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The Independent Investor: Is There a Doctor in the House?
By Tammy Daniels On: 03:50PM / Thursday November 27, 2014
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A doctor shortage in America has been predicted ever since the first Baby Boomers started to retire.  Now, that shortage is coming into question as technology and non-doctor, medical professionals are stepping forward to fill the gap.

The Association of American Medical Colleges predicts the nation will need 90,000 doctors by 2020 and 130,000 physicians by 2025. It is understandable how that organization arrived at that number. Just compute the proportion of Americans who will reach the age of 65 between now and 2030. Add to it the number of Americans newly insured, thanks to the Affordable Care Act, and you come pretty close to those numbers.

However, those figures simply represent the demand side of the equation assuming everything else remains the same.  To be sure, there will still be a shortage of general practitioners, those front line physicians who are our first stop in accessing medical treatment and services.  But a whole host of breakthroughs in medical knowledge, technology and treatment protocols are reducing not only the hours required to treat an aging population, but also the location of such treatment.

As a result, fewer patients visit hospitals today and when they do, their stay is reduced by a variety of outpatient choices. This pares down on the number of doctor visits each patient requires. In addition, many surgical procedures, thanks to advances in knowledge and technology, can be accomplished today through minimally invasive procedures that require less recovery time and therefore less doctor time.

Take my upcoming knee replacement, as an example. I have only seen my orthopedic surgeon once and will probably not see him again until the surgery. My hospital stay will be 2-3 days at the most, barring complications, and I'll most likely see him a week or so after the operation. That's it. Of course, in the meantime, I am seeing an army of technicians, physical therapists and so on.

This brings me to another sea change in medical treatment, the rise of the non-doctor primary care providers that include physician assistants, nurse practitioners, pharmacists and social workers. More often than not, you will find them working in teams. Think of the doctor’s assistant as the operations manager who, in my case, is sending me hither and yon to see various practitioners both before, during and after my operation.

In today's world you may never even see the doctor for some ailments. This year my GP suggested I see a dermatologist, (something I have avoided in the past). I have been back five times since that first visit and have never once seen the doctor. My skin ailments have been handled by a physician's assistant and a nurse practitioner. I'm sure the same thing is happening to you.

Training 130,000 doctors over the next decade requires an enormous amount of resources. In contrast, expanding medical practice law to allow nurses and pharmacists to provide more comprehensive primary care is a cheaper and a more time-efficient method to fill much of this potential doctor shortage. More emphasis on "team care" in our medical schools would also help leverage an underutilized medical work force that could do much, much more. Combined with the continued breakthroughs in medical technology and devices, we may just be able to keep up with the demand from people like me.

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.



     
The Independent Investor: The Pipeline Made Simple
By Bill Schmick On: 08:00PM / Friday November 21, 2014
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The U.S. Senate rejected passage of the Keystone Pipeline by one vote this week. The controversial energy plan will be back on the agenda, however, in January. For most of us, separating fact from fiction as both sides alter the facts is difficult at best, but here are some things we do know.

First, we can describe the project. The proposed Keystone XL project consists of an 875-mile stretch of pipeline and related facilities that will transport 830,000 barrels per day (bpd) of crude oil from Alberta, Canada, through Montana, South Dakota and Nebraska. It will then connect to existing pipeline facilities that flow through Nebraska, Oklahoma and ultimately down to the Texas Gulf Coast region.

About 40 percent of the total project has been completed. A 298-mile line that runs from Steele City, Neb., to Cushing, Okla., already exists as does another 485-mile piece between Cushing and Nederland, Texas. Oil is already flowing within these segments of the pipeline from various oil wells within the U.S.. The remaining segment has been held up for years thanks to the political wrangling among various American politicians and lobbyists.

There has been a cost to this controversy. Thanks to the delays, the price tag to complete the project has already doubled to something like $8 billion to $9 billion. Once approved, it will take two years to build out the pipeline and get things connected.

Depending on who you listen to, the project would mean as few as 20,000 high-paying construction jobs to as many as 42,000 (if you count indirect jobs). Energy spokesmen will tout as many as 200,000, but don't believe that. What no one disputes is that those jobs are only temporary. The actual head count of permanent jobs, once the project is complete, comes in at 50 or less.

Alberta has the third largest proven oil reserves in the world after Saudi Arabia and Venezuela, but much of it is buried within what is called "tar sands." Tar sands are a mixture of sand, water, clay and bitumen. The oil-rich bitumen can be processed into heavy, viscous oil. Producing the stuff will emit an estimated 17 percent more greenhouse gases than traditional oil drilling in the U.S. That is why the likes of Al Gore and Robert Redford are against it.

So if it is environmentally evil and good for just a few long-term jobs why in the world would this country want to approve it?

Over the long-term it makes sense strategically for us and our trading partner to the north.

Let's take Canada first. Our neighbor to the north is our largest source of oil imports, providing almost 2 million of a total of 9 million barrels of imports per day. Strategically, we know that two other major suppliers are problematic. Mexico's oil output is declining and Venezuela is unreliable at best.

Transporting oil via the pipeline from Canada would replace that shortfall for America. In addition, what we don't use, we can export. By law, America is only allowed to export third-party oil. Right now that only amounts to 30,000 bpd. Next year, that number is estimated to rise to 230,000 bpd. The Keystone pipeline would dramatically increase that number while reducing the amount we import from unreliable sources.

The fact is that with or without us, Canada will extract oil from their tar sands. So the argument becomes will we make it easier and safer for them to do so? Our environmentalists want Canada to just abandon the extraction program entirely.

Personally, I would rather our environmentalists focus more on our own issues and let Canada handle the environmental fallout from their tar sands extraction. In typical "America knows best" fashion we see nothing wrong with dictating what another country should do with its natural resources. But does Canada demand that we reduce our coal-fired generation industry, which has a carbon footprint 60 times larger than Alberta oil sands? Does anyone recognize that Canada produces less than 2 percent of the world's greenhouse gas emissions and tar sands make up just 5 percent of that total?

For once, let's do something that is good for Canada, a country that has stood by us through thick and thin for decades. Sure they can find other means of transportation — namely truck and rail — but why should they have to? The pipeline makes sense for us and for Canada.

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.



     
The Independent Investor: U.S. and China Square Off
By Bill Schmick On: 05:45PM / Friday November 14, 2014
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In Beijing this week, the annual Asia-Pacific Economic Cooperation summit is winding down. As representatives from its 21 member nations return home, one thing is certain.  China has become America's main rival for influence in that region.

Depending on who you talk to, China's Gross Domestic Product (GDP) is expected to overtake that of the United States sometime in the next five years. Some argue that it may be sooner than that. But while we Americans might fret over falling to second place economically, China's communist leaders could care less. They are eyeing a far larger prize — control of much of the world's natural resources and the means to transport them back to China.

There is nothing underhanded or dishonest about their ambitions. For the last decade, China has been investing, purchasing and partnering with countries and companies worldwide. Whether developing a Peruvian mountain loaded with copper or inking an energy deal with Russia's Vladimir Putin, China is methodically expanding its control over the means of production worldwide. This week's tariff and free-trade deals among Asian nations and the United States is simply another step in their long-term plan.

Much has been made of President Obama's agreements on Tuesday to reduce tariffs on a range of technology products worldwide including videogame consoles, semi-conductor chips and even prepaid cards. The media also applauded an agreement by the two nations to further reduce greenhouse gases and expand the duration of visas for education and business. There was even some progress on developing some military and defense initiatives.

However, in my opinion, China's real objective was to convince Asian members that their plan to extend their economic influence to energy-rich Central Asia was good for everyone concerned. The Chinese are dangling a host of goodies from a free-trade deal in competition with one of our own, and $90 billion in infrastructure investment funds as well as additional investment from an army of Chinese private and state corporations. It is tempting.

You see, China wants to create a "Silk Road Economic Belt." Their objective would be to establish a far-reaching network of transportation, distribution and logistics that would bind China, Central Asia and Europe into one vast economic network. No one is laughing. Asian members only have to look at China's track record in South America and Africa, among other places, to understand just how serious the Chinese are. Strapped for investment, struggling with anemic economies and high unemployment rates, many of these nations would just love to invite the Chinese into their parlors.

If there is a fly in this Chinese ointment, it is of China's own making. Territorial disputes instigated by China with the Philippines, Vietnam and Japan over the last few years have made many nations wary of China's true intentions. Fortunately, all sides have backed off from a shooting war but China's increasingly aggressive military stance has many neighbors troubled.

It is one thing to invite an investment partner into one's country, but quite another to risk occupation by such an acquisitive Big Brother such as China. In light of these fears, China's willingness to talk turkey with the U.S. on military issues may simply be a ploy to alleviate these concerns among some nations.

The bottom line here is that while we at home continue to debate a pipeline that should have been built long ago, China is focusing on sewing up most of the world's natural resources. It is that kind of long-range planning that we need here in America. Unfortunately, we neither have the will nor the leaders to implement such a strategy. And we will regret it.

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.



     
The Independent Investor: Workers Get to Save More in 2015
By Bill Schmick On: 01:48PM / Friday October 31, 2014
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The IRS has given us all a New Year's gift. As of Jan. 1, the tax-deferred contributions on a variety of employee-sponsored, retirement savings plans have been increased, but not for IRAs.

Readers may already be familiar with the traditional 401(k) plan. It was established as an alternative to the nation's pension plans that are fast disappearing. Most companies offer 401(k)s to their employees (or 403(b)s if working for the state or a non-profit) as a fringe benefit. These plans allow employees to contribute as much as $17,500 a year plus an additional $5,500 catchup if you are over 50. The contributions come right off the top of your W-2 wages so there are considerable tax savings in contributing toward your retirement. In addition, some companies will match your contributions up to a certain percentage. Starting in 2015, your traditional 401(k) and 403(b) maximum contributions will be increased by $500 for those in both age groups.

The maximum IRA contributions will remain the same. However, there will now be new limits on their tax-deductibility. If you are single and make more than $71,000 a year (or married with a combined income of more than $118,000) and have a workplace retirement plan, traditional IRA contributions are no longer deductible. As for the Roth IRA, couples who make more than $193,000 and individuals who earn over $131,000 will no longer be eligible to contribute to a Roth.

The government will also offer a new retirement account, called the myRA. These new retirement savings accounts are targeted to middle and lower-income Americans who make less than $129,000 for individuals or $191,000 for married couples. The myRA is like a Roth IRA, which means contributions, although not tax-deductible, can be withdrawn without triggering an additional tax once the account is five years old and the account owner is over 59 1/2 years old.

How it differs is that the myRA will be invested in a new retirement savings bond backed by the U.S. Treasury that is guaranteed not to lose value and will be free of fees. Individuals can continue to contribute to this account for up to 30 years or until the value exceeds $30,000. At that point it will be transferred to a private-sector retirement account.

Deposits are made through payroll deductions and a myRA can be opened with as little as $25. After that, one needs to commit to a direct deposit of $5 or more every payday. What if you quit?  Don't worry, these accounts can be moved without penalties to your new job.

Those who arguably benefit the most from the 2015 changes are small business owners who contribute to Solo 401(k) Plans. These plans were designed specifically for self-employed entrepreneurs or small business owners with no employees. These self-directed plans try to maximize contributions and at the same time be less complex and expensive to maintain than conventional 401(k) plans.

Solos can be opened at your local bank or credit union. They will enjoy the same 2015 increases in contributions that traditional plans receive and contributions can be made either pre-tax or after-tax (Roth). They also have a profit-sharing element that allows your business to make a 20-25 percent profit sharing contribution up to a combined maximum of $53,000 in 2015 (or $59,000, if you are over 50).

Of course all of this news is great for those of us who can afford to contribute the maximum to our 401(k) plans. To be fair, the myRA does address the widening gap between the haves and have-nots in this country but $5 per paycheck is still an enormous amount for someone making $15,000 a year. The problem is that once again our legislators, who are part of the one percent, fail to understand that very few in America can contribute the maximum to their retirement plans and still eat. 

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.



     
The Independent Investor: The Elephant in the Room
By Bill Schmick On: 03:27PM / Thursday October 23, 2014
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Mid-term elections are less than two weeks away. Issues, for the most part, have fallen by the wayside as pure politics runs amuck. No wonder voter turnout is traditionally so poor in this midterm madness.

Republicans are running against an unpopular president and are expected to sweep both houses of Congress. All they have to do is keep the focus on President Obama while mobilizing their die-hard base.  That strategy appears to be highly effective so why worry about mundane things like issues? After all, if voters don't care, why should they?

Both parties' campaigns are now dictated by whatever voters are worrying about on a day-by-day basis.  The fear of an ebola pandemic plays well, while the ISIS terrorists are always good for a sound bite or two. The minimum wage, the Affordable Care Act, the economy; these are all given short shrift while the most pressing challenge of this generation barely receives a mention. I'm talking about income inequality.

Despite gaining over 2 million new jobs in the last year or two, income inequality has widened in the United States and is, in fact, accelerating. Our country now finishes dead last in income inequality when compared to all developed nations. The U.S. actually trails Mexico, Chile and Turkey (all emerging markets) when it comes to an equitable distribution of wealth among our citizens.

As this disgraceful and dangerous wealth gap widens, shouldn't we be looking to our lawmakers in these mid-term elections to address this problem? Unfortunately, that's like asking the fox to guard the henhouse.

The average wealth of a congressman is now above $750,000. In the Senate, it's even higher, at $2.6 million. That wealth is distributed among both parties. John Kerry, for example is worth $231 million, while Diane Feinstein, claims $69 million in assets and Frank Lautenberg is worth $85 million to name a few. Clearly our representatives are part of the problem.

The failure to address income inequality in this country is not confined to one or the other parties. Democrats are just as anxious to ignore the problem as are Republicans. It may surprise you that income inequality is actually higher in Democratic-controlled districts than in Republican ones. In the 35 districts with the highest income inequality in the country, Democrats represent 32 of those districts.

These 35 districts share some similar traits. They contain small, enormously wealthy elites surrounded by impoverished neighbors. Most are situated within urban areas such as Washington, Boston, New York, Chicago and Philadelphia. Here are some examples.

Income inequality in New York's 10th District, represented by Jerrold Nadler, a Democrat, is about equal to Haiti. Nancy Pelosi's California District 12 ranks on par with Bolivia. John Boehner's Ohio District has the same income inequality as Nigeria and Paul Ryan's Minnesota District 6 is as bad as Burundi's.

It gets worse. Our elected representatives have actually exacerbated the income inequality problem over the last 20 years. Two decades of federal spending and expanding regulation by both parties have spawned a growing elite class of federal contractors, lobbyists and lawyers in the D.C. area. Over $100 billion has been funneled into this area since 1989. Is it any wonder that 10 of the capital's surrounding counties in Virginia and Maryland place in the top 20 counties nationwide in household income? Manassas Park City, Craig County, and Bath County, all in Virginia, placed within the top 10 counties nationwide that ranked among the highest in income inequality in the nation.

At this point, about 15 cents of every dollar of the federal procurement budget stays in the DC area. That amounted to $80 billion out of $536 billion in 2010. Think of the monumental transfer of wealth that is occurring from 98 percent of taxpayers to fewer than 2 percent of the U.S. population. Those in the top 5 percent of income in our nation's hometown make 54 times the money that the bottom 20 percent receives.

All of this is being conveniently ignored by those campaigning for your vote. So when you pull that lever in November, remember these are the people you will be voting for - regardless of political party.

As the rich get richer, your share in the nation's wealth and income is falling lower and lower. Do not be swayed by the fear mongers. Ask yourself if voting for these clowns is in your best self-interest and that of America's generations to come. I sincerely doubt it.

If you want to keep up abreast of my most up-to-date articles follow me @afewdollarsmore or on Facebook at billsafewdollarsmore.

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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