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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.
     

Independent Investor: Don't Worry, Be Happy

By Bill Schmick
iBerkshires Columnist

It is official: the happiest country in the world is Norway, with Denmark the runner-up, according to the World Happiness Report. What lessons can we learn from this survey and what, if anything, should we do as a nation to join their ranks?

Where, you might ask, do we here in the U.S. rank? The answer would be No. 14, down from No. 3 in 2007. The least happy inhabitants on Earth appear to be in Africa while the average Chinese person is no happier than he was 25 years ago, despite the country's much-lauded economic miracle.

How do a pair of tiny countries stay so happy for so long?  It sure isn't the weather, where it is so cold that summers require overcoats and the days can last so long that they keep tourists complaining about lack of sleep. Or is it?

Clearly, the people there have a lot of money. Norway, for example, is the sixth wealthiest country in the world. They can thank the North Sea's oil discoveries 40 years ago for that. Denmark also has a high GDP per capita, but so do we, and yet we placed far lower. One answer is what these people actually do with their money.

These countries make it a priority to give their citizens economic security. Take health care, for example. While our government is in the throes of reducing the number of Americans who will be insured through health-care, in Norwegian society citizens pay a maximum of $300 a year for doctors, hospitals, and other medical services. After that, the government pays for everything for that year. In addition, they get other benefits such as all children's medical expenses are paid for by the government, including childbirth and five weeks paid vacation.

Think of it, as our Baby Boomers worry over how they will pay for their future medical bills, people there feel a great deal of security about their medical future. And it doesn't end there. Everyone receives a pension at 67 and education is free through the university level. In exchange, Norwegians pay higher taxes than we do. Is the trade-off worth it? Well, if happiness is a measure of worth, the results seem to indicate it is.

In our country, at least on the East and West Coasts, winters are relatively mild compared to Scandinavia. And yet, so many of us fight depression over the winter months. How is it that people in Scandinavia, where it snows all the time, can maintain their good spirits? One reason may be that bad weather forces people to band together and to support each other against the elements.

Here in the Berkshires, for example, many of us can't wait for the next snow storm because we ski, snow shoe, tube, or all of the above, before the last snowflake falls. Norwegians, like we in the Shire, have a positive attitude toward negative weather. Norwegians have a saying that "there is no such thing as bad weather, only bad clothing." Tell me about it!

My wife's family is from Norway. For years, she has been bugging me to make a visit and meet her extended family. They are like other Norwegians. They have tons of community spirit developed by staying in one place, living their lives, passing down their family homes to their kids and so on.

Unlike the two of us, who have moved maybe six times in 17 years, Norwegians describe themselves as "place bound" and are proud of it. The good news is that I will get a first-hand experience of Norway in August, when we will spend two weeks meeting and greeting her family. I will have more to say upon my return. In the meantime, however, it appears that happiness has more to do with community than money. That, my dear reader, should be taken to heart. America today is all about us versus them; our right, versus their wrongs. If there was ever a prescription for unhappiness, all we need do is look at ourselves as a nation for the reasons why.

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.
     

The Independent Investor: Trump's Budget

By Bill Schmick
iBerkshires Columnist

It was late, "skinny," and guaranteed to send Washington lawmakers up a wall.  President Trump's first crack at a budget, released on Thursday, makes drastic cuts to many sacrosanct departments and programs while boosting spending in others.

If you haven't strapped in quite yet, now is the time to do so. The president's 53-page budget (less than half of his predecessor's lean, 134 pages) makes dramatic cuts to departments such as the Environmental Protection Agency (minus-31 percent) and the State Department (minus-28 percent), while increasing defense spending by $54 billion.

Areas that would also be hit hard were foreign aid, grants to multilateral development agencies such as the World Bank and United Nation's climate change initiatives. Clearly, "America First" was front and center in making these decisions. Here at home, renewable energy research and carbon dioxide emissions reductions would also be jettisoned, if the president gets his way.

The Agricultural Department, a bastion of American protectionism, was cut by 21 percent. It would see loans and grants for wastewater slashed, headcount reduced, and a program that gives U.S. farmers tax credits by donating crops for overseas food aid would disappear.

Nineteen organizations that count on federal funds for support such as public broadcasting and the arts would cease completely. Home heating subsidies, clean-water projects and some job training would also go by the wayside. The Housing Department's community development grants, along with 20 Education Department programs, including some funding programs for before and after-school programs, felt the ax. Anti-poverty programs were targeted as well.

In contrast, defense spending will be boosted by $54 billion, money for veterans would increase 6 percent and the White House is asking for a $1.5 billion down payment for the building of Trump's "Great Wall." In many ways, Trump's budget looks like a typical GOP blueprint but there are some differences.

For example, Trump wants to strip infrastructure funding from federal agencies, largely the purview of the Department of Transportation (highways, bridges and airports) and the Army Corp of Engineers, which takes care of the nation's inland waterways. Congress controls where that money is spent. We are all aware that historically, a large part of government spending programs is simply an exercise in legal bribery.

Each congressman and senator gets their "taste," depending on how powerful they are and how good they are horse-trading in the cloak room. Bridges to nowhere, choice contracts to favored construction companies — the litany of kickbacks, waste, and cost overruns go hand-in-hand with what we know as government spending.

Here comes Trump. By taking the purse strings away from Congress, he intends on keeping control of how much gets spent on what (and who benefits). Trump is throwing down the gauntlet to the business-as-usual crowd of Washington politicians on both sides of the aisle.

The ink isn't even dry and already the politicians of both parties are "outraged," "concerned," or "doubtful" in commenting about the White House budget proposals. In truth, presidential budgets are simply a "wish list" and should be taken as such. However, once again, the new president is hell bent on fulfilling his campaign promises.

I would expect Republicans will support the president's budget in theory but when it gets down to the nitty gritty, they, like the Democrats, will make sure that business remains "as usual" unless the new president can out-Trump them.

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.
     
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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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