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The Independent Investor: What's Wrong With This Flight Plan?
By Bill Schmick On: 10:14AM / Friday March 21, 2014
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The next time you board a regional airplane remember this. The co-pilots responsible for your safety are making the minimum wage. That means they are earning about as much as the guy hauling trashcans outside your local supermarket or flipping fast-food burgers and working a heck of a lot longer hours as well.

The disappearance of Malaysia Airlines Flight 370 has mystified the world. It has also brought the issue of flight safety on the front-burner again. The investigation has now centered on the possibility that someone on the flight crew tampered with or re-directed the flight path of the plane carrying 227 passengers. To me, it simply drives home the point that whether you are on an international flight or a regional puddle-jumper, your pilot is crucial to your survival.

As such, it is hard for me to accept that pilots, who are required to have a college education and countless hours of flight certification, can make as low as $22,000 a year or less and work 240-300 hours a month for that privilege.

Unlike most professions, pilots only get paid from the time the airplane leaves the gate until it arrives at its destination. So the typical pilot is only on the clock for 21.5 hours a week. That translates for a first-year co-pilot as no more than a gross weekly pay of $495. A pilot with a decade of experience might average around $1,312.

Why then does anyone want to be an airline pilot?

Many simply have a passion for it and will do anything to fly. In addition, regional airlines are considered a stepping stone to a much more lucrative job at one of the major airlines. The senior-most pilots who fly 747s or 777s can earn $200,000 or more a year. It may have required 35 years or so of poor pay and long hours to attain that level but, unfortunately, there are few such openings available given the overall number of working pilots.

The pilots of the missing Malaysian airplane are being investigated now as part of the government probe. Authorities believe that whoever disabled the plane's communication systems and then flew the jet according to a different flight path had to have a high degree of technical knowledge and flying experience. It illustrates how much control one individual can have over a great many people.

Although the amount of money you make does not necessarily reflect an individual's competence or sense of responsibility. I believe the airlines, in compensating their pilots, have sunk to new lows in their multiyear industry task of cost-cutting at the passenger's expense.

Like you, I have accepted most of these management changes with a modicum of grumbling. I have said nothing when, without warning or explanation, they cancel my flights (and the next one) simply because there are not enough passengers available to pack in like sardines in a can.

Although miffed, I also shelled out the extra money I'm charged to carry luggage on my trips. I had no choice. The fact that I now have to pay for seat selection as well as their lousy food and surly service, is the new normal in aviation.

But I draw the line at paying our pilots a minimum wage. After all, this is my life we are talking about. I don't like to entrust it to a young man or woman who is overworked, underpaid and probably less than motivated on a bad day. It is a wonder that we don't have more pilot safety issues already, but to their credit, these pilots, despite their slave labor, have consistently given their utmost to ferry their passengers to safety time and again in every kind of weather and obstacle.

If there was ever a reason to raise the minimum wage, this is one.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. 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 inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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@theMarket: Hanging In There
By Bill Schmick On: 06:17PM / Friday March 14, 2014
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Russia's attempted annexation of the Ukraine, China's internal economic woes, the less than auspicious enrollment numbers in Obama's health care initiative are just a few of the difficulties that the stock market has had to overcome this week. Given the news, stocks are hanging in there.

There's hardly a day goes by that someone, somewhere isn't calling a top to this market. The bears are doing their utmost to get a good old-fashioned rout going but investors by and large are ignoring their overtures. On down days, the volume dries up because most investors resist the temptation to sell. Only day traders appear willing to sell the market and even they are right back in again at the first sign of an uptick.

The market's momentum is clearly higher. That does not mean we are immune from bouts of profit-taking. This week, for example, the markets hit a three week low but it appears that these declines simply set us up for another move higher.

Those who are already invested are willing to sit through this consolidation phase. Those who are not yet in stocks are increasingly willing to buy on any dips, no matter how shallow. As one client recently said, "there is no place else to go, if you want to earn a decent return."

At this point in this bull market, it is not unusual to see the big gains of last year taper off to a slow grind higher, interspersed with fits of moderate selling. Sure, some individual stocks are still accumulating big gains or losses but the indexes are for the most part trading sideways.

Given the overseas background noise, the U.S. market's ability to absorb bad news is even more impressive. Events in the Ukraine this weekend will further test the market's staying power. Russia has engineered a sham voter referendum in the Crimea on Sunday. It is widely expected that the rigged results will give Vladimir Putin an excuse to annex that region.  There is little the West can do to stop it outside of military intervention, which is not on the table.

Economic sanctions by the U.S. and Europe, on the other hand, might hurt a bit but can go only so far before Russia retaliates by shutting off Western Europe's gas shipments. I can’t help but compare Putin's actions with those of Adolph Hitler prior to World War II when he annexed Austria and several other nation states unopposed.

At the same time, investors are concerned that China, once the economic locomotive of world growth is gradually turning into at best a weak caboose. As most readers know, speculation is rampant in China and has been for years. The real estate, financial and commodities markets have reached bubblelike proportions and the government is endeavoring to deflate the excesses without puncturing the balloon. How and to what extent they are successful have implications for markets worldwide.

As for you, my readers, I advise you do nothing during these short-term tempests, regardless of whether the teapot is in this country or somewhere overseas. The issues I see on these foreign fronts simply argue for remaining here in the U.S. market, which increasingly looks like a safe haven.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. 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 inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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The Independent Investor: Income Inequality Among Women
By Bill Schmick On: 06:37PM / Thursday March 13, 2014
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Today women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it's an embarrassment.

— President Barack Obama, State of the Union Address

This week the president met with women members of congress to discuss income inequality among the sexes. At the same time, the Democratic Party is making the passage of a minimum wage bill part of its campaign strategy for mid-tem elections this year. It appears that how much a woman makes in this country has suddenly become important.

It's about time. This has been a pet peeve of mine for years. Some longtime readers may recall my first four-part series on this subject back in 2009-2010. At least once a year since then, I have tried to keep the inequity between the salaries of men and women on your front burner.

There is a lot of misinformation bandied about by both sides on this issue although you would think that everyone would be on the side of women making at least an equal wage with men performing comparable tasks. President Obama didn't help when he used the often-quoted but confusing "77 cents statistic" during his State of the Union address.

Detractors immediately jumped on the number arguing that the 23-cent gender pay gap is simply the difference between the average earnings of all men and women working full time. It does not account for differences in occupation, positions, education and job tenure or hours worked. They like to add that the U.S. Bureau of Labor Statistics found that when measured hourly, not annually, the pay gap between men and women is only 14 percent not 23 percent.

Others argue that income disparity may be linked to the field of study that women pursue. A recent survey of 1,000 adult women in higher education by Western International University found that the income gap decreases significantly in cases where women held degrees in business, technology, science and math. The American Association of University Women concurred with those findings in their study of 15,000 graduates. They found that along with science, math and some technology areas, women received equal pay with men in engineering, health-care occupations (especially nurses), life science, social services and administrative assistants.

Although it is true that women are now the majority of students pursing academic degrees, few are pursuing careers in high-paying areas such as petroleum, aerospace, and chemical or electrical engineering. Instead, female students dominate in what are considered the 10 least profitable majors like early childhood education, communication disorders, human services, community organization and so on.

All of the above seems to point to one obvious conclusion. Your income is largely dependent on what degree and profession you pursue. Women, so the critics argue, earn less money because they choose to enter careers that have built-in income disparities.

They conveniently dismiss that, even with all of the above arguments, the statistics indicate that women still suffer from a disparity of income despite degree or profession. They also assume that choice, in American society today, is a woman's prerogative.  In my next column, I will explore those issues and why and how women now represent 60 percent of minimum wage workers and 75 percent of workers in the 10 lowest-paid occupations. Stay tuned.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. 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 inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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@theMarket: Markets Turn Positive for the Year
By Bill Schmick On: 03:58PM / Saturday March 01, 2014
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It is official. We made a new high this week and the markets appeared to be in "melt-up" mode. So why is everyone cautious?

After almost two months of consolidation, the equity markets broke out once again, spurred by the knowledge that if the economy falters, the Fed remains ready to reverse course.

Yet, by Friday afternoon, the bears were fighting hard to ruin the party.

It was no accident, in my opinion, that Fed Chairwoman Janet Yellen's testimony before a Senate panel on Thursday was followed by a record-breaking gain in the S&P 500 Index. But by Friday afternoon, the benchmark index was barely holding its gains. True, not all the indexes have reached new highs. Dow Theorists won't feel comfortable until both the industrials and the transports also break out and confirm the gains in the other indexes.

Yellen, in her testimony, said that the central bank was studying the economic data closely. She said, "a number of data releases have pointed to softer spending than many analysts had expected. Part of that softness may reflect adverse weather conditions, but at this point, it's difficult to discern exactly how much. In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."

This is a departure from her upbeat comments over the last few weeks when she appeared more positive over the future prospects of the economy. So why did the markets go up? I believe investors assume that if the economy were to slow further, the Fed would reverse its recent tapering and some argue that the Fed might even inject more stimulus into the economy.

Readers may recall that I have been expecting to see a spate of disappointing numbers in the weeks ahead as the country continues to suffer from the impact of the Polar Vortex. Today's GDP data, for example, indicated the economy in the fourth quarter dropped to 2.4 percent versus 4.1 percent reported in the third quarter. Lower exports and consumer spending were the main culprits in the sluggish number.

My own belief is that once the country thaws out from this winter's deep freeze, activity will once again spurt higher. However, between now and then, the stock market may get spooked by fears that the economy is rolling over.

As for events overseas, specifically in the Ukraine, the markets have been able to absorb events without too much difficulty. Naturally, when tensions rise between Mother Russia and the U.S., one must pay attention to events. Vladimir Putin seems bound and determined to escalate the situation further but hopefully cooler heads will prevail.

There has been so much talk this week on whether the market is "topping" out that I have my doubts. I would stick with the game plan and remain invested. The worst that could happen is that we have another mild pullback and we fall back into a trading range.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. 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 inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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The Independent Investor: True Confessions
By Bill Schmick On: 01:53PM / Friday February 28, 2014
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Money holds a great deal of power over us. For many, it is a symbol of worth, competence, freedom, prestige, masculinity, control and security. No wonder most of us have such a hard time talking about ours.

The psychological taboo of discussing money in this country had been identified and recognized as far back as the early 1900s by Sigmund Freud, among others. He wrote that "money questions will be treated by cultured people in the same manner as sexual matters, with the same inconsistency, prudishness and hypocrisy."

Recently an article from USA Today on the subject caught my attention. It concerned the anxiety most people feel when approaching financial advisers. The article was spot on, in my opinion. As an investment adviser myself, rarely does a week go by without my sitting down with an individual or couple to discuss their finances. Sometimes I feel like a therapist.

For the most part, at the beginning of most of my meetings with new individuals or couples there are few smiles and an air of tension. By the end, however, the sun has come out and the atmosphere has radically changed.

"You are not at all what we expected," said one couple recently.

I asked them why.

They confessed that they had been feeling a great deal of anxiety over revealing their finances to a stranger. It was hard enough, they confessed, to talk about money between themselves, but they worried what would happen if they shared this highly personal information with me.

"Everything you share with us is strictly confidential," I explained and I meant it. "Our privacy code is so strict that I won't discuss your information with anyone, even your spouse, without your permission."

In this case, the discussion allowed both of them to share a burden they were keeping to themselves with someone competent to help them work out their finances. We were able to pinpoint the problem areas in their finances and suggest several remedies.

Another client admitted that he feared that I would immediately judge him for either not saving enough or not making enough money. It turned out that he had done a magnificent job at both and I told him so. The point of hiring someone like me is to figure out how to save more or make more with the money you do have. There is no room in this business for judgment of any kind.

Others worry that by coming to me they will reveal their lack of knowledge of investment, finance and/or money management. No one likes to appear stupid and for many, finance might as well be written in Sanskrit. I do not expect anyone that comes through my door to be familiar with the subject. Why do some people think that because they may be an expert at whatever they do for a living, they must also be a whiz at finance?

So, how do I personally make prospective clients feel more at home with me? For one thing, I never "dress up" for my meetings. I left my three-piece suits, silk ties and wingtips behind when I left the canyons of Wall Street. It helps that I live and work in a rural community where few wear suits and ties. I dress like my client because it helps break the ice, puts me on an equal footing and dispels any image that I "come from money" just because I am a money manager. Besides, that's the kind of guy that I am, and any number of pin-stripes never helped me make money for my clients.

I also avoid "financial speak" at all costs. I talk like I write, in plain American, without pretensions or ten dollar words that no one understands. As for appearing stupid, I know you've heard it before, but in regard to your finances "there are no dumb questions except the ones you fail to ask." The moral of this tale is simple - seek financial advice at your earliest opportunity. In the majority of cases your anxiety will disappear almost immediately and the help that you may obtain will be good value for the money.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. 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 inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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Bill Schmick is registered as an investment advisor 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 and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



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