The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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Welcome to The Flinchum File

I am an Accredited Investment Fiduciary at Bay Capital Advisors, an investment firm headquartered in Virginia Beach, VA. After retiring from Truist Bank, I started this firm to work more closely with a smaller number of clients, and it has been great! Our client load is about 25% of the national average.

Writing is not for the shy or the meek. It exposes a person’s mind and character. I hope you enjoy the view.

The opinions expressed in The Flinchum File are those of the writer, Jim Flinchum, and do not necessarily reflect those of Bay Capital Advisors, LLC

Carrying the Water for Politicians

The European Central Bank announced their second round of Long-Term Re-financing Operations” or LTRO this morning.  It was bigger than the first round, and over 800 banks signed up.  The European markets rallied on this news. But, what is it?  Consider that the interest cost of government bonds in Europe has increased significantly, which starves their national budgets and spending plans.  Getting those costs down…

The Confident Weakling

Yesterday, we learned that consumer confidence has risen to a one-year high, improving from 61.5 to 70.8 in the last month alone.  It is interesting that their confidence has risen at the same time as gasoline prices have risen.  This is unusual.  Their confidence in the improving labor market is greater than their anxiety about rising gas prices.  (I suspect the lack of scary headlines…

A Survey of Economists . . . zzzzzzzzzzz

As a long-time member of the National Association of Business Economics, I pay close attention to their forecasting survey.  Here is the bottom line on the latest survey, which was just released this morning: The NABE Outlook Panel of 45 forecasters continues to predict moderate real GDP growth through 2012. Economists expect the economy to grow 2.4 percent in 2012, with GDP growth slightly stronger…

For Whom the Bell Tolls

In the final scene of Ernest Hemingway’s 1940 classic, the American Robert Jordan lies wounded.  He awaits his certain death at the hands of General Franco’s soldiers, but he is determined to take as many of those soldiers with him as possible.  He never knows the outcome of the Spanish Civil War. Mario Draghi is the new head of the European Central Bank.  In four…

Holding My Breath . . . Nope!

Suppose you have a first cousin living in California and another one living in Texas.  You trust and respect them equally.  Both of them have an investment proposal for you.  You like each proposal equally.  Incredibly, each proposal projects the same revenue as the other. However, one of the proposals shows higher expenses, which means lower profits for that proposal.  Do you really care if…

A Thug By Any Other Name . . .

First, The Wall Street Journal tells me that Google is violating its own Privacy Policy and sharing information on users.  As I value my privacy and that of others, I felt violated. Next, I cannot access my blog, which I have written for years.  I learn that I must download Google’s new browser, Chrome, in order to access my own blog.  Surrendering to The Thug, I…

Just for the record, I have been a long-time fan of Google but am mad-as-hell right now.  First, I read in the Wall Street Journal that you ignore your own privacy policy.  Now, I cannot find my blog, which I have labored over for years.  Then, you force me to download a new browser, when I am perfectly happy with whatever I had.  I would…

Framing the Election . . . ??

Americans usually demand excellence but, being realists, accept something less.  Our political debate often looks for the best or most excellent solution to problems.  But, the politics of the possible makes us accept something less. Readers will recall we live in a tri-polar world of economics.  We have Austrian economics, which argues that the budget should be balanced EVERY year and is often called the “tough-love” school of economics. …

Market Timing?

January was the best month for the stock market in 25 years.  Unfortunately, a huge number of retail investors have been so shell-shocked by the 2008 collapse that they still remain on the sidelines.  This is one of the primary reasons why trading volumes on the New York Stock Exchange and others have been so low. So, the question becomes whether it is too late…

Extend and Pretend

First, a little review of Accounting 101 — If you subtract total liabilities from total assets, you get net worth or capital.  If you sustain a loss on the sale of an asset, you decrease net income by the amount of the loss.  If you have no net income, you must decrease net worth or capital by the amount of the loss.  For banks, if…

On Wealth Watching

We have spent the last four days on Jekyll Island, a lovely resort of gentility and Spanish Moss.  It was originally founded 125 years ago by the famous “Robber Barons” as a place to escape the awful New York winters.  They spent lavishly on their 5,000 square foot “cottages.”  Their clubhouse even had a restaurant to rival their favorite restaurant back home, the legendary Delmonico’s in lower Manhattan. …

The Fat Lady Has NOT Sung Yet

Yesterday, the headlines screamed there is finally a deal to solve the Greek financial crisis.  Yet, the stock market barely reacted.  Why? Frankly, the market doesn’t believe it.  The announcement was made only by the Greeks.  (The “troika” still have a few more conditions they insist must be part of the package.)  Greece has unfortunately lost creditability in the marketplace.  They have made numerous promises that…

The “Selling” of Conservatism

America entered the 1960’s as a simple and trusting nation in many ways.  One was that we liked to believe that the election of a president was a serious, thoughtful, and intellectual exercise.  However, in 1969, I read a then-controversial book by Joe McGinniss entitled The Selling of the President 1968. McGinniss’ book showed us that electing a president of the Free World was not unlike…

The View from Up North

TD Bank (think Toronto Dominion) is the second largest bank in Canada and the eighth largest in the United States, which few people know.  It is also the largest shareholder of trading giant TDAmeritrade.  Last Friday, I listened to their chief economist’s slightly Canadian view of the U.S. economy. They see the world dividing into two speeds.  The U.S. remains in the slow speed lane. …

Some Things Never Change

In the sixth century Before Christ, the poet and philosopher, Lao Tzu, observed “Those who have knowledge don’t predict.  Those who predict don’t have knowledge.” So, why do economists make predictions every year?  Because the supply of predictions will rise to meet the demand for predictions.  So, why do people demand them?  Behavioral psychologists tell us there is a normal human need for “anchors,” which…

A Blizzard of Paper

In keeping with the age-old tradition of shooting the survivors, it was not surprising when regulators of financial advisors flooded us with confusing new paperwork to somehow better protect investors from advisors like Bernie Madoff (who had been audited by both the SEC and FINRA several times.) Today, I attended a class on the new rules being imposed on CERTIFIED FINANCIAL PLANNER (R) professionals like myself…

Good News From DOL

Yesterday’s monthly Jobs Report that our nation created 234 thousand jobs in January was very good news indeed.  It was about 90 thousand more than expected.  The report also reported that almost 50 thousand more jobs were created in December than earlier reported. While it is great that the unemployment rate dropped nicely from 8.5% to 8.3%, that has more political significance than economic significance.  I expect…

The Venerable NeoCon

Nobody ever accused former Vice President Cheney of being “warm and fuzzy.”  Still, he looked small and frail earlier today, even straining somewhat to open a bottle of water.  But, once he started talking, I remembered why he was nicknamed Darth Vader. He believes any withdrawal from either Iraq or Afghanistan is a tragedy.  He considers it “likely” that terrorists will hit the U.S. with…

Risk-Adjusted Challenge

One of the more difficult communications challenges for financial advisors is getting across the idea that a number means so little.  For example, is 4% a good return or a bad return?  If you take minimal risk and get 4%, then it is probably a good return.  If you take a great deal of risk and only get 4%, then it is probably a bad…

The Open Gates

For the list of the Top Ten Best Lifelong Public Servants, I nominate Robert Gates, former Secretary of Defense.  Fresh out of college, he started with the CIA, eventually becoming the first head of the Agency to have worked his way up thorough the ranks and later the 22nd Secretary of Defense.  A moderate Republican, he served seven different Presidents, both Republicans and Democrats. I was…

A Romney Rally ?

Years of presidential elections are usually positive.  Most of the upside occurs when the market “thinks” it knows the winner.  Regardless of the party winning, the market tends to rise as uncertainty goes down. However, the market tends to do better that year if a Repubican wins.  Over the four-term term of the presidency, the market tends to do better if a Democrat wins. After Romney’s…

One Gestation Period Away

My mother always told me “if you can’t say anything nice about a person, then just shut up,” which I still think is good advice.  As a result, it has been painful for me to be in Florida the last few days and watching the attack commercials on TV, leading up to yesterday’s Republican primary.  As a whole, they have been brutal, deeply personal and intellectually offensive.…