Home About Archives RSS Feed

The Independent Investor: World's Bread Basket No More

By Bill Schmick
iBerkshires Columnist
The recent controversy over dairy trade policies between the Trump administration and Canada is only the tip of the iceberg. While Trump is selectively picking on one particular product, the truth is that the United States is losing its competitive advantage in many areas of agriculture.
 
Government subsidies to the agriculture industry worldwide have always been a thorn in the American side. That's not to say that our farmers have gone without. We, too, subsidize our farmers. Taxpayers are expected to pay at least $87 billion to help farmers over the next dozen years. And for decades, we have been spending billions each year to protect them from lost income and crop failures.
 
The difference between then and now is that, despite other countries' farm subsidies, we were still No. 1 worldwide in a great variety of food stuffs. So we didn't care as much. Today this nation's market share for commodity such as wheat, soy beans and corn are shrinking rapidly. Exports of wheat, for example, have declined by over 50 percent since the 1970s, while countries like Russia have expanded wheat production by over 60 percent in just the last 10 years. As a result, Russia now dominates global wheat production.
 
And Russia is not alone. Countries in South America, specifically Brazil and Argentina, traditional agriculture countries, have also increased production, thanks to investment, technology, year-round growing seasons, and new planting methods. Four years ago, Brazil overtook the U.S in soybean exports (now the world's largest exporter) and will be the second-largest corn exporter after the U.S. this year.
 
How did Brazil accomplish it? Brazil embarked on its agricultural expansion forty years ago. The government enticed farmers to develop vast sweeps of unproductive lands in the north (called the Cerrado) where today over 500 million acres are now growing crops for exports.
 
There are any number of reasons why we are losing market share, but a lot simply has to do with increased worldwide production. For example, if U.S. crop production remains the same, while other countries produce more, then our market share slips. At today's prices for wheat, for example, American farmers are expected to plant 10% fewer acres this winter season because it is less profitable. Other countries will be happy to take up that slack.
 
And then there is the strength of the greenback. The U.S. dollar has been stronger than both the Russian and Brazilian currencies. Since most crops are priced in dollars, it makes our exports more expensive compared to theirs. Lower energy costs has also helped our competitors because it is now much cheaper for an Eastern European exporter like Ukraine to ship wheat between Europe and the Middle East and still make a profit. It is a similar situation wherever you look.
 
And don't think that our foreign competitors are still farming with wooden hoe and bags of apple seeds. State of the art satellite-guided combines, genetically-engineered seeds from the top global producers, and computer programs that can dictate the price of harvested crops months in advance are all tools of the trade now.
 
What could change this balance would be some kind of natural disaster somewhere outside of the U.S. to turn our competitive position around in the short-term. Over the longer term, as costs in competitor countries for labor and land begin to climb, and the worth of the dollar falls back to earth, our comparative advantages should help us regain market share. However, the day when we could call America "the bread basket of the world" appears to be in our rear view mirror.  
 
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.
     

The Independent Investor: Should College Be Free?

By Bill Schmick
iBerkshires Columnist
Recently, New York became the first state to offer a tuition-free college education to middle-class students at two- and four-year public colleges. Tennessee, Oregon and the city of San Francisco have also given similar benefits to students attending community colleges in their states. It's about time.
 
The headline of this column was taken from a series of articles I first published six years ago. At the time, I argued that the benefits of a college education today were about equivalent to the worth of a high school degree back in the 1940s and 1950s. Back then, graduating from high school opened the door to a good job, while creating a population of largely, law-abiding citizens (and guaranteed educated cannon fodder for the country's military in time of war).
 
Back in the day, when Thomas Jefferson first suggested creating a public school system, he and others like him argued that a free and common education would create good citizens, unite society and prevent crime and poverty. It took decades before that concept became law but, once implemented, it worked as the founders expected.
 
However, as society changed, a high school education was no longer sufficient. The computer age ushered in different educational demands and skill sets that students could only acquire in a higher-education environment. For all intents and purposes, college (and vocational schools) has replaced high school as the entrance ticket to the "American Dream." As such, I reasoned that since public high school education is free in the United States, why then should Americans pay for college?
 
Under the New York legislation, tuition will be free for residents who earn up to a specific income cap, which will be phased in over the first three years. Families who earn less than $100,000 a year would qualify for free tuition. Over the next two years that income level will rise to $110,000 in 2018 and $125,000 in 2019. The other tuition-free initiatives in Oregon, Tennessee and San Francisco have made tuition free for residents at all community colleges, regardless of income.
 
New Yorkers are required to take 30 credits a year, although students who encounter hardships can pause and restart the program or take fewer credits per semester. College will still cost money. The cost of fees and room and board, for example, are still the student's responsibility and could cost as much as $14,000 a year.
 
In announcing the program, its author, Gov. Andrew Cuomo, said "Today, college is what high school was — it should always be an option even if you can't afford it."
 
State officials estimate the program will cost $163 million in the first year with 200,000 students' eligible for the new program. Now, Rhode Island is considering a similar law that would make two years of public college tuition-free.
 
Criticism of the program largely centers on the cost. Higher education has gotten so expensive through the years that some form of government assistance already picks up the tab for half of the nation's education costs through a maze of loans, credits and whatnot. It appears that government has recognized that "pricing out" education for a growing portion of the population might not be such a good idea.
 
Others question the worth of a college education if it is free. What is the incentive to excel, to find a good job afterward if you pay nothing for it? They argue that so many young people today "hide out" in college, majoring in the easiest subjects possible (regardless of job market demand), while partying half the night and every weekend.
 
They have a point. My suggestion: while tuition may be free, to receive it you must excel in the entrance exams and have maintained good grades in a variety of subjects in high school, if you don't, than pay your own freight. What are your suggestions?
 
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.
     

The Independent Investor: Tense Times in Trumpland

By Bill Schmick
iBerkshires Columnist
The geopolitical landscape is heating up. U.S. relations with Syria, North Korea, China and Russia are in turmoil as the Trump administration flexes its military muscle. None of it bodes well for the stock market.
 
War cries and wealth are like water and oil. They don't mix well. For investors, there are far too many unknowns, especially when U.S. warships are steaming toward the Korean Peninsula. In Syria, American troops were spotted alongside Jordanian Special Forces troops along the border, despite our president's assurances that boots on the ground are out of the question. Actually, that isn't quite true, since U.S. Special Forces have been operating alongside our Syrian allies for some time.
 
Then there is Secretary of State Rex Tillerson's visit to Moscow. This diplomatic venture is a followup to last week's U.S. surprise tomahawking of one of Syria's airbases. Tillerson will be using America's new-found, willingness to use military might in order to further our diplomatic ends. In this case, to convince Putin to sever ties with Syrian dictator Bashar-al-Assad.
 
In hindsight, all that media speculation about President Trump's cozy relationship with Vladimir Putin seems somewhat far-fetched, given that Tillerson (who was also thought to be buddies with Vlad) is reported to be pursuing a hardline against Putin's failure to reign in its client state.
 
On yet another front, it appears President Trump has had enough grief from the "Fat-Boy" — chubby Kim Jong-un, grandson of the nation's founder, Kim II-sung, In a duel of tweets, the dictator warned of "catastrophic consequences" from any U.S. military action, while "The Donald" warned that "North Korea is looking for trouble" and that we would "solve the problem" with or without Chinese help.
 
Both sides have backed up these words with firepower. The U.S. response, in the form of an aircraft carrier and three guided-missile destroyers, is heading for North Korea while China has amassed 150,000 troops on its border with North Korea. In addition, Chinese medical and backup units have been stationed on the Yalu River in support of the People's Liberation Army.
 
Most military strategists believe that April 15 might be the day when things could heat up. It is the 105th anniversary of Kim Long-un's grand pappy. It could be an auspicious date too for "the Fat-boy" to brandish the puppet state's military might.
 
While all this is going on the markets have grown increasingly restive. The threat of war is normally a time when investors seek safety. Safe-haven plays such as gold, U.S. Treasury bonds and the U.S. dollar benefit from these concerns. They have done so this week. About the only good thing that can be said for these tense times is that they don't last too long.
 
If tension escalates, stocks usually fall fast over the course of a few days. If, as has happened in the past, geopolitical events resolve themselves, markets recoup their losses in an equally short time. Since the new administration appears to be trying to remove two thorns in our side simultaneously, the chances of further tension seem high. My advice is not to panic. Hang in there and remember that this too shall pass.
 
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.
     

The Independent Investor: Don't Let Romance Blind You to Finances

By Bill Schmick
iBerkshires Columnist
Don't let romance blind you to the financial downside of living together. Unmarried couples need as much, if not more, financial and estate planning than those who are married. Without it, one or both partners may lose everything they have committed to the relationship. Here is a primer on what steps you should take.
 
Over 6.7 million unmarried couples are co-habitating in America at last count. Over 90 percent of them are heterosexual, in case you're wondering. As such, these couples, regardless of sexual orientation or length of the relationship, are considered and classified as unrelated individuals in the eyes of the law.
 
And the rights of unmarried couples are different depending on your state. Not all states, for example, recognize common-law marriages. As a result, without legal safeguards, the children you are raising, the assets you have mutually accumulated, and the house that you share can easily be taken from the surviving partner. The law will assume that any property and the care of surviving children should pass to your next of kin. Even your stated wishes of what you would want to happen in the event of your death or disability may not be followed.
 
OK, now that I have your attention, the first rule is to protect your estate. Your estate is everything and anything you own, or have contributed to before your death. Next, there needs to be documents established for situations that may be short of death but that still safeguard your rights. This would include what happens to you and/or your partner in the event of disability or illness, which might require someone else to make medical and financial decisions for you.
 
Such an agreement is commonly known as a domestic partnership agreement. Think of it as similar to a pre-nuptial agreement.
 
"Where is the romance in that?" might be your first reaction. "I will sound like a money-grubbing, so-and-so if I broach this with my partner."
 
Granted, it isn't a discussion normally accompanied by candlelight and soft music, but every relationship needs to be anchored in reality. The facts are that every unmarried couple should, at a minimum, discuss and implement a domestic partnership document as well as develop an understanding on expense sharing and individual insurance for household effects.
 
Next in line would be homeowner's insurance, unless the unmarried couple jointly own their home. That's because homeowner's insurance doesn't automatically cover both of you. If one person owns the residence, the other should at least purchase rental insurance to protect his or her belongings.
 
Finally, if both partners believe they are in a long-term, committed relationship, estate planning is a must. A married couple has at least an implied estate plan. The IRS and the courts have already established and safeguarded the rights of a married surviving spouse in the event of death. No such regulations exist for an unmarried couple. As such, everything needs to be documented in legal form.
 
At a minimum, there are at least 10 documents and/or provisions that an unmarried couple should at least consider: a domestic partnership agreement, a health care proxy, a will and/or living trust, durable power of attorney, beneficiaries (especially designations on retirement accounts), properly titled property, life insurance, funeral wishes, welfare and custody of any children.
 
All of the above may sound complicated and/or not worth the effort. You would be right, as long as you never break-up with your partner, or if you never die, but if you feel that either one could happen to you sometime in the future then heed my advice.
 
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.
     

Living together is not what it used to be

By Bill Schmick
iBerkshires Columnist
Times are changing. Over 12 million Americans now "live in sin," as my parents would say, and their numbers are increasing every year. As long as they remain together, everything is copacetic, but what happens when they break up?
 
Thanks to the economy, demographics, and life-style choices, young couples today are living together and having children despite their unmarried status. In my own family, my niece is pregnant, unmarried, and has no intentions of tying the knot. Although her partner is the love of her life, they have decided (for now) to keep it that way.
 
And in today's economy, there may be a lot of good reasons not to get married. Number one among them may be affordability. In my example, both parties are young and work in a drugstore, stocking shelves and clerking. They live with his mother because they can't afford to get a place of their own. You might ask why in the world they have decided to bring a child into the world under these economic circumstances, but that's none of my business and more and more young people see nothing wrong with it.
 
It could be that like most unmarried couples they are going through what I call a "test-drive" period to feel more emotionally and financially secure before making a more permanent commitment. That happens all the time. However, there are other reasons why getting married is no longer the first choice.
 
As earnings and education levels among men and women are flattening out, there is no longer a crying need by some women to get married just to make ends meet. It was a traditional cultural bias that no longer has relevance. Many of these educated couples are making good money but still hesitate to marry.
 
Statistics don't lie and the most recent data suggest these trends are growing. Nearly two-thirds of women, ranging from the ages of 15 to 44 years old, have reported in a Centers for Disease Control (CDC) study that they have experienced periods of cohabitation. That is a 41 percent increase since 2002.
 
And the more education a woman receives, the more likely she will have lived with a domestic partner. Last year, the Wall Street Journal found that 58 percent of women with four years of college have lived with a domestic partner at some point. It also appears that 39 percent of cohabitating adults have children. Some already had kids, while 25 percent of these couples gave birth while in unmarried relationships, according to the U.S. Census Bureau. That's double the rate reported in the early 2000s.
 
But it is not just young folks that are choosing to live this way. Older Americans are opting for unmarried relationships at a faster rate than younger people. And these Baby Boomers have no intention of tying the knot. Retirement homes, for example, are evidently hot beds of "illicit" relationships.
 
There are plenty of financial reasons why seniors may not want to get married. Oldsters who have been married before have financial complications and could risk the loss of certain benefits by getting remarried. Pension's benefits, social security, health insurance and alimony come to mind. Then there is the inheritance you are leaving to the kids and/or grandchildren. For many, who have already spent time and money on estate planning, simply don't want to make any changes and don't feel they need to as an unmarried couple. Then there are the kids, themselves.
 
A lot of adult children have a hard time accepting Mom or Dad's new relationship. Fears that their parent will be taken advantage of, ("is my inheritance threatened?") or left heartbroken is enough to cause arguments and tensions. As a result, many seniors won't remarry and just don't tell their children about these relationships. 
 
That can cause yet another potential headache down the road.
 
In my next column, we will discuss the financial pitfalls of these new relationships. No one wants to contemplate a break-up, but they do occur, and when they do, neither party has a legal leg to stand on. It is worse if children are involved. They are ways, however, that both partners can be protected, so stay tuned for Part II.
 
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. 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.
     
Page 1 of 61 1  2  3  4  5  6  7  8  9  10  11 ... 61  
News Headlines
Lenox Named Best Northeastern Small Town
Lanesborough Couple Fighting to Save Historic, Family Farm
Rovers, Runners Hit Streets in Williamstown for Humane Race
Sociology Major Names Newman Civic Fellow at MCLA
Doctor Joins Southwestern Vermont Health Care Foundation Leadership
'Baseball and the Berkshires' Moves to Berkshire Mall
Traffic Commission Unsure What Else Can Be Done For Deming Park Traffic
Adams Community Bank Promotes Two
Williams College Junior Named Goldwater Scholar
Wealth Management Team At Berkshire Bank Expands

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.

 

 

 



Categories:
@theMarket (228)
Independent Investor (310)
Archives:
April 2017 (7)
April 2016 (1)
March 2017 (8)
February 2017 (8)
January 2017 (6)
December 2016 (2)
October 2016 (1)
September 2016 (9)
August 2016 (5)
July 2016 (7)
June 2016 (7)
May 2016 (5)
Tags:
Fiscal Cliff Congress Stocks Debt Ceiling Europe Selloff Metals Europe Wall Street Oil Euro Commodities Election Housing Pullback Currency Recession Energy Interest Rates Markets Crisis Rally Federal Reserve Debt Bailout Banks Stimulus Jobs Taxes Deficit Japan Stock Market Economy Retirement Greece
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
@theMarket: 100 Days Does Not an Economy Make?
The Independent Investor: World's Bread Basket No More
The Independent Investor: Should College Be Free?
The Independent Investor: Tense Times in Trumpland
@theMarket: Uncertainty Descends Upon the Markets
The Independent Investor: Don't Let Romance Blind You to Finances
@theMarket: New Quarter, New Market
Living together is not what it used to be
Independent Investor: Don't Worry, Be Happy
@theMarket: Fed Rate Hike Sets Stage For More