Although we are a month and half into the New Year, and covered some feel good resolutions in January, now is the time to look into another type of resolution.

 

Financial resolutions are good ones to make and keep. Unlike joining a gym then dropping out because it’s too hard to keep going day after day, let alone the effort it takes to stay on a Stairmaster or treadmill, financial resolutions can pay huge dividends.

 

Like many resolutions, the task at hand should not have the proverbial bar set so high, it’s discouraging. The best resolutions have easy to reach goals, gently moving you along to your final goal, whatever that is.

 

Taking financial matters into one’s own hand should be based on the belief that “education is the cornerstone of progress”.

 

Keeping that in mind, a good place to start is to make a promise to yourself to embark on a few simple tasks to begin your education. No need to get a degree in economics or become a stock whiz. Instead just start reading some financial websites or books on stocks and their markets. Forget the “magic systems” and trading techniques that many publications may promise are the next Holy Grail in trading profits. Instead focus on simple descriptions and explanations of what a stock is, what a bond is, what a dividend is and how stock markets work. Starting with this basic overall understanding of what investing is and how things operate. This is the starting point. Forget the complicated stuff. I find few investors understand these basics, and even some advisors and financial professionals are woefully lacking in their basic understanding of the markets they are trading in. In fact, many are just sales people, placing clients into the funds they are told to without really understanding what affects the underlying markets they play in.

 

Instead of a stock book, a beginning economic book might be better well suited for those wanting to get a basic understanding. I would rather have an investor that comprehends basic economics yet has little stock knowledge than someone who knows nothing about the economy but claims to have stock trading knowledge. The latter is a dangerous combination. It’s like being great at paddling a kayak yet knowing nothing about how the bodies of water flow they will be navigating behave.

 

I have seen such “gaping holes” the body of financial knowledge exhibited by many and it can be a costly lesson. In my opinion one has to understand the economy and how it works to successfully trade or invest in the markets that represent them.

 

Much like the business owners that over expanded during the real estate boom, their lack of the macro-economic knowledge (the overall view of what was happening in the economy around them) proved their undoing. Despite the fact many of these business owners may have been excellent managers in their respective endeavors, their failure to comprehend the causes and effects of the boom-bust cycle that was occurring in the real estate market extracted a heavy price on many. Thousands of companies went bankrupt during the bust and many more barely survived, having to scale down to take huge losses to prevent dissolution.

 

Forget the “how to trade stocks” books. Leave the “become a day trader millionaire” subscriptions where you found them. On the library shelves and websites you stumbled upon. Instead google up a Economics for dummies book, follow it up with a Stock Market for dummies publication, or something along those lines and start there. Read a few pages a day, or even a few pages a week. Forget the huge milestones and just start reading when you feel like it. Your only goal should be to read some of these beginning books without the pressure of huge milestones.

 

The resolution should be to start, and not necessarily finish by a certain date. Those kind of firm resolutions can be discouraging if find yourself falling behind.

 

By starting with an easy and basic economics book or articles, and beginning to understand how economies function, you will be better prepared to move on to actual stock books later.

 

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.

With the Corona Virus making the main stream news, investors may be asking how much influence could the outbreak effect markets as the situation unfolds. As of this writing, over 41,000 cases worldwide have been reported with 910 deaths and 3,350 recovered.  By the time you read this those numbers will have likely have vastly increased. The vast majority of cases and deaths have occurred in mainland China, the location of origin but the virus has spread to dozens of countries worldwide.

 

The last serious virus that received worldwide attention was the SARS virus, a version of the corona virus family which broke out in China in the spring of 2003. 8,098 confirmed cases were reported with 774 deaths. Gross Domestic Product (GDP) in China fell about 1% as a result of SARS but overall markets held gains throughout the crisis with the MSCI World Index staging a gain of 21.56% in the six months following (Marketwatch).

 

That said there are many factors that could have influenced markets in the respective time period so conclusions are difficult to draw from the markets past performance.

 

Today China is a much larger player on the world stage having grown to the second largest economy in the world, behind only the United States in GDP. The current strain of Corona is more virulent, affecting 3 times as many people in the few short weeks since the outbreak hit the newswires. SARS, compared to this new strain appeared to be more deadly however, killing about 9.5% of people infected, while the death rate of this strain is about 2%.

Advance medicines and quarantine methods may have a lot to do with the lower mortality percentages. Being a more aggressive strain based on the number of people infected compared to SARS, just how far and how long the crisis will persist is unknown.

 

The fact is the virus is spreading exponentially, a reality of the nature of the beginning stages of contagious diseases. The more people that become sick, the more they themselves end up exposing other people through proximity or direct person to person contact.  

 

As investors, we must take things into consideration both pragmatically and at the same time with foresight as to what COULD happen. Considering it is estimated that up to 42.9 million people fell ill during the 2018-2019 regular flu season, 647,000 people were hospitalized and 61,200 died, we have to put things in perspective. More people die from the regular cold and flu season yearly compared to Sars and Corona (so far).

 

It’s not so much about the actual damage the illness might do to the population but more the FEAR of the virus. With fear comes less travel and less comingling by consumers which translates to reduced spending. This is what causes the real damage to economies and subsequently the markets they represent. Indeed some of the photos coming out of China of some of the large metropolises looking like ghost towns is concerning.

 

The fact that the Lunar New Year is also happening in China. This popular holiday season has a significant contribution to China’s GDP due to the massive travel and celebration the holiday usually fosters. With many Chinese people staying home it will certainly put a dent in consumer statistics. Considering tariffs are also taking a dent out of China’s economic growth, this outbreak couldn’t have come at a worse time.

 

Concluding, if the Chinese economy falters big time, it may have more of an effect on stocks worldwide than is currently being priced into the markets. Unless Corona is soon contained, a lingering presence could rattle markets long term with severe consequences being possible. Keep in mind no one can forecast market direction at any time and past performance does not in any way indicate future movements in the markets.

 

This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. Investing involves risk. You can lose money. 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.

It is said if you want to convince the masses of something, develop a short and concise theme and repeat it over and over.

 

Most of us have been subjected to many of these. I call it brainwashing and certainly I have fallen for a few mantras in my lifetime but I try to remember what my dad always said:  “When everybody is thinking the same thing nobody is thinking”.

 

I do seem to hear a lot of these concise mantras put forth way too often. And some don’t make any sense. In fact, come to think of it, most of them don’t.

 

One common one I am hearing now that the presidential elections are coming is “pay their fair share”.

Referring to the rich obviously, I have to scoff at this ridiculous petition to get votes. Pay their fair share. This might go along with the other foolish rhetoric common nowadays “the living wage”.

 

So dissecting these, I have to start by saying whom exactly decides what is fair and what exactly is a living wage?

Someone else besides the one on the hook for paying it I suppose. Seemingly it’s always somebody else deciding what another should pay. And isn’t that the way of it.

 

I dare to say there is two types of people in the world. Those that make enough money and those that want to take it from them. You could also say there are those that believe retaining one’s personal possessions is a basic right and those that ignore that right.

 

Regardless of what the “thing’ is, if someone has too much of it, there will be someone else who lays claim to it. This claim usually has little to do with how the thing was obtained. No matter if someone worked his butt off to get it, saved a long time to amass it or just inherited it from a parent that did, if its deemed “too much” there are those that believe it should now be someone else’s, or at least part of it should be.

 

 That’s where the subjective part of the mantra comes in. Words like fair share or living wage are tossed about like some God given edict applies.

 

Can’t recall ever seeing what exactly a “fair” share is, or just what amount is a wage suitable for living. But those that believe such things seem to have an idea of just how much is too much. Thank goodness breasts aren’t divisible, or hair transferrable.

 

Wait a minute, now that I think of it, I could use little more of the latter. Is it fair some have hair like Motley Crue while others have to sunscreen up their dome?

 

It’s probably not fair. Sometimes I admit it bugs me when I look at a picture of someone with a hairline resembling a Planet of the Apes movie. He won the hair lottery. I did not.

 

But hey, although seemingly unfair, I realize it’s not unfair, although it may seem like it is at times.

Rather my good sense calls it life. Life is not fair. It’s a part of, well, life.

 

Nowhere is it written that life is fair.  One could say life is unfair. Birds eat worms. Not exactly fair to the worm. In fact it’s fatal. Trying to mandate fairness in life is like trying to stop it from raining. It’s an exercise in absolute futility.

 

Some mope around dwelling on all the inequality that life offers up. But then you end up moping instead being grateful. That’s not life, its ingratitude. And I was told more than once, if we’re not thankful for what we have, we will never be happy with what we don’t.

 

Yes some people make more money. Some a lot more. Some have millions while others have none.

 

Funny thing is, we were all born naked. Some with a bank account, true, but everyone has the right to try and make a bank account and last time I looked, there were still a lot of people starting with nothing becoming people with something.

 

Through hard work? Maybe. Or maybe some hit the lottery and didn’t work at all.

 

Is that fair?  No, it’s called the lottery and it’s not fair that somebody wins it, but it happens. Funny thing however, nobody ever goes after them in the news. For some reason if you win it, all is fair. But if you work for it, nothing is.

No dear reader, I don’t know what paying a fair share means, nor a living wage. Both take someone to be the judge of whatever that is, and I am not ready to have so much hubris to think anyone can or should decide such things for another.

 

I don’t mind if there is rich people, millionaires or billionaires. There is no shortage of greenbacks if one thinks of a way to acquire them.

 

And it’s not fair my head has thinning hair while my neighbor’s thick curly locks flow magnificently in the wind.

 

It’s called life.

 

Get over 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.

 

Deutsche Bank AG last week warned investors the stock market is pricing at “extreme levels’ as investors drive the Dow to new highs once again. Up from the mid 17,000’S in 2016, the Dow now sits in the high 28,000 range and is not all that far from the major milestone of 30,000.

 

The multiples of ten thousand have only been reached twice before when the Dow surpassed 10,000 and then 20,000. Closing in on 30,000 is indeed a major milestone. Deutsche strategists Parag Thatte, Srineel Jalagani and Binky Chadha wrote January 10, 2020 “Equity positioning, like the market itself, has run far ahead of current growth, as investor’s price in a global rebound”. The market is “now in the 96th percentile on our consolidated measure, with a wide variety of metrics stretched”.

 

In plain English, Deutsche is saying prices are very high historically speaking, and a variety of measuring metrics are all above their averages to the upside. The only time Deutsche’s metrics have been stretched farther was in January of 2018, prior to a significant sell-off in the markets according to the Deutsche strategists.

 

They went on to note “investors are clearly overweight” at the highest levels since October 2018. October 1, 2018 brought the start of a severe correction lasting until December 24, 2018. It was the worst correction since the 2008/19 market crash and economic real estate implosion that preceded it which brought the world’s financial system to its knees.

 

The S&P 500 has already gained 1.2% since January 1, 2020 pushing new records almost daily. That followed an eye-popping 29% gain in 2019, it best performance since 2013. Despite geopolitical concerns and impeachment proceedings, the market seemingly is in an almost relentless upward trajectory.

 

Rumors of a soft patch caused minor gyrations in the market throughout 2019 yet the indexes eventually plowed ever higher.

 

Deutsche strategist Chadra had been the most bullish of top strategists tracked by Bloomberg and his prediction of an S&P at 3,265 compared to the actual level of 3,231 at the end of 2019 hit the mark almost exactly. Now Chadra is relatively bearish (negative on the markets) and is calling for an S&P level of 3,250. Not that the 3,250 level is catastrophic. Far from it. It sits about that level now. What he is saying is it won’t end up higher 12 months from now and instead end up approximately where it sits now. Kind of slow grind to nowhere.

 

Now that we’ve got your attention, here are some caveats to keep in mind when taking the Deutsche Bank observation to heart and selling out your portfolio. No one can predict market movements with 100% accuracy and history is rife with analysts who got it right the first time around and were completely wrong on subsequent calls.

 

Even the smartest quants (math geniuses) employed by the largest financial firms more often than not disagree on their prognostications and I could show you 100 articles that would have you convinced the Dow  is going to 35,000 and another 100 more articles which would have you quivering in fear of a Dow 10,000. The opinions are that varied. 

 

If you need reasons to doubt the Deutsche warning, there are many. Unemployment is at decade lows, disposable incomes are rising, the employment market is tighter than it’s been in years, many companies are reporting better than expected earnings, interest rates are historically in a very low range, the Federal Reserve is maintaining it accommodative monetary stance and 2020 is the fourth year in the election cycle. The fourth year is historically the second best year of the four years in the cycle (2021 will be year one of this four year cycle).

 

Lastly there are a few old sayings on Wall Street that may calm nervous investors. From the CEO of Citibank during the real estate boom of the 2000’s. “One day it will come to an end but as long as the music is playing, you have to keep dancing”. 

 

That and “markets can stay illogical much longer than you can stay liquid” meaning just because the market has been rising by a huge amount, doesn’t mean it can’t keep going. Remember there have been those predicting this market would crash ever since it began its recent historic rise in late 2016 and throughout other market super-rallies.

 

The bottom line parallels another old saying “it’s not different this time”.  Better said “it’s different every time”. This means there is no rule that says this market can’t keep running. At some point all markets go through corrections, some severe. But with many economic statistics being more positive than in decades, this market has many reasons it could just keep going. That said, having good diversification in one’s holdings, not going too far out on a “stock limb” and having some sort of exit strategy might be prudent in the face of this historic rise.

 

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. No one can predict market movements at any time. 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.

It is said there are no free rides. And unfortunately when it comes to social programs, the same can be true. I believe the vast majority of folks are compassionate and reasonable. Sure there are some that just want to watch the world burn, but for the most part America is filled with compassionate people. So let’s continue with todays rant.

 

What bugs me is when people use the term “free _(fill in) ___________”.

 

The most common thing that comes to my mind is free healthcare for all. “Single payer” is a better description in today’s political environment but even that name is an incorrect moniker. Single payer may mean the government but the government gets its money from all of us. A better name for it should be something like “Taxpayer funded”.

 

Flashback a decade and half ago and we were told the Affordable Health Care Act (ACA) would solve many of the problems in the U.S. healthcare system. Now fast forward and as the ACA ramped up, it didn’t work so well. Prognostications from those originally opposed to it began to ring true. Two things happened. 1- It was a mess and among many snafus was its website (Remember that?)  2-Where government money goes, so follows rising prices and bingo, true to form health costs soon skyrocketed.

A mandatory program by law, fines for not participating raised the ire of many. As the years ticked by, the fines rose by design. As predicted, some businesses scaled down the number of employees to get under the mandated number of employees. Some businesses just closed down. Some individuals sucked it up and paid the fines and still went without. Insurance company’s rates climbed as mandated coverage hurt balance sheets. With many more sick people coming into the program then forecasted, insurance companies raised rates. There are those increased costs I mentioned. Not wanting to anger voters with egregious rate increases the Obama administration added insurance companies to their listed of subsidized corporate conglomerates. Now the government subsidized the patients AND the insurance companies. Adding insult to injury, many doctors wouldn’t accept the program and refused to take on ACA patients. The lack of available doctors forced many into hospital emergency rooms to get basic medical care causing further price increases.

 

Basically a mess, the ACA morphed into the train wreck it was forecasted to become. Undaunted, supporters blamed the GOP for altering its form and gutting some of its basics. Truth be told if the GOP had their way, the ACA would have been killed entirely.

 

As the ACA debacle unfolded, undaunted, supporters changed their tune to advocate single payer healthcare. Afraid to admit that the ACA may have failed because the mechanism itself is unworkable, single payer or the recently touted “Medicare for all” became the newest fix-all be-all. When that implodes (not if but when) a new cat call will be heard and a whole bunch of fingers will be pointed.

What people don’t understand is that “wants” are just that, wants. That in no way means that want is attainable. I might want to visit the moon, but that doesn’t mean it’s possible or even feasible. Like free housing for all, health care for all is an admiral dream, but it’s not possible. It’s just that, a dream.  Sounds like I am without compassion but that is not where the statement “it’s not possible” comes from. The estimated cost for healthcare for all tops 36 trillion dollars over ten years. That from the Center for Health and Economy. That’s trillion with a “T”.  Frankly folks, 36 trillion is an impossible amount. That’s not figuring in the rising costs from the influx of that eye-popping amount into the healthcare sector.

 

Remember “where government money goes, so goes inflation”. In other words, plow 36 trillion into the healthcare system and prices would launch upward like a nuclear missile.

 

There are some of you out there that think we would save trillions for a healthier population, or health care costs would actually drop, or the government could just print up the money to pay for it, and yada yada yada and so on.

 

None of these things would happen except the money printing part. How else would we pay such a tremendous sum?

 

What would certainly happen is 36 trillion would turn into 50 trillion and 50 would turn into 100 in due time. The bottom line is supporters would get their free healthcare but it would be anything but free despite its name.

 

Instead inflation would skyrocket, the healthcare system would experience skyrocketing prices and likely near implosion, and the U.S. would likely near total bankruptcy. The amount is that huge. Yea, free healthcare or Medicare for all is easy to say, and a wonderful dream, but the ramifications would be so dire for the economy the dream would be more like a nightmare if it ever came to pass.

 

My prediction is that if this nation approaches anything even close to free healthcare for all, the finances of the U.S. government would require major currency and monetary manipulation to pay for it, and that kind of manipulation would eventually spell the end of U.S. dollar and subsequently our economy as we know it.

 

Like I said, the amount is that huge. 

 

Would I like free healthcare for all? You bet I would. But I also would like  to go to the moon. I just have the good sense to know neither is feasible and most likely not even possible.

 

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.

The U.S took out a bad guy by the name of Soleimani last week. Ramifications to the markets are yet to seen but it’s beginning to look like a non-event. Defense stocks popped on the news along with gold and oil. Since the bad guy is in (or was) the Middle East, the rise in these stock sectors is not surprising.

 

Interest rates are falling once again after a few increases from the FED. First they lower them, then they raise them, now they lower them again. All in the span of a few years. Can’t say if the FEDS are playing it by ear but you have to wonder if so, what tune are they listening to. The general consensus now is rates will likely stay where they are at least for the time being. One has to wonder why the up and down movement in rates. Interest rates have a monumental effect on markets, and to be jerking them around like this doesn’t make for the most stable environment for investing in my opinion. Ten year notes pay about 2% right now. Ditto with the rate of inflation so says the Bureau of Labors Statistics. (BLS).

 

Boeing fired its CEO in response to the ongoing problems with its Max jet liner diving twice into the earth seemingly with a mind of its own, killing all aboard in the two well published crashes. A software issue with what is called its MCAS system is to blame. No doubt Boeing will fix the problem eventually. Either that or scrap the plane all together, although with the billions and billions already invested this analyst doubts the Max will go the way of junk heap.

 

Unemployment sits a historic lows and the stock markets continue to hit new highs. Housing vacancy is at a 35 year low, meaning the demand for housing remains robust. Savings accounts of the consumer is running around 8%, a high figure to be sure, and household debt is the lowest in 2 generations. Those statistics from “The Rant” by analyst Dave Ogilvy.

 

Federal debt sits at 80% of GDP. GDP is all the money taken in from sales and service in the U.S. That figure is relatively high according to common belief and government debt, no matter what government one references, cannot climb forever without something eventually breaking somewhere.

 

With 2020 being an election year, The Presidential Cycle stock theory says 2020 should be a good year for the market. The cycle looks back on how markets have reacted in the past during the four years of a president’s term. 2020 is the fourth year in the cycle. 2021 would be year one. Since no one or no theory can predict future market movements however, investing money based on a theory is never a good idea. There are just too many variables in stock markets, which are complex systems with millions of players casting trillions of dollars to and fro. If any one theory or otherwise was foolproof, the system would break. Imagine everybody piling in on one market direction only. I can’t even pencil out what that would look like where 100% of participants all buy or all sell at the same time based on a foolproof prognostication.

 

That does it for this week’s Money Matters.

 

This article should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a registered investment advisor.

 

The views expressed are opinions only. They do not necessarily reflect those of Cambridge, this news media, its staff, members or underwriters. Marc’s website is moneymanagementradio.com. Mr. Cuniberti holds California insurance license #0L3424. Marc can be contacted at SMC Wealth Management. 164 Maple St. #1  Auburn, Ca 95603  (530) 559-1214. SMC Wealth Management and Cambridge are not affiliated.

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.

New Year's Resolution

 

As we embark on a new year, many will make promises and resolutions full of hope of new beginnings. A worthwhile endeavor for sure. All of us have things we would like to change, some easy to change and some we may have been trying to change for years.


Financial resolutions are a popular resolution as are health changes, weight loss, relationship and job changes, life goals and many others.


Change in the positive is just that, positive. The resolution we hope will improve our lives and maybe even lives of others, and herein lies my message for you today.


Let’s see if we can make up and make a resolution, a specific resolution to help someone else. Whether it be care for an elderly, volunteer at a shelter or food bank, clean up a park or just reach out to someone. It might include a monetary donation or just giving part of your time. Whatever is it, it is said one of the most selfish things one can do is help someone else. A strange take on the charitable action for sure. But in it lies the truth of it. Helping someone else makes one feel great. It’s uplifting and one of the best anti-depressants one can take, and all without drugs with the added benefit of someone else benefits too.


Simply put, let’s all make a resolution to help someone else. Each one Teach one. And you might find this resolution the most uplifting and rewarding of resolutions. And while we’re at it, let’s take a moment and look not forward on the year, but backwards. And no in retrospect but in gratitude. Gratitude for what we have. The most obvious one is just being here for another year. Some of our loved ones or friends may not have lived to today, 2019 being their last year on earth. But we can be glad we knew them at all. And that they knew us. For to love is to eventually know love lost. But it is the way of things, as it should be and is.


In this New Year, we look back with gratitude, gratitude for all we have and all we have known. And with our resolution to also help others, I for one cannot think of anything I would hope for more as this New Year brings its dawn upon us.


Wishing you the best of New Years and the best of past years.

 

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.

How is your advisor doing and how are they doing it?

 

Take the case of two advisors, A and B. Both advisors start out with a 100K portfolio. At the end of 12 months, advisor A has grown the portfolio to 106K while advisor B ends with a 103K balance.

 

Which is the better advisor?

 

Asked at multiple seminars I have given, the answer is usually the same. Advisor A is superior.

 

But much like a young man taking your daughter out to the prom who arrives at the dance safely and on time while another teen suitor arrives late, the end result does not necessarily mean the correct answer was the obvious one. In fact, it could be just the opposite.

 

In the case of the first young suitor who arrived on time, perhaps he drove a little too fast, ran some red lights and failed to come to a complete stop while transporting your precious little jewel while suitor 2 took his time driving more carefully.

 

The same could be said of the two advisors.

 

Much like the teen driver, in the two advisor comparison and how they managed the portfolios and their ending balances, the better answer is just how did they get there?

 

It’s true the end result from advisor A bested advisor B by a 100% margin (3k return versus 6K), but just how he did it is the real concern.

 

The word “risk” would be a key factor in this equation as well as the symptom of that risk which I call draw-down and take up.

 

I’ve talked to many investors and money professionals alike, and more often than not, the end result is the main consideration surrounding how one advisor did compared to another.

 

A serious flaw in my opinion, yet the underlying problem in this thinking will only be known when it’s usually too late.

 

The level of risk each advisor subjects his client to should be one of the main considerations when evaluating performance. In investing circles it is sometimes referred to using a technical term called “beta’. Beta is the degree of comparative movement a security historically exhibits when the overall market moves up or down.

A beta of 1.0 means the security has an historical tendency (but not a guaranteed predictor of) to move in lockstep with the overall market.

 

For instance, if stock A has a beta of 1.0, if the market drops by a certain percentage, stock A will be forecasted to drop a similar amount. Note I said “forecasted” and “similar”. Beta is a historical value, based on the past, and therefore is no guarantee of anything. It’s just represents what it has done.

 

If stock B on the other hand has a beta of 2.0, it has moved twice the degree of the overall market in the past. Conversely a number below 1.0 (such as .5) means the security may move half the amount of the overall market. A lower beta is assumed to less volatile and therefore more “conservative”.

 

One can surmise the beta of a portfolio overall by adding the beta values of each security and its percentage of the portfolio make-up then divide by the number of securities in total. This would give you the beta of the portfolio.

Continuing on, in our example of advisor A and B, “draw-down” means how much under 100K did the portfolio move at its lowest level, and “take-up” (my term) means what is the highest level it reached. The ending value (103K and 106K) in our example is the “end result” that is being evaluated.

 

If advisor A had a higher beta in the portfolio than advisor B, one would expect the draw-down of advisor A portfolio would be a greater number. An example might be the advisor A portfolio may have seen the 100K drop to 93k sometimes during the course of the investment time period while the advisor B portfolio may have only dropped to 97K. Fictional values here of course but it illustrates the point: the end result means little if you don’t know how it got there. In simple terms, what risk was the client exposed to using either advisor A and B, was it what the client expected and was it the appropriate level of risk the client should be exposed to given his particular situation.

In an up market, advisor A would likely yield better results, but much like our teen driver rushing to the prom, all is well until it isn’t. In a down market, the advisor A portfolio would probably mean bigger losses.

 

If a crash in the market was to occur, advisor B would likely be the driver of choice.

 

And much like a vehicle crash, you wouldn’t know just how bad the outcome might be until after the fact. And at that point you may wish you had picked the slower driver.

 

This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. No one can predict market movements. Investing involves risk. You can lose money. The example is a fictional illustration only. 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

It is said if you want to convince the masses of something, develop a short and concise theme and repeat it over and over.

 

Most of us have been subjected to many of these. I call it brainwashing and certainly I have fallen for a few in my lifetime but I try to remember what my dad always said “when everybody is thinking the same thing nobody is thinking”.

 

I do seem to hear a lot of these concise mantras put forth way too often. And some don’t make any sense. In fact, come to think of it, most of them don’t.

 

One common one I am hearing now that the presidential elections are coming is “pay their fair share”.

Referring to the rich obviously, I have to scoff at this ridiculous petition to get votes. Pay their fair share. This might go along with the other foolish rhetoric common nowadays “the living wage”.

 

So dissecting these, I have to start by saying whom exactly decides what is fair and what exactly is a living wage?

Someone else besides the one on the hook for paying it I suppose. Seemingly it’s always somebody else deciding what another should pay. And isn’t that the way of it.

 

I dare to say there is two types of people in the world. Those that make enough money and those that want to take it. You could also say there are those that believe retaining one’s personal possessions is a basic right and those that ignore that right.

 

Regardless of what the “thing’ is, if someone has too much of it, there will be someone else who lays claim to it. This claim usually has little to do with how the thing was obtained. No matter if someone worked his butt off to get it, saved a long time to amass it or just inherited it from a parent that did, if its deemed “too much” there are those that believe it should now be someone else’s, or at least part of it should be. That’s where the subjective part of the mantra comes in. Words like fair share or living wage are tossed about like some God given edict applies.

Can’t recall ever seeing what exactly a “fair” share is, or just what amount is a wage suitable for living. But those that believe such things seem to have an idea of just how much is too much. Thank goodness breasts aren’t divisible, or hair transferrable.

 

Wait a minute, now that I think of it, I could use little more of the latter. Is it fair some have hair like Motley Crue while others have to sunscreen up their dome?

 

It’s probably not fair. Sometimes I admit it bugs me when I look at a picture of someone with a hairline resembling a Planet of the Apes movie. He won the hair lottery. I did not.

 

But hey, although seemingly unfair, I realize it’s not unfair, although it may seem like it is at times.

Rather my good sense calls it life. Life is not fair. It’s a part of, well, life.

 

Nowhere is it written that life is fair.  One could say life is unfair. Birds eat worms. Not exactly fair to the worm. In fact it’s fatal. But its life. Trying to mandate fairness in life is like trying to stop it from raining. It’s an exercise in absolute futility.

 

Some mope around dwelling on all the inequality that life offers up. But then you end up moping instead being grateful. That’s not life, its ingratitude. And I was told more than once, if we’re not thankful for what we have, we will never be happy with what we don’t.

 

Yes some people make more money. Some a lot more. Some have millions while others have none.

 

Funny thing is, we were all born naked. Some with a bank account, true, but everyone has the right to try and make a bank account and last time I looked, there were still a lot of people starting with nothing becoming people with something.

 

Through hard work? Maybe. Maybe some hit the lottery and didn’t work at all. Is that fair?

 

No, it’s called the lottery and it’s not fair that somebody wins it, but it happens. Funny thing however, nobody ever goes after them in the news. For some reason if you win it, all is fair. But if you work for it, nothing is.

 

No dear reader, I don’t know what paying a fair share means, nor a living wage. Both take someone to be the judge of whatever that is, and I am not ready to have so much hubris to think anyone can or should decide such things for another.

 

I don’t mind if there is rich people, millionaires or billionaires. There is no shortage of greenbacks if one thinks of a way to acquire them.

 

And it’s not fair my head has thinning hair while my neighbor’s thick curly locks flow magnificently in the wind.

 

It’s called life.

 

Get over 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.

Black Friday stores are not so well lit lately. Thank cyber Monday for that. Another American tradition may be fading into history as online shopping in slippers lures shoppers away from strip malls and to stay home and eat turkey. Consumers spent 11.3 billion Thanksgiving and Black Friday online however so the tradition may be still there but instead of venturing out, shoppers are just staying home munching on turkey getting their keyboards greasy. In a new twist about 2.9 billion of the online shopping came from the trusty mobile platforms, in other words phones.

A few diehards did hit the malls driving up mall sales 4% but much of that I suspect is just higher prices and not necessarily an increase in actual units sold.  Adobe Systems meanwhile projects Cyber Monday sales north of nine billion. Lots of greasy keyboards on Monday as well.

 

Is the mall rat dead with four feet up, caught once and for all in the online shopping roach motel?

We will see in years henceforth but my guess is eventually yes.

 

Meanwhile likely not much shopping done by a group of New York City construction workers in the solar industry who happened to follow Representative upstart Alexandria Ocasio-Cortez (AOC) down another one of her rat holes. They likely couldn’t afford to shop anywhere. The workers, after being convinced to unionize by AOC, witnessed something unexpected happen. The company Bright Power fired them all, saying among other enlightenments: “it makes business sense to return to a fully subcontracted solar installations market”.

 

Welcome to free markets boys and girls. This is still America and private companies still have the right to turn a profit and do what is necessary to accomplish that task. Nice going AOC and welcome to the real world X-Bright Power employees now joining the lines at the unemployment office. That union idea sounded good at the time. Now its coal for Christmas. No harm no foul for AOC. She tweeted a nasty response then retreated to her swank condominium to shop online. So goes the rumor anyhow.

 

The Federal Reserve also wants to get into the game of lengthening unemployment lines. They are looking for a new inflation target for the U.S. economy. Already setting the inflation rate at 2%, where it’s been since 2012, this rate will erode your paychecks purchasing power 18% every ten years. Yikes.

 

And they want to make it worse?

 

Yes they do. Failing to hit the 2% target in recent years consistently, they are debating jacking the target higher to make up for lost ground. How would they go about raising inflation? Do what they always do: print more money and firehose it into the system. Unfortunately the hose points mostly into the banking lobby doorways. Oh, and Wall Street gets drenched as well. After all, the Feds aint so good at hitting targets now are they?

 

Great stuff, a great financial commentary newsletter, made a hilarious observation about the exercise bike company Peloton. You know the one. The have the most prominent exercise bike ad on the television today. Picture a healthy young stud or muffin riding to a TV screen with an interactive coach via the internet egging them on. You’ve seen the ads. The bike is not cheap compared to what I paid for my Schwinn sting ray in the 60’s. Try 800% higher.

 

Somewhere in there. You do the math. Anyway Great Stuff notes that to buy a Peloton, seeing the ad you apparently also have to have a big room with a large picture window. Like I said, you’ve seen the ad right?

 

The Democrats are up to their usual shenanigans in response to the GOP’s usual shenanigans. Plowing forward with impeachment hearings, it’s no wonder the U.S. government is about to hit the debt ceiling again. What’s the debt ceiling?  Apparently it doesn’t matter anyway so were told so never mind.

 

Now for something new and entirely different.  The Dems are also trying to raise taxes again. This time they’ve targeted social security. No, not the fund itself but the people that pay into it. They are proposing to raise the cap on the income exclusion. Basically once you make so much in income, the amount over a certain number is no longer subject to social security taxes. Can’t have that can we?

 

Actually since the trust fund called Social Security had little trust in its management over the years (they spent it all and some), you have to get more money somewhere. So let’s tax the rich. Like I said, time for something new and entirely different.

 

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. California Insurance License #0L34249

CYBER TRUCK

 

money mattersThe electric car company TESLA is no stranger to investors. Neither is its maverick owner Elon Musk. Without hashing through its long history, it’s safe to say this company pushes a few envelopes in almost everything it does.

 

From rooftop solar to spaceships, Elon Musk and his companies go big for sure. Not a recommendation to buy or sell mind you any of his companies, TESLA’s newest thing-a-machig is the CyberTruck it unveiled last week.

 

Touted to go from 0-60 in under seven seconds, you have to wonder why anyone would make such a thing and if it really can get up and go like they claim it can.  You also have to wonder what would happen to all the stuff in the back as the truck accelerates at this ungodly rate.

 

Along with bust resistant windows, which by the way, embarrassingly busted during the unveiling from a metal sphere that Musk hurled into it, one would hope it has an equally strong tailgate to keep the things in the back from spilling out on the roadway if you happen to punch it while hauling something.

 

I saw a picture of this truck and for the life of me I couldn’t really see the truck bed. A truck without a bed? If there was such a thing, Mr. Musk would likely be the one to build it.

 

Looking like something out of a transformer movie, its jagged lines and robotic like appearance looks more like a time machine than something you would haul garbage to the dump in. It’s that odd looking.

 

I might say it looks impressive but then again, that’s not the word that comes to mind. Crazy is more like it. I dunno, it just popped out.

 

Touching down in one of America’s most popular market, you have to give it to Musk. Much like the steel ball he hurled at the trucks window during its unveiling, Musk must has similar equipment below his beltline.

 

Tesla's website says the truck will hit the salesroom in for late 2021. The truck has a single motor and a starting price tag of $39,900. It will go 250 miles on a single charge, have a tow rating of 7,500 pounds, and a 0- to 60-mph time of 6.5 seconds. Further options, models and upgrades are forthcoming.

 

Go Elon go.

 

This is not a recommendation to buy or sell any securities nor meant as investment advice. Investing involves risk and you can lose money including total loss of principal. Order up the prospectus of any security you are considering and consult a qualified financial professional before making any investment decisions. 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

Regardless of the massive inconvenience caused by the widespread power outages, it is a real cost to consumers and businesses alike.

 

The power company responsible for instigating the blackouts could suffer from a bad reputation and consumer ire true, but real economic damage is caused when consumers stay home while the businesses they may have utilized were shuttered due to the lack of electrical power.

 

It’s hard to put a figure on just how much revenue may have gone by the wayside as the main streets of many towns and cities sat idle without power. Indeed my home town looked like a ghost town when the power was out and it wasn’t hard to conclude business revenue was at a standstill.

 

Michael Ware of the Stanford Woods Institute estimates the potential losses in California reached a staggering 2.5 billion at small businesses and homes with at home endeavors. Mr. Ware excluded large businesses in the figure stating many have back up plans and systems for just such an event. No telling just how much these conglomerates lost but one can only imagine the hardship felt by small mom and pop stores that run on a shoestring budget. Missing entire days of revenue, it’s a foregone conclusion many now find themselves in dire straits as their monthly budgets turned red as the lights went black. For those businesses handling perishables, the damage was likely multiplied as the lack of refrigeration sent their wares into the garbage can out back which may have been a total loss and one not normally covered by insurance.

 

In my local town, some small businesses are reaching out on social media to get customers back in their establishments and rumors of hurting proprietors swirl around in conversation circles.

 

No doubt a handful of business running their finances close to the surface may find themselves facing bankruptcy due to their inability to make up the losses.  An unfortunate statistic and a hard lesson to be learned about the need for financial cushioning when establishing business budgets for what-ifs.

 

Simply put some businesses barely turn a profit and any hole in the revenue stream can start a vicious downward financial spiral. Never being able to make up lost revenue, the fixed costs to operations don’t miorror the deficit in income. Simply put, many business costs cannot be avoided regardless of whether the doors are open or not.

Those business owners with health balance sheets might be ok but others can’t take a 5% hit to revenue, their profit margins are that thin. Case in point for turning a healthy profit and being a prudent business owner that watches costs and squirrels away funds for such occurrences as unforeseen power outages.

 

On the flip side those with generators did a landmine business. A testament to being prepared. For someone’s loss can be someone else’s gain. Although few anticipated massive power outages in their budgets, for those that did have power back up systems or those nimble enough to obtain such, the increase in business from desperate home owners looking for supplies likely more than paid for those generator systems and some.

 

Needless to say those selling and servicing back up power systems also saw a lot of new business. An odd and likely welcome surprise from an otherwise unfortunate situation. From speaking with many in this industry, most were exhausted from non-stop calls from desperate homeowners looking to get electricity to power at least a minimal of household appliances.

 

The question now becomes should a small business and indeed homeowners spend the money on a backup power system. Depending on individual power requirements, the cost could run from a few hundred for a small portable generator to many thousands of dollars for a larger system to power high square footage establishments.

 

No doubt there is likely at least a temporary shortage of available generators due to the sudden spike in demand and luckily the worst of fire threats may be over because of the turning of the seasons but the situation will likely be on us next year when the summer heat and seasonal weather patterns once again bring the threat of widespread area fires.

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

 

 

The Cal Fair insurance plan is the last resort in fire insurance for many homeowners. Cal Fair is not a government agency. It is much like the assigned risk program for problem drivers. Cal Fair is made up all of the insurers that are licensed to do business in the state of California. Yes, it is made up of the very same companies that may have cancelled you. How much each company participates is in direct proportion to the percentage of business they do in California. They share in the profits and losses. That said, one could say they are financially adequate being all the companies are in it and backing it together versus just being just one company.

 

Cal Fair is basic coverage only. They cover fire, lightning, internal explosion and some optional coverages. From Google: The FAIR Plan provides basic fire insurance coverage for residential and commercial structures, as well as personal property coverage for residential and business occupancies. There are also optional coverages available for both residential and commercial properties.

 

Cal Fair does not estimate or warranty coverage will be adequate. That is left up to person applying for the coverage. They will pay up the limit specified given the conditions have been met for a covered peril (a peril is the cause of loss such as fire).

 

There are standard coverages in homeowner’s policies as it pertains to what is covered. They include the dwelling (the structure and all things “attached to it”), personal property (your stuff), fair rental value (your new “rent” in case you have to leave), other structures (structures not “attached) ordinance of law (cost to bring you house up to the new codes if any), debris removal (haul your burnt out stuff away) and other coverages you can add such as fences, plants and more.

 

You will still need a separate policy called a “wrap” or “difference in conditions” (DIC) to cover the other perils besides fire.

 

There are many factors and descriptions that homeowners should review with their agent as you discuss how to proceed and with how much coverage.

 

Costs will likely increase over current premiums but in most cases insurance can be had, contrary to what some may have heard. Make sure you understand what is covered and what is not and how much is covered. An experience agent can discuss this with you. Agents are plentiful. If you’re not getting the service you require, try another agent. As in all things business, there are good ones and not so good ones.

 

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.  Mr. Cuniberti is a licensed insurance agent. California Insurance License #0L34249.

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