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The Independent Investor: The Pumpkin Patch Thrives in America

By Bill Schmick
iBerkshires Columnist

The pumpkin harvest is in and America's farmers assure us that there will be enough supply available for October and maybe even through Thanksgiving. The Christmas holiday season may be a bit more problematic.

Heavy summer rains in parts of the Midwest and elsewhere, as a result of El Niño, have crimped production of this year's pumpkin crop. Illinois, by far the largest producer of pumpkins in the country, has been especially hard hit. Over 80 percent of all commercially grown pumpkins in the U.S. are grown within a 90-mile radius of Peoria. Morton, a small town outside of Peoria, for example, processes 100,000 tons of pumpkin every year. That amounts to enough canned pumpkin to make 50 million pies.

Americans love their pumpkins. Beginning in October, families make their annual trek to their local farm for that perfect pumpkin. Farmers not only bank on that event, but have expanded on that local tradition by offering consumers other harvest experiences such as a trip through their corn maze, petting zoos and haunted farm houses.

Pumpkin-flavored or scented products are also a big business. Starbucks has sold more than 200 million pumpkin-spiced lattes since introducing that drink back in 2003. Candles, pillows, pasta sauce and even pumpkin tortilla chips start showing up in grocery stores about this time.

As Halloween approaches, windows, doorsteps and porches are sprouting jack-o'-lanterns carved from pumpkins. More and more communities are holding carving contests that have elevated this member of the squash family to a work of art. The practice of pumpkin carving is centuries old and originated in Ireland. "Stingy Jack," a mythical Irishman of unsavory character, tricked the devil on several occasions, or so the story goes, with serious consequences. Jack was banished from both heaven and hell and sent roaming the Earth for eternity with only a burning coal to light his way.

Ever resourceful, Jack put the coal into a carved-out turnip. As the myth took hold, believers in England, Ireland and Scotland began making their own versions of Jack's lantern by carving scary faces into turnips, potatoes and even beets. They placed them in windows and doorways to frighten away Stingy Jack and other evil spirits around this time of year. Immigrants from the United Kingdom continued the tradition and found that pumpkins, a native fruit grown in this country for 5,000 years, made perfect jack-o'-lanterns.

The pumpkin business overall is only worth about $150 million a year in the U.S. Economically, pumpkins are a low-cost (but also a low-margin) product that requires a lot of room to grow. Acreage planted in pumpkins could be used instead for higher profit produce. As a result, only a little over 51,000 acres of these orange beauties are harvested each year. Unfortunately, the rain has reduced this year's crop by about one-third.  

The Department of Agriculture believes there will still be plenty of pumpkins to supply our needs through Thanksgiving, but there may be some shortages after that. In which case, just to play it safe, buy a few extra cans of pumpkin pie filling early, so you can be sure to have that dessert on hand for the holidays.

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.


Independent Investor: Millennials — The Misunderstood Generation

By Bill Schmick
iBerkshires Columnist

Millennials are feeling good about their financial future, says one survey. Another poll tells us that this same class of Americans is giving up on getting rich. Both can't be right and yet they are.

The first thing you have to understand is that attitudes change depending upon one's circumstances. In a recent poll by Bloomberg, for example, 47 percent of Americans between the ages of 18-35 believed that they do not expect to live better than their parents.

That is understandable if, for example, you happen to be living under your parent's roof (and 15 percent of millennials are). It is darn difficult to imagine living better than your folks under those circumstances. This is especially true if your own parents owned a home at your age. But is this a permanent situation or will higher income and a relaxation of strict mortgage lending standards change their perspective in the future?

Student debt can also impact a young person's attitude. How can one save for the future or put a down payment on a home when every spare cent you make is earmarked to pay off that student debt? However, over time, that debt will disappear, if and when it does, will the millennials attitude change as well?

While one poll paints doom and gloom, another, this one by Wells Fargo, "How America Buys and Borrows," came to the opposite conclusion. Their survey reflects optimism with 28 percent of millennials viewing their current financial situation favorably versus 24 percent of the general population. The survey goes on to say that nearly one-third of millennials plan to buy a home in the next three years compared to the general population's 19 percent.  In 2014, 84 percent of millennials said their financial situations were stable to strong and 94 percent expected their personal financial situation to get better or stay the same.

You can find the same contradictions throughout the workplace. Polls tell you that social media has turned these millennials into team players. At the same time, this same group hates to be managed and is allergic to ideas of careerism. Some research will tell you the opposite: that competition is their driving force and they do not have much faith in their co-workers.

I could go on and on, but what explains these contradictions, in my opinion, is trying to generalize about a generation when much of what is going on is simply part of the aging process. A generation whose birth dates span 20 years (from 1980-2000), will experience changes in attitudes as they grow older and acquire more experience, especially in the work world.

Today we all want to apply our modern behavior studies and technologically sophisticated marketing tools to pigeon-hole a demographic group that is changing all the time. Like generations before them, the Millennials who have been on the job 10 years will have a different perspective (and income) than those just starting out.

Does that explain away all the differences between the Baby Boomers, for example, and this Generation "Y," of course not? In prior columns, I have identified many differences, such as their reliance on social media to communicate and access knowledge and news. Consumption patterns are clearly different from choosing less than more in living space, in valuing experience over acquiring "stuff" and in many other attitudes involving everything from social values to raising children.

The point is to sort through fact from fiction and identify the generational differences, which may not be as large as we think, and the more transitory and age-related changes that every generation experiences.

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 Stock Market & You

By Bill Schmick
iBerkshires Columnist

If one listens to the chatter throughout the financial media, you are most likely at your wits end in worry. No matter how much we may tell ourselves that this is not another 2008, the gnawing doubt in the pit of our stomach remains.

Let me say categorically that we are not entering another financial crisis. The stock market is not going to drop 50 percent from here, no matter what some strategists are saying. If you have been reading my columns since 2007, you know that when it's time to raise cash I say so. This is not one of those times.  You may not agree with me, (although you want to) so let me give you some food for thought.

Although the stock market and the economy do not necessarily perform in lock step, over time, they tend to trend in the same direction. The U.S. economy is growing moderately, employment is rising and there is nothing on the horizon that indicates that the economy is changing direction. This is decidedly different from 2008.

On the other hand, the stock market over the course of the last year or so may have gotten a bit ahead of itself. It is this discrepancy that is behind the present correction within the financial markets. As the economy continues to grow and interest rates begin to rise, investors are searching for a price level that more accurately reflects this new environment.

This adjustment period is almost over. The ultimate level in which investors finally agree that stocks represent "fair" value may be here or a 100 points lower on the S&P 500 Index. If your time horizon is anything longer than next week, that level should not be as important as the longer term direction of the market. To date, there is no evidence that the stock market has changed its long-term trend, which is up.

Over the past several years, most investors have experienced fairly good gains in their portfolios. To some extent, the market's stellar performance since the financial crisis has conditioned investors to expect more of the same. Anything less fills us with consternation. The problem is that expectation is not based in financial reality. Markets go up and markets go down.

It would be just wonderful if you (or your financial adviser) could time the market: selling at the top and buying at the bottom. Unfortunately, no one has been able to do that consistently in my experience. Investing is a process where no one catches the bottom (or the tops) but instead invests along the way. Normally, the best time to buy is in an environment like we are experiencing right now. Conversely, it is absolutely the worst time to sell (although emotionally that's just what you want to do).

How do you keep from making emotional decisions with your portfolio that you will regret later on? Stop looking at your account every day or week. Does knowing what you gained or lost on a daily basis help you make investment decisions for the long term?  Compare your attitude toward the stock market with how you look at the real estate market.

 Ask yourself this question, how much is your house worth today? You don't know, do you? And yet, for most of us, our house is worth more (in many cases several times more) than our financial portfolio. If your house were to fall by $10,000 by the end of this month, would you sell it? Of course not - because it is a long-term investment. In order to invest successfully, you must view your financial investments in the same way.

Don't get me wrong, losing money (even if it's only paper losses) hurts like the Bejeezus, The pain of losing is far worse than the jog of gaining. It's just how we humans are built. Just remember, we have all been here before and those who have stayed the course have benefited the most. This time will be no different.

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: How Cell Phones Hurt Your Productivity

By Bill Schmick
iBerkshires Columnist

Forty-two years ago, when the cell phone was first invented, the new device was hailed as a major tool in boosting everyone's productivity. Today, we are discovering that the opposite is true. The cell phone has become a major distraction.

Ever notice how many people on the job are making cell phone calls? Cops, clerks, nurses, brokers — it doesn't matter who they are — their dependence on their cell phone is almost an addiction. New research reveals that you don't even have to answer your phone to reduce your productivity.

A study by the Journal of Experimental Psychology discovered that subjects who needed intense focus in their daily routines performed poorly when they simply received notification of a text or call on their phone. Their productivity dropped dramatically even if they chose to ignore the notification. Researchers call it the "degree of distraction."

Recently, I tested this concept on myself. My friends and relations will attest to my lack of interest in all things cellular. I regularly forget my phone. Many times my wife will call me on my cell, only to hear it ring on the kitchen counter next to her.

But I have grudgingly been attempting to join the 21st century in my electronic life. As such, I have a brand-new smart phone, a watch that tells me I have a call (as well as my heart rate) and an tablet at home. Over the last week, I've made sure my cell phone was on my desk, fully charged and "on" in my own experiment. I wanted to test my own level of distraction.

Money management requires a fair bit of focus; writing columns even more. Usually, I am under a deadline when I write. Producing readable copy regularly requires an enormous amount of concentration on my part. I try not to be disturbed during this process because it does throw off my focus.

This morning my cell phone was on and I received three calls and several text messages that I did not answer. Nonetheless, it took me an extra hour to complete this column. The same thing happened earlier in the week while writing another column. For me, simply the knowledge of receiving a message triggered a distracting stream of questions — who was calling me and why, was the message important, was it an emergency? Suffice it to say that I did check and see who had called just to put my mind at ease.

Granted, it was a most unscientific experiment, but it does support a growing volume of research on the subject. Although in this day and age multi-tasking is a daily chore, the facts are that human beings are really not that good at it. Workers think that they can text or access social media sites such as Facebook, Twitter or Snapchat and still maintain productivity. The facts are that the average office worker wastes over one-third of the day on these pursuits and that brings down their productivity level drastically.

Not only do cellphones create constant distractions, but they often interrupt important meetings. They can also represent a security risk, mixing personal and business applications on one phone. They can prove physically dangerous to those employees who believe they can multitask while performing physical work. Sometimes they can spread confidential information in the public, which is a big concern in my business.

All in all, while your cell phone can be a useful tool in your life, best practices in the work place would be to turn it off and put it a drawer until after the work day is done.

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: Mind the Gap, Please

By Bill Schmick
iBerkshires Columnist

As the unemployment rate drops toward full employment, the growing skills gap between business and labor is becoming a huge problem in this country. Fully 80 percent of manufacturers and small business owners can't find qualified staff.

Over the years, I've written several columns about this growing problem, but now the economy is picking up and unemployment, at 5.1 percent, is coming close to full employment. Both corporate and government leaders are realizing that in in some industries, such as utilities and aerospace, the skilled labor shortage may hamstring America's ability to do business in the years ahead.

The Harvard Business Review estimates that 47 percent of all new job openings over this decade will fall into the middle-skills range. Middle-skill jobs usually require postsecondary technical education and training and, in many cases, require college math and science courses if not a degree in those subjects.

Although the manufacturing sector today only represents 18 percent of total GDP, every dollar spent in manufacturing adds $1.37 to the U.S. economy. And every 100 jobs in that sector create an additional 250 jobs in other sectors that support manufacturing. The vast majority of manufacturing executives believe this growing skills gap will impact their ability to meet customer demand in the future. They say they are ready and willing to pay well above market rates for qualified employees, yet six out of 10 positions go unfilled.

Back in the day, skilled workers had two avenues to obtain marketable work skills. They could learn on the job through a cooperative apprenticeship system developed by management and company unions. But as unions declined (less than 12 percent of the total U.S. work force is represented by unions), so did the system of this on-the-job training. At the same time, the landscape has changed from gradual and incremental upgrades easily learned on the job to new skills requiring a quantum leap in technical and behavioral understanding. Things like problem solving, communication, teamwork and leadership.

That's where the second avenue of learning new workplace skills would be useful. Colleges were supposed to be the place where young people can absorb these massive breakthroughs and develop the rules necessary to excel in a modern-age professional work life. We were told to major in a field that suited our interests and talents.

Unfortunately, thanks to a high school system that has failed to adequately prepare our students in science and math, plus an American prejudice against just about anything that was not in the liberal arts field, fewer and fewer college students choose a career that is needed in the job market. Over the last two decades only 15 percent of U.S. college graduates majored in science, technology, engineering or math and that, my reader, is where the jobs are.

As the gap widens, a number of initiatives between government, education and the private sector has sought to remedy the situation through training and hiring of graduates, so far with varying degrees of success. The old system of apprenticeships, although trial-tested, is difficult to maintain, given the small number of unions remaining throughout the country.

In-house job training has also been met with some success in major corporations that have the time and money to bring a new employee up to the level of skilled competence necessary for their job requirements. However, small businesses, the main engine of employment and prosperity in this nation, do not have the time, money or number of skilled employees necessary to teach and/or train the unskilled employee.

A crisis always seems to light a fire under those who know what to do, but have just not got around to doing it yet. I think we are getting quite close to the point where everyone in the private and public sectors is going to have to roll up their sleeves and focus on this issue.

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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