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The Independent Investor: A Tale of Two Charities
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As Senate Republicans unveil their version of a new health care law replacing the Affordable Care Act on Thursday, Democrats are already crying foul. But while politicians are busy back-stabbing each other, there are real people out there who are sick and getting sicker.
These are Americans who can't afford, or can no longer find, insurance. Their stories are evidently not "newsworthy." Instead, the media prefers to accentuate the divisions among our lawmakers, while President Trump describes the House "Choice Act" as "mean." In the meantime, who is taking care of all those sick and elderly victims in this supposedly divisive America?
Well, the national, 90-clinic strong, Volunteers in Medicine (VIM) are doing their damdest to help.
"A national solution to America's uninsured," is the slogan of this the non-profit organization founded in 1994 by a physician, Dr. Jack McConnell, in Hilton Head, SC. They provide free medical, dental and other health-related services to all those who have no insurance and can't afford it. Sound familiar?
It should. In my last column, I wrote about the heroic volunteers of the Mercy Mission, a wholly-volunteer, charitable organization deep in Trump country that is doing a yeoman's job of providing the same — free dental and medical services to the poor and undocumented in Fort Worth, Texas.
This week, I visited a VIM clinic in Great Barrington in Berkshire County. Hillary Clinton once called Massachusetts "the Red Army of the Democratic Party." You can't get more liberal than Great Barrington. It is where Arthur Peisner, the local VIM chairman, oversees 150 volunteers that have provided 4,500 hours of clinical services this year alone to the undocumented, uninsured and poor residents in this hot-bed of liberalism. Since their founding in 2004, they have helped over 2,800 people in 30,000 clinic visits.
This particular VIM, in addition to medical and dental services, provides mental health, optometry, nutritional counseling, acupuncture and even therapeutic massage.
"We help whoever comes through our doors, however we can," says Peisner, who ran Lionel Trains Inc. for many years before retiring to the Berkshires 17 years ago.
His tireless Director of Medical Services Ilana Steinhauer is a firebrand whose compassion and support for the "have-nots" in our society is obvious. Like all their volunteers, she is committed to doing what our politicians can't or won't — helping those in need.
I tracked down Sasha Bianchi, the executive director of VIM's national organization, in Bernie Sander's home state of Vermont. To hear tell, everyone in Vermont wants universal health care and a society where government does everything. We talked about the myths that both liberals and conservatives hold about each other and how the press and political parties tend to perpetuate those ideas.
"We see none of that here nor anywhere else in the nation, and clinics are popping up everywhere," she said.
"But what about the idea, held by so many up here in liberal land, that people in places like staunchly Republican Texas, believe people should fend for themselves and all undocumented Mexicans should be arrested and booted back over the border?" I asked.
"All I can tell you is the facts," she said. "We've got more clinics opening up in Texas than anywhere else in the country."
The moral of this tale of two charities is quite obvious. Although we are led to believe that the tree-hugging liberals on both coasts want government to do everything, while they sit back and clip coupons, is no more true than every Republican Trump supporter is a die-hard, gun-toting, minority-hating, red-neck.
The truth is that most of us are loving people who are doing the exact same thing: caring in our own way for those less fortunate than ourselves. My advice is to ignore the myths of America that the politicians and media would have you believe. The volunteers at the Mercy Clinic and at VIM should be an example to us all. Put away your social media devices, roll up your sleeves, and go out there and help.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
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@theMarket: Markets in Pullback Mode
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Technology stocks continued to consolidate while the Dow made new highs and the S&P 500 Index hovered just below historical highs. Throw in the fact that the markets are notoriously slow and biased to the downside during the summer months, and you have a recipe for further consolidation.
That does not necessarily mean that we will see some sharp and painful correction in stocks. My regular readers understand that the averages could simply move sideways for a month or two before resuming their upward climb. However, within those averages, individual stocks and sectors could experience much deeper declines.
Take the present decline in the technology-laden NASDAQ market, or the carnage investors have experienced in energy shares. Tech stocks are presently down almost 3 percent from last week's high, although several individual shares are down a great deal more than that. At some point, these pullbacks will have run their course.
The oil patch has seen even greater declines as the price of oil plummets, then spikes, only to fall again. But once these areas find a bottom, something else — financials, health care, utilities, etc. — could be the next group to sell off. It will depend on their price level in relation to the rest of the market.
This is the concept of "rotation," which I explained in last week's column. So while the overall averages may show little change from month-to- month, certain areas could experience substantial declines. Small cap stocks have done little all year while many other sectors have risen in price. Some traders are betting that money coming out of technology could conceivably end up in the small-cap Russell 2000 Index and financial sector.
Financials have been held back this year because of the onerous rules and regulations that encumber their business as well as the continued historically low level of interest rates. This could be another area where investors may perceive "value." Some investors have been buying the banks, expecting the beginning of a Fed-inspired, interest rate rise will help their profits.
That may not be too far off, given the actions of the central bank this week. They hiked short-term rates higher by a quarter of one percent (expected) but also revealed additional details on their plan to reduce their balance sheet by selling back trillions of dollars in bonds over the next four years or so. You should simply understand this as another form of tightening monetary policy. A rule of thumb would be $30 billion in balance sheet reduction would be roughly equal to a quarter-percent rise in the Fed Funds rate.
While no one is blaming the Fed for tightening monetary policy too soon or too fast, the fact remains that Fed Chairwoman Janet Yellen and her 12 apostles are no longer expanding monetary policy. The punch bowl of loose money is drying up, at least here in America. The hope is that the economy and the private sector are strong enough to takeover and the Fed can get back to its normal duties of playing the top cop in relation to inflation and employment.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
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The Independent Investor: A Tale of Two Charities
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We are a country divided. Washington is paralyzed. Half the country considers our president a joke and any and all legislation is dead on arrival, according to the TV talking heads. Social media is filled with outrage and despair. As a result, Americans are supposedly wringing their hands, or worse, hiding under the covers. Don't you believe it!
To hear the media tell it, on one side of this nation are the ultra-left, tree-hugging liberals, who want government to do everything by taking from the rich and giving to the poor. On the other side, are the red-necked conservatives, who despise government and its welfare programs. They want to whack the Muslims, build "the wall," put God back in the classroom, and generally "live free and die hard."
Granted, there probably are people who fit both stereotypes, but this isn't a story about them. It is a tale about real Americans. It's a story about getting off one's butt, rolling up one's sleeves, and helping others, sometimes even saving lives, regardless of your political affiliation or views. It begins deep in Trump country, but it doesn't end there.
The Mercy Clinic of Fort Worth, Texas, was founded back in 2013. Its goal is to provide free medical and dental services (including prescription drugs) to 35,000 residents in a particular zip code in the city. Last year, the entirely volunteer staff of 140 treated 1,700 patients, although they were only open two evenings a week. This year, they plan to double the number of patients seen. Dentists, doctors, nurses, computer techs, business people, ranchers, farmers and everyone in-between are volunteering their time and money.
The clinic's budget this year is $140,000 and just about all of their patients were either undocumented aliens working in this country illegally or those who have no insurance and little prospect of obtaining it. The volunteers work out of a two-story building that was originally provided by their church. Twenty-five men, women and children spent months of their own time and money renovating and repairing the place. It's beautiful, tastefully furnished and chock filled with modern medical equipment. But they have already outgrown it.
As a result, they have established themselves as a non-charitable, 501(c) organization and are hell-bent on raising $2.5 million to build a bigger, better facility with even better equipment and services to help even more of the city's underprivileged. On my last trip to Texas, I toured the facility, observed those treated, and talked to some of the volunteers responsible for the undertaking.
"This isn't about walls or Muslims or Obamacare," explains Bill Rice, a local small businessman and one of the founders of the clinic. "It's about helping those who need it, regardless of whether they are legal, Mexican or whatever."
Others explained that while the debate on who is right (or wrong) among politicians and the media rages on, "real people need help, and real people need to help them," says Dr. Jack Keen, the clinic's medical director.
Bottom line: while the politicians fiddle and the media incites, someone needed to do something about those in this country who are in trouble. Texans are standing up to be counted. This was just one tiny slice of life in Trump country as I experienced it. Charites like the Mercy Clinic are springing up throughout Texas and elsewhere. It should be a lesson to all of us on how to take America's destiny in our own hands. In my next column, I will be visiting another charity, only this time in Bernie Sanders country.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
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@theMarket: FOMO Fuels the Markets
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The fear of missing out (or FOMO) has supported the stock market averages this week. Although it appeared that the indexes simply marked time, appearances can be deceiving.
We made new record highs again this week as investors piled into stocks on any sign of weakness. The fear that stocks will go ever higher fueled those who are underweighted in equities to buy, buy buy. The S&P 500 Index has reached the lower end of my target (2,443) but could easily spike to 2,475, which is at the top of my range.
In bull markets, and this one certainly qualifies, I often observe traders attention move from concentrating on one set of sectors to focusing on another. Price usually dictates the move.
Take the NASDAQ 100, for example, it is the large cap technology index. This index has hit record highs in 9 out of the last 11 sessions and has been higher 24 out of the last 30 market days.
Other areas, such as semiconductors and large cap growth stocks have also been "in favor" and are now trading at nose-bleed levels. Yet, some sectors, such as small cap stocks and financials, have been lagging the market most of the year. As the price levels between the leaders and laggards widen, traders are now willing to buy those cheaper "out of favor" sectors.
We call this "Sector Rotation" and this week, despite a relatively quiet market, traders were beginning to rotate into undervalued areas. If you are sharp and can afford to watch the markets day -- in and day -- out, you can detect these behavior patterns. There are still other areas, like commodities and basic resources stocks that are still in the doldrums. You can be assured that if the markets continue to run, their day will come.
Given that the entire world (according to the media anyway) was focused on the testimony of ex-FBI Director James Comey and what the president did or did not say, do, or feel in regards to the Russian Affair, most investors missed some important developments coming out of Washington.
The Department of Labor's Fiduciary Rule becomes law today (see Thursday's column for a complete rundown). The bottom line: if you are receiving investment advice on your tax-deferred investment accounts from someone who is not a fiduciary, you better find someone who is. From now on, financial advice must be in the best interest of the client and not the adviser.
The trigger that saw financial stocks leap higher yesterday was the House's vote to replace the Dodd-Frank Wall Street Reform Law that was passed as a result of the Financial Crisis in 2008. Investors know full well that the House version of this new "Financial Choice Act" won't see the light of day in the Senate. Nonetheless, there is an expectation that the most onerous regulatory requirements of Dodd-Frank will be jettisoned, freeing up banks to make more profits and reduce their costs.
As for the rally in the Russell 2000 small cap index, the bull story is a bit more nebulous.
The thinking is that, despite the media and the Democrat's hope that Comey would provide some kind of "smoking gun," he didn't. That leaves the Trump Administration to re-focus their efforts on tax cuts, cutting regulations, etc. etc. All of the above would be good for the small-business community and thus small cap stocks. My own opinion is that the opposition parties (the media and the Democrats) are hell-bent on keeping the Russian Affair alive to its bitter end.
The hope is that the Republicans and the Trump Administration will be so encumbered by this scandal that they will be unable to govern through 2018. That would pave the way for the Democrats to regain the Senate and/or the House. If you think this is a case of Washington gone wacky, just remember, it is exactly the same strategy Republicans used throughout the eight years of the Obama presidency. Unfortunately, the real victims in this tragedy are the American people.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
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The Independent Investor: The Client Comes First
As of Friday, putting a client's needs first becomes law.
Despite a bitterly contested battle by brokers, banks and insurance companies to kill it, the on-again, off-again Department of Labor fiduciary rule becomes effective June 9, 2017. Investors should cheer the news.
That's right — it is no longer just a slogan that slick marketers use to woo unsuspecting retail investors into their fee-based, commission-based, fee-sharing web of duplicity and immoral behavior. Since I am already a fiduciary, I tried over the years to advise readers on what is in their best interests since their advisers certainly were not. The new law changes all that.
If your adviser, broker, wealth manager, banker, et al provides you retirement advice for a fee, they are required to act in the best interest of their client. This rule covers all tax-deferred investment accounts. Ordinary taxable investment accounts are excluded from the rule.
"But hasn't my broker been acting in my best interest all along?" you might ask.
The simple answer is no. Previously, the law states that as long as he or she puts you in a suitable investment they were within the letter of the law. Suitable does not mean the lowest cost or best performing fund, stock or any other financial security. It just means they can't put a 92-year-old grannie into a two-cent biotech stock that she knows nothing about.
A number of brokers, annuity shops and others have already abandoned ship sending out letters to their customers that they will no longer be managing their IRAs, 401(k)s and other tax-deferred accounts. Some enterprising brokers are trying to get around the law by having their unsuspecting client sign a paper that releases them from acting in their best interests. Why, you might ask would anyone be naive enough to sign something like that?
Many elderly clients, for example, have established long and trusting relationships with their advisers, despite the suitability — only rule. I understand that. There are brokers out there that genuinely do care for their customer's well-being. It is not the individual that you need to worry about; it is the managers that he reports to and the organization he works for those are the real problems.
What do they do when their boss says "get him to sign this form?" Do they quit or do what the boss says?
Balancing the demands of their firm, versus protecting their customer is a dilemma that many in the financial services sector face every day. The new Department of Labor rule makes it easier for some to do what is in their customer's best interests. Yet, others will use the trust they have built up with their clients to have them sign a waiver form. Don't do it!
Studies suggest that over a life time of savings, the typical investor has paid out one third of their saved, retirement assets in fees. From the government's point of view, they are condoning the payment of roughly $4 billion per year in fees by savers on the total $3 trillion in assets that represent the tax-deferred savings pool.
In a world where defined benefit plans and pensions for life have disappeared, it is now the American public's responsibility to save for retirement through government sponsored tax-deferred savings accounts. But most of that public has no financial background or education, and yet they are left on their own to make investment decisions.
Until now, financial advisors, who were not fiduciaries, simply compounded this problem by giving advice and charging fees that were not necessarily in the public's interests. Good advice can make the difference between a satisfying retirements or bagging groceries for income at the local supermarket. Anything that helps savers achieve the former (rather than the latter) has my vote.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
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