Fire Insurance.

 

The very mention strikes fear in the hearts of homeowners. With the recent catastrophic wildfires wiping clean whole neighborhoods, an unprecedented situation has arisen not only in the scope of the destruction by those affected, but in the environment that California homeowners find themselves in obtaining fire insurance to protect their residences and businesses.

 

Facing skyrocketing claims at saturation levels seldom witnessed, insurance companies are pulling back their exposure to high fire prone areas by cancelling in masse’ homeowner policies.

Nevada County’s beauty comes from being surrounded by trees and brush and its the very reason for cause of its insurance problem.

 

Home and business owners are finding cancellation notices arriving in their mailboxes. Regardless of loyalty or claims history with a company, the notices keep coming with seemingly no consideration for any other factors. Basically if you live here and home happens to be in a designated brush area, expect a cold hearted sounding letter to arrive in your mailbox.

 

Few have been spared. Regardless of the amount of tree work you’ve done, or open space that surrounds your house, if you’re on a specific spot on the map (and there are many such spots) you’re probably going to be scrambling for a fire insurance policy.

 

With such wide spread problems, there is likely to be misinformation, wild claims and exaggerations, some name calling and a host of upset homeowners.

And there are.

The basic question now being asked is where can I find fire insurance and how much will it cost?

The answer can be distilled down to a simple answer for most.  You will be able to find a policy somewhere and yes, it’s probably going to cost you more. In some cases a lot more.

 

As in any screwy situation like what exists currently in the homeowner’s insurance arena, there is no steadfast rule as to what to expect. As a licensed insurance agent, and one deeply entrenched in social and news conduits, I have seen little that resembles normalcy. I can say the stories run from ridiculous to unbelievable to situations that almost appear almost like little has changed.

 

Some claim they can’t get any insurance at all (usually untrue) to claims they actually paid the same or even less than before (usually untrue as well). 

 

From recent my experience, and probably like almost all agents in Nevada County and California for that matter, the intensity of the situation is as new to us as it is to you. The phones are ringing nonstop as consumers scramble for coverages.

 

Experienced agents know coverage is possible for most but that coverage is also going to cost more. In many cases, I see costs rising from 200-250% of previous premiums. Those claiming their premiums stayed the same or went even down may not have looked at their coverages closely.

 

It’s a rapidly changing environment. The common belief is the insurance companies are immersed in a Frankenstein-like confusion of an untenable situation. Some say it’s all one big grand experiment in what has to be done and what will be done forced upon all of us by necessity caused by the workings of Mother Nature.

The questions being when you get a policy (usually not if), how much will it cost and what sort of coverage will I get. If God forbid my house is obliterated in a catastrophic fire like the ones witnessed in recent years, will the insurance companies be able to handle the onslaught of claims in a timely and efficient manner. These are questions that are difficult to answer.

 

Lord knows the insurance companies, much like the agents, are bombed with fire policies applications. They are also bombed with claims. Having to settle hundreds of homeowner claims as whole communities get incinerated is no easy task, and likely not a cheap one for the insurers. Hence the cancellations.

 

Remember insurance companies, like most companies, exist to provide a service and make a profit in doing so. If the profits burn up in a wildfire along with the homes they insure, they are within their rights to pull back from the market. In other words cancel you.

 

The good news is there is an entity called Cal Fair.  From Google: “The FAIR Plan is an association located in Los Angeles comprised of all insurers authorized to transact basic property insurance in California

In other words, Cal Fair is made up of many of the same companies that cancelled you but assembled in conjunction with the Department of Insurance to provide insurance that otherwise is not available. Much like the assigned risk program for problem drivers, you could say Cal Fair is for problem home policies, and in this case the problem is wild fires.

 

I’ll cover how Cal Fair works and the subsequent coverage issues in future articles. Just know for now, you will likely have little problem in getting a fire policy. Contact a licensed insurance agency for assistance and yes, they are busy. If you find you’re not getting a call back, try another agency. There are a host of reputable agencies and agents in Nevada County that can help.

 

This article expresses the opinions of Marc Cuniberti 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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. Mr. Cuniberti is a licensed insurance agent. California Insurance License # OL34249

I’ve done many media pieces on running a restaurant but apparently although many readers and fans of Money Matters are reading them, few restaurant owners apparently are. That said, we all want better service in our local eateries so let’s put out our peeves (suggestions) once again.

 

There are cardinal sins, forgivable oversights and outright stupidity when it comes to how to run a restaurant.

Have I ever run one?

 

Nope, but my father in law had one of the most successful restaurants in the second largest city in the world, Sao Paulo, Brazil. I learned some from him of course, but most of the suggestions border on some obvious do’s and don’ts and frankly I am surprised I keep seeing at least a few of these mistakes more often than not when I dine out.

 

The cardinal sins are so obvious but seldom is a restaurant error free. I can think of one or two eateries that just have it down, then there’s the rest. I eat out a lot and although I am not a food connoisseur by trade (whatever that is) I know good food when I taste it and good service when I see it. And vice versa.

 

I am also not one of those who give glowing reviews on every restaurant I eat at under the guise “they’re trying and I am nice person and don’t want to burn any bridges”.

 

Hey, I don’t like burning bridges either but what good is a review if every restaurant I review is positive?

On the contrary, giving honest reviews is no jab against an owner. It’s an honest evaluation on how to improve and therefore get more business. So what’s wrong with that? Also for every one person that complains there are likely ten more that don’t. That’s the Pareto rule of eateries.

 

So here we go. Make these mistakes and you’ll find empty tables at primetime if not at all times.

How many of these do you recognize or are guilty of?

 

A customer should never have to ask for silverware or napkins, salt or pepper.  I mean really. That’s kind of a no brainer but it happens more often than you would think. Owners: prepare your tables, and that include making sure they are clean, as in very. Also nothing is more unappetizing then left over food on the floor. Sweep up! Thoroughly and often. Check after every table is vacated.

 

Immediately upon sitting get their drinks! Don’t make them wait. Getting drinks right away makes customers more patient and if you serve alcohol, do it immediately. Like within 3 minutes. They’ll order more food, be happier, likely also order more drinks (a high profit item) and you‘ll make more money both on food and drink. Practice this one diligently and owners can increase check totals by up to 20%.  Remember alcohol stimulates appetite, loosens up the pocket book, trashes common sense (good for the restaurant) and patrons have a better time. Tell that talkative bartender to zip it and get on his horse and quickly mix drinks! This one is the easiest way restaurants to make more money (a lot more money) yet many just leave patrons sit for 5, 10 or 15 minutes before their drinks are served. Stupid. Let’s fix that right now!

 

Don’t be a show off and memorize orders. Write it down. Nothing makes a patron more nervous than a showoff server memorizing 4 orders with sides and specials. They will be looking for mistakes and its nerve wracking. Drinks maybe, but not complete food orders. Use a pad Einstein.

 

Serving cold food. I once had a waitress tell me after I told her the food was cold she would talk to the cook. Think about that one. The cook had to use HEAT to cook it. Cold food meant it sat. That is the servers fault period.

 

Serve all dishes at the same time. Nothing spells disorganization more than dishes arriving at different times. An amateurish mistake and shows a disorganized cooking staff. And don’t forget the toast! And if you do, get it immediately.

 

Don’t forget the ________ (fill in the blanks). Salad, toast, cream ,sugar, a spoon, drinks, sides. Whatever. Make sure they get what they ordered and at the right time and correctly.

 

Don’t serve brown or wilted salad or fruit. Fresh is fresh. Serving ugly or old greens mean it made it by the cook AND the waitress. Note very good quality control. Each person in the restaurant should have the authority to stop food from going out and asking for a correction.

 

Don’t bring dirty dishes or the wash tub to an occupied table. Yuch. And don’t leave the dirty dishes out for customers to see. I once was invited to the fanciest steak house in Portland and they had the dirty dish cart full of dishes in the entry way. I kid you not.

 

Know what the soup of the day is. I can’t tell you how many times I ask the waitress what the soup of the day is and they answer “let me go find out”. Really? Check at the start of every day!  And make sure its HOT!

Don’t ever say “I’ll get your waitress” for simple things like water or coffee.  Every worker should have the authority to serve coffee or get something for a customer. Every customer is everyone’s responsibility.

Don’t ask how the food is when you see patrons eating and talking. They’re obviously happy. Don’t bother them. Walk by and take a peek instead. If they need something they’ll stop you. Be subliminally available, always looking but never interrupt them with full mouths or while they’re obviously doing fine without you.

Don’t clear plates before all customers are eating and done. So many restaurant staffer and owners alike think clearing dirty plates from patrons quickly is good service. It’s not. It’s rude and make patrons feel rushed and some like to pick. Fancy restaurants that know what they’re doing never do this. Don’t clear plates or offer to until all patrons are completely done.

 

Ask patrons if they desire dessert. Better yet, tell them the desserts in detail without them asking. If it sounds good enough they might just split one, or better yet order a few. Suggestive selling works and it’s why the smart fast food behemoths do it. Even a breakfast or lunch can be topped off with that homemade pie. Yumm. More coffee with that sir?

 

Don’t make people ask for their check. Another amateurish mistake. After telling them about and/or serving dessert, ask them if they are ready for the check. Don’t make them ask and don’t just plunk it down like a wet fish. Be polite and gentle. It’s the money part, be nice about it.

 

Finally make sure your servers are nice and friendly. If they’re rude, have an agenda, are snobby or are the ‘b” word, get rid of them. They are your FACE to the customer. A rude waiter or waitress can make a customer not come back. Then they will tell ten friends. Word of mouth can make or break you.

 

And if you’re opening a restaurant, be ready on day one! Many will only give you one chance. Blow the open and say goodbye to your investment. It’s very difficult to recover. First impressions in the restaurant business are SO IMPORTANT. Don’t make excuses like “we just opened”.  If you’re not completely ready, DON’T OPEN. Then take the extra time to TRAIN your staff well. On all the above. And make it known anyone not onboard with this kind of knowledge and service will be shown the door.

 

9 out of every 10 new businesses fail. In the restaurant business, 14 out of 15 don’t make it pass the first two years. If you currently own a restaurant, review all your practices and make sure you’re not overlooking some of these no-brainers. Ignore at your own peril.

 

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979.

 

His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages and You Tube. The views expressed are opinions only.

About a year ago I penned an article about the recent, as in a decade or so, movements to destroy, relocate or otherwise deface historical artifacts like statues and monuments because of political correctness.

Civil war statues are moved from courtyards or courthouses, protesters deface or destroy them, sports team’s names are under fire, once famous food branding is altered or changed altogether. The list goes on and on.

 

My original article took the spin that an historic work of art or plaque, saying or allowing representation of, displaying or promoting, or just allowing such historic things to exist in today’s time no more says that you support whatever it was that it signified, just as removing or altering such a thing indicates that you don’t.

Here is an example to illustrate what I’m talking about:

 

A friend of mine got a pair of healing snakes tattooed on her leg and when I asked why, was told to represent she was healing from a past relationship. Such a story might also apply to a lovers name tattooed on one’s arm. She had one of those too. Go figure right?

 

The reality of it is just because you have a healing snake tattoo doesn’t mean you are necessarily healing and not having one doesn’t mean you aren’t.

 

The same could be said tattooing a lovers name doesn’t mean you love them anymore and not having one doesn’t mean you love them less.

 

Ditto for destroying or defacing, removing or altering civil war flags or statues. Just because you did doesn’t mean racism no longer exists and just because their on display doesn’t mean you support slavery.

Travel down that path and half the world’s art and artifacts would go up in a protestor’s puff of smoke.

These are historic artifacts and a part of our history, like it or not. I where we came and that applies to all Americans.  Many of these pieces are precious works of art.

 

So following their logic, if you could call it that, Rome killed Christians because of their religion. Obviously a restriction of religious freedom and a major violation of human rights. Shall we destroy all Roman statues or knock down the Coliseum?

 

Hitler attempted and partially succeeded in massacring an entire race. Shall we now destroy all the WW2 German artifacts? Or is it simply we pick and choose because of the amount of time that has passed.

Obviously Rome was a long time ago, so apparently it's ok we let those artifact remain. Wait minute, the Nazi regime was only about 80 years ago, and the Civil War 158 years ago. But WW2 artifacts are ok but the civil war is not?

 

Humm.

 

Something's not adding up. Perhaps those that want certain past representations destroyed because of bias yet allow other artifacts to remain have their reasoning  in who or what group was enslaved, killed or tortured rather than a blanket protest against discrimination itself?

 

Let’s see now. The Nazi’s targeted Jews and the Romans hunted the Christians.

 

Suppose I dare not go there.

 

In any case the logic is idiotic and the acts ridiculous. The hurling of rocks at civil war statues. The destruction of certain collector flags, the removal of a gold miner statue at a college in so called respect of the Native Americans because gold mining was a scourge of native lands. The removal of books like Huckleberry Finn from certain school districts. Even flying an American flag can get you into trouble in some places apparently because it means you support a certain President.

 

I would say “what the ----“ but this is a family newspaper and I’m supposed to be a respectable columnist.

In any case the latest in the saga of the destruction of American culture akin to the Nazi’s burning books the political correctness Gestapo have set their sights on Mel Brooks and his   award winning film “Blazing Saddles”. Those of you who saw it, and likely not many haven’t, know its contents. I won’t hash it out for the four or so people who haven’t seen the flick but just know it’s a parody on racism set in cowboy times.

It’s a ridiculous assumption to think Mel Brooks, a brilliant film producer, is a racist. In fact he is a Jew and made another film just as controversial called “The Producers” which takes a similar tact on the Nazi regime. And to destroy or not air the film or even protest it is another in many slippery slopes those that advocate such things are going down.

 

That the social warriors of correctness continue their zero tolerance practices against anything they find offensive, the irony and contradiction is too funny for words. Actually it’s not funny at all.

 

Considering all the works of art and books that the Nazi’s burned and destroyed, it’s a sick twist on life that those trying to preserve their so called perfect view of America, in aiming for a world with no references to intolerance to be left standing, that in course of their self-administered “purification” of America, they are not only wiping clean some of its history, they are acting a lot like the subjects they so abhor in the two Mel Brooks films.

 

Think that ever dawned on them? Not likely. They’re too busy trying to find more examples of intolerance that they can’t tolerate.

 

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214.

 

Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

The latest in economic figures out from the Commerce Department (CP) shows Gross Domestic Product (GDP) at 2.1%. GDP for the second quarter of 2019. GDP is defined as the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time. (Investopedia). 2.1% puts it on par with the post 2008 expansion which many regard as anemic (The 5 Min. Forecast).

Figures from the previous quarter (1st qtr. of 2019) were also revised downward and are short of the Whitehouse target of 3%.

 

Many economists argue GDP is non-representative of the living standard of the average American as the figure includes many parameters, adjustments and assumptions that don’t apply to the day to day living expenses of the consumer.

 

The latest figures show government and consumer spending as the biggest contributor with business investment woefully lagging. Stock buybacks by companies took up some spending and that kind of makes some sense. If businesses aren’t spending money on expanding, they might opt to spend some excess cash buying back stock from the public. By taking some stock back off the market which is what happens during a stock buyback, it has a tendency to lift the stock price. Not always mind you, as once again the caveat “nothing is for sure when it comes to the stock market” comes into play.

 

One of the big questions that seems to never leave the evening news when it comes to the stock market is are the GDP figures bad enough to prompt the Federal Reserves, here forth called the Fed, to lower interest rates again just like they did on July 31st, 2019 where they dropped it for the first time since the 2008 crisis. The most watched interest rate manipulated by the Fed (fed funds rate) went from 2.25% to 2%, a quarter percent reduction.

 

What’s the thinking when it comes to dropping rates?

 

From USA Today: “The Fed lowers the fed funds rate to stimulate the economy by making it cheaper to borrow money. Rates on credit cards and home equity lines of credit track the fed funds rate closely and provide more spending power for American”.

 

More often than not, in recent decades at least, what the Fed does can have a significant impact on market reaction. As always in the markets, one never knows what the market will do as a whole, and if economic conditions deteriorate, the markets may run in anticipation of a Fed interest rate drop in response. On opposite side of the spectrum, if the economy shows itself to be booming, where normally one might think that would prompt stock buyers, the opposite might happen. Good economic news might lead to a drop in markets as investors anticipate a Fed rate increase.

 

What’s to learn from all of this and how can we use it to guide our investing? In reality, the best move is not to worry about day to day movements in the markets. My personal opinion is the common belief of holding for the long haul exposes one to a 2008 type melt down and no one can say for sure whether next time it will stop falling like it eventually did  in 09 (-54.1 % loss October 07 – March 09- The Dow- Wikipedia). Who is to say next time won’t be worse right?

 

But day to day movements due to Fed interaction can be a flash in the pan. Economic fundamentals are a more reliable indicator, at least in my opinion, to better base investing decisions on, and those fundamentals can be better evaluated and communicated to you by an economic professional obviously.

Keep in mind investing involves risk and you can lose money. Consult a qualified financial professional before making any investment decisions and do your own research before investing. This is not a solicitation to buy or sell any securities. 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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. SMC Wealth Management and Cambridge are not affiliated.

 

His website is www.moneymanagementradio.com. California Insurance License # OL34249

With Bernie Sanders all but out of the presidential race due to a recent heart condition, the Democratic favorite seems to be Elizabeth Warren. But for the Democrats this presents a bit of a problem. Her and Joe Biden are neck and neck according to some poles.

 

Of course  Biden has his own political problems that will no doubt surface should he be the candidate to represent the Democratic Party. It would definitely be a battle and the perception of him being a good old boy and  white male candidate he may not appeal to some more left leaning voters. Elizabeth Warren on the other hand is leaning more socialistic than many in the main stream would prefer. The money obviously is more supporting Donald Trump with Trump having raised at least five times more money than the opposition. Apparently Wall Street fears  the socialism  represented by Warren and in an  attempt to compete with Warren, Joe Biden has also been more socialistic in his rhetoric of late.

 

That said the more well spoken and “cleaner” candidate for the Democrats in my opinion is Elizabeth Warren. No doubt this fact is scaring some Democrats as they realize that she may be just too radical and socialistic to be actually elected. Enter another candidate of which some may have expected but I did not. Apparently in recent polls Hillary Clinton is running third among Democratic candidates.

 

And she’s not even running. 

 

The rumor is that she will enter the race lead as a savior to the Democratic Party. Obviously the stench of the Clinton candidacy will rub some the wrong way but when you think about it, she would be the most main street in comparison to Trump. Fact is she has been close to the White House in her previous role both as first lady and in various appointed official positions.

 

Of course  the initial fanfare around a Hillary entrance would be great and that might give her enough momentum to make a serious challenge to the president.

 

She would be the first woman president and a president that, to the chagrin of many, is a buddy of Wall Street. No doubt the rumors of her paling up with her Wall Street buddies might be an issue, having made millions in speaking engagements to various banks and the like. This might hurt her some but in comparison to Trump those rumored connections shouldn’t hurt her much. I have to admit I was surprised when I heard the strategy and the possibility that she would be running. Although I won’t vote for her myself I think that particular possibility give the Democrats the best chance at a serious run at the White House. It will remain to be seen whether she can beat Trump but having heard it just a few days ago and dissecting the strategy, in my opinion it borders on brilliant. 

 

Keep in mind there will be people that will not vote for her no matter what, but compared to the other candidates that are in the race, this may be the Democrats only glimmer of hope.

 

Surprised?

 

I was.

Since the 2008 crisis, the Federal Reserve injected somewhere in the area of 5 trillion dollars into the banking system both here and abroad to help stabilize the financial system that was spiraling out of control due to the real estate implosion which began in 2008.

 

They also guaranteed another 7 trillion or so (https://michael-hudson.com/2011/06/how-a-13-trillion-cover-story-was-written/) of debt from various institutions.

 

It’s safe to say things have calmed down a bit since then, with the markets rising to new highs and the real estate market taking off the to the proverbial races since 2011.

 

That said, last week witnessed a blast from the past in an area the financial market the average Joe Blow doesn’t really understand or probably even know it exists. This seldom discussed but very important marketplace is the “Overnight Repurchase Agreements” (repos) mechanism.

 

The repo market is the plumbing of the financial system. Banks and market funds of all types rely on this market to finance their day to day operations. Billions of dollars flow into and out of this market daily. It’s where business and investment firms of all types draw on funds to operate, while still others deposit excess funds for safekeeping and possible income. 

 

The market operates funding for as short as overnight to longer terms.

 

From CNBC:  “In a repo trade, Wall Street firms and banks offer U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight, to finance their trading and lending activities. The next day, borrowers repay their loans plus what is typically a nominal rate of interest and get their bonds back”.

Think of it as a huge octopus taking in and handing out thousands of loans a second to various branches of business and markets.

 

If demand for funds increases, the interest rates paid for accessing these loans may rise. On the contrary, if demand falls off for this type of funding, interest rates might fall.

 

The interest rates on repos usually run about 2.25% and a baseline is set by the Fed although the rate in the day to day market moves up and down based on demand. The repos typically follow the Fed baseline rate closely however last week the repo rate rose to 4% then skyrocketed to 8%.

 

Known as liquidity, it simply means the demand for quick cash was soaring. Higher than normal rates can cause serious turmoil as the cost to institutions rise past what is budgeted and expected. 8% is regarded as extremely high to put it mildly.

 

As rates climbed the Fed intervened injecting close to 53 billion dollars into the repo market starting two weeks back. The injections happen when the Feds purchase Treasuries and other debt (known as agency debt) from the various institutions known as “Primary Dealers” in the group. This is a group of 24 big banks and trading firms that have an agreement to participate in swapping debt for cash and vice versa which acts like a gas pedal to the overall money supply in the system.  

 

The intervention was the first one since 2008. Ominous sounding, the recent increase of the repo rate past is considered normal was called “bordering on chaos” by a BMO Capital Markets strategist.

 

In an opposite move last year, The Fed started selling debt back to the repo dealers over many months to the tune of 700 billion in an attempt to rid itself of some of its holdings, which the Feds had stockpiled during the crisis. Now the Feds found it necessary to reverse some of those purchases as rates climbed.

This spike and subsequent move by the Fed doesn’t necessarily mean the environment resembles 2008/09 liquidity crisis but it definitely doesn’t make this analyst sleep any better.

 

Only time will tell if the recent machinations by the Fed solved the problem and it was a simple one-off temporary occurrence or a sign of something more ominous going on in the financial gearbox of the economy.

 

Before I sent article this to publishing, on September 18th, the New York Fed printed up another $75 billion to inject into the “repo” market — on top of another $53.2 billion the day before. On September 26, the Fed added yet another 71 billion and its becoming increasing hard for me to keep current!

 

It is getting more interesting by the day.

 

Who knows how much more will be added by the time you read this?

 

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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated.

 

His website is www.moneymanagementradio.com. California Insurance License # OL34249

I do believe either Presidential candidate Bernie Sanders is suffering from Alzheimer’s, is mentally ill, doesn’t really want to win and is sabotaging his campaigning or severely delusional.

 

In music there’s an old saying on radio: “and the hits just keep on coming”.

 

So let’s break it down for you.

 

Simply put, many of the economic plans some of the “whacked lefts” are coming out with are bordering on Donald Duck like. Sorry but no other words come out of my mouth as I read some of these proposals. Must be the type of coffee I’m drinking or something.

 

Anyway the first “deal’ coming from the whacks are the “New Green Deal”. Not new actually but a revamp of a previous fairytale, Bernie supports it.

 

If you haven’t heard the details, it’s like missing the fifth installment of “Nightmare on Elm Street’ or “Alien versus Predator”. In other words you haven’t missed much but some bodies idea of entertainment and a big waste of money.

 

Actually the movie titles fit quite well here. The Green Deal is basically a nightmare and monster attack rolled up into some bodies pipedream with no basis in economic sustainability. In other words, it’s like saying everybody gets a Lear Jet.  That would be nice but it’s not remotely feasible and the ramifications would be catastrophic. Imagine 320 million Lear jets flying around, and that would be just in the U.S.

 

So this Green Deal says we do away with Lear jets, in fact all jets, rebuild every building in America, and…..blah blah blah. You get the jest of it. Beyond crazy right?

 

So Bernie supports that. Then he comes out and says everyone should get a home. EVERYONE. I see.  On top of that all colleges should be free. Nice! Wonder what the colleges have to say about that. Last week he says he would also seek criminal charges against oil and natural gas company execs.

 

Whee!  What fun this is.

 

He calls these “programs” (lets you and I use the word delusions shall we?) “progressive, aggressive, timely and privileged”. 

Whatever.

 

Anyhow, if you can’t stop laughing, you better hold on to your lunch, because Bernie and his compadres in the asylum think a tax on the rich will pay for it all.

 

Well not “all of it” says fellow nutbag Rep. Alexandria Ocasio-Cortez.

 

Her plan calls for establishing a whole set of Federal banks to conjure up the money. “Conjure” is an appropriate word I guess. I am thinking: how does a bank go about “conjuring up” a couple of trillion dollars?

 

Oh wait a minute. I DID go to school and majored in economics so I know what that means. Conjure means print up. But wait another minute. Ocasio-Cortez also majored in Economics.  Whoa. This is really getting good and the plot thickens immensely.

 

So adding up all this stuff to see if we can really pay for it all and we get…… well, a lot of zeros. Like a whole lot of zeros. 

Nobody really knows how much it would cost to paint the moon a different color either and who would want to do such a thing, but since we’re all smoking something real good, let’s just figure 25 trillion to start shall we?

 

That sounds good. Likely not enough but enough to say “it’s nowhere near enough” and that’s good enough and by the way, not remotely feasible.

 

Unless of course these new Federal banks get nuclear printing presses with 7 speed automatic transmissions. Then maybe we could “conjure up” the trillions all these programs would cost. No mention how much greenhouse gases and raw materials would be “conjured up” rebuilding every building in America and building everyone a house, but what the heck. It’s a dream anyway and anything can happen in dreams.

 

Oh and the inflation it would cause? Oh gosh, I can’t even go there, not even in a dream. It would be that bad.

Seriously folks, these guys and gals are for real and there are millions of people believing this stuff. Mostly young and foolish folk, but there are some older smokers in there too.

 

In any case, back to Bernie for a rocking conclusion.

 

He won’t win. Not a snowballs chance they say. Not now, not ever.   But a derivative of him might. A lower calorie “light” version shall we say. And that will be dangerous enough.

 

Like the Nightmare on Elm Street’s Freddie Krueger who gets you when you fall asleep. Bernie is part of a dream, but the ramifications can be real if you close your eyes and fall asleep.

 

If anyone of these folks get even close to the White House, one of the first casualties will be the economy and America as we know it.  And the nightmare will only get worse from there. Stay awake America, stay awake.

 

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

Don’t look now but the so called “smart money’ is hoarding cash.

 

With ominous sounding economic news headlines peppering the media like “yield curve inversion” and prognostications of a coming recession, there is another not-so-publicized event happening which has might also be pointing to stormy seas ahead in the stock market ahead.

 

The “rich’ as they’re called are supposedly hoarding cash in significant amounts. 

 

CNBC reports spending by those that can have reduced their buying of real estate, jewelry, retails stores, and toys such as boats and classic cars to name a few.

 

Reports have the middle class still opening their wallets, but the thought is when the very rich stop buying or a least slow down their spending and start banking the cash, there is a very good reason.

 

For instance, luxury retailer Barney’s filed for bankruptcy and no other than the famous Nordstrom’s is seeing three straight quarterly declines in sales. (Bloomberg). Manhattan real estate priced over 1.5 million have seen their sales fall 5% during the second quarter of 2019 (Redfin).  Playgrounds for the rich and famous like Aspen and the Hamptons are seeing similar anemic results compared to past years.

 

Million dollar and up automobiles, another favorite toy of the super-rich are also finding the same lack of exuberance. Art auctions are down with a 10% decline at Sotheby’s and a stunning 22% at Christies from a year ago.

 

I would imagine few people will lose sleep or shed tears over such facts, but the recent pullback in the spending of the wealth can be an indicator of something that will have farther reaching effects than just a drop in sales figures at the exotic retailers and “toy” sellers.

 

The top 10% of earners amount for about half of consumer spending (Moody Analytics) and if that’s the case, when the rich stop spending, overall economic performance may start to suffer.

 

When the wealthy are not spending, they are stockpiling cash.

 

Although the middle-income people have picked up some of the overall slack, slowing job growth could affect that as well.

The rich also own the lion share of stocks with 80% attributed to this high income group. They also own the majority of large businesses and businesses that export to other countries.

 

With tariffs the talk of the town, a tariff war could combine with an overall business slowdown and lagging stock market, giving the superrich yet another reason to close their wallets.

 

Although comparatively few in numbers, the rich control a large proportion of the wealth, and when that wealth stops moving or even slows down, history shows so can the general economy and the rest of us with it.

 

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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

They say first impressions are the most important. I have to admit what I expected to see when Insurance Commissioner Ricardo Lara showed up at the local town hall meeting on fire insurance and what I saw did not exactly mesh, at least for me.

 

What I expected was a seasoned insurance man, in the know about the insurance business hardened by years of experience. What I saw was a handsome, strapping younger gentlemen, dressed in peg-legged jeans, cowboy boots and a Nehru type shirt, tight fitting around rather impressive biceps, all indicating this man spent at least some of his waking hours in the gym. Not exactly the fat old guy in a tie and suit that I expected.

 

Lara’s background as it turns out has little to do with experience in the insurance industry. Born in Commerce, California, Lara is the son of a formerly undocumented factory worker and seamstress from Mexico. Lara attended Los Angeles Unified School District schools and graduated from San Diego State University, where he earned a Bachelor of Arts degree and served as student body president. He is currently pursuing a master's degree from the University of Southern California.

 

A longtime Assembly staffer, Lara worked as Chief of Staff to Assemblyman Marco Antonio Firebaugh (D–South Gate) when Firebaugh served as Majority Leader. Lara later served as Fabian Nuñez's district director during Nuñez's time as Speaker. He then served as communications director for Assemblyman Kevin de León (D–Los Angeles). (Wikipedia).

All this has to tell you something and you got the feeling he was to be protected and isolated the entire time he was there and he was.

 

From the onset, a celebrity like aura engulfed the building. Photo ops and handshakes occupied the first 15 minutes and after the obligatory thanks you and introductions from those that do such things, Lara took to the stage in front of a video screen that I imagined would act as a security blanket and guide all in one.

After all, it’s easier for the speaker and audience-distracting if they, the audience, have a TV to watch instead of focusing their entire attention on a speaker. It’ the reason I use no such visual complements when I speak. I WANT the complete attention of the audience.

 

Not one to jump to conclusions however, I let the cameras and microphones roll and sat back to see what nuggets of wisdom and subsequent action Lara was to bequeath to the room full of anxious homeowners and insurance professionals, dignitaries and wannabes that were in the packed house that was the Foothill Event Center on August 22, 2019.

 

He started out by what I perceived as a prepping us for a watered down presentation what was to follow by saying the department somewhat has its hands tied and “is trying” to get the insurance companies to do this and that.

Oh boy. Starting with the “poor us” theme didn’t instill a lot of confidence, at least in my mind, and probably a few others in the room as well.

 

Flipping from slide to slide, Lara attempted to instill some sort of rebound by illustrating some of the problems homeowners were having obtaining, keeping and paying for fire insurance.

 

Tell us something all of us in the room don’t know sir.

 

I have to admit I was somewhat taken in by his charm and good looks, as I’m sure others were, and gave him the benefit of the doubt that this was a sincere and caring man in front of me. That said, I caught myself shaking my head thinking “if this is our main defense against the huge conglomerates that are the insurance companies, we’re all screwed.

I kept thinking as the slides slipped by illustrating little but visual lip service, this vegetarian type of presentation resembled the Beyond Meat phenomenon. Beyond Meat is a company that makes vegetarian hamburgers that look and taste like meat but have no real meat in them.

 

Yea, the evening was kind of like that.

 

Lara dived into what I perceived as a less than critical “honey do’ list of things the department was trying to implement such as longer notification times for cancellations and such. I’m thinking “we all came tonight because insurance is so damned expensive, not because a 45 days’ notice is too difficult to understand.

You get what I’m saying here?

 

After an hour or so, and without questions, the commissioner left the stage and ended what was obviously a very well prepared presentation. In the old days it was known as the proverbial “dog and pony show”.

 

Hearing him speak and in speaking with him, I perceived mostly lip service, generalities and prepared responses to the same old questions he was hearing in the green rooms of the many such presentations he was giving on this road show.

After a few more smiling photo ops with those waiting in line to shake the hand of this handsome gent, Lara was whisked away in a waiting black SUV (yea I know) and in his place two topic knowledgeable non-politicians fielded handwritten and prepared questions taken earlier from the audience by staffers.

 

If there was meat in this dish, we got a taste of it from these two. For more than an hour, they answered honestly and diligently every question handed them, and it was here that we learned at a bit more about the department and its machinations that are taking place addressing this very serious issue.

 

I have to at least give the Department of Insurance (DOI) some credit for making the effort to address the fire insurance issue in California by these ongoing roadshows, if not really making a lot of real headway on the main issue of insurance costs, but holding the hands of nervous and concerned homeowners. In the final end however, when I think of whom I saw from the DOI at this town hall meeting, then picturing them going up against armies of Ivy League educated CEOs and VPs of huge and powerful conglomerate insurance companies, in reality these DOI folks don’t stand a snowballs chance in hell, or should I say our house’s chance of survival in an out of control wildfire.

 

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages and You Tube. The views expressed are opinions only.

One of the fastest growing sports in the nation is video gaming. Called E-sports, some might debate whether it’s really a sport at all, but what isn’t in debate is the explosive growth both by players and spectators. E- sports is competition between players where they play a virtual game of some sort on TV screens. You can play with friends in the same room or compete with someone in another country via electronic connection. Think internet of course.

 

Although E-sports runs the gamut from car racing to all the real sports like soccer and basketball, the war type games are the most lucrative. And when I say lucrative, I mean to both the companies that make the games and to the players that play it.

 

E-sports is fast gaining in overall revenue on the real sports. Not the cost of waging war mind you but in revenue generated. The MLB (professional baseball) generated in excess of 10 billion in 2017. The NFL garnered 13 billion, and although revenue last year from E-sports was a paltry 850 million in comparison, it is projected to explode to 1.5 billion next year. Given all the other sports in the real world attracting the public’s money, it not a far stretch to envision E-sports in the multi-billions in 2020 or beyond.

 

Just last month, one of the most news worthy competitions were held in a popular game platform called Fortnite, a shooting type game where up to 100 players all battle in various landscapes where the last man standing wins. The grand prize for the player who wins ‘Fortnight World Cup?”

 

A cool 3 million.

 

It doesn’t stop there. Fourth place will take home over a mil and every “finalist” earns 50 grand.

Somebodies watching, and playing.

Next month Shanghai will host another similar competition called “Dota 2”. What is the total prize money tossed this pot? 30 mil.

 

Whoa.

 

As money pours into the industry, the companies that make and support such things will also grow.  Already rife with video gaming companies, developers and other supporting cast members, Wall Street seldom sleeps on huge conduits of money opening up, and the list of publically traded companies only continues to grow. There is even baskets of E-sport companies offered up for investors not willing to take a chance on only one company.

 

But don’t just hit your stock controller button to buy any and all video gaming stocks just yet. With oodles of money don’t necessarily come oodles of profits. As in all potentially explosive investing areas to play with your money, they’ll likely be big time winners and others that will blow up just like the ongoing explosions in their games.

 

Video stocks can be volatile. Just google up the last 12 months price action to sober up your enthusiasm. As in all investments, it best to consult a qualified financial professional before making any investment decisions and order up the prospectus on any security you are considering.

 

Remember, although E-sports is all about playing, when it comes to investing your hard earned money, playing around is the last thing you should do.

 

This is not a recommendation to buy or sell any securities. 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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Amassing wealth takes some smarts. Whether learned in school or just on the street of hard knocks, how to amass wealth can run the gamut from going to college for a vocational degree to learning how to cut wood from your father. Not all wealth will be equal of course, and how much wealth you garner may have to do with how much education you have.

But not all wealth gathering strategies center around collecting wealth in order to amass it. Some wealth building ideas have more to do with not being careless with what money you have already.

A common theme among many I meet who struggle for wealth is the careless spending of it. Obviously the more you spend, the less you retain. And since building wealth means stockpiling a bigger and bigger pile of cash and assets and then letting it compound, spending it depletes that pile.

I am not talking about an extra Starbucks a week. Those tiny dollars add up yes, and saving even a few dollars once a week can add up to real money. Where I see people really act stupidly is the spending of money they may get as a windfall or lump sum, or spending it on things they shouldn’t be buying in the first place. I know it sounds like I’m about to cast a judgment on what people should and shouldn’t buy, but it’s more like how they buy what they buy.

Money is more effective in chunks, meaning it’s better to get a thousand bucks in one lump sum then a dollar a week for a thousand weeks.

One the biggest mistakes I see folks struggling for funds make, and indeed those who have even a moderate amount of funds,  is to buy a new car. Heck, I see waitresses, masseuses, housemaids and similar low paid service workers buying a new car under the auspices they deserve it, or perhaps telling themselves they want a car that won’t break down.

In the old days the car ads used to show the sale price. Now it’s all about the payments. Buffered by ridiculous low rates from the Feds, car companies can afford to offer super low payments for terms that last next to eternity. Keep the client paying interest for years does two things: racks up the interest and makes the payments lower.

That’s good for the car companies and those that provide the financing but not so good for that low income consumer. They end up paying a lot more for a car and the low payments mask the real damage a new car decision has on a person’s financial health.

In my opinion, unless you’re making at least 4 times poverty level for how many family members you have, you shouldn’t be buying a new car. In fact, I have never bought a new car because the decision is so financially stupid I can’t bring myself to do it.

When you drive a new car off the lot you immediately lose about 10-15% of the value of the car because once it’s used, you can’t ask a new car price for it.

Buy a car a year old or so however and you get a car at its market value and usually one that still looks brand new. You also still get a factory warranty and pay a lot less for the car to boot.

Not so once you drive a new car off the lot.

If someone buys a $25,000 car (a modest price by today’s standards), if you add in the interest, you are robbing your future self of at least the price of the new car, and probably many times that in financing and lost opportunity cost.

Spend $ 25,000 on a new car.  At 6% interest for 5 years you’ll end up paying close to paying $35,000.

Now let’s flip it over and pay $10,000 for a used car and look at the opportunity cost of the funds you saved.

Assuming a 6.6% return on stocks, run that out 25 years and $25,000.00 you didn’t pay is now worth $129,000.00.

Looking at it simply, your new car cost you $129,000.00 in lost money. . Even if the market returns less, you will make a relative bundle.

New cars? Worth the money?

In my opinion, absolutely not. And why I’ve never bought one.

And now you know why you’re still broke.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

Well you have to admit, crazier things have happened but not many. Bernie Sanders, presidential candidate and democratic socialist (kind of like being half pregnant and a contradiction in terms) and millionaire (go figure) posts some strange endorsements on his official campaign website page. https://berniesanders.com/anti-endorsements/

That a semi-socialist would run in a capitalistic country (still thank God) and think he has a chance to win is odd enough, but what his endorsement section looks like makes one wonder just how sane this 77 year old is.

Not that I am knocking or endorsing him myself mind you, but being an economic guy and self-professed capitalist, I have to call out folks who I perceive are posting stuff that makes one question if the grey matter within their head is sound enough to run a small country, let alone the most powerful one on the planet.

Apparently other likely much smarter folks then me have entertained that thought as well and it becomes rather obvious when you look at what some pretty powerful and successful people are saying about him. Bernie had the guts (maybe there’s a better word for it) to actually list what’s being said about him on his official page, thinking these types of things will help him get elected. Quoting Franklin Roosevelt on the section above the anti-endorsements: “Judge me by the enemies I have made”.  Ok Bernie, we will do just that.  

  • ·         “In 2016 I saw Bernie Sanders and the kids around him. I thought: ‘This is the antichrist!'” — Home Depot Co-Founder Kenneth Langone
  • ·         “If Bernie Sanders became president, I think stock prices should be 30% to 40% lower than they are now.” — Billionaire hedge fund manager Stanley Druckenmiller
  • ·         “Just because it resonates doesn’t make it right.” — JPMorgan CEO Jamie Dimon Sanders’ wealth tax proposals on the rich
  • ·         “Bernie Sanders, in my opinion, doesn’t have a clue.” — Leon Cooperman, a former partner at Goldman Sachs
  • ·         “The senator’s uninformed views are, in a word, contemptible.” — Former Verizon CEO Lowell McAdam
  • ·         “All of these proposals, Sanders’ proposals, they are just going to kill growth.” — Hardees and Carl’s Jr. CEO Andy Puzder on Sanders’ plan to raise the minimum wage
  • ·         “How many jobs have you created?” — Disney CEO Bob Iger on Sanders’ calls to raise wages at Disney
  • ·         “GE operates in the real world. We’re in the business of building real things and generating real growth.” — Former GE CEO Jeffrey Immelt after Sanders called out the company’s greed
  • ·         “It has the potential to be a dangerous moment,” Former Goldman Sachs CEO Lloyd Blankfein said of Sanders’s campaign
  • ·         “Remember, the basic problem of inequality is a fact that people are born that way.” — Former Fed Chair Alan Greenspan on Sanders’ agenda
  • ·         “He’s the enemy of every entrepreneur that’s ever going to be born in the country and has been born in the country.” — Home Depot co-founder Bernard Marcus

I really get a kick out of Alan Greenspan’s quote. Born that way Alan? No comment but although it is said all men are created equal, you have to wonder sometimes.

In any case, there is a lot of pretty accomplished people in the lineup against Sanders here and all of them have a LOT of real business world experience. Again look at their job titles.  I might repeat Disney’s Bob Iger’s quote by asking “Hey Bernie, just how many jobs have you created?”


One might argue these folks are all capitalists and yes, anyone in business is or least should be if they are to be successful. In fact I never knew a business man who stayed one adopting socialistic principals. To be successful you pretty much have to be a capitalist in my opinion.

Concluding now, I doubt Sanders has a snowballs chance in you-know-where and more likely the Democratic candidate will be another multi-millionaire, Joe Biden, perceived by many to be more moderate. He’s just as rich as Sanders if not more so.

You can’t make this stuff up. Comedy Central here we come.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

Famous investor Warren Buffet, in a recent article New York Times articles entitled: “Warren Buffett’s Case for Capitalism”, claims a capitalistic society is the best system for America. “I’m a card carrying capitalist” said Buffett.

In recent years, capitalism at least in some circles has been blamed for income inequality, the rise of excessive corporate greed and the plight of the American worker.

On the surface, the negatives to our capitalistic system seem valid. The average worker is finding it harder and harder to make ends meet as the stock market hits all-time highs.  The polarization of the two seems clear and it’s easy to draw the cause and effect conclusion that one has led to the other.

That would hold true if our system was truly capitalistic. And although the American economy does retain some aspects of a capitalistic system sadly, many of the most important checks and balances of capitalism have been removed or compromised by meddling governments over the decades.  

Those hating on capitalism largely get their information from the many news media outlets, most of which also don’t understand capitalism and hence don’t report on the important aspects that are missing in today’s America. Without such education and hence media exposure, Americans are left to only misinformation about their economy, and hence push unknowingly to destroy it.

Capitalism is not synonymous with corporation greed and income inequality. In fact, capitalism will correct most of both corporate greed and income inequality as well as many of the other negatives we see in today’s American economy.

To begin to understand these concepts, know that at its roots, capitalism is nothing more than someone going to the store and buying something with their own money at the price they find acceptable and from someone who is willing to sell that something for a price that is acceptable to them. 

Everything else the economy functions on are just offshoots of this basic premise. Some of the basic concepts of capitalism include free choice, the right to private property, the right to work and the right to negotiation. Sounds logical, and it is.

Left alone capitalism allows for and protects these basic premises. Start tweaking capitalism and distortions arise. Think of a tire that is perfectly round and each tweak of capitalism adds a lump in the tire. The tire now starts to wobble and its efficiency wanes. The more you tweak it (add more lumps) the worse it rolls.

Such is the result of the interference in capitalism, which is usually caused by a central government.

Capitalism isn’t perfect. No system is. But it is the best system. All others are worse, and some economically fatal.

But in the imperfection that mankind and our world is by nature, some think they can improve on this reality.

Of all the imperfections that is our physical world, the economic reality with the most effect is economic truth known as scarcity.

Simply put, there is not enough to go around for everyone to have everything they want. That some won’t accept this fact is delusionary. It’s a fact, and no amount of hoping, wishing or economic manipulation will change that fact.

Enter Capitalism, the most efficient method for distributing the inherent scarcity of goods. It’s not a perfect system, but it’s proven to be the best there is. A perfect system would have to eliminate the reality of scarcity, but scarcity is an economic fact and it cannot be eliminated.

To accomplish the distribution of scarcity in the fairest way possible, free will must be maintained. Only the voluntary construction of goods for an agreeable exchange allows the continuance of the economy.

Introduce mandate or remove incentive and the system eventually collapses. Incentive is simply the reason people work and hence produce. Remove the incentive and forced labor by some means is the only alternative. Either that or starvation, neither of which is an improvement over scarcity. Scarcity isn’t perfect, nor is it always comfortable, but it is a fact. There will always be scarcity. And instigating any system that removes incentive will lead to more scarcity. For without incentive, some will not work, and hence not produce.

Capitalism maintains incentive at its highest and therefore allows for the most production of goods and services, which minimizes scarcity the most over other economic systems.

It’s the best we have.

Specifically, in capitalism, excessive profits are throttled by competition (without cost to entry which is usually increased by government), and although owners will always make more than workers (there’s that incentive we talked about to start a business) income inequality is reasonable by maintaining sound money where as unsound money (inflation) which increases income inequality, is brought about by government.

Reasonable employment opportunity is maintained by the healthy economy brought about by the previous two mentions and maintained by incentive (if though shall not work, thou shall not eat). Again we find government at contributory fault as government has a tendency to remove incentive through taxation and entitlement programs (free money). Criminality is punished in a capitalistic system unlike today where our lobby system and the big money get-out-of-jail card is fostered by and encouraged by government and their cronies.

The few holes in the capitalistic system (environmental and monopolies) can be easily monitored by a minimal (MINIMAL mind you) central government.

Capitalism is not a perfect system, but it’s the best we have.

Its premise is liberty, which is free will and the right to perform, or not perform, as the choice may be.

You have the right to do what you want, as long as it doesn’t infringe on the rights of another. Pretty simple stuff. All the other systems they’re proposing are merely pipedreams.

Not surprising considering what they’re allowed to smoke nowadays.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

In my opinion, no one group arguably played a bigger part in fostering the housing boom then the National Association of Realtors (NAR) and their member agents.

Raking in millions in real estate commissions throughout the bubble, this group has strangely enough avoided almost all blame from the media for the 2008/09 real estate blowup that almost brought down the world’s financial markets.

By selling all those homes, in my opinion the realtors had a direct hand in placing millions of families in over priced homes subsequently causing the devastating losses to families and their balance sheets when this house of cards came crashing down.

Self professed “experts” in real estate, you have to wonder how this group was taken entirely by surprise when their asset of expertise was in an obvious bubble apparent to anyone caring to look at the figures instead of the hype.

History is rife with examples of asset bubbles and their collapses and many of which occurred in real estate. In most recent decades occurring in Japan in the 80s’, the Hawaiian real estate bubble driven by Japanese demand, Texas real estate during the onset of the oil boom and even reoccurring bouts in Florida, the vacation spot of the working class.

Although mainstream media and even Washington overlooked what was happening, many analysts, including this one, (listen to my Money Matters show entitled “Real Estate” which aired in 2006) shouted from the roof tops that housing was severely over valued and was in the midst of the biggest bubble in economic history. It literally encompassed everyone from investors to mainstream America.

Placing millions of families in the largest investment of their lifetimes, one would think the NAR would have dug a little deeper into what was really going on in their asset of specialty. After all, the signs were visible to anyone who bothered to search farther then the evening news.

Once the housing boom started to implode, housing groups went crawling to Washington

for bailouts, tax credits and incentive programs, all paid for with public monies.

The size of the realtor lobby is huge, and coupled with the sad stories of homeless families, public monies were soon showered into real estate markets via incentive programs, promoting more home sales and adding even more to the commissions received by sales agents.

Add in the foreclosure glut, short sales and distressed property liquidations and the commissions kept flowing in a seemingly never ending stream to the same people that had a major hand in promoting the mess.

Still touting the same old mantra “It a good time to sell or a great time to buy”, I can’t remember a time when it wasn’t either a good time to sell or a good time to buy according to the realtor members.

The bottom line here is if you believe this malarkey, then it’s always coincidently a good time for them and their commissions as well. No wonder it’s always a good time buy or sell.

You have to wonder with all the head hunting that went on looking for fish to fry for the 2008 housing blowup, why hasn’t anyone named the pushers of the very thing that caused it all, the realtors?  The starched-haired guys and gals that sold all those homes.

These so called, self-professed “experts in real estate” got more egg on their faces when it all went to hell yet they ended up raking it in once again on the foreclosure bonanza in the years that followed. Talk about double dipping.

Realtors.

It’s about time somebody named them and I just did.

 

This article expresses the opinion only of Marc Cuniberti, host of Money Matters and Moneymanagementradio.com radio shows carried on 65 stations nationwide. Mr. Cuniberti holds a degree in Economics with honors, 1979, USD, is a registered financial advisor representative for Cambridge Investment Research Advisors, Inc, a registered financial advisor, His website is www.moneymanagementradio.com. Licensed California Insurance Agent #0L34249. He can be reached at (530) 559-1214.

Today we’re straying off money economics and delving into the topic of investing in a sport.  And why not? Investing your time into learning a sport is as valid topic as investing ones money.

You’ve heard time is money and spending the time to learn a sport, much like investing, must have some sort of payback. The obvious payback to any sport, besides the lucky few who make oodles of money from it or become famous (think the NFL or NBA), is the enjoyment one gets from playing. The investment part is how much work (practice) is required to be able to get good at it and subsequently enjoy enough to make the time learning it worthwhile.

Some may call it a learning curve and we have all tried one sport or another. Some sports we have stuck with, others we may have given up for whatever reason.

Obviously the harder a sport is to learn, the flatter the learning curve. I’ve played a number of sports and spent literally decades in martial arts. So much so I earned my instructors license in a hard style of Karate and was good enough to make it on a college university Karate team. I also ski and play golf, racquetball, tennis, football, baseball and host of other sports.

One of the flattest learning curves I have ever experienced (in other words the hardest sport to learn) was windsurfing. This particular sport was so hard to learn if I had been any older (I was in my mid 20’s) I would have given up. But I learned it after hundreds of dunks and was so exhausted falling off and getting back on the board, I must have burned a million calories. I did after much pain, learn and enjoyed it immensely.

On the flip side about two years ago I was introduced to the game of Pickle ball.

Having played racquetball for decades, and tennis, upon picking up a pickle ball racquet, I found it the easiest game on the planet to learn. Being the fastest growing sport in the country, obviously many others have found it easy to learn and get proficient at it as well.

How easy is pickle ball?

Literally stupid easy.

So easy in fact, it seems everybody claims to be an expert at it. I have to admit, I have met more people I know that play this game, and although I haven’t played it more the handful of times, my racquetball experience has bled over to pickle ball and I will bet anyone willing to play me I can either beat them or give them one hell of a game. It’s that easy, at least for me.

I think I’ve figured out why so many tennis and racquetball players, and indeed the average Joe and Jane are gravitating to pickle ball. The investment in time to learn it is minimal.

Literally anyone who plays it can get proficient at it in a surprisingly short amount of time. That’s one payback. There are many others that keep people coming back.

Unlike tennis, one gets a lot more hits at the ball without having to chase the ball very far.

Pickle ball is like giant ping pong, played with a whiffle type plastic ball and oversized wood or plastic paddles. This means the ball doesn’t go very far and you can whack the hell out of it.

The court is dinky so the distance from one end to the other is but a few steps. That means both old and young, able and un-abled bodied people can play. I’ve seen people with oxygen tanks on the court, people with limps and bad knees and older women who can seemingly barely move be able to give a competitive game.

The rules are simple and I think the real hooks are it is, like I said, stupid easy, and one gets ten times the hits per minute than any other racquet sport. You also don’t have move much and did I mention its crazy fun?

In investing terms, the payback far outweighs the investment. And people from all walks of life are picking up a paddle and trying it.

You can contact your local pickle ball club through the national website at https://www.usapa.org/.

There are clubs literally everywhere and more and more cities are putting in courts. Compared to tennis and other sports, pickle courts are small and inexpensive to build and maintain, and everywhere I go it seems there’s somebody playing and it’s easy to rotate in wherever you go.

There is a downside to this sport however, at least for me.

Since it’s so easy, everybody thinks they’re an expert, and you’ll find more than a few people will be willing to step in and help you out sort of speak.

However for a person like me who has spent his whole life playing a variety of sports, I find the constant kibitzing quite irritating.

Yea, I got it. You hit the stupid ball.

Pickle ball. Give it a try. You’ll love it.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages and You Tube. The views expressed are opinions only.

Laddering

 

Laddering is a strategy investors can use in a variety of asset classes. Laddering is structuring a number of similar assets with differing time periods or maturity dates. In my opinion laddering is best explained by using Certificates of Deposits (CD) that you would get from a bank. 

To ladder a group of CDs, an investor would buy a group of CDs with differing maturities.  Typical lengths of CDs are 21 days, 1 month, 3 months, 6 month, 7 months, 9 months, 1 year, 2 year, 3 year, 5 year, and 10 years. There are 11 CDs above with 11 different maturity dates.

An example would be to buy one CD of each length above. This would mean the investor would have a CD coming due according to the maturity dates above. This accomplishes two things. It means the investor would have cash due him when each CD matures, continually making cash available for up to 10 years with 11 dates in total had the investor bought all the CDs listed. Of course not all 11 have to be bought. An investor could buy as many or as few as he desired. In addition to having an amount available at every maturity date, the investor would get a different amount of interest paid to him with each CD. The longer dated ones would usually pay a higher amount with the shorter duration paying less. This is not always the case such as when the yield curve inverts, an event typified by shorter maturity dated CDs paying more than longer dated ones but that occurrence is rare and is a story for another day.

Although the longer dated CDs pay more interest, they are more susceptible to movement in the economy’s general interest level. Since your interest rate on a CD purchased is locked until the maturity, when rates rise for example, you can buy the higher interest rate CDs when each of your CDs matures. If interest rates fall however, you longer maturity CDs would look more attractive, as the higher rates they pay are locked in.

Laddering can also be used on annuities. In this case, an investor would buy a handful of annuities with different payment conditions, different maturity dates and perhaps even differing “gearing” to an underlying index. In other words the investor buys a handful of different annuities. Since annuities come in a variety of structures and there are literally hundreds available, selecting a few different ones might provide an additional level of performance based on what happens in the markets.

Although how one sets up a ladder on whatever asset class they choose will take some knowledge, your investment advisor or some time spent in researching what is available and how laddering works might go a long way in accomplishing better diversification in your portfolio.

Laddering can also be used on a variety of what is called fixed income investments such as individual bonds, mortgages and other types of debt instruments. In simple terms, buying a variety of time sensitive investments with different maturities and conditions might be preferred over owning a lot of just one thing.

Laddering may not necessarily prevent losses. This is not a recommendation to buy or sell any securities. Investing involves risk depending on the type of investment. 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 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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

 

Upstart Representative Alexandria Ocasio-Cortez (AOC) and Presidential candidate Senator Elizabeth Warren have sent a letter to Sears’ former CEO Eddie Lampert, criticizing him for his efforts to avoid repaying Sears for $43 million in severance to the retailer’s workers. A war of words and accusations between Lampert and the now defunct Sears Holdings has Lampert claiming the pay back to employees is no longer valid. The argument stems from Lampert’s acquisition of the beleaguered retailers assets.

Lampert bought Sears assets through an affiliate of his hedge fund ESL. Lampert as its CEO headed up Sears as it spiraled into chapter 11. The original deal, which saved the company from total liquidation, also stated that Lampert would reimburse Sears severance costs for workers who lost their employment in the bankruptcy. Further muddying the waters is the fact Steven Mnuchin, Trumps secretary treasury, was on the board of directors at Sears and now both him and Lampert are being sued by Sears. Adding more conspiracy to the story is the additional fact that Sears bankrupt pension were taken over by the Pension Benefit Guaranty Corporation (PBGC), an organization that helps administer and settle pension’s claims from involvement members. It just also happens to be overseen by Mnuchin, as well as the secretaries of commerce and labor.  You can’t make this stuff up.

Now that the smoke is clearing, or just starting to clear as the case may be, Lampert and his firm are claiming Sear’s part of the deal is suspect and he may not pay the severance pay.

Yes it sounds complicated and it likely is, but my point is not the bankruptcy itself but the camel nose insertions by Warren and AOC, who for all intents and purposes, probably know less about Sears and its acquisition then the lowliest assistant accountant in any one of the number of firms that are handling the Sears mess.

Likely based on more of a political pulpit than an employee related one, although Warren has bankruptcy knowledge by study, AOC probably leans more into the personal experience aspect of the mechanism. Not to say she’s filed bankruptcy, she hasn’t, but her net worth of only a few thousand (Weeklystandard.com) mostly stemming from a bartending job gives little reason to think she knows much about a corporate bankruptcy such as a size that is the Sears liquidation. More likely she is exercising her well known talent of riding the political bandwagon and shooting off her now infamous mouth.

The point here being is that both the army of Sears lawyers and accountants along with the Lampert’s many CPA’s together with the bankruptcy courts will get to the bottom of this and probably get pretty close to if not spot on to the truth and who is possibly screwing who.

That Warren and AOC are joining forces, both of whom recently appeared together in their own version of a propaganda video on the Sears issue, the question should be asked is exactly what, besides more dissent, is their goal here?

Like I said, the armies of lawyers and accountants that are likely to see all the financials will bring their findings to the courts and then the courts will decide. That Warren and AOC are attempting to stir up controversy because one of the people involved is a cabinet member of the current administration is typical of the political maneuvering that is common among those that practice such things.

Warren and AOC can’t possibly help the financial forensics. The accountants and lawyers involved would never permit it. What Warren and AOC can do is cause more hate and polarization that many claim has become the cornerstone of their party’s strategy. In more common language, they love to stir the brown stuff.

Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 65 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at (530) 559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the "Money Matters” and “Money Matters Investing in Community" FB pages. The views expressed are opinions only.

 

About a year ago I penned an article about the recent, as in a decade or so, movements to destroy, relocate or otherwise deface historical artifacts like statues and monuments because of political correctness.

Civil war statues are moved from courtyards or courthouses, protesters deface or destroy them, sports team’s names are under fire, once famous food branding is altered or changed altogether. The list goes on and on.

My original article took the spin that an historic work of art or plaque, saying or allowing representation of, displaying or promoting, or just allowing such historic things to exist in today’s time no more says that you support whatever it was that it signified, just as removing or altering such a thing indicates that you don’t.

Here is an example to illustrate what I’m talking about:

A friend of mine got a pair of healing snakes tattooed on her leg and when I asked why, was told to represent she was healing from a past relationship. Such a story might also apply to a lovers name tattooed on one’s arm. She had one of those too. Go figure right?

The reality of it is just because you have a healing snake tattoo doesn’t mean you are necessarily healing and not having one doesn’t mean you aren’t.

The same could be said tattooing a lovers name doesn’t mean you love them anymore and not having one doesn’t mean you love them less.

Ditto for destroying or defacing, removing or altering civil war flags or statues. Just because you did doesn’t mean racism no longer exists and just because their on display doesn’t mean you support slavery.

Travel down that path and half the world’s art and artifacts would go up in a protestor’s puff of smoke.

These are historic artifacts and a part of our history, like it or not. I where we came and that applies to all Americans.  Many of these pieces are precious works of art.

So following their logic, if you could call it that, Rome killed Christians because of their religion. Obviously a restriction of religious freedom and a major violation of human rights. Shall we destroy all Roman statues or knock down the Coliseum?

Hitler attempted and partially succeeded in massacring an entire race. Shall we now destroy all the WW2 German artifacts? Or is it simply we pick and choose because of the amount of time that has passed.

 

In a recent article from Money and Markets entitled “Fed: Tariffs Will Cost Average Family $831 More in 2019”, the argument was made that after the latest increase from 10% to 25% on $200 billion in tariffs on Chinese goods, the average U.S. family will pay $831 more a year for the same goods they bought last year. What the article didn’t include was the next round of tariffs on Mexican goods. Also not factored in is the rising costs of goods and services as a general result of inflation here in the United States. Indeed no one needs to remind you of the sudden increase is gasoline which pushed close to four dollars or more per gallon in recent months. This also means the approximate 6000 other things made out of petroleum will also likely go up in price.  

The average American family is having a hard enough time making ends meet and the challenging effects of increasing prices undoubtedly put more strain on some families.

Tariffs are fees put on incoming goods coming from countries outside the U.S. under the auspices of protecting the American business counterpart of whatever it is you’re applying the tariff to, and/or punishing the other country for some egregious act or violation, as the case may be.

Tariffs are not new and usually there are tariffs on a variety of imports at any one time. To the degree we are seeing them now however is something of a rarity historically.

Because the price of something in the market place is somewhat arrived at by the sum of all prices of the item with slight variances off the average price to account for local demand and conveyance, raise the price of any one major supplier of something and the price of that something will rise. Since tariff money goes to into government coffers and the consumer ends up paying the higher price, tariffs are generally believed to be ultimately paid by the consumer.

I have made the argument in a previous article that should protection of U.S. companies selling into any market where imports are sold competitively, a tax CREDIT to the U.S. company would serve the same purpose. Although tariffs raise the price of a good to the consumer and therefore make a domestic made good that much cheaper in comparison, a tax credit would enable the U.S. company to sell its product cheaper and thus better compete with the import just the same. The difference being the average cost of the good would decrease thereby lowering the cost of the item to the consumer.

I don’t hear the argument for tax credits anywhere in the media and that’s baffling. Both a tariff and a tax credit accomplish the same thing which is to punish the importer and give an advantage to the domestic producer.

As to who pays the tariff and where the money ends up is quite different thing. In the case of the tariff Washington gets the money that the consumer pays in the price increase. In the case of a tax credit, the consumer would pay less for the good and therefore have more money left over to spend on other things. In the latter, the economy would also benefit from higher consumer spending which came from the consumer having more money to spend because of the savings.

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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249

Jun102019

Can you protect your stocks from a falling market automatically?

 

In the world of investing, protecting profits and limiting losses is tantamount to success. The most common method of protecting your money from downside whether it be to keep profits or limit losses, may be to sell out all or some of your holdings and turn that into cash.

You could have a preset price on percentage in mind, much like going to a casino to play a slot machine and the spouse says you can’t lose more than $200. Although most people exercise good money management at the one armed bandit, far fewer people have this exit point strategy in mind when dealing with their retirement funds.

Is it wise to have an exit strategy?

One only needs to remember how it felt during the 2008/09 market freefall. Thoughts of losing it all put the squeeze on many investors grey matter and more than a few investors and advisors lost some sleep during those dreadful times.

That said, having a predetermined sell point might be a good idea in case of a catastrophic market collapse. No one can say it will or won’t happen of course.

Investors could just keep in the back of their mind a predetermined selling point. Something like if they lose a certain amount or if a stock hits a certain price, you call your broker and tell them to sell. The problem here is you might forget, lose your nerve, change your mind or worse yet, be unable to get through to your broker, which can happen during severe market upheavals.

However there is a way you can enter a sell order automatically on certain types of stocks and funds with some exceptions of course.

A “stop” order can be entered ahead of time by phone, computer or otherwise. These work by keeping your order on file and when the price is hit, the sell order is transmitted to the appropriate people in the market place who then attempt to sell your stock.

This order can be placed usually anytime and at any price you prefer. They work like this:

Suppose you have a stock that is $100 a share today and you decide you want out at $90.00 or lower.  You enter your order as a “stop” order (in lieu of a market or limit order) at $90.

That order will sit for a predetermined amount of time, usually 60 days, and if the stock never hits $90 the order expires at the end of the term. If the stock does hit 90 anytime during the timeframe the stop order then becomes a market order. This means when your order hits the trade pits you get the market price for it. This also means you could get less or more than your stop price. In fast moving markets, your stop price, becoming a market order, means you get what they give you when your order hits the front of the line.

Another type of stop order is to add the word “limit” to the above order and enter a “stop limit” order.

The “stop limit “order means you want out at a certain price and will take no less than that price.

Although this sounds like a better way to go, the old adage there are no free lunches comes into play. Suppose you own the same stock at $100 a share and you enter the order under a “stop limit” (versus a stop order) at the same $90 price as before. The stock hits 90 and your order triggers. In this case, your order instructs the market makers to get you $90 but no less.

Should the market be moving fast and because your order again has to wait in line, if the stock keeps dropping, you may not get out. The market makers have their marching orders from you which are “I want $90 and no less”. If the stock hit 90, and your order triggered, but while waiting to get filled the stock kept dropping, if it now is below 90 and because you said you want 90 and no less, you MIGHT NOT get out at all, or only get partially filled.

Summarizing: a “stop” order will certainly get you out but the price you get may be below your stop price. A “stop limit” will get your price but you might not get out at all or only be partially filled.

Keep in mind during the 1000 point flash crash (August 24th, 2015) the drop happened so fast, many stop orders were filled significantly below their stop price. Keep in mind stop-limit and stop orders may not prevent losses and there is no guarantee of being filled under ideal conditions but these types of orders do illustrate some strategies that many investors might not be aware of. Contact your local financial professional for more information on protections strategies that may be available to you.

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 SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249