Monthly Archives: August 2015


I don’t usually write on this subject but recent circumstances have forced me to think about it.  Perhaps you’re thinking about it too.  I’m not a maven or an expert on the economy or the stock market, but I have taken notice of a number of comments, trends and warnings that I thought I would share with you.

Writing helps clarify and crystallize my thoughts, as well as helps me to prepare to seek advice.  You may want to do the same.

Here are my concerns about the market and our economy:

  1. The Fed is making noises about raising interest rates. The usual effect of this is likely to send stocks down and bonds up.
  2. The volatility of the market has been more extreme than I can ever remember.

There appears to be a rising chorus of players and economists (pessimists) predicting that a currency and market crash is about to happen:

James Davidson, Nouriel Roubini, Larry Summers, Jim Rickards, Jamie Dimon, Ron Paul, Stanford Research and short seller Bill Fleckenstein each agree with almost all of the following:

  1. Our massive national debt may approach $20 trillion by the end of 2016
  2. World countries (Russia and China) are starting to back off our bonds
  3. The market has been going up on relatively low volume
  4. Margin buying is the highest it’s been since 2007
  5. Price-to-earnings ratios are at an all-time high
  6. Real unemployment is probably at 23%

I believe all the factors I’ve cited above (A-F) are accurate.  It must also be noted, however, that all the people I’ve named who are singing their alarming song are consultants and newsletter publishers who want you to subscribe to their recommendations.

To pursue this concern, I contacted the two investment sources I use to gain their input on these troubling factors.

Conversation with my Charles Schwab Investment Advisor

They share most of the concerns I’ve outlined although they’re not sure there is an imminent crisis.  There is a lot more debt than we had in 2007, but it’s government debt, not in the private sector as it was in 2007.  We have and are seeing improvement in the economy although not as robust as we normally expect.  Commodities are low in price and we are in a currency war right now which translates to imports being up, exports down.

Bottom line expectations from Schwab:

  1. Overall 2015 year end is expected to see a 2-2½% increase in the economy; the Dow down to maybe 16,000. (As of August 24th, the Dow is just about there already.)  Maybe they meant 15,000.
  2. They recommend downsizing their model modest conservative portfolio to 45% equity, 46% fixed income, 4% commodities and 5% cash.

After a week of non-response to my fax and phone calls, Vanguard informed me that their personal advisory services were only available to holders of a mutual fund with at least $50,000.

Wonder why they didn’t tell me that when I transferred my annuities over to them in March?

In just the last week, the market appears to be reacting to the concerns the prophets of gloom are predicting.  Except for the commodities, I decided to go along with Schwab’s recommendations and peg fixed income at 50%.

Let’s hope for the best!



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As a frequent traveler, my credo is “I’ll try almost anything once.”  That open-mindedness has served me well.  The huge majority of my travel experiences have been very much worth having.  But I’ve had a few duds—destinations to be crossed off the wish list and never considered again.  Most travelers I know have their anti-favorite list of overrated places.  Here is mine.

Keep in mind that my visit to these places was quite a while ago.  Things may have improved since then.

Bora Bora

I always dreamed of going here.  It sounded like nirvana.  The sparkling blue water around the island is spectacular, but that one beautiful view gets old pretty quick.

More than one friend of mine calls this island “boring boring.”  The reefs and water are absolutely spectacular, but how long can you stare at fish?  There’s nothing else to do.  The resorts are on their own private motus (islets), so there’s no nightlife, and guests aren’t looking  to socialize at all as they’re all on their honeymoons.  And the “France in the South Pacific” marketing is not a selling point:  French Polynesia offers the worst combination of Gallie snobbishness and island indifference.  And it’s expensive.  If you want Polynesia, just go to Hawaii.  If you want exotic, go all the way to Asia, where your money will go a whole lot further.


Dubai proves that bigger isn’t always better.

I don’t mind glorious excess, but Dubai is just too much.  “The Las Vegas of the Middle East,” as Dubai is often called, is really a half-finished monument to wretched excess.  Also, it’s hot.  When I visited, there were also grim reminders everywhere of the economic crash in 2009; abandoned skyscraper skeletons with idle cranes on top, billboards advertising the Ferrari that would be thrown in along with the purchase of a luxury condo.  Still, shopping remains the most popular sport (and international draw) here, but that’s another non-selling point for me.  Yes, you can ski at the Mall of the Emirates.  Know where else you can ski?  Mountains right here in the U.S.


The Caribbean

No, I didn’t see all the islands, but what I saw didn’t encourage me to go back.  I got to St. Maarten, St. Barts, Antigua, Grenada, and Puerto Rico, and wondered why I bothered.  It was a collection of the dullest, non-scenic, little volcanic eruptions you could imagine.  No culture, no scenery.  The water was warm but there was little reason to spend so much time being bored.


To be honest, we only saw Casablanca and Rabat but there wasn’t much to see there.  We went to the Kasbah early and it was kind of a barren, mostly closed mall.  Rick’s Bar of Bogart’s movie fame was a non-descript, second floor hangout.

Club Med, Moorea

Very French, very spartan, and very wet.  A whole week of rain is not the best way to see anyplace.  With only a single light bulb in the center of the room, there was no place to read or relax.  The lobby was a loud, noisy (all French) scene.  I’ve never been anywhere I wanted to leave so badly.

A few other spots I would have enjoyed missing:

Duluth, MN – A drab, one-horse town on the shore of Lake Superior.

Ushuaia, Argentina – The southern-most city in South America and maybe the windiest.  A few stores and not much else.  Only redeeming feature is that it’s the gateway to Tierra del Fuego, a great park, and Antartica.

Rio de Janiero, Brazil – The view from the Christ statue on top of Sugarloaf Mountain is spectacular.  The rest of the city just seemed like a lot of hype without much substance.  Ipanema Beach was a nothing.  I’ll take Santa Monica or Hawaii anytime.

Seabourn Adriatic Cruise – Venice and Dubrovnik are great ports, but the other four or five were a total waste of time and Seabourn was over impressed with themselves.

Ayers Rock in Australia was hardly worth the time involved to get there.  It was super hot.  You had to wear mosquito netting and a weekend in Sedona is a much better red- rock experience.  On top of all that, I got a toothache there.

After 80 trips or so, these few didn’t diminish the overall enjoyment of travel.


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The presidential primaries just started and I’m already tired and confused.  Here’s what I’m confused about.

  1. Why run if you have no chance of winning?
  2. How much money will be wasted supporting candidates who have zero chance to get the nomination?
  3. How does a candidate with no prospects ask people for money…and sleep at night?
  4. What motivates people to donate money to candidates with no prospect of winning?
  5. The Republicans are cutting the number of debates in half, but are doubling the number of candidates who want air time for our attention.
  6. A lot of Democrats are struggling to find a viable alternative to Hillary Clinton.

Let’s look at a few of the no-chance candidates.  In the Republican gaggle, you have:

  • Carly Fiorina* – the terminated CEO of HP and losing candidate for Senate in California
  • Ben Carson – the likeable, naïve physician with zero political or governing experience
  • Rick Santorum* – a champion of conservative policy but a loser even in his own state
  • Marco Rubio – a young, bright, well-spoken 2024 candidate with as much governing experience as Barack Obama
  • Donald Trump – with his usual bombastic craving for publicity with no basis or understanding of issues who will sink as fast as he rose
  • Ted Cruz – smart with minimum experience and an overly aggressive conservative extremist. Please stop telling me to repeal Obamacare until you give me an alternative.
  • James Gilmore III* – former Virginia governor who appears to want to join the scrum. He hasn’t even made the polls.

*Didn’t make the prime-time debate.

I would go on, but you get the picture.  On the Democrat side, you have mounting ethic questions about Hillary Clinton’s emails, her role in Benghazi and the Clinton Foundation’s donors from questionable sources which have encouraged the likes of Socialist Bernie Sanders, former Senator Jim Welsh, and a few unlikely governors, Martin O’Malley and Lincoln Chafee.  And now maybe here comes Joe “Oops” Biden.

What can any of these people contribute?  Do any of them really believe they can add some new ideas that will shoot them over the front runners to victory?  Give me a break.

The Republican circus car is so crowded that last Thursday featured not one but two kickoff presidential debates.  Fox scheduled a prime-time debate with the top 10 candidates in the most recent national polls.  The network also held an earlier forum for those junior varsity candidates who didn’t make the first cut.

There were no real winners or losers in the jamboree.   The Donald came off as his usual snarky self, but he’s the flavor of the month.  He was the only one of the ten who refused to pledge allegiance to the eventual Republican nominee.

Chris Christy and Rand Paul generated the only real fireworks in their disagreement on whether our civil liberties are being violated by the government surveillance programs.

The three Fox News anchors were focused and fair

Only five more to go for the Republicans and six for the Democrats.

It is estimated that well over $500 million will be spent by all these candidates in the primaries.  Five hundred million dollars in no piece of chump change.  Do the donors have any clue how pointless their money will be?

The cause of a lot of all this wasted money is the Supreme Court decision in the United Citizens case, in which they stretched the definition of “free speech” to include spending money—huge, almost unlimited gobs of it.

I’m no linguistics scholar, but my definition of speech is words, not money.  How the Supreme Court Justices got there, I’ll never understand.

If we have to pass a constitutional amendment to get rid of it, let’s do it.  It’s a cancer on the whole political process.  Campaigns don’t usually end because candidates give up; they end because they run out of money.

While we’re talking about changing the rules, why don’t we change the whole election process:

  • Primaries 60 to 90 days max
  • General 90 to 120 days max

No expenditure of money for any internet, print and/or broadcast media outside those time constraints.

It would save a lot of money and probably increase voter turnout.

In the past two Republican presidential primaries, the eventual winner led when 50 percent of the delegates were selected.  By the time 75 percent were picked, the field was cleared and the party could declare a winner.  In 2016, March 8 is the 50 percent date and April 26 is the 75 percent mark.  Let’s all try to make it until then.


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A recent column by Tom Freidman in the N.Y. Times highlighted some interesting new developments in our lives and the way we live.  Here is an excerpt of that column.

“We’re in the middle of some huge disruptive inflections in technology, the labor market and geopolitics that will raise fundamental questions about the future of work and the social contracts between governments, their people, employers and employees which will erupt n the next presidency.

“What are the signs of that?  Well, my candidate for best news article so far this year goes to Tom Goodwin, an executive at Havas Media, whose essay began:  ‘Uber, the world’s largest taxi company, owns no vehicles; Facebook, the world’s most popular media owner, creates no content; Alibaba, the most valuable retailer, has no inventory; and Airbnb, the world’s largest accommodation provider, owns no real estate.  Something interesting is happening.’

“There sure is.  We’re at the start of a major shift on the question of what’s worth owning.  What all of the above companies have in common is that they have either created trust platforms that match supply and demand for things people never thought of supplying:  a spare bedroom in their home or a seat in their car or a commercial link between a small retailer in North Dakota and a small manufacturer in China.  Or they have behavioral platforms that spin off extremely valuable data for retailers and advertisers or they are behavioral platforms on which ordinary people can generate reputations—for driving, hosting or any skill you can imagine—and then market themselves globally.

“This is a result of the exponential growth in computing power, storage, networking, sensors and software generation and interoperability, which is allowing us to both gather massive amounts of data and apply software to that data to see patterns at a speed and scope unknown before.  And it is taking friction out of so many things at once:  from hailing a cab to reserving a room in someone’s home in Timbuktu to buying groceries to learning from anyone anywhere to designing an airplane part on a 3-D printer in a week instead of six months.  Complexity is becoming free.

“A recent study by the Oxford Martin School concluded that 47 percent of U.S. jobs are at high risk of being taken by smart machines and software in the next two decades.  And what is interesting, notes James Manyika, a director of the McKinsey Global Institute and co-author of No Ordinary Disruption, is that, contrary to expectations, ‘knowledge workers at the middle and the top” may be more threatened than those doing physical work.  For example, The Associated Press now uses computers, not reporters, to generate more than 3,000 financial reports per quarter.  This can free up workers to do more creative work, but they have to be trained for it.

“On geopolitics, we still have great power rivalries, but the most relevant divide in the world will no longer be East-West, capitalist-communist.  It will be the World of Order versus the World of Disorder, as environmental, sectarian and economic pressures are pulverizing weak and failed states.  Every day now you read about people fleeing the World of Disorder for the World of Order.  Rohingyas, a Muslin group from Myanmar and Bangladesh, are trying to get into Thailand and Malaysia; Africans and Arabs are trying to cross the Mediterranean to Europe; Central American parents have sent thousands of their kids to the United States.  Israel’s government has started sending letters to 45,000 Eritrean and Sudanese refugees—who walked, rode and sailed to Israel in search of order and work—telling them they have 30 days to accept $3,500 in cash and a one-way ticket home or to an unnamed third country in Africa or face prison, The Washington Post reported last week.  Last year, the U.N.’s refugee agency said there are more displaced people worldwide—some 50 million—than at anytime since World War II.

“But here’s the rub:  We don’t know what to do.  We used to reply on empires, colonizers and dictators to control at lot of these places, but we’re now in a post-imperial, post-colonial and, in many places, post-autocratic age.  No one wants to touch these disorderly zones because all you win is a bill.  And most are incapable of democratic self-governance.  Who will control these areas?  What if the answer is nobody?  It will be one of the big leadership challenges of the next decade.

“So, to paraphrase Leon Trotsky once more:  ‘Our presidential candidates may not be interested in talking seriously about the future yet, but the future will be interested in talking to them.’”




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