News roundup - FAs push for higher wages and Tesla may be replaced in the Mag 7

CNBC: Pilots got their payday. Now flights attendants are pushing airlines for higher wages

Feb 13, 2024

Pilots at major carriers have won large raises, partly due to a shortage of aviators in the post-pandemic travel boom.

Flight attendants make an average of about $67,000 a year, according to the Labor Department, though pay can range from around $38,000 at the bottom 10th percentile to about $97,000 at the top.

Inflation has been “the most difficult for our new hires,” said Julie Hedrick, national president of the Association of Professional Flight Attendants, which represents about 27,000 flight attendants at American. “We want [American] to come to the table and recognize what we’ve done to return this airline to profitability.”

Flight attendants for the most part are paid when the aircraft door is closed. Unions are largely pushing for either ground pay or boarding pay to compensate flight attendants for their work before takeoff.

Move Over, Tesla! These 6 Stocks Could Replace It in the "Magnificent 7"
March 15. 2024

1. Berkshire Hathaway
2. Taiwan Semiconductor Manufacturing (TSM)
3. Eli Lilly (LLY)
4. Novo Nordisk (NVO)
5. Broadcom
6. Visa (V)

My Top 3 Stock Candidates to Replace Tesla in the Magnificent 7 - Investor Place
Feb 16, 2024

Berkshire Hathaway (BRK-A, BRK-B): Buffett keeps delivering for shareholders. 

Eli Lilly (LLY): It’s got an up-and-coming $14 billion drug. 

JPMorgan Chase (JPM): Jamie Dimon remains America’s top banker.

Bozeman among the 'safest small cities' in Montana despite increase in crime rate, police say - KBZK
Feb 20, 2024

The Bozeman Police Department says there has been a 29% increase in felony cases since the same time last year. ..."Compared to the rest of the state of Montana, Bozeman is one of the safest small cities," says Swanson.

Articles and Headlines that forewarned of the next Stock Market Downturn

7/4/23
The 'superbubble' in stocks and housing will burst - but the AI boom might delay the crash, Jeremy Grantham says

Blackstone Announces Major Asset Liquidations As Redemption Requests For Its REIT Continue

Visualizing assets by generation

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Image from Visual Capitalist

Some staggering wealth facts

• baby boomers own half of the nation’s $156 trillion in assets despite making up 21% of the country’s population.
  
• The Great Wealth Transfer - Millennials and Gen X are expected to inherit $84 trillion by 2045. $16 trillion of this could be transferred in the next decade

Assets and Liabilities by generation (table image)

If you are millennial who does not own a home or are behind on your retirement savings, your saving grace could be inheriting a paid off home or investments from your parents. 

If you already own a home, but don’t have income to save, the inherited home could provide a great source of rental income when you are ready to retire. 

Inheriting wealth later in life

Let’s say you are currently 35 and your parents are 65. If they live to be 85 (above average age for Americans), you’ll inherit their property and remaining investments at age 55. 

If your parents live longer, to 90 years old, you’ll inherit their estate at 65, and you might be able to retire a few years early. 

If you inherit a home that you don’t need and can be rented out for $2,000/month, you and another sibling would each get $1,000/month before taxes. After taxes, that would probably be about $800/month in net rental income. 

$800/month is a lot of extra income, especially when you consider that the average social security benefit is currently only $1,781 in 2023. 

You would need to work 32 extra hours in a month at $25/hr to earn $800. The wage amount would actually be higher, because the amount is noted with taxes already removed. 

Generational wealth has huge impacts, because it allows each generation to receive the growth of investments and appreciation of property over time, and it provides more stability for all generations who don’t squander the received assets. 

Best in Class ETFs - Paul Merriman

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Large cap value: RPV

Alternatives: AVLV, VONV, IUSV, SPYV, 

Investment portfolio options for a parent with low investment balance

 

The 60/40 portfolio

This portfolio contains 60% stocks and 40% bonds and has been one of the major standards of investing for decades.  

It could be built with mutual funds or ETFs. 

ETFs - VTI, VXUS, and BND

Mutual Funds: 

VBIAX: Vanguard Balanced Index Fund Admiral Shares

Expense ratio: 0.07% (only $7 for every $10,000 invested. About as low as it gets!)

Investment minimum: $3,000

Allocation: 60% stocks, 39% bonds, and 0.88% to short term reserves

Number of stocks: 3,385 (almost no foreign holdings -- less than 1%)

What does a current lifecycle fund for retirees contain from Vanguard?

VTTVX: Vanguard Target Retirement 2025 Fund

Expense ratio: 0.08%

Min. investment: $1,000

Allocation: ~54% stocks, ~45% bonds, and 1.2% short term reserves.

Of the entire portfolio, about 22% of the holdings are in international stocks.

Dividend ETFs

SCHD

VYM

VIG

NOBL

Value ETFs

VTV - Vanguard value

MGV - Mega Cap Value

Michael Burry's Most Important Tweets of 2023

Legendary investor Michael Burry occasional drops some wisdom about the markets on the Twittersphere. 

Here are his significant tweets from 2023.

This is a good chart/guide.
(The Y-axis shows uninsured deposits greater than $250k at major banks. The X-axis shows the realized losses percentage of CET1 Capital.)

The crisis could resolve very quickly. I am not seeing true danger here.

2000, 2008, and 2023, it is always the same. People full of hubris and greed take stupid risks, and fail. Money is then printed. Because it works so well.

It is possible today we found our Enron.

It's time memesters look up what a death spiral convertible is.

2/9/23

1/31/23

"Sell."

Burry deleted his Twitter account briefly after posting this. 

Dividend tax rate tables

 

Qualified dividend tax rate

Non-qualified dividends tax rate

iBonds are paying a hefty 6.89% until April 2023

iBonds purchased before April 2023 are paying a whopping 6.89%.

Your money will be locked up for a year, but you'll also receive a risk-free guaranteed rate of return. 

The current rate is almost 3% higher than the top level High Yield Savings Accounts (HYSAs) that are paying around 4% interest. 

A $10,000 max investment in iBonds would earn almost $300 more interest in a year than an HYSA. 

CFPs - Certified Financial Planners in Bozeman and Livingston

In the greater Bozeman area, there are currently 45 CFPs (Certified Financial Planners). Only two CFPs are in Livingston, 41 are in Bozeman, and two are in the neighboring communities of Gallatin Gateway, Manhattan, and Three Forks.

Most of the them service clients with minimum assets of $100,000-250,000. Here's the minimum assets filter as of October 2022.

These planners work with clients who have at least $500,000 of investable assets, Meredith Farris at Morgan Stanley.

And these planners work with clients who are millionaires by their asset levels.

J. Bratton Dubose at Ashton Thomas Private Wealth and Troy Miller at Private Advisor Group.

Smaller companies that have CFPs on staff:

* XY Planning (Alan Moore, 

* Stifel, Nicolaus, and Company

* Raymond James (Alex Hudak, Afton O'Meara, 

* Bozeman Financial Advisors

* Ashton Thomas Private Wealth

* Springbrook Financial LLC

* Equitable

* Black Cat Wealth LLC

* Abacus Wealth Factors, LLC

* Professional Financial Management, Inc.

* CoCreate Financial (Krista Hudak and Matthew Hudak)

* LPL Financial

* Core Wealth

* McKenna Financial

* Parsec Financial

* Private Advisor Group

* Palisade Financial

* Useful Solutions

* Chicago Partners (Manhattan, MT)

* 

Large companies that have CFPs on staff in Bozeman:

* Wells Fargo (Scott Brown)

* Charles Schwab (Erin Yost)

* Morgan Stanley (Meredith Farris)

* Edward Jones (Jared Hauskins, 

* DA Davidson (Brenda Kitto, Jacob Werner, Morgan Owen, Ryan Meeks, Neil Sexton, Brian Brown, Annie Ashton)

* Ameriprise Financial Services (publicly traded as AMP) (Jeffrey Larson, Charles Friend)

* Primerica (Ramiah Pickett)

Local Companies created with the owner's name

* Hunter Wealth Management LLC

* Monteith Wealth (Mike Monteith)

Specialty Focus Planners

Only one person had military and government employees listed as focus clients, Daniel Ritter at Core Wealth. He also listed 'no minimum' for investable assets.

Only one advisor listed other languages on their profile, Edward Tomkins at Bozeman Financial Advisors. He listed Spanish and German as additional languages.

Only two CFPs are in Livingston (25 miles from Bozeman), serving a community of 8,000 people in the city limits, though all of Park County has about 16,500 people. Neil Sexton works for D.A. Davidson and Jeffrey Larson works for Ameriprise.

PMCC - Poor Man's Covered Call Explained

Stumbled on Poor Man's Covered Calls through two YouTube channels.

This was one of the videos that did a great job explaining how the trades work and how to collect regular premium.

Poor Man's Covered Calls Explained - Markus

15-50 Rule of Investing

I first heard this investing principle from finance YouTuber Andrei Jihk.

The principle goes that if you plan to live for at least 15 more years, then 50% of your investing portfolio should be in stocks.

And for people trying to understand how much money they can have in retirement and not run out of money, the 4% rule (or 4.5% rule) states that you can withdraw 4-4.5% of the value of your investing portfolio and never run out of money in the account. 

If you have $1 million in a retirement portfolio, using the 4% rule, you could withdraw $40,000-45,000 per year.

Dividend investors also like to get to a magic number of having their portfolio yield about 4% in dividends. This alloes an investor to theoretically live off the dividends and not need to sell the stocks. 

YCharts.com - see performance of funds in the same category

 YCharts.com

Link to VUG ETF on Ycharts

Periodic total return (including 5, 10, and 20 year percentage returns).

Cumulative Total Returns Versus Peers

Yearly Returns and YTD Versus Peers

How Much to Save for Retirement and Financial Order of Operations - Money Guy Show

How much to save at every age for retirement - and multiplication factor

Financial order of operations 

Investment Returns from 15 Years in the S&P 500 index (from July 2005 to July 2020)

The S&P 500 investment calculator can help you see hypothetical market returns over time.

Investing in the S&P 500 from July 2005 to July 2020 and merely investing $100 per month would have grown $18,000 to a whopping $41,905.  After capital gains taxes, this would have been closer to $38,889.

This period of 15 years would have provided an annualized return of 10.59%.

Here's the breakdown, as a screenshot from their website:

A comparative annual return of 9% would have yielded $38,124 (using Nerd Wallet's investment calculator).

Getting Rich with the TSP

 

At the very minimum, you should contribute 5% of your pay to get the free matching money.

However, to get rich using the TSP, you want to max it out each year. In 2022, that maximum is now $20,500 per year. This is the same 2022 limit as a traditional 401K for all people who have one through their job. For 2022, the IRS increased this amount by $1,000.

The employer contributions don't count against your maximum contribution.

For most young servicemembers, ROTH is more advantageous, because at a lower income level this is better. All money you put into a ROTH is completely tax free when you hit retirement. All of the growth your money sees over the decades is tax free. Only ROTHs offer this.

The matching contribution from the government will always go towards traditional.

Ever even year, you'll get a pay raise. If you got a 4% pay raise, maybe you put a little bit of that and increase the percentage being contributed to your TSP. You were living without this money anyway.

If you're not going to do any of your own research, the L-funds (life cycle funds), this will set you up for retirement. Can leave that in the year that you turn 60. The L-funds will automnatically adjust as you age, so you don't have to tweak your investments.

However, if you're younger, you can leverage the C and S funds that will grow a lot more during your career.

The C fund is large cap stocks (similar to the S&P 500).

The S funds is small cap stocks.

If you want to be a little more aggressive, you could put into the Life cycle fund for 10 years after you hit 60.

Read the book Simple Path to Wealth. They cover the TSP and explain index funds.

Suggested ratio:

75% C fund / 25% S Fund.

Simplifying my core investing portfolio

My investing portfolio currently has about 25 stocks and ETFs.

Simplifying the portfolio would make it easier to see performance over time and re-balance it as time goes on.

The portfolio does include the essentials of a four fund portfolio:

1. Large Cap Value - VTV/MGV

2. S&P 500 - VOO

3. Small Cap Value - VBR

4. Small Cap Blend - VB

A four fund portfolio historically performs better than merely holding the S&P 500 during rough decades.

All of the above funds have very low fees because they are all Vanguard funds. 

I want my core portfolio to have 10 holdings or less. Even 3-5 ETFs, when selected appropriately, can create a diverse portfolio.

Choices for my core portfolio:

MGK

Performs slightly better than VOOG in the long run, but VOOG is more diversified. The largest holdings include household names, like Apple, Microsoft, Amazon, Google, Tesla, Facebook (Meta), Nvidia, Home Depot, and Visa. 

MGV

Mega Cap Value

The largest companies in the US with good value (almost the opposite of MGK). Up 11.1% in the last year. Largest holdings include Berkshire Hathaway, J&J, United Health, JPMorgan, Proctor & Gamble, Exxon, Bank of America, Pfizer, Chevron, and AbbVie.

BRK.B

Berkshire Hathaway

An extremely alue oriented company creates by Warren Buffet. Many of the companies they bought are better insualted from harm during a recession than the overall S&P 500. Their current P/E ratio is only 8.2. In the last year, it's up 25.9%, blowing the S&P out of the water. 

COWZ

Cash cow fund (ETF)

Companies rated with good free cash flow. Up 25.6% in the last year. Contains 101 stocks, with the biggest holdings currently in oil, chemical, and drug companies. 

VOOG

High growth companies within the S&P.

Has nearly identical 5 and 10 year average annual return as MGK, except it holds 307 stocks instead of just 112. The largest holdings include household names, like Apple, Microsoft, Amazon, Google, Tesla, Facebook (Meta), Nvidia, Home Depot, and Adobe.

VBR

Small Cap Value fund

A good counter balance to the S&P 500 and high growth companies. In several decades in the last 70 years, small cap value has been the highest performing asset class out of the four fund portfolio.

VOO

The Benchmark standard, the S&P 500, as a fund provided by Vanguard. It holds 510 of the largest companies in the US. Over long spans of time, it typically returns 8-9% average annual return. In the last 10 years it's grown annually by 14.55%. 

SPHQ

S&P 500 Quality ETF

"Tracks an index of US large-cap stocks and selected by return on equity, changes in net operating assets, and financial leverage." Up 9.3% in the last year (March 8, 2022) and 70.1% in the last 5 years. The fund contains 103 stocks and the largest holdings include: Apple, Microsoft, Visa, JP Morgan Chase, Bank of America, Pfizer, Mastercard, Wells Fargo, Adobe, and Walmart. Before the downtown in growth stocks that started in Decembee 2021, this fund was performing better than the S&P 500.

VHT

Health Care fund

Contains 448 stocks in the health care sector. Up 73.07% in the last 5 years. 

VB

Small Cap Blend fund

Contains 1,553 stocks and pulls from the bottom 2-15% of the investable stocks in the US. With an average annual return of 12.2% over the last 10 years, this fund has still done well for investors. Small caps started to tank in late November of 2021. This fund is up 48.2% in the last 5 years.

Motley Fool Investing Tips

 Investing tips from Motley Fool.

For beginning investors, avoiding huge losses from risky investments is very important.

Sign of the Times - Economic Update

Millions of Car Loans Overdue

A record 7 million Americans are 3 months behind on their car payments
Feb 12, 2019
"The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post.

A car loan is typically the first payment people make because a vehicle is critical to getting to work, and someone can live in a car if all else fails. When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans.

...

Most of the people who are behind on their bills have low credit scores and are under age 30, suggesting young people are having a difficult time paying for their cars and their student loans at the same time.

Overall, many borrowers have strong credit scores and repay their loans on time, but defaults have been high among “subprime” borrowers with credit scores under 620 on an 850-point scale."



----

While the car loan industry by itself would likely not cause financial collapse, it's a good indicator that millions of Americans are not making enough to pay their bills, they are living beyond their means, or both.



Student Loan Defaults

50 Failing Companies at Risk of Going Out of Business in 2019

J.Crew
Sears
GNC
Fred's Pharmacy
JC Penny
Office Depot
Vitamin Shoppe
Neiman Marcus
Pier 1

Land's End

David's Bridal (lots of debt and not drawing as much interest from brides looking to spend less)

Claire's

Eddie Bauer (in 2017 they faced problems with debt, it did manage to emerge from bankruptcy in 2009)

PetSmart (facing debt maturities in 2022, $8 billion in debt)

Payless (closed 600 stores in 2017)

Mattress Firm
The company filed for Chapter 11 bankruptcy protection on October 5, 2018, CNBC reported. Their finance trouble has partly to do with an accounting scandal and what CNBC described as “an onerous store footprint.”

Brookstone

Toys R' Us
In their 2018 bankruptcy filing, they planned to liquidate all the stores.

PG&E
After the California wildfires in 2017 and 2018, they filed for Bankruptcy in January 2019.
"Mercury News reports that PG&E wants to approve $235 million of bonuses for its employees."

Shopko
Filed for bankruptcy in January 2019.  They plan to close 251 out of 361 stores (70% of their locations).

The Weinstein Company
Filed for bankruptcy in March 2018.

Great American Companies in Serious Danger of Disappearing Forever (CheatSheet.com)
- DineEquity (owner of AppleBees and IHOP) is struggling as the younger generation prefers to eat local and at other restaurant choices
- Subway lost more than 900 stores in 2017.

Warning Signs of a Company in Trouble (Investopedia)

Clothing Store insights:
SF Gate goes on to say Z Gallerie wished it invested more in e-commerce and didn’t sink so much into a costly distribution center. Its expansion also didn’t meet its performance goals, which contributed to its business woes.

8 Companies That Could Disappear Before 2019 Is Over [Investor Place]
Feb 5, 2019 (originally published in Feb. 2018)
Go Pro
Fit Bit
Container Store Group
Neiman Marcus (not a publicly traded company)
Immunomedics
Remington (privately held)
Sears
Southeastern Grocers

Housing Market

Existing-home sales slide nearly 5% in March as the on-again-off-again housing market retreats (MarketWatch) 4/22/19

Auto makers in financial trouble

General Motors
"Cost-cutting should make GM a leaner, more flexible business, as Chris Lau argued. There’s still concern as to whether GM can compete in self-driving and electric vehicles, admittedly. But GM’s aim of focusing on more profitable, larger vehicles while managing costs seems like the right move for shareholders.

But that cost-cutting also has raised the ire of many lawmakers. President Trump has said publicly that GM had “better” replace plants being closed in Ohio and Michigan. "
Source: Stocks Facing Big Political Risk in 2019 - Investor Place

Companies affected by the home building and construction market

Caterpillar (CAT)

Financial Companies in Trouble

Deutsche Bank (NYSE:DB)

How to see when wholesale/raw material orders are down

Stock Market Pulse - January 2016

Using Percentiles To Outperform The Market With Volatility - iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) | Seeking Alpha

Dr. Duru Blog | T2108 Update – A Calm Bullish Divergence Amid A Raging Storm For The S&P 500 | Talkmarkets
Shows an Apple chart in a style I've never seen before.

World's Cheapest Crude Hits Record Low as Oil Slump Deepens - Bloomberg Business

Boone Pickens to Cramer: Oil is close to bottoming - Yahoo Finance [video]
"Close to the bottom. I was just a year off. We will be back to $70 to $75 by the end of the year," Pickens said. (Tweet This)

The oil tycoon added that the world is currently using approximately 95 million barrels a day, and is oversupplied by about 1 million barrels of oil. Therefore he does not believe that it will take much to balance the market. When that occurs, the price of crude will move up fast. 

China stocks halted for the day after sharp plunge - Jan. 6, 2016 [video]

Investment idea: GFI

Looking at the 3 month and month chart of GFi, it seems like a good opportunity to jump in at $2.60 or less. 

Today's range was 2.53-2.66. 

IN today at 2.56. 

I plan to cash out at $2.75 or higher.  Best case scenario would be to hold a little longer and cash out at $3.00. 

3 month chart. After the last big dip on September, it bounced back. 

One month chart. It dipped at the end of September and topped $3.00 briefly. $2.80-$2.85 would be a good time to get out. Then buy back in when the price drops below $2.65 again.