Home About Archives RSS Feed

The Retired Investor: Small-Town America Is in Vogue

By Bill SchmickiBerkshires columnist
The on-going coronavirus pandemic has boosted consumer demand for small-town real estate. Whether that trend will continue with a vaccine on the horizon is anyone's guess. 
 
In the meantime, it could be a godsend for those looking to retire and possibly downsize during this period. The obvious driver in this trend change has been the safety factor. The devastating carnage that occurred in the nation's large cities during the first surge of the coronavirus convinced many families to pull up stakes and find dwellings as far from the mayhem (and people) as possible.
 
Home listings in small towns jumped more than 100 percent this spring, according to Redfin, while viewings of rural county properties increased by 76 percent. But relative safety was only one of the draws. The ability to work remotely had opened up possibilities to re-evaluate and rethink lifestyles. That became especially appealing for those who had faced long daily commutes and extended work hours. The pandemic also curtailed, or even shut down, many of the reasons consumers enjoyed the urban centers in the first place, such as restaurants, bars and other leisure activities.
 
From a financial point of view, low mortgages rates (thanks to the Federal Reserve Bank's monetary stimulus) have made borrowing mortgage money more affordable. Property prices are also much more reasonable when compared to housing in places such as New York City, Boston, or San Francisco. Buyers also benefit from lower taxes generally.
 
In many cases, a young family's plans to move out of the big city in a couple of years was simply hastened by the pandemic. Others found that the coronavirus was the excuse they needed to move closer to aging parents or find a place that offered a guesthouse for other family members. 
 
And these days, where most leisure activities involve the great outdoors, the appeal of living somewhere rural is an added draw. 
 
For many, small towns are a good choice. At some point, (when things return to normal), most work-at-home employees plan to go to the office a few times a week.  As such, a convenient transportation system is a priority. Many small towns offer train, bus, and even airport services nearby. My own small town (well city), Pittsfield, offers all three, plus a wealth of other services for new home buyers.
 
As someone who has lived in the back-country, take it from me, when it snows commutes become a nightmare. I also found that without good internet service working from home is practically impossible. Something I discovered too late when I moved to the "boonies."  
 
The pandemic has even made school choices easier for many moving parents and their kids. Many children are still attending virtual schooling and they don't get to socialize with their friends, except through the computer. As such, a move to somewhere else may not be as life-changing to many children as it could have been under more familiar circumstances. 
 
All of this is good news for the segment of the population who are retired or planning to retire. For many aging Americans, that four-bedroom house of forty-some years with the big backyard and front lawn has long since emptied out. The children are gone. The driveway is too long to plow and even the garden is taking more effort than it used to. 
 
For those thinking of downsizing, the timing couldn't be better. 
 
Bill's forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
 
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 OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by OPI. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.

 

     

The Retired Investor: Polling Business Takes a Body Blow

By Bill SchmickiBerkshires columnist
There has been one clear loser thus far in the outcome of the 2020 presidential elections and it is not the candidates. The polling industry has gotten it wrong twice in a row. Can the industry survive that kind of mistake?
 
As votes across the nation continue to be counted, the pollsters and the media, which count on those polling results, are asking how Vice President Joe Biden's 10-point lead nationwide could have evaporated in the blink of an eye. 
 
Political polling is a type of public opinion polling, which in the past (when done right), is a fairly accurate social science with established rules about sample size, random selection and margin of error. The top political polling organizations employ mathematical models and computer analysis to collect a response from the best representative sample of the voting public. Over the past three years, the Marketing Research and Public Opinion Polling industry in the U.S. has averaged an annual growth rate of 2.3 percent to reach $20.6 billion in revenue. And yet, this multibillion-dollar industry would admit that there is still plenty of "art" in this science of political polling. 
 
Unfortunately for pollsters, it is the art side of interpretation that seems to have gone radically awry for the second time in eight years. In my opinion, it is sure to only heighten the suspicion and distrust many Americans already have towards polling after the 2016 performance.
 
During the last four years, there has been a lot of soul-searching among the polling community on what went wrong. Their answer: not much.  
 
The polling industry has argued that President Donald Trump's 2016 win fell within the normal statistical error implicit in all polls. Essentially, Trump beat the polls by just a few points in just a few states. So, from their point of view, the presidential polls were not that far off. However, at the state level, the polls were even less accurate, but the industry still maintained that they were within the normal range of accuracy.
 
Some pollsters, however, did adjust their methods of polling to improve their accuracy. One modification was to emphasize the importance of education. Polling organizations realized that they were missing some of the president's support in the last election by underrepresenting voters with little or no college education. Pollsters also placed more emphasis on where respondents lived. Did they live in a city, suburb or rural area, for example?
 
Another improvement was the decision to rely more on cell phones — instead of landlines — as a method of reaching respondents. This has had its own problems, however, since pollsters are finding that the response rate to phone calls is decreasing. At the same time, the costs to conduct high-quality polling are going up. Pollsters can still resort to online polls, but most firms believe online interviews are less accurate than live-caller polls result.
 
In preparation for this election, pollsters were worried that the pandemic could alter the accuracy of their polling in unpredictable ways. Some voters, for example, could tell a pollster they planned to vote, but a sudden spike in coronavirus cases in their area might force them to change their mind. They might avoid election day voting booths and opt to vote by mail or not at all. 
 
 The huge number of mail-in ballots alone might create uncertainty. Questions of accuracy, disqualifications, and court challenges might throw off the predictions in unpredicted ways.
 
Unfortunately, none of that matters in the minds of the public. The failure to hold the 8-9, even 10-point lead for Biden in this election was so far off the statistical margin of error that pollsters may not be able to dig their way out of the doghouse. But you can bet that they will try.
 
Bill's forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
 
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 OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by OPI. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.

 

     

The Retired Investor: Food Faces Escalating Prices

By Bill SchmickiBerkshires columnist

It has been a long time coming. Commodities have been in the doghouse for years, but a combination of events are conspiring to lift the prices of soft commodities much higher.

A definition of soft commodities refers to future contracts of substances that are grown, rather than extracted or mined. We know them best as food and fiber commodities, such as wheat or lumber. 
 
Shortages are occurring in everything from soybeans to wheat and it is not just in the United States. Readers might immediately think to blame the pandemic for this trend. You would be only partially correct. At the outset of the COVID-19 crisis, the hoarding of food in certain areas of the world did occur, but by April and May, despite the spread of the pandemic, food commodity prices stabilized and even toilet paper in this country was back on the shelves. 
 
However, the recent resurgence of the coronavirus in Europe and the United States might threaten the supply chains for certain foods once again. If lock-downs in the U.S. are re-instituted (as they are beginning to be in Europe right now), or the cases of COVID-19 begin to decimate the work force again, food prices could spike considerably. Readers might recall earlier in the year when some Midwest food processors were shut down. As a result, supplies of beef, chicken, and pork began to disappear from grocery shelves. Prices jumped and are still nowhere near their pre-pandemic levels. 
 
However, beyond the coronavirus threat, the real culprit sending prices skyrocketing is the weather. It is not my intention to debate global warning. Economics has a way of doing that for me. Consider this: the wheat farms of both the United States and Russia are dealing with serious drought, which is decimating harvests. The same is happening to the soybean fields in Brazil.
 
But while our hemisphere contends with drought, over in Southeast Asia, farmer's crops are drowning in too much rain. Flooding is occurring throughout the rice paddies and pam oil plantations in countries like Indonesia, Malaysia, and Vietnam. The result of all this devastating weather has been higher and higher prices of everything from sugar to lumber to cooking oil. This is occurring at the least opportune time for billions of workers struggling to make ends meet because of the impact of this worldwide pandemic.
 
Compounding the crop shortages, are the decisions by multiple governments to safeguard their food supplies. In the event of another supply-chain disruption this winter, no country wants to be presented with a food shortage at home. Soft commodity buyers representing China, the Middle East and other governments are competing (while bidding up prices) for existing harvests.
 
And as grains of all kinds increase in price, so does the cost of livestock feed. When the cost of soybeans rises by 81 percent and corn by 56 percent, as it has in Brazil, you can just imagine what that does to the cost of pork, beef, and chicken production. It is a never-ending, upward spiral. The situation has already convinced many governments to remove import tariffs that simply add further costs to the equation. 
 
To be sure, the world still does have an ample inventory of crops, such as wheat, for this year with bumper crops expected in Australia, for example. But if the world's wild weather persists, in combination with another global surge in the pandemic, we could be facing even higher prices ahead for soft commodities. 
 
Bill's forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
 
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 OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by OPI. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
 
     

The Retired Investor: China Leads Global Economic Recovery

By Bill SchmickiBerkshires columnist

There is a saying on Wall Street, "first in, first out," which aptly describes the experience of the world's second-largest economy this year. The coronavirus was spawned in Wuhan, China late last year, but thanks to the country's quick response, China has sprung back stronger than ever.

By almost any economic measure, China has not only managed to avoid a recession this year, but will actually see its GDP grow by 1.6 percent in 2020. To put that growth in perspective, the world's economy is expected to decline by 4.4 percent this year.
 
The startling Chinese recovery in the face of ongoing pandemic problems throughout the rest of the world, can be credited with the government's tough lockdown procedures, population tracking abilities, as well as a rapid testing program among billions of citizens. At the same time, governmental fiscal and monetary policy went into action immediately. Major infrastructure projects were launched. In the consumer sector, cash in exchange for more spending programs encouraged consumers to spend more in a variety of areas from tourism to dining out.
 
In September, the manufacturing sector hit a six-month high. Small businesses, which are struggling to stay alive in most other countries, have expanded as well. The service sector is growing in tandem with other areas of the economy, according to the Caixin Insight survey, a media group that follows and forecasts the Chinese economy.
 
Most Americans had expected that, during the last four years, our trade balance with China would improve, and it did, thanks to tariffs and other restrictions. The problem is the U.S.  simply imported more from other countries instead (like Vietnam), and as a result, our overall trade deficit remained the same. China's trade imbalance with the U.S. is once again widening. The U.S. trade deficit with China surged in July to $63.6 billion. That is the highest level in 12 years, as imports jumped by a record amount. Politicians won't admit it, and you may not want to hear it, but we need what they make, and they make it better, faster, and are far more reliable than most.
 
By the end of this year, China will account for 17.5 percent of global GDP, a rise of 1.1 percent, which values the entire economy at about $14.6 trillion. The difference in nominal GDP is expected to lessen between China and the U.S. over the next three years, by how much may depend on our future response to the pandemic. This performance has not been lost on investors.
 
China's stock market has climbed to a record high of $10 trillion. That level blew past the country's previous market peak, which occurred during the stock market bubble of five years ago in China.
 
During that time, the stock market hit $10.05 trillion in June of 2015, just before governmental authorities decided to crack down on leveraged trading. The Chinese market subsequently halved in value.
 
This time around, however, stock investors are simply looking for growth, and worldwide that has been hard to come by. While equities are up about 17 percent (versus 9 percent for the S&P 500 Index), the buying has taken on a more measured approach. Valuations, while rich, are not reflecting unrealistic values like they did in 2015.Valuations for the CSI 300 trades at less than 19 times trailing, 12-month earnings, compared to 40 times the Index's 2015 peak. Institutional investors now own more than 70 percent of the free float of all Chinese stocks, while foreign investors hold about 5 percent, according to China Renaissance, a financial investment bank.
 
Recently, the country's currency has also been strengthening and foreign direct investment continues to grow. U.S. investment, for example, has risen by 6 percent in the first half of the year, according to China's Ministry of Commerce, despite all the anti-China rhetoric coming out of Washington.
 
There are risks investing in China, which is still considered an emerging market economy, despite its size. The authoritarian political system and centralized economy present downside risks in investing, as 2015 aptly illustrated. Still, investors might want to eye some equity exposure to this country, especially if the markets were to experience a pullback in the weeks ahead.
 

Bill Schmick is now the 'Retired Investor.' After working in the financial services business for more than 40 years, Bill is paring back and focusing exclusively on writing about the financial markets, the needs of retired investors like himself, and how to make your last 30 years of your life your absolute best. You can reach him at billiams1948@gmail.com or leave a message at 413-347-2401.

 

     

The Retired Investor: U.S. Moves to Nail Down Strategic Metals

By Bill SchmickiBerkshires columnist
Rare-earth minerals, with names like cerium, dysprosium and gadolinium have become "must have" materials in the global race to win the technology battles of the future. The problem is that throughout the last 30 years China has built a near monopoly in these strategic metals.
 
Rare-earth elements (REEs), consisting of 17 different minerals, are used to make components in many high-technology devices, including smart phones, digital cameras, computer hard discs, fluorescent and light-emitting-diode (LED) lights, flatscreen televisions, computer monitors, and electronic displays. China commands 35 percent of the world's reserves of these minerals and produces more than 70 percent of all rare earth tonnage worldwide.
 
In our present trade wars with China, the possibility that China might respond to U.S. tariffs by embargoing our REE imports is a real threat, since last year China accounted for 80 percent of our total rare-earth compounds and metal imports.
 
After years of delay before recognizing this danger, President Trump signed an executive order aimed at expanding domestic production of REEs last week. He ordered the Interior Department to explore using the Defense Production Act to speed up the development of such mines. Trump used the same law to accelerate the production of medical supplies to help combat the coronavirus pandemic this year.
 
The hope is that the energy secretary can identify projects here in the U.S. that could help the country increase our own production and holdings of these minerals. Sadly, we have a long, long way to go before we catch up to China. Today, the U.S. has only one rare-earth mine, which is located at Mountain Pass, Calif. It is owned by a private company, MP Materials, which is 10 percent owned by a Chinese company, Shenghe Resources Holding Co. All of MP's materials are exported back to China.
 
Rare-earth isn't the only strategic metal that the U.S. needs, however. Lithium is another metal in great demand and is used to manufacture electric car batteries. Global lithium production is about 400,000 tons annually. That is enough to power 2-3 million electric vehicles (EVs), but only about one third of that production actually goes into EVs. The rest, like REEs, is used in computers, cellphones and rechargeable devices. If companies such as Tesla plan to increase production of EVs in the future, then the supply of lithium must increase dramatically. Once again, it is China that controls about 40 percent of world lithium production. The rest is divided among Australia and Chile. The "Big Three" producers — Albemarle, Sociedad Quimica y Minera de Chile, and FMC — hold practically an oligopoly in the lithium market.
 
In another U.S. initiative, our Department of Commerce has taken steps to protect America's uranium industry from foreign dumping. Both Russia and the U.S. have initialed a draft amendment to reduce U.S. reliance on uranium from Russia over the next 20 years. Russia has been dumping cheap uranium into U.S. markets for years, driving American miners and processors out of business. This practice leaves our country exposed to the same dangers we now face with other strategic metals. 
 
While all of the above actions are necessary, in my opinion, it will be years before the U.S. can gain a competitive advantage in any of these resource areas. Doing so is just as important as domestic recognition back in the 1972 that we needed energy independence in order to remain the nation we are. 
 

Bill Schmick is now the 'Retired Investor.' After working in the financial services business for more than 40 years, Bill is paring back and focusing exclusively on writing about the financial markets, the needs of retired investors like himself, and how to make your last 30 years of your life your absolute best. You can reach him at billiams1948@gmail.com or leave a message at 413-347-2401.

 

     
Page 5 of 8 1  2  3  4  5  6  7  8  

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
MCLA and MassHire Partner to Support 2021 Berkshire Virtual Career Week
Williamstown Fire District Asks for 10.6 Percent Budget Increase
Selectman Candidate Rosenberg Wants to Change Adams' Narrative
Adams Town Meeting to Be Held Outside Again
Big Y Streamlines Sack Hunger Campaign
Dalton Man Gets Year in Jail For Burning Political Sign
Baker Tours Vaccination Site at Berkshire Community College
Pittsfield, Alford Receives Shared Winter Streets Funds
LitNet Welcomes New Board Member
2021 Fishing Derby at Wild Acres
 
 


Categories:
@theMarket (366)
Independent Investor (450)
Retired Investor (40)
Archives:
April 2021 (6)
April 2020 (3)
March 2021 (8)
February 2021 (8)
January 2021 (5)
December 2020 (6)
November 2020 (8)
October 2020 (7)
September 2020 (6)
August 2020 (6)
July 2020 (10)
June 2020 (7)
May 2020 (9)
Tags:
Federal Reserve Banks Housing Deficit Energy Europe Europe Crisis Japan Jobs Retirement Commodities Euro Fiscal Cliff Economy Selloff Election Stock Market Currency Debt Ceiling Pullback Markets Greece Stimulus Taxes Metals Wall Street Interest Rates Recession Bailout Stocks Debt Oil Rally Congress
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@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: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
The Retired Investor: Our Hospitals Are in Trouble
The Retired Investor: A Highway of Opportunity
@theMarket: Stocks Grind Higher as Bond Yields Retreat
The Retired Investor: Water Becoming a Rare Commodity
@theMarket: Spring Has Sprung in the Markets
The Retired Investor: Will Infrastructure Spending Boost Clean Energy Stocks?
@theMarket: Cross Currents Confuse Investors
The Retired Investor: Cannabis Catalysts Coming Soon
@theMarket: Rising Rates Create Headwinds for Stocks
The Retired Investor: Food Scarcity in a Nation of Obesity