Dec112017

Dividends

Dividends are payments by companies to shareholders. They are at the discretion of the company and can be changed usually at any time in a variety of ways including to increase, reduce or eliminate them.

Companies may utilize dividends to entice people to buy their shares and hold on to those shares for the payments. Some companies pay dividends and others do not. Some companies never paid them, some used to and some may even start to pay them in the future. The point being made here is companies can do whatever the heck they want as long as they don’t break the law. And fooling around with dividends is usually a common occurrence.

An obvious observation to make is in order to pay out money, the company first has to have it. And therein lies the caution. Like any other entity needing cash for whatever reason, a company short on cash could still pay out a dividend or a series of dividends by borrowing the money to do so. But having to borrow money only to turn around and pay it out might not seem like a prudent financial decision and in many case it isn’t.

When an investor buys a stock for its dividend and that dividend is increased, it makes for a happy investor. Usually it also makes for more investors buying the stock. When a dividend is cut, the reverse might be true and the stock may fall as investors head for the exits once the payments go away.

How can you tell if a company can afford its dividend or is living on borrowed time (literally) in order not to spook investors by reducing or cutting its dividend?

There are a variety of indications but unless you are on the Board of Directors making that decision, an investor can only make an educated guess based on the public information about the company’s financials.

Without getting too complicated, your question is: does the company have the cash to pay out its dividend and for how long? If not, when will it cut or eliminate its dividend in the future?

A lot of it boils down to what is called “free cash flow”. One obvious question is if a company pays out five million in dividends, does it have the cash after paying its bills to pay the investor?

Another question would be even if the company is making enough in profit to pay, is the company banking that profit when dividend time comes around.

It can all boil down to it free cash flow. Is there enough cash left over after all expenses to pay out the dividends promised and is the cash received in time to pay the dividend when it’s due. The other issues are can the company continue to make enough money to continue to pay its current dividend over the long haul or will it eventually have to cut or eliminate it because profits and the receipt of such profits eventually fail to meet the obligation?

The ability to pay dividends hinges on many events but the first question investors can ask is the basic one: can it afford to? A good place to look for that answer starts with its cash flow. An old saying in business is “cash flow kills”, and when it comes to dividends, those words couldn’t be truer.

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

Investments in the Human Condition

As many of you may know, my show and articles revolving around the theme Money Matters involves more than just money. My video series “Investing in Community” details events and organizations that exist in our area. My articles can go off topic into non-profits and plain old summer fairs. The commonality among all of them is the investment we make in what we call the human condition, no matter what it entails.

One’s greatest investment in my opinion in one investment in oneself and taking inventory of what is there in you already is a great exercise in illustrating one’s own attributes and interests. By doing this, we can build from a position strength instead of a position of fantasy. This simply means identifying what you like and what you are good at, and then moving forward. I tried this exercise below and this is what I came up. See if it draws a picture in your mind of who I am and then do the exercise it yourself to see who you are, and then build from there.

My greatest talent and skill quite frankly is interacting with people. My parents were highly interactive with people in a variety of capacities. This has rubbed off on me. Quite simply, I love interacting with others on all levels, whether it be at school, where I converse with friends and school administrators, at any of my volunteer capacities where I have the opportunity to help those that are less fortunate, with other people in general who can teach me things about life, or just with strangers I meet at a Starbucks or in some of the other places if find myself in during my day to day travels.

I love to question what I see and have others question me about what I think. I love to interact with those in other cities, schools, businesses or even countries when I have had the opportunity. I want to know why people do what they do and make the decisions they make. I want to give my input as well, which I think is a highly blended version of common sense mixed with an astute observation of what is working and what is not.

People often surprise me as to their acceptance of my ideas and at other times are surprisingly unwilling to take advice on any level. The former I take as a compliment and a confidence builder that spurs me on to even more interaction. The latter a blend of stubbornness and ignorance on their part. No matter what the outcome however, I find it all unexpected and interesting.

Life is indeed a wonder. Every morning I cannot wait for it to show me the day’s blend of simplicity yet opposing complexity.

Who will cross my path today? What will they say? What will I say? Will I contribute greatly today or simply observe and learn to enhance another day?

My greatest talent is knowing and enjoying those around me, my co-passengers of this ride called the human condition.

And now that I have who I am clearly defined, I can now take the next step in investing in myself and start earnestly building from there.

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

Nov272017

Getting Advice Invaluable

Sending a child off to college can be challenging in more ways than one. Not only is there heartbreak on a personal level from a loved one leaving home for good but the costs can also break the proverbial bank as well. There are a myriad of options as to what schools one can select which run the gamut from local junior colleges, state colleges, or as in California, UC schools. Then there are the many private schools. I was surprised when we started the college selection process just how many private schools there were.

We considered many things as we compiled a list of potential schools for my 17 year old son Kyle. We retained the services of a professional college advisor to help us and in hindsight that was the best decision we made. With all the deadlines and considerations, choices and requirements, we found her services beyond invaluable.

As to school selection, for our son, junior colleges were of no interest so we eliminated that option immediately. Grades and test scores had a bearing on what schools we selected and although Kyle has never received a grade under an A, other test factors determined some schools were still out of the question.

His vocational interests steered us toward some schools and away from others. The list was by default getting smaller and we were thankful for it. The UC system was less expensive than out of state schools yet they themselves offered little financial assistance unless a student was very exceptional in sports or merit. State colleges can cost less than the UC systems but the quality of education at least to my son was in question. Not to say state colleges aren’t quality institutions, they are. But Kyle had it in his head to go to a UC school, an Ivy League school or big name private school so that’s where we focused.

Private schools offered financial assistance depending on family income, grade merit and athletic scholarship and the smaller colleges seemed to want students and went out of their way to do what they could to help families financially and through the whole process. In the UC schools process however, we felt we were just one of the many mass applicants.

Interestingly enough Ivy Leagues schools don’t necessarily cost more than others, they are just harder to get in. Acceptance rates in the single digits make trying for one of these schools discouraging but not impossible.

In our particular case, family income was sporadic and varies drastically year to year.

Since the financial evaluation system evaluates family income made during the time the student was a junior in high school, we basically got railed due to a one-off circumstance which spiked our income.

Although one-off income streams are just that: one time occurrences, it hurt us badly when it came to qualifying for help. Families not familiar with how these things work could end up paying more for special circumstances like these onetime spikes in income. You can be sure when my next child goes into his junior year in high school, I will take every legal maneuver available to me to get my income down in that particular year.

As of things I did to prepare for college cost years ago, a 529 college saving plan helped and we did what is supposed to be done, mainly set one up when a child is born. These college funds have special IRS considerations which can help defer potential tax liabilities yet can offer growth while the child grows.

Saving income instead of buying a new car every year or going on lavish vacations are wise decisions and can really add to the college accounts over the 18 year span leading to adulthood. Never lose sight of how much college will cost and just how important college is to insuring a happier life for your child when he graduates into adulthood and the workforce.

And for our family, spending money on an independent college counselor (in lieu of the standard high school employees) was one of the best decisions we made. The cost vastly outweighed the potential headaches and application deficiencies we would have experienced had we not retained her services. The hunt for a college and its application process is challenging enough. To go it alone, at least in my opinion, would have been frightening.

We are not done selecting a school for our first child and are far from figuring out how we are going to pay for all of it when all three kids complete the process, but in the end, the rewards to our children and our sense of pride in their accomplishments, makes it all more than worthwhile.

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

Nov202017

DJIA Loves Trump

With the Dow Jones Industrial Average (DJIA) racing to new highs almost daily, one has to ask, what is driving this market?

Certainly there are enough Donald Trump haters to cast a dim light on anything financial, where even many are doubting the civilized world itself will survive if Trump continues as President. But one cannot deny that the DJIA has loved this President, as evident by the rally that has been in place since he was elected.

With the DJIA making news headlines with every milestone it passes, the news might entice some investors to review their statements and then call their advisors to see why they haven’t doubled their money in light of this almost relentless rally.

Although the DJIA is the most talked about index in the media, it encompasses only 30 stocks of the thousands that are out there in the various marketplaces.

The question some may ask: is the Dow a realistic representation of the market in general and the economy.

On the latter, I have always said the market will reflect reality eventually but its day to day movements are only the sum of the perceptions of all the players in it at any given time. For example, late in the housing boom cycle after Bear Sterns collapsed two funds tied to mortgage products (the proverbial first domino to fall in the real estate blow up), the reality was the housing crisis was already in its early stages of implosion. That was the reality. The perception however was that real estate never falls in value and any set back would be temporary. Housing stocks therefore continued to climb as the housing market was beginning its historic collapse. The perception that all was ok drove these stocks ever higher even though in reality the real estate market had already turned. The market did however eventually reflect that reality when all the indexes worldwide eventually cratered miserably.

That being said, the perception at least up until now, is the economy is strong and the stock market is justified in roaring upwards.

Certain things however might not add up and be confirming of the apparent strength of in the market meaning not all assets are firing on all cylinders.

If the economy is galloping forward in strength, one might expect the commodities and energy sectors to be in high demand and therefore screaming upwards as well.

Such in not the case, at least in the proportions the Dow has climbed. Indeed some energy and commodities have languished badly and or gone nowhere. (Yahoo.com). Since booming economies need energy and commodities, why have we not seen these asset classes go up in concert?

Additionally the Dow index is very limited in what is has in it. Remember it only has 30 stocks out of thousands and only seven stocks make up almost half of the index weighting (42%- Forbes.com) Some have even speculated the people who decide on what stocks go in the Dow rotate the losers out and replace them with winners in order to make it look better. This idea was put forth by QZ.com in an article by J.L Zargosky

Matthew Yglesias of Slate.com goes so far as to call the DJIA a “nonsensical index” due to how it is purposely constructed to favor more positive results.

Indeed just the fact that the DJIA contains only 30 stocks might be enough to convince the investing public to better observe how the market in general is performing by looking at a variety of indicators and markets. Indeed many of those indicators are positive.

But because most investors hold a variety of assets in their portfolio which include assets that might move in opposite of a rising market, and because there are stocks in many areas that have actually gone nowhere or even fallen in the midst of this rally, its likely few portfolios have seen proportional increases their value that the DJIA has. Additionally because fixed income investments (bonds and preferred stocks to name a few) may have moved opposite of the rally, some portfolios may actually have lost value.

Keep in mind this is not a solicitation to buy or sell any securities. It is not possible to invest directly in an index. Past historical movements in any security does not guarantee future performance.

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

So They Say

Many people throughout history have uttered memorable quips and one liners.

Many of these utterances are well known because they were said during a turning point in history. An example would be “The only thing we have to fear is fear itself” made by FDR during his 1933 inaugural address.

Although inspiring quotes can move one to action, modern day man seems fascinated by a series of words strung together with some sort of poetic beauty.

Barack Obama held a talent for elegant speech, as do many politicians. Such admirations seem to put less validity in what you say and more on how you say it. After all, Obama took the highest office of the land partly by his command of the English language. Few would argue that was one reason a junior US senator could managed to get elected to the highest office of the land without completing his first term.

Some my own include “Going in the wrong direction is easy to identify: it feels like you are going nowhere. If you are wondering where are you going in life, its likely you are going in the wrong direction, where you go in life depends a lot on who you hook your cart to, the first step in making a change in your path for the better is first realizing you are currently on the wrong one, the hardest part of change is realizing you have to”

Although a string of words can be poetic in nature, we often give an unearned admiration to people who can come up with such things on an ongoing basis.

The art of language mastery is often confused with intelligence, business sense, common sense and what some call “street wise”. The best example is often represented in politics where those that can speak well get elected to public office.

We must be careful not to confuse the ability to speak well and develop catch phrases that please with the ability to run a city or administrate a constituency.

On the contrary, we often find those that talk a good game not being able to live up to their own rhetoric.

I often run into many that are advising others on what to do yet they themselves have spotty resumes a mile long.

Many of these people seem to prosper despite not being able to hold a steady job for a significant length of time or perhaps many of their past business endeavors have failed miserably.

Despite such repeated failures, somehow the gift of gab has enabled a career of sorts advising others. By them being able to string together a slick sounding plan or mantra, they end up teaching others how to succeed.

It’s almost like the accomplishment of repeated failures gives them a license to advise others on what do to as long as they can sound good doing it.

In my many years in business, both financial and media, I have run into countless people trying to sell me their “advice” on how to better succeed.

I can usually and easily spot the true experts from the fakers.

The ones that may be able to assist me have held successful and long careers either in employment or businesses of their own. The fakers on the other hand may have a long history of job changes, no pattern to an employment theme (being in the same business for long), held businesses that they had closed up (in contrast to selling them for a profit), or whose majority of titles included positions in volunteer organizations or on the board of directors of some non-profit. Public office also seems to be popular among those who make a living advising people on how to do something they themselves have been unable to do, and that is make an honest living.

In conclusion, I know this article has a harsh sound to it, as well as having a tint of judgement in its weaving, but the subject is a serious one.

Following the advice of those we admire because of the sole ability to convey a message eloquently can be a dangerous practice. When looking to mentors, leaders, advisors and coaches, make sure they themselves have been successful in whatever it is they are trying to teach you.

Being able to talk a good game may sound good, but their words might be nothing more than words, with no successful experience to back them up.

Instead of admiring their slick mantras and quips, ask to see their resumes, what businesses they have successfully run for a long period of time (10 years or more), what jobs they held for an extended period (5 years or more) and what concrete evidence do they have of actually being successful. Ignore the fancy sounding titles and abbreviations after their name (the ones you likely have never heard of) and if looking for business or career advice, above all ask them how much they’re worth.

For more on fakers and others you should avoid, you can see my previous article entitled “The types of workers” here: https://www.linkedin.com/pulse/classification-worker-types-classic-i-really-liked-doing-cuniberti?published=t

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

Oct302017

Medigap Insurance

Medicare provides basic medical insurance to those over 65 but the free part only is what is called Medicare A and only if you or your spouse paid Medicare taxes according to the criteria. Medicare plans are labeled A through N and each letter has different benefits. As the letters go up the plans usually improve and/or cover something not covered in the previous plan letter. Pretty simple stuff actually but prior to getting my insurance licenses, quite frankly the whole Medicare thing was quite daunting and I don’t doubt many people feel the same way. The subsequent plans over the basic plans are commonly referred to as “gap” or Medigap insurance.

First off, know that all plans are federally mandated to be identical. That means no matter where you might buy a plan, they all cover the same thing. But insurance companies don’t have to sell those plans for a mandated price. That means you could be paying more for the same plan depending on where you bought it. A plan bought from insurance company A could be more expensive than if you bought it from insurance company B even though it’s the same plan. So much for consumer protection from our insurance regulators.

Can plans differ drastically in price?

WeissRatings thinks so claiming “you could end up paying hundreds...even thousands.of dollars in unnecessary premiums”.

Not only are the same plans sold for different amounts, the mark up for a particular value service may be increased way beyond the actual value added by the subsequent plan.

For instance, suppose a plan decreased a fixed deductible by $180.00. The premium should be increased by that amount. But Weiss found gross and unexplainable increases.

Weiss conducted an analysis of 70,852 individual premiums nationwide and estimated insurers have marked up their premiums by unexplainable $1.2 billion. Weiss also found price differences in charges based on application questions that had no bearing on actual costs to the insurance company. In other words, insurance companies were using data that had no cause and effect to the cost of services which meant premiums should have been identical but were not.

The California Department of Insurance (CDI) provides comprehensive information on buying Medigap coverage at: http://www.insurance.ca.gov/01-consumers/105-type/95-guides/05-health/03-medsup/

They also have comparison information of which they state; “The rates are intended to give you an idea of what a Medicare Supplement Insurance policy may cost. The premium rates may vary depending on your specific Medicare Supplement Insurance needs and individual or group profile. The premium rate each company charges an individual or group is based on a number of different factors including your age, location, and the benefit plan you select. To find out more about one of these policies, call the company's consumer service telephone number included on the Medicare Supplement Insurance website for the policy plan that interests you”. The link for this information is:

https://interactive.web.insurance.ca.gov/apex_extprd/f?p=111:30

Shopping for Medicare/ Medigap insurance is not as scary as it seems once you know the resources that are available to consumers and those resources are actually fairly plentiful. The CDI is likely the first place you should start. There are also many paid services and booklets one can purchase for objective comparisons to make sure you are getting the best deal for your particular situation.

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

Oct232017

Horizontal Integration

It is said businesses are either in a state of expansion or contraction. When the state of stagnation exists, the state of contraction is usually argued.

Small business might expand by selling more stuff and/or getting more customers. Although this is the first type of expansion one might think of for businesses both small and large, very large corporate conglomerates have other ways of expanding that might not be as feasible to a small mom and pop store in some retail mall somewhere.

The two types of expansion that comes to my mind from my economic class many years ago are commonly referred to as horizontal integration and vertical integration.

Horizontal intergration may sound like a fancy word but think of it as acquisition of companies in the same business. For a shoe company that makes athletic shoes, it might buy another shoe company that makes shoes as well. The types of shoes made might be the same or different but shoes are the key concept here.

Horizontal integration means a company just buys other companies in the same business, thereby decreasing the total number of companies in that particular business that exist and in the process getting larger by the merger.

Examples of horizontal integration are many and varied. Horizontal integration usually means two companies become one with one of the companies being the buyer and one being the “acquired” company.

If the merging of the two companies into one larger company threatens competition and limits consumer choices in a monopolistic way, the government can stop the sale under the guise of preventing a monopoly by the merged company.

Companies look to horizontal expansion to garner more market share or move into a similar market they might not be currently in. The main reason for doing this is obviously to eventually make more profit.

John D. Rockefeller used horizontal integration when he bought up many of his competitors and subsequently dominated and controlled the oil industry with his company Standard Oil which today is known as Chevron.

Vertical integration is also done by acquisition and to improve profits but it accomplishes this in quite a different way.

A company doesn’t buy another company that makes the same product but instead it buys the companies that it buys from, uses their services or sells to. Andrew Carnegie was known for his vertical integration strategy when his steel company Carnegie Steel Corporation bought up the companies that serviced his company both above and below him. Think transportation companies that moved his steel and companies that made the equipment he used to make the steel. Other vertical integration moves might include buying the chain of stores that sells your product so you keep the extra profit on that end and then buying the trucks that move your product so you pay yourself for shipping therefore reducing expenses below you.

There are many examples of both vertical and horizontal integration happening frequently in the board rooms of large corporations.

Companies buying similar companies that make similar products are practicing horizontal integration by expanding market presence and product variety. Companies buying companies that service it like shipping companies or perhaps buy the companies that make the stuff they use to make THEIR stuff are examples of vertical integration.

Although horizontal integration is fairly easily identified and therefore news making when authorities step in to block a merger, vertical integration, where a company buys an unrelated company that just services it, is much more difficult to prevent due to the case that the monopoly is not obvious or even related in the true sense of the word.

Think of it this way: the number one shoe company buys the number two company.

Pretty easy to see how that might make a monopoly.

Now consider the same shoe company buying the company that makes it rubber or sells the shoes it makes. That one is hard to argue as creating a monopoly. For this reason, vertical integrations are usually much easier to accomplish by companies looking to reduce costs and increase profits without being accused or refused due to the definition of establishing a monopoly.

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

Oct162017

money matters  10 16 17Taking PRIDE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Their phone number is (530) 477-1832

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

Toys "R" Us Files Chapter 11

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

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

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

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

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

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

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

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

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

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

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

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

Honoring Our Vets

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

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

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

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

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

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

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

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

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

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

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

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

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

Welcome Home Vets: Welcomehomevets.org

Stand Down: Standown.org

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

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

Sep182017

Investing, One Size Does Not Fit All

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

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

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

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

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

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

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

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

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

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

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

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

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

Women CEO's

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

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

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

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

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

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

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

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

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

"The Stock Rental Income Strategy"

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

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

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

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

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

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

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

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

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

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

Aug282017

Can Book Burning be far Behind

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

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

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

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

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

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

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

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

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

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

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

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

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

Aug212017

Junk IOU's

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

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

How bad is it?

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

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

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

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

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

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

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

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

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

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

Aug142017

"Ratepigs"

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

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

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

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

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

What????

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

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

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

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

Cha-Ching.

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

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

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

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

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

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

Jul312017

Investing in Community- Foster Families

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

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

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

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

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

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

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

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

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

Jul242017

Medical Discounts

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

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

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

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

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

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

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

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

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

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

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

Jul172017

About Warren Buffett

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

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

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

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

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

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

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

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

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

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

Jul102017

Too late for change?

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

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

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

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

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

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

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

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

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

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

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

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

Is it ever too late to change?

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

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

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

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

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

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

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