The Independent Investor: How to Run for President and Make a Fortune

Almost every day this week we received an announcement of yet another contender for the 2016 presidency, or an announcement that an announcement would be forthcoming. The reason for so many candidates however, may have nothing to do with winning the presidency.

Back in the day, it was rare to have any more than two or three candidates in each party (and maybe an independent) running in the presidential primaries. Over the last few years that number has tended to increase. This year it looks like we may set a record of most candidates seeking the country's highest office. As of this week, I think we have 10 announced with another eight or more coming.

Can all these politicians truly believe they have a chance at the number one spot? After all, it takes money, time, effort, a large staff and so on to run a campaign. In my experience, politicians have never been known to waste their own money on a losing cause unless there was something in it for them.

Running for president, it would appear, has actually become a short-cut to fame and fortune in this country for many politicians. The "losers" benefit from an enormous amount of free media coverage, fundraising sources, job offers and more. In addition, they get a chance to have their views aired to millions of people, regardless of whether these views have anything to do with reality.

Losing candidates are offered television shows, speaking engagements, lobbying positions, even company management slots as well as the opportunity to position themselves for the next race whether for the presidency or in state or local politics.

What's more, given the right contacts, the whole effort is paid for by someone else. In this day of "Super PACs" and unlimited contributions from individuals and corporations, there is always somebody who is willing to buy a politician somewhere.  Politicians canvas the country seeking campaign funds from every available source. When the competition becomes too intense (as it is now), well, there are always the billionaire survivalists or wealthy religious extremist who is willing to bankroll someone who will act as a mouthpiece for their views.

And this newly-found political gold mine is not the preserve of Republicans. As time goes by Democratic candidates are also jumping on board. Who, outside of Rhode Island, for example, would know Lincoln Chafee, the son of a politician and a lifetime politician himself?

He wants the country to switch to the metric system. Then there's Martin O'Malley, former governor of Maryland and mayor of Baltimore, and Bernie Sanders from Vermont. They are all claiming to be the heir to America's Progressive Movement.

Hilary Clinton, the front-running candidate of her party, gave us some insight into how lucrative the speaking tour can be for an out-of-office politician. Her husband, Bill Clinton, earned $104.9 million for 542 speeches over 13 years. Hillary can now demand $200,000 and up after her failed bid for the presidency and her stint as secretary of state. She is in greater demand than her husband.

But let's not pick on the Democrats. Mike Huckabee, a contender for the GOP presidential candidacy in 2008, landed his own television show on Fox News as a result. Rick Santorum now runs a company that makes Christian movies. And let's not forget Sarah Palin.

Our girl Sarah was showered with book deals, TV shows, high-priced speaking engagements and much more. And that's all from a candidate who exhibited a level of world-class ignorance in foreign affairs that stunned me. Remember Rick Perry? He is running again. In case you forgot, he was the 2008 candidate that couldn't remember the names of the three government agencies he had promised to close. I could go on and on but I won't.

You get the point. The tragedy is that most of us learned in civics class that it was our patriotic duty to listen and to try and understand the policies of every candidate seeking this, our most important public office. Now these politicians have managed to subvert and use that duty as a means to further line their own pocketbooks, while expanding their fame and future fortunes.

Enough said.

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: Man's Most Expensive Friend

The pet business is booming. Last year, we spent $58.5 billion on our animal buddies and will plunk down an additional 4-5 percent more this year. The lion's share of that increase, after food, is going toward health care.

One reason for this growth is that a record numbers of Americans have pets today. The ASPCA estimates that there are 70-80 million dogs and 74-96 million cats that are homesteading in our houses. That means that approximately 37-47 percent of all American households own either a dog or cat. If you throw in birds, fish, rabbits and other small pets, nearly 70 percent of Americans own pets today.

There was a time when the experts could just tell you how much that pet might cost you over a lifetime. A medium-sized canine, according to the stats, could cost you $1,580 in the first year and then roughly $700 annually thereafter for the life of the pet. Your cat might cost less, maybe $1,300 year, but about the same as a dog every year thereafter. Those costs would include spaying or neutering, vaccinations, food, treats, toys, training, leashes and other routine care and medicines. However, that does not include the costs of boarding, sitting, major medical and of course, pampering  

Food is still the largest expense. Dog food prices have risen steadily since I was a kid when my father brought home our first boxer. Back in the 1970s, for those of you who remember, a can of dog food cost about 8 cents a can. Today that can is fetching $3-$4 or more. This year, treats alone will cost us $2.5 billion while pet food costs overall will total $23 billion

Clearly, Mad Men on Madison Avenue have embraced the dog food business. Human dietary trends and social and consumer habits have been neatly translated into new doggy diets, organic treats for your cat and even monthly deliveries of high-priced gift boxes like "barkboxes." Buzz words such as "range-free, byproduct-free and organic" abound on $100 bags of kibble.

No one blinks an eye when advertisers apply the slogan "you are what you eat" to that fur ball you imagine is lacking a certain luster in her coat or looks a bit porky (unless, of course, he is your pet pig). They use these ploys to convince us to spend two or three times the regular price of that run-of-the-mill stuff we normally buy and it works.

But remember, dog food is not people food and the FDA cannot always protect the consumer from companies that claim one thing and sell another. Just recently, Blue Buffalo, a high-priced, billion-dollar, premium pet food company that ships over 10 million bags annually, was called-out by its competitor. Purina sued the company for claiming its food was byproduct free when it wasn't. It took a year in the courts, but finally Blue Buffalo had to admit to the truth.

Health care costs have also risen. Veterinarian care will cost Americans a total of $15.73 billion dollars this year. Medical breakthroughs in technology and medical services like chemotherapy, radiation, surgery, ultrasounds and biopsies for pets are now readily available at our local vets. There was a time when these services, if they were available at all, were few and far between. These skyrocketing costs are the principal reason that the pet insurance industry is growing at an average rate of 13 percent a year from nowhere a decade ago. The number of insured pets has risen to over one million and growing steadily.

The engine of growth behind this pet phenomenon is a growing and changing emotional bond between us and our pets. Increasingly, we feel that Duke or Daisy is a part of our human family. There is even a word for it, "anthropomorphization," the attribution of human characteristics to our pets. Many pet owners today seem to blur the lines between children and their animals. As such, these newest members of our families enjoy the same level of attention and spending that one's other children demand.

You don't have to agree with it, but you can't fight it either. There is something downright comforting to come home to a wagging tail or a body purring against your leg. As for me, I draw the line at the dinner table. My dog does not sit at the table (although he does sit under it where the scraps are best).

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.

@theMarket: June Is Off the Table

The notes of the Fed's April policy meeting, released this week, may have confused more people than not. The central bank committee revealed that they were unlikely to raise short-term interest rates in June. That statement could be taken as both a positive and a negative, depending on your investment position.

The official notice of a delayed rate hike was greeted with relief by some, although the markets had largely baked in that outcome. Many Fed Heads contend that a rate hike in September is still only a 50/50 proposition, while others argue any increase in rates won't happen until sometime next year.

This, they argue, is because the growth rate of the economy is simply not strong enough to weather even a small uptick in interest rates. Some economists in that camp actually believe that the economy may very well be rolling over (as it has in the past), after the Federal Reserve discontinued other quantitative easing programs. Would that be good or bad for the stock market?

A slowing economy could be interpreted either way. Some investors might bail out of equities and back into bonds believing that the market is way too expensive given the possibility of an impending economic decline. Others might see that as a positive scenario. Traders might anticipate that the Fed, like other central banks worldwide that are faced with slowing economies, would launch yet another QE stimulus program. History indicates that would give a further boost to stocks as it has in this country over the past few years (and Europe, Japan and China today).

Then there are the economic bulls, who believe that we will see the economy roar back after the impact of a dismal winter, declining energy prices, and a strong dollar begins to dissipate. These headwinds to the economy are already abating, they argue, and as the summer progresses, both employment and consumer spending will pick up. That would most likely be taken as another positive for the stock market, justifying existing valuations and more potential upside in the future.

For those caught within this quandary, the only thing they can do is watch, wait and worry. As for me, I'm not in that camp, since the present "muddle-through" economy is just fine with me. A "not too cold, not too hot" state of economic affairs has worked out well for our portfolios and tax-deferred retirement accounts.

And now that we are seeing some job growth, even Main Street is getting to participate in the prosperity that has been confined to Wall Street over the last five years. I believe the Fed has our backs, especially those of the middle class. They are as concerned about the growing income inequality in this country as I am. Janet Yellen, chairwoman of our Federal Reserve, has said as much on several occasions.

The Fed, in my opinion, will do all that is humanly possible to maintain and grow this economy with an eye to increasing employment and wage growth. If, in accomplishing these objectives, Wall Street also profits, then everybody wins. Right now, and for the foreseeable future, that is the investment environment we find ourselves.  If, others chose to watch, wait and worry be my guest. I will stay invested and I hope you do too. I wish everyone a Happy Memorial Day and Semper Fi to all my fellow Marines out there.

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: Will Memorial Day Kick Off a Strong Summer?

Brace yourself for a crowded holiday weekend. This year the kickoff to the summer season will see 37.2 million Americans take to the roads. It will be the strongest volume in travel in over a decade. And the summer is only beginning.

The joyful combination of low gasoline prices and a stronger economy is expected to improve the economic health of sectors ranging from hotels to autos to summer jobs for teenagers. After a dismal winter, this rebound should allow the economy to bounce back and then some.

Memorial Day weekend, for example, is typically one of the four best times each year to purchase an automobile (with tax season, Labor Day weekend and the end of the year the remaining three). That's because shoppers have been hibernating all winter and are heading outside to take advantage of spring deals. The three-day weekend also gives potential buyers an extra day to shop. And it's the end of the month when car salesmen are trying to hit their monthly bonus targets. This, some think, makes salesmen more willing to make a deal and earn a big bonus check.

This year, many manufacturers are sweetening the pot even further by adding cash allowances on top of special financing while many dealerships are offering a special bonus to those who make the most sales over the long weekend. Together with low gas prices, this combination has enticed Americans to pay up for luxury cars, extras and sport-utility vehicles. That's good news for the automakers since those models are far more profitable for the industry than simple passenger cars.

Consumer confidence is also at record highs, thanks to lower fuel savings and an improved job market. Those factors are giving families more disposable income heading into the summer. That's good news for the hotel and tourist industry as consumers are expected to head to the beach or to other vacation destinations in record numbers.

This year too, many more Americans will be travelling overseas, thanks to the 12-month climb in the U.S. dollar. The currency effect has made overseas destinations affordable, making the cost of foreign vacations the cheapest in over a decade. Not only has there been an increase in the number of Americans travelling, but their length of stay has also risen.

Europe, especially, has seen a healthy uptick in bookings largely due to the steep fall in the Euro, the currency of the European Union. As an example, a typical hotel cost for a week's stay in Vienna is cheaper than a comparable room at the same hotel in Dallas.

There is also some good news for kids looking for a job over summer break. The results of a summer hiring survey of 1,000 employers, by Snagajob, an employment website, indicates that 78 percent of those polled expect to hire the same, or more, hourly workers this summer compared to last year.

Another outplacement consultancy firm, Challenger, Gray & Christmas, said employment demand for those between the ages of 16 and 19 years old is currently at its highest level since 2009. What's more, overall hourly wages are expected to increase to an average of $11.52 this summer, compared to $10.39 last year. That appears to prove wrong all those doom and gloomers who were predicting this year's increases in the minimum wage would decimate job growth, especially among women and the young.

All in all, it looks like this weekend will launch a fairly healthy summer for Main Street while Wall Street goes on vacation. By the time traders return after Labor Day, the results of this summer could add a boost to the stock market as well. Now that's a nice prospect. Enjoy your holiday, America.

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: Millennials & Money

Recent studies indicate our nation's youth are not investing in the stock markets. That's nothing new. It takes a rare individual under the age of 30 to have the wisdom to invest at a young age. For those who do, their future could be golden.

A recent survey by Banknote.com, a personal finance company, found that just 26 percent of individuals under the age of 30 are investing in stocks. That number hits home when we compare it to the 58 percent of people between the ages of 50 and 64, who do invest in the stock market.

Part of this lack of interest in stocks can be attributed to young people's attitude toward aging, retirement and death. When I was that age, I was invincible. Like me, at that age, the young believe they have all the time in the world to save. The younger you are the more difficult it is to identify with the concept of someday becoming too old to work.

But those attitudes account for only some of the reasons that under 30s shy away from investing, according to the survey. It appears that a lack of money and investment knowledge are also two important barriers to investing within this age group. Scarcity of funds in this day and age is understandable.

Between the financial crisis, income inequality, and the high cost of education, many young people cannot afford a place of their own, let alone the money to save and invest. Putting away even $100/month when you are unemployed or underemployed is a daunting challenge.

Their lack of investment knowledge simply underscores my contention that neither parents nor schools are teaching our children the importance of saving and investing (see my columns on "Kids and Money," Parts I & II).  Millennials are simply not equipped with the practical knowledge they need to make investment decisions once they are earning a paycheck.

It is a shame, because the absolute best time to begin saving is in your 20s. The most valuable asset these potential investors own is time. Another powerful tool at their disposal is compounding growth. Just how powerful is it?

Consider this: it will usually require just 10 years (using a 7 percent nominal rate of return) for an investment account to double. Just imagine what one dollar invested at the age of 20 would be worth by the time retirement time rolls around 45 years later. Many young people make the mistake of thinking that when they are 40 and making the big bucks they will make up for lost time when it comes to retirement savings. Wrong! The $100 a month saved when you are 25 is worth much more than the same amount saved at 40 years of age because compounding rewards early contributions much more than later contributions.

Let's say your annual income is $30,000 a year and you decide to save 10 percent of your estimated after-tax income ($2,160). In 25 years those contributions will grow to $288,001 using a 12 percent annual return, which is the long-term return of the U.S. stock market. If you put that money into a pre-tax IRA, that amount would be exponentially larger.

Unfortunately, few Millennials will heed this advice and fewer still read my columns. So, do your kid a favor and pass this column on to him or her. They will thank you for it later.

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.