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.

When Trains Collide

There were no winners in the Kavanaugh – Ford reality show yesterday.  This national embarrassment continues. However, there was one clear loser —  the New York Stock Exchange, where the trading volume dropped 50%, as traders were glued to the show. Productivity declines when workers watch trains collide.

Tiny Crack

There is a tiny crack in the Fortress Economy of the United States.  Corporate earnings per share (EPS) are slowing.  They have been increasing at a 25% annual rate so far this year, but that is obviously not a sustainable rate.  It has to slow down somewhat. Most companies try to manage expectations and provide “guidance” on what they expect their EPS will be each…

Confident and Cocky

The relentless flow of good economic data can become boring.  Indeed, the latest Consumer Confidence Index is the highest in eighteen years.  Remembering that a confident consumer will spend more money than a frightened consumer and that consumer spending is about two-thirds of GDP, this new data suggests continued strong economic growth and even stronger retail stocks.  Yea! However, this index has been even higher…

Thank you, California

It seems unnatural to applaud bureaucrats anywhere, but the bureaucrats of the European Union are doing more to protect the privacy of their citizens than the august Congress of the United States.  Europe now has the General Data Protection Regulations (GDPR).  Fortunately, the state of California has rushed in to fill the American vacuum left by Congress.  They have now passed California Consumer Privacy Act…

First Law of Political Economy

Watching Will Ferrell reprise his impersonation of former President George W. Bush on Saturday Night Live, one is reminded of the first law of Political Economy.  His portrayal showed the formal President essentially saying “I know history says I was an awful President, but don’t I look pretty good now, compared to President Trump?”  Bush was blamed for the 2008 market collapse, but that was unfair. The…

NOT Sharing the Burden

Many times, I have written about the “bad rap” that globalization has been receiving, recalling the Clinton-Gingrich push through Congress.  At that time, numerous economists talked about the benefits of globalization but reminded the Congress that there would be losers.  Numerous Congressmen promised job re-training and even relocation benefits for those workers, whose jobs were transferred overseas.  Of course, Congress grabbed the benefits and forgot…

Repeat After Me

“I will not do business with any financial advisor who does not use an independent third-party custodian!” The Feds just broke up yet another Ponzi scheme.  This one caused a $364 million loss from 230 innocent investors.  If anything is unusual about this particular Ponzi scheme, it is that some financial advisors actually fell victim.  They should have known better!  It must have been some…

The Budget Vacuum

Economics is about the allocation of limited resources to satisfy unlimited needs. There are about 35 thousand gun deaths each year in the U.S.  Another 45 thousand die of strokes, and about 35 thousand die from opioid abuse.  That is every year!  Only a cumulative of 120 people have died from terrorism attacks in the U.S. since 2012.  Yet, where do we spend the money…

Death of A Good Idea

Obama was right.  Trump is wrong. Stockbrokers are very different from registered investment advisors (RIAs).  Stockbrokers can charge all sorts of hidden fees and follow the “suitability” standard, which allows them to put mutual funds into a client’s portfolio that pay kickbacks to the stockbroker.  They even increase the price of bonds and make the client pay the increased price.  RIAs do not follow these…

THE High Crime

Apparently, Mueller has “flipped” Manafort, who will now testify against Trump.  I would caution my Democratic friends to be less gleeful.  Impeachment is a terrible thing.  It is bad for the country.  I was opposed to the impeachment of Clinton, and I am opposed to the impeachment of Trump. With one exception! If Mueller finds Trump is merely another sleazy real estate developer, will anybody…

Death, Taxes and ….

I listened to an interesting lecture yesterday.  Some laws of nature are immutable.  Water runs downhill.  Moths are attracted to lights, and poor people are attracted to wealth. Just as certain as death and taxes, there will be immigration.  Reflecting Paul Erlich’s iconic 1970’s The Population Bomb, the speaker predicted social chaos by 2030 or just twelve years hence. Unfortunately, rich women don’t have kids, but…

The bookstore at the University of Pennsylvania/Wharton has always been a favorite of mine.  It was always such a pleasure to leaf through the new books, but that bookstore has changed in two ways. First, there are fewer books.  Of course, many books are now electronic, on Kindles, etc.  In addition, information is now cheap.  We drink information from a fire hose and learn less.…

Driving Away

Sitting on my balcony here on the beach, the weather is delightful – warm, gentle breezes with low humidity.  Yet, I am looking at white sea gulls but thinking about Black Swans.  You know, Black Swan events are those events that happen suddenly, with no warning but seem utterly predictable in hindsight.  Far offshore right now, there is Hurricane Florence, hurtling toward my little piece…

Just A Red Shoe ?

On September 11th of each year, we stand and remember the almost three thousand people murdered by sick, crazed terrorists in New York and Washington.  Certainly, our hearts still go out to those victims and their families. But, I also think about the collaterally damaged people, like our next door neighbor, who worked in the Pentagon.  When the plane hit, thousands of employees began running…

Here, Here . . . Mr. President

1.  Call me shallow, but I enjoy watching NFL football games. 2.  Color me patriotic, but I think the First Amendment is fundamental and is actually worth defending. 3.  Paint me pointy-headed, but I believe race relations are still incredibly and inexcusably poor. 4.  Thus, I defend the right of NFL players or anybody else to protest the poor state of race relations in this…

F

Economists have flunked and have let America down!  All we have done is provide the intellectual ruse that the two political parties use to indulge their worst impulses. For the Republicans, we have provided “supply-side” economics, which argues that all tax cuts improve the economy at all times and under all circumstances.  For the Democrats, we have provided “Keynesian” economics, which argues that increased spending…

Honor or Laughs?

I was deeply moved by the death of John McCain, whom I respected deeply for his heroics in standing up to his captors and standing up to his own political party when he thought proper.  Oddly, I am also moved by the death of Bert Reynolds but for very different reasons.  McCain aspired to a life of honor, while Reynolds aspired for nothing more than…

Too Soon To Know

President Trump is justifiably concerned about our nation’s ongoing trade deficits.  At first blush, the latest results are not encouraging.  For the first seven months of this year, the deficit is a whopping $22 billion more than last year.  It doesn’t appear that his worldwide trade war is making much progress. But, it is premature to make any judgment.  For one thing, the stronger U.S.…

The Mainstream . . . Media(s)

News Flash:  Fox News is NOT “fair and balanced” . . . but neither are CNN nor MSNBC. Fox is more interested in complaining about “mainstream news” even though Fox has more viewers that CNN and MSNBC – combined. Doesn’t that make Fox the mainstream media that it criticizes? The other two have breathless coverage over the never-ending Mueller probes and the inevitable impeachment –…

Prepping For The Apocalypse ?

I have often written that investors are less fearful of economic recessions.  There is ample research that “buy and hold” makes sense during such recessions.  It is impossible to predict the exact top or exact bottom.  The level of cash can be adjusted, but only so much that a person can sleep at night. Likewise, I have often written that investors should be more fearful…

MORE!

Scratch any financial advisor, asking how much a person should save for retirement, and the answer is always “MORE”.  That is more than a flip response. Scratch most prospective retirees, asking how much of their income that they will need in retirement, and the answer is usually 70% of current income.  That is more than wrong – it is dangerously wrong.  One recent study shows…

Military Honor

Existentialists generally have a low regard for “pomp and circumstance” or ceremonies, finding them to be hollow exercises, all form and no substance.  They are unneeded constants in a fluid world.  We generally avoid them at all costs. Still, the 2 1/2 hour ordeal that was the funeral for John McCain seemed too short.  We witnessed powerful people surrendering themselves to all that pomp and…

Entirely Different Predictions

Predicting an economic recession is difficult enough, even with tons of economic data.  For example, we learned this week that GDP grew at a 4.2% annualized rate during the second quarter (Q2).  This is very strong growth, indeed.  Consumer confidence is at a 17-year high.  Not surprisingly, Consumer Spending is robust.  The economic data tells us there is no recession on the immediate horizon. Predicting…