can’t keep it finds itself in the dubious position of possibly having its debt downgraded to junk by Moody’s, one of the three credit rating companies that evaluate the viability of financial institutions and their products. S and P, another large rating company already made this threat to Illinois some time ago. Fitch Ratings has issued similar warnings.

If its debt does get downgraded, it would be the first such state to get the not-so-coveted term of junk applied to its IOU’s.

How bad is it?

Illinois has 15 billion in unpaid bills for the last two years with an estimated quarter of a trillion dollars in unfunded pension liabilities.

Years of overspending politicians which include Barrack Obama who was elected Senator of the beleaguered state in 1997 made a mess of all things financial. There is simply no nice way to put it. An interesting side note on Obama’s propensity to over promise the public purses under his control, Business Insider nails the former President to adding 86% to the deficit during his 8 year term. Obviously balancing a budget or even coming close eluded him as Senator and continued to baffle him during his Presidency.

Not to put the entire Illinois mess on Barrack of course, he had many overspending compadres to help him move the state into near bankruptcy where it is today. Its apparently extremely difficult for some elected officials to spend within their means.

So today the great state of Illinois wrestles with unpalatable recipes to solve the mess and many doubt without massive defaults it can be solved at all, it’s that bad.

New budget proposals including the most recent being offered slash spending across many lines including education and other coveted programs and many social spending advocates are putting up the usual resistance. Ralph Martire, director at the Center for Tax and Budget Accountability said "It's like taking a meat cleaver to spending rather than a surgeon scalpel”. This analyst thinks Illinois will eventually throw out both cutting tools in lieu of a chain saw because the amount owed is so staggering.

Illinois lawmakers decided that part of the solution is to pay old debt with new debt, a seemingly common theme for elected officials finding themselves in the financial red. A recent bill was passed authorizing borrowing six billion more to pay some of the 15 billion that is past due. Those doing the advanced math will arrive at the solution that the remaining obligations will stand at around 244 billion. Ouch.

If the either S and P, Fitch or Moody downgrades Illinois to junk, the interest on any new debt the state wants to issue will likely skyrocket, not mention the possibility such a downgrade would cause extreme digestion to the state’s other debt instruments as well as its ability to fund itself in the long and short term.

The credit agencies are warning Illinois to take the latest budget proposal, the implied threat being the unthinkable and first of its kind downgrade below today s current

BBB-minus rating. Regardless of what happens, much like Puerto Rico’s recent belly up financial condition, it means a whole lot of people are not going to get paid a whole lot of money.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Aug142017

"Ratepigs"

‘Wealthyretirement.com slaps the term “Ratepig” on investors who only look at yield when evaluating a potential investment. One of my family members does this and has been burned multiple times when the underlying investment offering the yield got into trouble. Basically a Ratepig’s most important criteria is how much they will get in dividends or interest no matter how economically healthy the entity offering the investment is. A Ratepig might be attracted to the junk bonds of poorly rated companies, municipalities or even third world countries. The high yield of certain investments may reflect the underlying financial strength or lack thereof of the borrower. The high interest may be offered due to its poor credit rating or ability to pay back the debt. For the most extreme example, think a deadbeat brother in law or shady investment deal that entices investors by ultra-high returns. The old adage “if its too good to be true it usually is” comes to mind.

In the case of my family member, they received high interest payments (which they loved) until they didn’t. Payments may have stopped or been reduced or the underlying stock or bond price may have plummeted, resulting in loss despite the high payments.

Borrowers pay high rates not because they want to, but because they have to, and that usually spells risk.

High returns do attract investors but what good is a 10% annual yield if the stock drops 20% in value? Or cuts the payment shortly after you sign on, or worse, defaults altogether.

Cash strapped Argentina has recently offered up a Ratepig’s appetizer in a new flavor, a bond whose term hits the century mark. What that means in laymen terms is the bond has a maturity date 100 years from now.

What????

On the surface it is easily understood by most of you that anyone who buys this bond has to live a long time to get paid back, like a REAL long time, like 100 years from when you buy it, but what the heck, whose counting.

The bond’s 8 % yield is not too shabby for the near zero rate environment we find ourselves in today but waiting 100 years? If that’s not enough to make you turn a blind eye to such an investment, consider this: The longer term the bond, the more sensitive its price is to interest rate moves. This means if interest rates move in one direction or another, the longer a bonds term, the more violent the move up or down in the price of the bond.

If you hold a bond to its maturity, the daily price won’t affect what you get paid in interest and when getting all your money back when it comes due, but should you have to sell early (because you can’t wait the 100 years) the chances are you might get your head handed to you when you try and sell the thing.

Seeing Ratepigs salivate at a 100 year sovereign bond paying 8% might make a good story over a strong martini by Wall Street stock brokers is one thing, but the fact that these bonds are real and up for sale is quite another. In fact Wall Street big boy Citigroup Inc along with HSBC took the deal as lead book runners while Nomura Securities and Banco Santander opted to be co-managers.

Cha-Ching.

Now wait just a minute you say, who would buy such a bond? Apparently enough investors (if that’s the right word) saw it as a good enough deal to pony up 2.75 billion for these things. (CNBC) Apparently a lot of people expect to live a long time (pun intended).

Of course the reality of the situation is its likely none of the buyers intend to keep these bonds until maturity in the year 2117 and plan to off them to someone else at some point but seeing as worldwide interest rates are near historic lows and some say could only rise from here, if rates do rise, the bonds with the longest terms get hit the hardest because of the math involved.

No doubt some Ratepigs were among those that wrote checks to Argentina for the “privilege” of loaning them money, but seeing as this country has defaulted about 12 times since 1816 (Valuewalk.com) you have to wonder who else bought these things.

Of course it may all work out in the end, Argentina will gets its act together and do something it has been unable to do for about 300 years, which is to stay solvent for any reasonable length of time. And those folks that ambled up to the trough for the “juicy” yield of these century bonds will get all their money back. But it likely you and I will never know as we will be food for another kind of animal when these things come due

Certainly at least some investors believe the country is good for the money when it comes due in 2117 and all the interest payments in between and they may well be. But then again, a lot can happen in a 100 years, especially in a country like Argentina. Keep in mind this is not a recommendation for or against any security or the debt instrument mentioned or in any way be construed as an investment recommendation to buy or sell any security or investment.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jul312017

Investing in Community- Foster Families

Investing doesn’t always necessarily mean money. We can invest in many things. We can invest in our homes by keeping up with the maintenance, our bodies by eating healthy and exercising, our minds by education and in a host of other things that might need our attention and hence our “investment”.

Investing in the community around us is a very important investment that all of us in that community would likely benefit from and the very word community means people. Since our future members of our community will obviously inhabit and administer it, it makes sense to do everything we can to improve and insure the education, value, health and moral of these future stewards of our society.

We’ve all heard of foster parents and no doubt some of you reading this have either been a foster parent or been hosted by a foster family in your youth. It’s a vital service as not all home environments are conducive to providing a healthy and safe environment all the time. Whether it be because of general neglect, trouble with the law, domestic violence or other reasons, sometimes a child needs to leave the biological parents for a time to allow that home environment to get back to normal. Of course, sometimes the biological parents might never get it together or it may even take years, but in most cases the care provided by a foster family is only temporary.

The goal stated by our local foster agency Environmental Alternatives is for the family to provide a safe and nurturing environment. The families go through a screening process to protect the potential foster children and the once the child is placed, a weekly visit to the home is customary. Medical and dental is covered by Medi-Cal and a reimbursement stipend is provided to the foster family.

Children ages up to 18 years of age are looking for foster homes and there is even a need for providing homes to young adults from 18 to 21 years of age.

Environmental Alternatives office manager, Kitty Cannon says they are always looking for foster families as the need is ongoing. Many families host more than one child and since it is preferred siblings stay together, there is an obvious need for households who can accommodate multiple children.

Investing in our community can take many forms, and hosting a foster child or two is one way we can help. Not only do we help our future generation of adults start off from a healthier launching pad, the rewards that we receive may be more than we expect. I am told special relationships which may last a lifetime often develop and the feeling one can get from helping another human being can be a once in lifetime experience. I speak from experience. 19 years ago I became a mentor to a troubled teen through the Big Brothers program and we are still good friends to this day. Next month my “teen” will be 35 years old!

If you are interested in learning more about foster parenting here in Nevada or Placer County, you can contact Environmental Alternatives at (530) 273-7120. For those in other counties, check your local phone book or web browser.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jul242017

Medical Discounts

On a recent visit to the local hospital near my home to get a rather involved medical test, I compared the cost of paying cash to paying by insurance. I told them due to my type of insurance I would pay cash and get a receipt to submit to the company. This is regarded by the hospital as what it is: a cash payment collected at time of visit. The cost was $1,780.00. If I had paid by insurance, the cost that would have been billed to the insurance company would have been $2,620.00.

This works out to a difference of $840.00 or an almost one third higher price. One then asks the question: what is it about getting paid by an insurance company versus cash that requires the hospital to charge a third more.

Having to wait for payment might be one reason but even a extremely high usury rate assumptions, the opportunity cost (the use of the money I paid up front versus waiting for the insurance company to pay) certainly amounts to but a few dollars. Assuming an unheard rate of return based on current interest rates of 10%, which the hospital likely gets nowhere close to that return, and assuming a liberal 90 day pay period for an insurance company, the loss incurred by waiting for insurance company to costs the hospital less than $100.00.

What other costs does the hospital incur when dealing with an insurance company which could amount to $740.00?

The question does boggle the mind, at least mine. Since shipping and handling (actually processing and handling- pun intended) is the only major cost I can imagine that is incurred in dealing with an insurance company, just how involved and costly is that entire process. Apparently very.

The required paperwork is detailed. The submittal process exacting and the kickback rate significant. Since the old adage is an insurance companies secret mission is to “keep the money as long as they can”, you can imagine there are many landmines in the paper trail awaiting an inexperience clerical worker in crossing all the “T’s and dotting all the “I”s.

Even experienced clerical managers can make mistakes on the pile of forms required during a claim submittal. Resubmissions can be required and every box left unchecked or checked incorrectly means a longer wait until the reimbursement check arrives.

Of course, should legal issues arise that requires the services of a lawyer to recoup a denied claim or loss, the hospital will pay that out of its pocket as well. That cost is therefore assumed by the hospital as a reoccurrence at a presumed rate and is then built into the insurance rate as well.

Sit over a cup of coffee for a spell and the possibilities of what problems could arise when transmitting and transacting complicated medical procedures can occupy ones mind for hours. I know, it did it, and I basically gave up after compiling quite a list of things that could go wrong when dealing with a profit driven insurance conglomerate and trying to get them to cut the hospital a check. Never mind the government requirements heaped on the poor processing souls when dealing with a Obamacare, Medicare, Medi-Cal or other government entity.

After an hour or two of listing all the pitfalls and requirements that does and could befall a processing hospital or Doctor, I’m actually surprised that a 30% surcharge covers it. And that’s one reason your medical costs are skyrocketing.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jul172017

About Warren Buffett

Arguably the most famous investor of our time is Warren Buffett of Berkshire Hathaway. Often referred to as the Oracle of Omaha, referring to his place of birth and residency, Buffett holds the honor of being one of the top five richest men on the globe with an estimated net worth of 73 billion.

His first company, the Buffett Partnership, established with his lifelong partner Charlie Munger eventually became the company they run today Berkshire Hathaway which was named after a textile company they bought as one of their first acquisitions.

Through the years Berkshire Hathaway has made numerous acquisitions or investments into companies large and small, many of which are familiar household names. The line-up is impressive and you can view it here: https://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway).

With a long and successful history and many proverbial irons in the fire, the Berkshire Hathaway shareholders meetings have become quite the spectacle. Packed with literally thousands of spectators, shareholders and news media, Charlie Munger and Warren Buffett take the stage. In 2015 it was estimated over 40,000 people attended. Each shareholder can be awarded up to four passes to the meetings and extra tickets are commonly sold on Ebay or other resale mechanisms. Mr. Buffet and Mr. Munger have a habit of staying from three to five hours answering the hundreds of questions put to them at the meeting, which are have to be held in extremely large venues to accommodate the crowds.

Many one liners and notable quips are muttered by the two VPs as their lively and comedic personalities perk forth for all to see. Media outlets everywhere offer up the quotes and comments in the days and weeks following the event, with many off the cuff remarks becoming famous investing mantras to be repeated for years.

A few notable quips (of which there are many) are:

“Risk comes from not knowing what you’re doing, Rule No.1 don’t lose money, Rule No.2, don’t forget rule No.1, only when the tide goes out do you discover who is swimming naked”, and “it takes 20 years to build a reputation and five minutes to ruin it”. There are too many more enlightening insights to list here but you can see many of their famous utterances at https://www.brainyquote.com/quotes/authors/w/warren_buffett.html.

Warren Buffett still lives in a modest house in central Omaha which he bought in 1958 for $31,000.00 although he also owns other properties that he may reside in from time to time.

Labeled by many a modest man by several measures, Buffett continues to capture the minds, hearts and imaginations of many. Despite running a company currently valued at almost half a trillion dollars, Buffett and his partner Charlie Munger earn an annual salary of only $100,000.00.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jul102017

Too late for change?

When is it too late to change and when is it time to?

Change is part of the universe and there are many things we are capable of changing.

First to mind might be to change clothes, our hairstyle or diet. Next could be a change in attitude or the proverbial changing of our mindset. The list is endless of the things we can change and the same would go for the things we cannot ad infinitum.

The important changes in our lives are sometimes easy and sometimes difficult but the hardest part of change is realizing the need to.

Sometimes small corrections in direction or speed might do the trick when negotiating the roads, waterways or skyways if piloting a vehicle of some sort. Other changes could save our lives such as a change in lifestyle, diet or exercise. Change in financial habits can save us money or even make us more. Changing jobs or careers could make us both more money and more happy.

Changing our lifestyle might apply if one had chosen the wrong path in life which resulted in poor mental or physical health or just plain plunked us down in a group of people that were not conducive to our life expectations. Even changing locations or residences can result in monumental alterations from current situations.

What to change might be obvious or hidden. Why we should change is usually obvious but not always. Sometimes people see no reason to change and therein lies the most difficult part of altering paths.

For example, suppose an investor loses millions using a trading strategy that repeatedly fails. Or an overeater gets a note from his Dr. their blood pressure is too high and cholesterol is through the roof. In both examples, the need for change is obvious. But many times the need for change can be obscured. Ego can make change an admission of failure. Not an option for a person with a high ego. Addiction can mask the reason for change through chemical or mental euphoric and reoccurring “hits”, making any change not only undesirable but possibly painful because of the nature of withdrawal. A lack of will power might be to blame or perhaps external conditions such as finances or even incarceration might also make change impossible. The list is endless.

But the meaningful and willful positive changes in one’s life that are controllable, doable and deliberate can be rewarding in many ways. Financial changes can result in less debt and more income. Changes that address addictions can make for a happier and healthier life. Changes in lifestyle, career, residency or peer groups may make for better outcomes in the long run. Again the list is endless as are the positives from making such change.

Realizing there is need for change is step one. Regardless of what you think you need, like, require or are addicted to, taking a step backwards and being honest with yourself and your particular situation is required in order to change.

The need for change is not always self-realized. Others might drop hints, make suggestions or bring up the issue directly either through honest conversation or even the radical and often last resort of “intervention”.

No matter where you are or think you are, reoccurring negative outcomes and consequences are signs that perhaps something needs to change, and at least being open to the conversation with yourself is the beginning of possible change. If friends or family are making comments or even being ignored entirely, that could also be a red flag that perhaps something needs to change in your life.

Is it ever too late to change?

Arguably no. Eventually a change in direction albeit late in a cycle will yield at least some results. The sooner you make a change, assuming it’s a positive one, the sooner you will begin seeing positive results. Even change late in the proverbial game will likely help something.

Unfortunately there are things in life that cannot be undone as that is the way the world works. Somethings are permanent. You just can’t go back and undo them.

But I am of the belief, no matter whether it’s financial, personal, medical or what have you, the willingness to change does yield some kind of result, even if it’s just the improving the self-respect of the individual making that change.

Regardless of whether it’s early, right on time or even very late, the saying “it’s never too late to change” may be a concept we should grasp tightly and never let go.

It brings to mind something I heard once somewhere: “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference” (Reinhold Niebuhr (1892–1971).

Being a financial columnist, I will sum this up by saying it is never too late to change investing strategies. Better late than never certainly applies to revising a financial strategy that isn’t working. The longer you wait, the less money you will make by going to a more successful plan. And it goes without saying, the longer the wait to make a change, the more money you will likely lose.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Is the Market Up or Down?

The markets go up, the markets do down. One expert says we are in the midst of a strong recovery while another expert says we are days away from financial Armageddon.

Who is right and why is there always so much disagreement?

It is human nature to disagree and with each opinion comes yet another.

The real question most investors are concerned with is not if there is an actual recovery but which way the markets may go.

For only in an up market do most investors make money. We could be in a recovery yet the markets could plummet, or we could be headed straight off a financial cliff and the markets could still be rallying. The truth lies in the fact most investors only really want to know which way the markets will go and if their stocks will go up in value.

I have always said the stock markets of the world will reflect reality eventually but that their day to day movements are only the result of the perception of all the millions of players in it on any given day and at any given moment.

For instance, while the housing market was starting to turn down in a big way in 2007, housing stocks were still going up, as most investors didn’t see the coming crash and bought housing stocks right up until we were in the midst of the storm. The perception was that the real estate market was fine even though the statistics were starting to turn negative.

Housing stocks eventually reflected the reality of the bust and subsequently crashed and burned. One could draw the conclusion perception first kept housing stocks up then reality brought them down.

With that thought in mind, how do we know how much the markets of today are reflecting reality or just mirroring investor perception?

I like to parallel markets and economics with your personal finances except on a grander scale. By drawing certain comparisons to your daily financial challenges one might more correctly assess the macro economic picture in global stock markets and give us clues as to where we are actually headed.

Think of it this way. Imagine a neighbor who had new cars in his driveway and seemed to go on vacation every other month. His kitchen was recently remodeled and he wore the best clothes. Would you assume he was wealthy or would a part of you wonder whether he just was up to his eyeballs in debt? Your perception might be quite different than his actual financial reality.

Now fast forward to what you think you know as to the degree of consumer and government debt that exists today. What conclusions might you draw as to how healthy our economy really is? Are we running on the fumes of excessive debt or is the economic engine of America firing on all cylinders? Is the stock market running on perception or reflecting reality?

Answer these questions and you might be one step closer to assessing the financial health of our economy and therefore have a better indication which way the stock market will go in the near and far future.

This article expresses the opinions of Marc Cuniberti and are opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jun262017

Why do you own the stocks you own

Investors usually tell me they hold a variety of assets which might include stocks, bonds

and mutual fund in order to be diversified yet few can give me a specific reason for why they hold each investment. Somehow they believe holding a wide variety of assets is diversified, and while this is a partially true statement, the actual reason why this is true can be elusive.

Having clarity and focus in ones investing is tantamount to reaching financial goals. This means you have to be clear on why you own everything you own and how we reach that awareness is actually quite simple.

For instance, I own my shotgun not as an investment but for protection. I am investing in my safety and the safety of my family in case some bad guys arrive at my house late at night. I own my garden to give me food and own my car for mobility. I own my house for my family and I to inhabit yet many investors think of a house as place to accumulate retirement savings or invest for growth. While this might be true to some extent, during 2008/09 we discovered that perhaps that wasn’t such a good idea. Part of the reason for the housing bust was confusion on the part of investors on why we own our homes. Decades ago most people thought of home ownership as just that, a place to live. In the last decade however, the reason for owning a home morphed into an “investment” instead of a “necessity” and that’s where the trouble may have started.

The reason for holding money in a bank has also changed over the decades. When I was growing up, the banks paid me six percent interest on my savings. My Dad told me to save my money in the bank for the interest payments much like he did. Since banks now pay little interest, the reason for putting money in a savings account has changed. Now we put our money in a bank for safety, not for the interest. When investors complain to me they cannot make money in a savings account, I tell them that is not why we are there, at least it isn’t at this particular point in time. We have savings accounts and similar bank products for safety, not to make money. If we want to make money, we obviously must look elsewhere.

Many people hold stocks for growth. I do not. I hold stocks for their potential income as I usually don’t buy any stocks that don’t pay me money (dividends) to hold them. With the income they pay me, I may get the growth regardless of whether the market goes up or down. If the market does go up, I might do even better. If the market goes down, any payments I might receive takes some of the sting out. Keep in mind, dividends are not guaranteed and. having stocks that pay dividends does not ensure profit or protect against loss

Some investors might hold gold and silver coins in a bank safe deposit box for peace of mind against a possible currency collapse while others might hold gold stocks for speculation on the gold price.

Commodity funds may help guard against rising grocery bills while holding some Cd’s, Treasury bills or cash would tend to help preserve funds in a broad market sell off.

I could pay off my home mortgage, I don’t. I consider my mortgage as a way to help protect against inflation. (Inflation could allow me to pay off my mortgage with cheaper dollars) Others consider debt the devil’s own and avoid it all costs.

By detailing the reason you hold each asset, it may help clarify your portfolio goals and even cause you to perhaps alter its contents. Once you detail and carefully consider why you hold what you do, or at least ask the question, your investing plan might become that much clearer. The thought process of truly knowing why you place money where you do will go a long way in helping you reach your goals and allow you to better allocate your money where it may offer the maximum possible return, the possibility for growth and protection while providing clarity to your reasoning.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jun122017

Puerto Rico four feet up

Puerto Rico has gone four feet up in mouse terms, which means it filed for a bankruptcy of sorts. A territory of the United States, one could argue it ran its finances like much of our country, which is to say very poorly. Although a corporation would go through what is called Chapter 11 and a municipality the proverbial Chapter 9, Puerto Rico being listed as an unincorporated territory of the United States. (Wikipedia)

3.7 million U.S. citizens live there and with countless numbers of attempted but failed conversations and proposals behind it to restructure its debt, the time arrived where the Government there decided enough was enough. What comes next is likely to be a multitude of judicial rulings and countless back and forth negotiations between creditors, arbitrating authorities and Puerto Rican government officials.

$70 billion in debt is on the chopping block and with so much as stake and many hands wanting to dip into the available pie, expect the negotiations to be a long and arduous task.

The usual solution for such a problem is some sort of debt relief being granted in exchange for the indebted country (Puerto Rico) to go on some sort of fiscal diet. In other words, spending cuts and other forms of economic reform. With many historic examples of countries not being able to stomach such remedies however, debt restructuring is usually the entrée of day.

Why so many public entities get the fiscal affliction of unpayable debt is arguably one of life’s secrets but many theories abound. Overspending governments wishing to appease their constituents with a variety of social spending is certainly a factor. Over building is another.

Public improves in infrastructure and things such as education and welfare spending certainly contributes as any dollar spent adds to the mountain of debt. No doubt the popularity of such spending by the public also makes cutbacks in these areas unpalatable by politicians who wish to get reelected, which is basically the wish of politicians everywhere.

The rotating door of politics also plays a role, as each subsequent official will bear no responsibility for the spending of the administration that came before. With each new elected officials come their own ideas on what the next dollar should be spent on. With little regard or responsibility taken for the previous indebtedness, another program or plan is sure to be hatched with each new official in power. Little by little, each program and its spending adds to the mounting pile until such a time the pile of IOU’s become unmanageable.

No doubt, economic booms and bust, when they occur can also fool officials to overspend. During the boom times, government revenues roll in, and seeing mountains of cash in the coffers, officials succumb to visions of massive public parks with their names on plaques, immortalization of their persona as the one who “got things done” and other undertakings of grandeur or cause. Pet projects are instigated and improvement whether necessary or not or eagerly scheduled. When the boom inevitably turns into a bust, what was once an abundant stream of cash turns into an anemic trickle. At that time, the debt amassed during the boom loom larger and larger in the fiscal windshield. With huge entitlements and spending ongoing and in motion, the debt that was undertaken implodes under the weight of insolvency.

Regardless of the exact cause of unpayable debt, one truism becomes clear. With the funds spent , when it comes to paying it back, somebody is not going to get all their money back.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

"Risk-on" and "Risk-Off"

In the world of investing, there are two types of environments often referred to in media outlets which describe the general investing mood of the public. The terms often used are called “risk-on” and “risk-off”.

Risk-on refers to a positive outlook from investors as it pertains to the stock markets and the economies that drive them. Risk-off is the opposite of risk-on whereas when the term risk-off is used, it means there is a higher level of trepidation about economic conditions and therefore the financial markets.

During risk-on, investors are said to be more inclined to purchase higher risk assets which may have a higher potential for gains. Assets of this type might be such things as stocks and stock funds. Simply put, if investors are confident in the business and stock market climates, they are willing to take on more risk in exchange for the chance of higher gains. Influencing factors causing a risk-on environment might include favorable interest rates, little or no political upheaval (both domestic and foreign), healthy consumer spending and encouraging economic statistics from the reporting authorities.

Should one or more of these factors turn negative or appear to be deteriorating however, the investing public may begin to suspect things may worsen in any number of areas. With the specter of possible economic malaise on the horizon, a risk-off mentality may take hold.

The change from a risk-on to risk-off mentality can be sudden caused by an event like the 9/11 attack, an economic event or serious political strife, or it can be a gradual shift to a more pessimistic nature brought on by deteriorating economic statistics, bad employment numbers, or contagion from an overseas market or markets.

The possible catalysts for economic surges both positive and negative are many and one just has to think back to any number of events in our recent or not so recent past that has roiled markets or caused them to reach dizzying new heights.

The importance of understanding risk-on/risk-off environments is not to be underestimated.

Certain asset classes may have a tendency to sell off, rise or remain stable during these two opposite investing environments, and knowing the historical patterns of such asset classes may help the investor navigate such conditions.

A better informed navigation may result in lower losses or even gains during risk-off cycles while enhancing the possibility of greater gains during risk-on cycles. While historical performance is no guarantee of future results and no one can say for certain what will rise or fall and when, seeing what things have done in the past could yield some clues as to the mindset of investors and what they buy and sell during such swings.

Risk-on assets may be thought to include stocks and other traditional investments while risk off assets may be as simple as holding more cash or U.S. debt instruments. There are no hard and fast rules I can flat out list in the context of this article, but a knowledgeable financial professional should be able to enlighten you as to what exactly what assets one might hold in either a risk-on or risk-off environment.

As in all things, knowledge is the cornerstone of progress and the more you know, the better off you will be. An investor that understands market dynamics such as the risk-on/risk-off environment may be better equipped to make more informed and therefore better financial decisions when it comes to managing their investments.

As always, be sure to consult with a financial professional before making any investment decisions and do your own research before investing.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

May302017

Creating Money

The term Quantitative Easing refers to a government’s ability to create currency with the touch of a keystroke and is commonly called Money Printing. This ability to create something for free while the rest of us have to work for it is deemed necessary in order for the powers at be (The Federal Reserve) to control the economy. That the economy can be controlled by a central body is a subject for another day but the issue of money creation brings into play many market dynamics.

When governments print dollars, it causes the quantity of dollars in the economy to increase. Much like a bumper crop of bananas, increasing the quantity of bananas causes the price of bananas to fall. The same goes for dollars. Increase the quantity of dollars and the price of each dollar falls. This “fall” in the price of the dollar is exhibited thru its loss of purchasing power and we know that as inflation. This inflation is currency specific however. This means that more U.S. dollars causes the price of something to go up only in U.S. Dollars. Print more Swiss francs for example, the price of something only goes up in Swiss francs.

But what happens to the price of good when measured in other currencies?

Since currencies can be arbitrarily created by willing governments, the measuring stick for the value of each currency is essentially other currencies. They are, for the most part, measured against each other. Hence when the U.S. dollar goes down in value, the Swiss Franc would likely go up. This is not exclusive or automatic and there are many factors at play but you get the picture

A product bought using U.S. dollars may rise in price while the same product purchased in Swiss Francs may fall. This inverse relationship of currencies has a unique effect when it comes to exports (what we sell to foreigners) and imports (what we buy from foreigners).

If the U.S. prints more dollars and thus causes inflation here, it is said our currency gets weaker, making our imports more expensive. But conversely, it makes our exports cheaper to foreigners. By printing more dollars, our corporations tend to make more money because they sell more overseas but it also causes you and I to pay more for everything we buy as we use U.S. dollars.

For you conspiracy buffs out there, if the government was for the corporations, by the corporations and of the corporations, a money printing propensity would seem to confirm this theory. Of course, it is all up ones interpretation isn’t it.

By printing more U.S. dollars, our corporations do sell more, but since this inverse relationship works against a foreigner’s currency as well, foreign goods then get more expensive causing foreign corporations to sell less to us.

These foreign corporations then go to their governments and demand they print their currency as well, to keep up with our printing. They in turn weaken their currency by printing so their goods get cheaper again, and grand “tit for tat” encompasses monetary policy makers’ worldwide.

Its all adds up to a grand money printing race, with the U.S. being the leader as it is the largest consumer of goods in the world. In essence, when the U.S. embarks on massive money printing to fund itself, it forces the rest of the world to do the same.

In a grand race to devalue each others currency against the others so everyone corporations sell more stuff, the populace of each nation is doomed to higher prices caused by all those created dollars.

In conclusion, the U.S. is the biggest importer in the world, but is also the biggest exporter of its currency. An argument could be made that the end result is that the U.S. is exporting its inflation through its massive money printing machine.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

May222017

Trump Tax Reforms on the table

The Trump tax reforms are finally on the table. Well, sort of. Big in rhetoric but lacking in real detail, the rough draft is predictably causing the usual rifts between parties. Although his ideas on reform seem to be changing weekly as public response is measured by the White House, the stated mission is the often used term, Tax reform.

Don’t confuse this with simplifying the tax code which implies reducing the approximately 74,000 pages in the IRS code book. This might be one of few concepts most everyone would agree on yet Trumps tax reform is not reducing the actual tax codes but reducing the actual tax paid. The initial proposals in Trumps reform will no doubly be altered if and when it actually gets through the political process, here they are in condensed form:

- Cut corporate tax rates from the current 35% rate to 15%.

- Increase the standard deduction 100% to $25,000.00

- Repeal the estate tax in its entirety

- Eliminate the 3.8% surcharge on dividends and capital gains which fund Obamacare

- Simplify by reducing the existing personal income tax deductions. The implementation of this reform means eliminating all personal deductions now currently allowed. The exception being mortgage interest paid, charitable deductions and retirement contributions. These three are the most commonly used deductions by the majority of Americans. (It’s no wonder Trump did not target these).

Since most of these are revenue negative events for the U.S Governments income sheet, many are questioning how this loss will be paid for. The printing press notwithstanding, real solutions on how to make up the losses are a subject of hot debate. Treasury Secretary suggests lost revenue will be paid for by an increase in economic activity. This is the proverbial trickle-down effect, where an increase in economic growth will yield more tax revenue over time. Advocates of the Trump proposals may be referring to the Laffer curve, a theory which demonstrates there exists an optimum tax rate for the highest revenue. The Laffer Curve was developed by supply-side economist Arthur Laffer to show the relationship between tax rates and the amount of tax revenue collected by government. Increase the tax rate past a certain point and revenue actually decreases. To low of a tax rate also yield a figure less then optimal.

Contradicting that opinion is the Committee for a Responsible Federal Budget (CRFB) stance which tags the hit to Federal balance sheets at about $5.5 Trillion over the next decade or so. Ouch.

No doubt opinions differ depending on what side of the aisle you reside in and to which economic theories and models you believe. This analyst is of the opinion the Laffer Curve is to believed. The trick however is knowing exactly where on the curve we are at before and after the proposed cuts.

This article expresses the opinions of Marc Cuniberti and our opinions only and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

May152017

Investments Concerns over the new President

As a financial advisor, I have to analyze and communicate market information to my clients. They likewise should communicate their needs, expectations and preferences to their advisor as to what certain areas what they want do and do not to invest in if they have a preference, how conservative or aggressive they want to be and what their financial needs are both in the short and long term.

It’s a forgone conclusion to say that many advisors may have received phone calls from their clients regarding their concern over the Trump election and how his policies and actions as President might influence markets. Some clients have expressed more than a minor concern and some have even requested an all cash positon preferring to be out of the market all together.

Although definitely the most controversial president elected in recent memory, his actual effect on markets will likely be tempered by the reality of what he actually can and cannot do.

Our political system has many checks and balances designed to limit the power any one branch or person has and in that may lie the answer to the many concerns clients might have.

Any major policy action will require the support of the legislative branch and in many cases also the judicial branch of government. Although Trump may talk a big game that his many radical ideas will be carried out, in actuality, his hands will be tied on many issues as all Presidents hands have been.

That said, clients concerned about Trump policy will take some comfort in knowing that portfolios do not have to be all “long”. This means one does not have to structure possible gains around an exclusively rising market.

Proper allocation and a diversification of assets may have a tendency to counter balance each other no matter which way the market might go. Although no one can say with certainty that the performance of any investment will go one way or the other, advisors can allocate certain contrarian positions based on their historical performance. Keep in mind past performance of any asset does not guarantee success and a knowledgeable advisor will know that.

A mix of fixed income, traditional stocks and funds, cash and cash equivalents can be tailored to reflect a more conservative posture for clients concerned with the new administration. Advisors can also look to areas the new president has pledged support by reviewing his campaign promises and Trumps suggested areas and programs where funds might be spent by.

Although investors are correct in voicing their concerns, history has a pretty good track record in demonstrating it can be difficult in today’s political structure for any one person to drastically alter the landscape of the global financial markets considerably and for an extended period of time.

That being said, history never repeats itself so the old adage “never say never” comes to mind. If you’re concerned about the direction your investments might take in light of the current administration, a meeting with your advisor will be beneficial to insure your concerns are heard and your portfolio holdings reflect that concern. An experienced advisor should possess the knowledge to structure a portfolio to reflect the client’s needs and expectations at any point in the investment cycle. Your opinions matter and you should not be shy in voicing them, especially when it comes to your financial future.

After all, it’s your money.

Please remember discussions in this news piece should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. This article expresses the opinions of Marc Cuniberti. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249