You, you said that they — What'd you say just a minute ago? They had to wait and save their money before they even thought of a decent home. Wait? Wait for what?! Until their children grow up and leave them? Until they're so old and broken-down that — You know how long it takes a workin' man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

— George Bailey, "It's a Wonderful Life"

The most expensive home ever sold in America occurred over the weekend in "The Hamptons," Long Island's playground for the one percent. Just a week before that a Greenwich, Conn., estate sold for $120 million. At the same time, the percentage of America's first-time home buyers is at its lowest level since 2008. What does that say about homeownership in the United States?

American income inequality is taking on an even uglier caste as it impacts the real estate market. The recovery in housing over the past two years has been highly unusual. This time around, it has been led largely by institutional investors, hedge funds, private equity firms and wealthy individuals. These astute investors, flush with the cash they had made in the recovery of the financial markets, took advantage of the 35 percent decline in housing prices and the new rental demand of 5 million foreclosed homeowners who were forced to find a new place to live.

These entities spent more than $20 billion to buy up over 200,000 homes which they rented or resold (flipped) as the housing market climbed. All-cash sales have become so prevalent that in the first quarter of 2014 almost 43 percent of all residential property sales were transacted in this way. That's up from 38 percent in the previous quarter.

At this point the big money has been made and the institutions are winding down their purchases. Wealthy individuals, second-home buyers and the occasional owner-occupant buyer, who have the cash, are entering the market. Thanks to the Fed's tapering, mortgage rates have climbed, while stricter credit standards following the crash have shut out the rest of us from any hope of tapping the mortgage market.

As the American middle-class disappears, so too will homeownership at an accelerating pace and what's worse, there is little hope for the future. Consider, for example, those young, first-time homebuyers. Rest assured that "the kids are not OK."

Struggling with high college debt, low-paying jobs (if any) and high monthly rents, the younger generation has little chance of cobbling together the money needed for the 10-20 percent down payment required to purchase a home, even if they could get a bank loan. The reality is that the only borrowers most banks will lend to are those who don't really need to borrow in the first place.

Sure, prices have appreciated and in several locales, mainly along the nation's east and west coasts, sales of $1 million homes have spiked 7.8 percent over the past year. But at the same time, there has been a 7.5 percent drop in overall home buying during that same period.

One wonders who these new, all-cash buyers are going to sell these properties to in the years to come. By definition, there is only one percent of the population that can afford to buy or borrow. How many jumbo loans can banks make before borrowing dries up? Evidently, U.S. lenders are seeing the handwriting on the wall and are cutting jobs in their mortgage lending divisions in advance of further downside.

Clearly, the housing market is stalling and even Janet Yellen, the chairwoman of the Federal Reserve Bank, worries that "the flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery."

As my readers know, almost all of the country's income gains from 2009 to 2012 flowed to the top one percent of earners. It is becoming clear that the same thing has happened in the real estate market. That leaves 99 percent of us who will either remain property-less or who will live in our present abode for the foreseeable future. Unfortunately for America, as housing falls prey to the growing trend of income inequality in this country, the future prospects for all of us continue to dim, especially among our young.

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.

It was a great April non-farm payrolls labor report. The headlines read that job growth in the Unites States increased at its fastest pace in over two years, while the unemployment rate fell to a five-year low.

Taking a peek beneath the headlines, however, all is not as it seems.

The report indicated that 288,000 jobs were created last month, dropping the jobless rate to 6.3 percent. That was above economists' expectation of a gain of 210,000 jobs. However, the number of workers looking for jobs declined by 806,000. Therefore, they are no longer counted in the employment statistics. Bottom line: a lot of Americans have given up hope in finding a job for good.

A breakdown of jobs was also more than a little disturbing. The most important age groups for jobs in America are those workers aged 25-54. They represent the bulk of our labor force as well as the most productive of all U.S. workers. The total number of their jobs fell from 95.36 million to 95.151 million - a drop of more than 200,000 jobs.

Employment for our younger workers also took a hit. Teenagers (16-19 years old) lost 24,000 jobs while those in the 20-24 age groups lost another 26,000. So who did gain those jobs?

Funny enough, it was workers, aged 55-69, who gained 174,000 jobs. Government was also hiring, and both construction and manufacturing saw employment gains.

Clearly, the economy stalled in the first quarter, as a result of a bad winter and had a deeper impact than first thought on unemployment. We will know exactly how bad when the government releases the next revision of first-quarter GDP growth. The last data point was growth of 0.1 percent. We might actually see negative growth for the quarter when all is said and done. However, I believe that the slowdown is behind us and that future quarters should see accelerating growth.

It is one of the reasons I believe that any pullback in the stock market will be contained over the next few months. The fundamentals of the economy will provide support for this market. Granted, we still need some kind of sell-off in the double-digit category to remove some of the excesses that have crept into overall valuations.

The markets also need time for economic growth to catch-up to market expectations. That process began in the beginning of the year. The sideways chop we have been living with since then is part of that process. A further decline that would last through most of the summer would be ideal. Who knows, maybe this century's madman, Vladimir Putin, may be the catalyst for such a fall.

I know that the majority of professionals are now expecting a sizeable pullback and being in the majority always makes me uncomfortable, but it doesn't make me wrong. I still expect the markets to grind higher, pushing stocks to record highs over the short-term. The Dow made its first record high of the year this week. The S&P 500 Index should breach 1,900 shortly. That's not saying much, since it is less than 20 points away from that level right now.

We could also see a bit of short covering once we make a new high. It could propel the S&P 500 a little further but after that, I am not expecting much. My most bullish case for the markets in the short-term is slightly higher highs with more sideways volatile action as May progresses. I am sure that on-going events in Ukraine will be supplying the volatility while day traders will continue to boost the markets higher until they don't.

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.

Many of us yearn for the day we can retire and live the good life. However, too many Americans plan to retire at age 62 simply because that is when they become eligible to collect Social Security. That might not be a good idea in the majority of cases.

The Social Security system was intended to be easily accessible, but like so many of our government organizations, it has become a nightmare of complexity. Rather than try and understand the system, many simply retire at 62 and lose out on valuable benefits because they retired too early.

Recently, thanks to the bankruptcy of one regional hospital and another local company's early retirement incentive offers, I have been fielding a lot of questions on the subject.

For most people, it makes more financial sense to wait until you reach full retirement age (FRA) which is 66 (for those who were born between 1943 and 1954). This is especially so in low-interest rate environments like the one we have now. The simple reason is that for every year you delay filing, your monthly benefit will increase between 6 and 8 percent. That is far higher than the present rate of interest, so you are getting paid to wait.

Life is too short to wait, say some, especially if death comes at an early age. You can't predict when you will die, but if you are healthy and longevity is a trait that runs in your family, chances are you will increase your lifetime benefits by waiting. Single women will benefit more than single men simply because women tend to live an average of five years longer than men.

Married couples stand to benefit more than singles by waiting as well. As a 62-year-old spouse, you can choose to either file for Social Security based on your own earnings (if you are working) or on a spousal benefit, based on your spouse's income. However, to receive the spousal benefit your partner must have already retired. The spousal benefit is up to 50 percent of the earner's benefit. If you both wait until FRA or later you will both collect higher benefits.

As a couple, there are all sorts of strategies that could work for you. The lower-earning spouse, for example, could take benefits as early as age 62 while the higher-earning spouse waits until age 70 to file. You will need to crunch the numbers (or have a financial planner do it) to discover what's best for you.

Remember, too, that if you file for Social Security benefits before your FRA and continue to work you need to be aware of how much you earn. If your earnings exceed a certain limit, some of your benefits will be withheld until you reach your FRA. As an example, if you file at age 62, $1 in benefits will be withheld for every $2 you earn above $15,120. If you make more than $40,080, then the government withholds $1 for every $3 you earn above the limit.

If you are a two-earner couple, you have to think about your tax situation. Up to 85 percent of your Social Security income could be taxed if your modified adjusted gross income reaches a certain level. You may be in the unenviable situation where one spouse retires only to see her hard-earned benefits taxed away by the higher income bracket of the spouse.

In certain situations you may have no choice but to file at 62. You may lose your job and you don’t have enough savings to cover the bare necessities, then you may need that Social Security income just to live. For most, early retirement is really just an emotional urge to get out of a bad or boring situation as early as possible. If so, think again. You may have spent the good part of your life at that company and working a few years more won't kill you, but it may make the difference between a great retirement and one that you might regret.

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.

Investors began to focus on events in Ukraine this week as a continuing stalemate between Russia and the West erupted in gunfire. That bloodshed stopped the market dead in its tracks. The question is, for how long?

Up until now, the dispute over Ukrainian territory has been largely a war of words and an excuse to take the occasional profit every now and then. Investors are worried that might change. Here's what we know.

The international agreement forged in Geneva a week ago has broken down with both sides crying foul. We also know that several pro-Russian militants were shot dead at a roadside checkpoint on in an eastern Ukrainian city of Slovyansk on Thursday. It was result of the Kiev government’s military attempt to wrest back control of 10 cities that have been occupied by local insurgents (Russian military?).

Russia's response was to launch new military "exercises" along Ukraine's eastern border. Whether Vladimir Putin is preparing to invade the Ukraine in defense of its ethnic Russian citizenry or is simply bluffing is why the stock markets are on hold. Kiev, fearing an invasion, immediately halted its military offensive.

The fact that the U.S this week has committed hundreds of soldiers to its own military exercises in Eastern Europe simply adds to the tension. It is all well and good to pile on economic sanctions in reprisal for Russia’s new-found adventurism, but if even one of our boys takes a bullet over there, escalation would be immediate and quite dangerous.

Speaking of sanctions, it is obvious that measures levied by the West have not deterred Russia in the least. Granted, it is early days and if new sanctions are invoked, there could be some tough times ahead for the Russian economy. However, the private markets aren’t waiting. They are pummeling Russia’s financial markets in earnest.

The Russian stock market has declined 13.5 percent since the beginning of the year, while its currency, the ruble, has lost 8.8 percent of its value during the same time period. To make matters worse, Russia's economy was already slowing to only 1 percent GDP growth this year, prior to Putin's annexation of Crimea. Russia's central bank has been forced to raise interest rates twice to defend its falling currency and only today hiked them again to 7.5 percent on sovereign debt. That will compound the economy's problems.

At the same time, the debt credit agency Standard and Poor's, cut Russia's sovereign debt rating to its lowest investment grade, BBB-minus, just one step above "junk" status. That is sure to accelerate capital flight which, during the first quarter, topped $70 billion. But is this really a deterrent in the short-term?

Throughout history, the hunger for more political power has always trumped national economic consequences. In fact, the more misery heaped upon the Russian people, the more Vladimir Putin can blame the West. It would be similar to Hitler, who argued that it was Europe and the Jews that were responsible for Germany's post-WWI woes.

Given the reality of blood in the streets of Slovyansk, the stock market's reaction has been remarkably sedate. Many bears are just looking for an excuse to take this market lower. They argue that investors are simply not recognizing the level of risk involved in this confrontation. That may be so.

It is impressive that, instead of crumbling under this geo-political pressure, we find the S&P 500 Index is less than 30 points from its all-time high with the other averages at similar levels.

The bulls point to earnings as a reason to buy. There have been some upside surprises this week in earnings with some big name technology companies releasing surprising numbers. Of course, as is customary in the earnings game, expectations had been driven downward over the course of the last three months by Wall Street analysts, so that even the worst results managed to come in better than expected.

By now, you should be at least 30 percent cash. Clearly, the volatility in the markets is increasing. We are still in a wide trading range.  Russian risk is a concern and could generate more short-term selling. Keep your eye on gold and the yield of the U.S. 10-year Treasury note. If interest rates drop dramatically, while the gold price spikes higher, be prepared for further conflict overseas and a fast drop in the markets.

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.

This week several multibillion deals were announced in the pharmaceutical sector. Merger and acquisitions on a global scale appears to be heating up in this sector with over $140 billion in transactions so far this year. What's behind this feeding frenzy?

We all know that the majority of baby boomers are getting older so the demand for health care of all kinds is growing. As a result, the health care sector overall is a great place to invest. While many other industries experienced a devastating drop in profits and revenues over the last five years, the pharmaceutical industry weathered the financial crisis fairly well.

But that's the good news. The bad news is that the cost of bringing a new drug to market has skyrocketed. The development time has lengthened as well while a drug’s patent expiration leaves companies open to low-cost competition. Today it is estimated that the cost of inventing and developing a new drug can be as much as $5 billion. The risk is even greater since 95 percent of the experimental medicines that are studied in human trials fail to be both effective and safe.

When you combine the astronomical costs involved, the lead time and a 5 percent chance of success, it is no wonder that pharmaceutical companies are searching for alternative ways to succeed and thrive in this kind of environment. A merger or acquisition, as opposed to years of in-house research and development, can make more economic sense.

Back in the day, big pharmaceutical companies used M&A activity to diversify. The concept was to be able to offer a lineup of drugs and treatments in various areas of medicine and treatment. That way, if one area did poorly, others would compensate. More categories of treatment, it was thought, would also improve the number of new drugs under development in the pipeline. The problem with that concept was that health care treatment has evolved differently over time. The trend in the industry is toward developing specialty drugs. Drug companies are thinking in terms of disease-related, treatment-specific portfolios and patient groups (such as cancer, diabetes, heart disease, etc.).

As a result, many drug companies have reversed course and are attempting to sell-off what they deem are "noncore assets." Companies are shuffling their portfolios, selling some product groups while acquiring others. These purchases involve smaller companies and subsidiaries of various global companies as the race is on to build franchises in strategic disease areas.

But M&A is not the only road to success. Collaboration and partnerships among global companies is also increasing. While all of these companies have different visions, the dramatic changes they face on all fronts from global government regulation, to Obamacare in this country to the dynamic revolution of the life sciences industry, itself, is altering the way they manage risk and focus their business. Sharing costs and expertise is another new trend in the healthcare arena. As companies understand and become familiar with their partners’ core and noncore assets, deals are a natural outgrowth of this collaboration and being made with increasing regularly.

These agreements take on a new immediacy when the fast-growing emerging markets are taken into account. Regulations are usually less onerous in these developing markets, market share for new drugs is a wide open proposition and an exploding middle-class with purchasing power are an irresistible combination.  Smaller local drug makers in some of these markets, like Latin America and India, have become big enough to catch the eye of U.S. and European behemoths. I expect even more M&A activity there as well.

So the M&A activity that we are seeing is a natural outgrowth of the changes that are occurring in the health care sector worldwide. Those changes are expected to continue and with it so will the pharmaceutical sector.

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.