Saturday, April 19, 2014 01:02pm
North Adams, MA now: 55 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Good Friday and the Stock Market
By Bill Schmick On: 03:52PM / Thursday April 17, 2014
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
2
Ridiculous
0

This Friday the stock and bond markets will be closed to commemorate the crucifixion of Jesus Christ, or so the theory goes. But that is just one of the many myths involved in this holiday and its origins remain a mystery.

The fact that the New York Stock Exchange (NYSE) has a tradition of closing on Good Friday, one of nine holidays per year, has many traders and investors scratching their heads. After all, it is not a federal holiday and plenty of other businesses are open on that day. What makes Good Friday any more important than say, Columbus Day?

There is a story that during the 1890s there were three years in a row that the market suffered big drops on Good Friday. Superstitious traders took this to be a sign from God that "Thou shalt not trade on Good Friday." There is no evidence that is true. The Exchange was open for trading during Good Friday on three separate years (1898, 1906 and 1907). However, when the exchange did open for business in those years, the market was up two of those three Good Friday dates.

Another fable that many believe was that the market suffered through a Black Friday market crash in 1869. As a result, the Board of Governors of the Exchange swore never to open again on Good Friday. That seems a little hard to believe, since records indicate the exchange was closing on Good Friday as far back as 1864.

Art Cashin, the renowned trader at UBS, says there never was a stock market crash in 1869 but there was a crash in the gold markets back in September of that year. Easter week, however, is in April, not September, so go figure.

Although Good Friday is not a federal holiday, many states do recognize it as a state holiday with local governments, banks and other institutions closed this Friday. As a result, trading volumes are smaller, since fewer potential players are at work.  Businesses that normally stay open on Easter Sunday also tend to close on Good Friday so that their employees get a day off to compensate for working on Sunday.

Some think that the holiday was a nod to Jewish and Christian traders looking for a day off between Passover and Easter. Globally that makes some sense since already anemic trading volumes are even lower because Europe traditionally closes for Easter week. But as the original reason for this NYSE holiday, it does not square. Daily global trading is a relatively recent phenomenon on the stock exchanges.

There is some reason to believe that religion did play a role in the holiday. New York, a century ago, was the home of Irish immigrants. As such there was a preponderance of Irish Catholic officials in just about every walk of life in the city, including the NYSE. It is plausible that those officials could have lobbied for the closing of markets during this important Catholic holiday.  But no one can prove it.

So the origins of this stock exchange holiday remain mired in mystery. It is just one of the many quirky twists that amused and confuse Wall Street on slow holiday weeks. Whatever the reason, Friday is a day off for me, but never fear; I'll still be writing your market column as usual.

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: Banks Face Tougher Regulations
By Bill Schmick On: 08:46PM / Thursday April 10, 2014
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

This week the eighth largest U.S. banks were told they need to increase capital by about $68 billion. In some ways it is too little, too late in the government's efforts to prevent another financial meltdown. Nonetheless, the regulations do provide an increased level of safety for taxpayers.

"Too big to fail" is a term that makes most of us grind our teeth. It was taxpayers, after all, who were required to pay trillions of dollars to rescue our financial sector after the 2008-2009 financial crisis precipitated by our largest banks. Ever since then, regulators have been looking at ways to prevent the same thing happening again.

Now, over five years later and despite massive lobbying efforts by these same banks, this week the Federal Deposit Insurance Corp., the Federal Reserve and the comptroller of the currency approved rules that would raise the ratio of capital required as percentage of total assets to 6 percent at our country's largest banks. That would require the top eight banks to raise an estimated $68 billion in capital by either selling off parts of their businesses or raising equity via the stock market.

The idea behind raising capital levels is simple. The more capital an institution has to put up in order to participate in a risky trade, the less profit they make. In the past, banks could borrow or leverage their existing capital through derivatives or short-term funds called "repos" and buy or sell things like credit default swaps, collateralized mortgage obligations and other exotic, poorly understood financial instruments. With little capital down, the bank's profits were tremendous — until they weren't.  The resulting house of cards they build practically buried us all.

Banks are blasting these new limits. Their spokesmen are arguing that it puts U.S. banks on an uneven playing field with their counterparts in Asia and Europe. These banks, they point out, are governed by the Basil III accord, which also takes into account both a leverage ratio and risk-based capital requirements. That Basil agreement, at 3 percent, they argue, is half the level now required for their American counterparts.

All the usual arguments have been trotted out — loss of competitiveness, less market liquidity, senseless regulations. Over-turning these rules will be the subject of intense lobbying within Washington's corridors of power. Although the lobbying will be fierce, many of these same banks have already taken steps to adjust their capital base higher. In addition, these new regulations, if approved, will only begin to take effect in 2018.

What none of the banks will say is that the old system, where banks themselves set capital levels based on their estimate of the perceived risks of their assets, failed miserably. They have also conveniently forgotten that it was neither European nor Asian banks that triggered the meltdown. It was our largest eight banks that disregarded their own risk assessments in the name of greed.

In many ways, regulating the banks at this late date is similar to closing the barn door after the horse has bolted. Still, the new rules are simple, straightforward and will make it harder for rogue traders and institutions to set off another financial Armageddon. These rules may and do create some unnecessary and nonsensical consequences such as holding large amounts of capital against safer assets like U.S. Treasury bonds. However, unfortunately, our banks have proven that they cannot regulate themselves in these areas. By their own actions, they have invited the devil, in this case, government regulators, to their door.

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: Obamacare Confounds Critics
By Bill Schmick On: 04:15PM / Friday April 04, 2014
Important
0
Interesting
0
Funny
5
Awesome
0
Infuriating
0
Ridiculous
6



Despite a coordinated and well-financed effort to sabotage and overturn the Affordable Care Act, the open enrollment numbers this week indicate there is a groundswell of support by Americans for a universal and effective health-care coverage.

That may surprise some of you but not this columnist. Back in the day, I lived through the fear and anxiety of having no job or health-care coverage. The nightmare of how to protect my family kept me awake at nights. Fortunately I did land a job, actually a crappy position I took simply because my employer offered health-care coverage.

Right here in my neck of the woods, the North Adams Regional Hospital announced (with three days' notice) it was closing, putting 530 hospital employees (and their families) out of work. A byproduct of this layoff is an abrupt end to their medical insurance. In a different day, these families would have nowhere to turn. Fortunately, thanks to the Massachusetts health-care laws and now the Affordable Care Act (ACA) there is someplace to turn.  

Most readers understand that the legislation that is Obamacare is far from perfect. In my opinion, its passage was simply the beginning brick of a health-care system foundation whose time had come in this, the greatest nation in the world. I expected that there would be wholesale changes to the original legislation as time went by. The resulting vitriolic response to the law consisting of overblown predictions of doom, outright lies and organized sabotage both dismayed and angered me.

Granted, the Obama administration fumbled the ball right out of the gate with their less than auspicious launch of the program's primary website, HealthCare.gov. The Congressional Budget Office, you may recall, had subsequently reduced its estimate of open enrollment by this Monday's deadline to only 6 million due to the botched launch.

Some of the data extrapolations and promises of what the program could and would do for those Americans who were uninsured or underinsured were also overblown. That damaged the credibility of a sincere effort to provide what even many emerging nations offer their citizens. Obamacare was quickly labeled a "train wreck" by the majority of Republicans and was touted as the main issue of the upcoming mid-term elections. Yet, none of those mistakes warranted the effort to overturn the law, let alone shut down the government if its critics didn't get their way.

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.
So it is doubly important to recognize that with all these headwinds, the government's original estimate of 7 million enrollments in individual insurance plans was not only met but exceeded by the March 31 deadline. All those predictions that the ACA would spawn "death panels" (Sarah Palin), massive layoffs (Marco Rubio), skyrocketing health costs (most Republicans) and let's not forget Rush Limbaugh's prediction of "the total collapse of American society," were either outright lies or at best examples of monumental ignorance.

Readers note that this week there has been a deafening silence from the opposition. How very predictable.

Make no mistake; the opposition pulled out all the stops to defeat this effort.  As one small example, the response to my own columns on Obamacare was organized and orchestrated. I still receive daily and weekly comments protesting my position on the need for some kind of universal health care.

I started to dutifully publish these comments but soon realized the emails were so similar and the writing style so clearly from the same hand that it became obvious that I was a victim of a mass anti-Obamacare email campaign.  I can't prove it nor do I need to. I simply delete the innumerable computer-generated emails from "poor widows and orphans wiped out by Obama."

Bottom line, I hope these Obamacare enrollment numbers force a change in the opposition's tactics. Rather than insist on overturning a much-needed health care initiative in this country, wouldn't it be nice if they simply worked to improve it?



     
The Independent Investor: Do Women Have a Choice?
By Bill Schmick On: 03:05PM / Friday March 28, 2014
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

Income inequality between the sexes in this country has always been a problem and it does not appear to be getting any better. Critics argue that much of the blame lies in the choices many women make in pursuing their education and career goals. I beg to differ.

In my last column on the subject two weeks ago, I observed that the pay differential between men and women had finally caught the attention of national politics. The National Budget Office, for example, pointed out the biggest beneficiary of a minimum-wage increase would be women.  It is true but the real core of this issue lies elsewhere.

As most readers are aware, American society has changed. As a result of the overall income inequality in this country over the last 30-plus years, most couples are required to work full time in order to make ends meet.  Women have also spent decades fighting for that right to work on equal footing with men. Why is it, therefore, that when two people get married, pursue equal professional careers, and decide to raise children, it is the wife who is expected to sacrifice her career, take time away from the workforce and forgo income and advancement?

Who says this is the way it should be?

For me, this is the main obstacle that women face in this country. This expectation that women are required to be the primary caregivers in our society is the root cause of gender income inequality. It is an expectation so prevalent among us that only the strongest of 21st century women even question its fairness.

When a woman is expected to quit her job and raise children, several things occur. Her professional career is interrupted, sometimes for many years. Think of the "Good Wife's" Alicia Florrick, for example. This fictional lawyer dropped out of her legal profession for 13 years to raise children. In the meantime, her philandering husband cheats on her and then goes to prison. In order to support her family, she had to beg and plead simply to be offered a paralegal position at a Chicago law firm.

During those child-raising years, she did not contribute to Social Security a 401(k) plan or IRA, failed to keep up with her competition (mostly male lawyers), and when she did get a job it was at a salary far below what she should have been making if she, instead of her husband, had raised the children. What's more, from her employer's point of view, why pay her more since who's to say she doesn't take another leave of absence if she gets pregnant again?

Unfortunately in America, there is more fact than fiction in this television tale. The divorce rates in the U.S. are 40 percent to 50 percent and guess who ends up with the kids the majority of time? So not only have women given up a career, income and economic advancement, but a vast number of them now are required to support the kids while the ex goes off to prison or to enjoy his professional success with someone younger.

But let's say you are one of the lucky ones with a happy marriage. Whether you like it or not, with the kids grown, you probably still need to go back to work to make ends meet in this economy. But the chances of getting more than the minimum wage job are slim at best. It explains why women represent more than 62 percent of minimum wage workers.

Many of these women are divorced, have children to support or, just as important, they are widowed. You might find it surprising to discover that more than 75 percent of women in this country are widowed at an average age of 56. One in four of these women are broke within two months of being widowed, according to the National Center for Women and Retirement Research. More often than not, their only avenue of support is low-paying jobs with no future.

We haven't even examined the other side of women's role as caregivers to aging parents. It is the woman, once again, who is expected to provide economic and social support for aging parents at the expense of saving for retirement, Social Security benefits and income generation.

So it appears that blaming women for the choices they make as an explanation for gender income inequality would be laughable if the present state of inequity were not so serious. The solution to this injustice goes far beyond raising the minimum wage, but at least it would be a step in the right direction.

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: What's Wrong With This Flight Plan?
By Bill Schmick On: 10:14AM / Friday March 21, 2014
Important
1
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
1

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.



     
Page 1 of 35 1  2  3  4  5  6  7  8  9  10  11 ... 35  
News Headlines
Pittsfield Committee Divided on Chiefs in Civil Service
North Adams Closes Beaver Street Over Mudslide Fears
MCLA Opens New Facilities Building in North Adams
State Pothole Funds Helpful But Not Enough
Holiday Hours: Patriots Day
Pittsfield Lakefront Property Being Developed on Churchill Street
Committee Finds Leaking at Hoosac Valley High
Three Resign From Williamstown Affordable Housing Committee
Williamstown Fire Committee OKs Budget Request to Voters
"Draft Day": It's a Coin Toss
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 (133)
Independent Investor (179)
Archives:
April 2014 (6)
April 2013 (2)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
July 2013 (3)
June 2013 (5)
May 2013 (7)
Tags:
Metals Banking Europe Employment Stocks Energy Rally Debt Ceiling Pullback Banks Greece Interest Rates Markets Currency Japan Fiscal Cliff Commodities Retirement Economy Stock Market Election Bailout Crisis Jobs Stimulus Qeii Congress Deficit Selloff Taxes Debt Federal Reserve Recession Oil Euro
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Easter Bunny Bounce
The Independent Investor: Good Friday and the Stock Market
@theMarket: No Spring in the Stock Market
The Independent Investor: Banks Face Tougher Regulations
@theMarket: A Crowded Trade
The Independent Investor: Obamacare Confounds Critics
@theMarket: The Faint of Heart
The Independent Investor: Do Women Have a Choice?
The Independent Investor: What's Wrong With This Flight Plan?
@theMarket: Hanging In There


View All
Track: Monument @Hoosac...
Monument Mountain bested Hoosac Valley on its home turf...
Girls and Boys Tennis: PHS vs...
4-17-14 Girls and Boys tennis match between PHS vs Mt....
Softball: Lee vs Hoosac
4-14-14 Kassandra Kazimierczak went 2-for-4 with a double...
Baseball: MG vs Hoosac
4-11-14 Dan Flynn's suicide squeeze with the bases loaded...
Softball: MG vs McCann
4-11-14 Mount Greylock and McCann Tech played an atypical...
Sullivan School CPR Class
Seventh-graders at Sullivan School in North Adams learned...
Lacrosse: Mounties vs. Hoosac
Mounties overwhelmed Hoosac Valley on Wednesday 14-1....
North Adams Furnace St. Fire
Firefighters contained a top floor apartment blaze on...
Berkshire Chamber Career Fair...
More than 50 employers connected with job seekers at...
Lacrosse: MG vs St. Joe
Mount Greylock boys lacrosse team won 17-4 St. Joseph at...
Softball: MG vs Drury
4-8-14 Mount Greylock softball claimed a 7-2 victory over...
Wahconah High School Musical...
Wahconah Regional High School is putting on the 1930...
Drury Coach Marceau Benefit
Friends and supporters filled the Eagles Hall on Friday...
Lenox High International Fair
Lenox Memorial Middle and High School students got to...
Slice of Life Pizza 2014
Moments House's annual Slice of Life fundraiser that pits...
North Adams Hospital Closes
Union members and supporters of North Adams Regional...
Track: Monument @Hoosac...
Monument Mountain bested Hoosac Valley on its home turf...
Girls and Boys Tennis: PHS vs...
4-17-14 Girls and Boys tennis match between PHS vs Mt....
Softball: Lee vs Hoosac
4-14-14 Kassandra Kazimierczak went 2-for-4 with a double...
Baseball: MG vs Hoosac
4-11-14 Dan Flynn's suicide squeeze with the bases loaded...
Softball: MG vs McCann
4-11-14 Mount Greylock and McCann Tech played an atypical...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved