The Flinchum File

Among my holiday reading was Lifespan:  Why We Age – and Why We Don’t Have To” by Dr. David Sinclair of Harvard.  He argues convincingly that “aging is a disease, and that disease is treatable.”  It is profound book, given to me by a good friend, and it is laced with one medical discovery after another – some of which exceeded my ability to appreciate. …

At year-end 2018, there was terrifying 17 percent drop in the stock market during the fourth quarter, then economic datapoints weakened during the first half of 2019.  To make things worse, the political atmosphere was terrible, with Brexit, Mueller/impeachment, Korea and a very real trade war.  A recession looked inevitable at that point.  An inverted yield curve during the summer seemed to confirm this.  Fortunately,…

The Wall Street Journal runs a small cartoon in every issue, which are usually worth a chuckle or two.  One from late 2009 still hangs in my office.  It shows a sad, forlorn financial advisor looking out his window, saying “It’s hard enough accepting that I let my clients down.  It’s even worse knowing the system I believed in . . . let EVERYONE down.”…

The “scientific method” is the process of making decisions by identifying each hypothesis and carefully testing it before determining if something is true.  Originally developed for use in science, it is taught extensively in business education as well.  It is a way-of-thinking that has worked well. One weakness of this technique is the strict delineation between form and substance.  You know, if it looks like…

Another of my personal heroes has left us. Paul Volcker was a New Jersey boy with a tough mind.  Even without a Ph.D., he was appointed Chairman of the Federal Reserve Bank by President Jimmy Carter and subsequently by President Ronald Reagan.  Do you remember the WIN buttons for “Whip Inflation Now” of President Gerald Ford in 1979 as the country lost control of inflation? …

Genworth is a huge insurance company in Richmond that has long been a leader in long-term-care (LTC) insurance.  It is to their benefit to over-estimate the monthly expense of long term care, so they can scare more people into buying LTC policies.  With that caveat, they have recently estimated the monthly cost of care in a nursing home at $8,517 and $4,051 in an assisted-living…

Last week, the biggest surprise was the November “jobs report” that 266 thousand jobs were created in November — way more than the 187 thousand new jobs that analysts expected.  Plus, we learned more jobs were created the two previous months than reported earlier.  The three-month rolling average is a whopping 244 thousand – very impressive for an economy with a recession in the manufacturing…

Marion Weinzweig was an 18-month-old girl in Poland when World War II began.  To survive, her Jewish parents sent her to live with Catholic friends, but the Nazis soon learned there was a little Jewish girl in that home.  So, that little girl was shipped off to a Catholic convent, to live and learn as a little Catholic girl, until it was bombed by the…

I have long argued that globalization has tremendous benefits, although there are costs to be paid, such as retraining and relocation.  Years ago, Congress grabbed the benefits and wouldn’t pay the cost.  Instead, that price was paid by the people of lower-middle class America.  The most important book for the last ten years was Hillbilly Elegy by JD Vance, in which he described the growing…

A common scenario is that money flows out of a falling stock market into the bond market, which drives up the price of bonds and therefore lowers interest rates.  Of course, lower interest rates usually strengthen the economy, which is good for stocks and causes money to flow back into the stock market. Faithful readers know my love-hate perspective on Goldman Sachs, the venerable Wall…

If humility was a muscle, it would be withered away and shriveled-up for most of us.  Thanksgiving is the annual workout for that weak muscle.  It is a day to be humble, a day to remember how other people have helped us.  Nobody does it alone, without the help of others.  So, go exercise your humility muscle like this . . . Thank you for…

In 2004, I had a good job with a bank, which was acquired by another bank, which was then acquired by yet another bank.  It is disconcerting and confusing for the staff, of course.  Employees of an acquired company invariably expect a “housecleaning.” Yesterday, Schwab announced it was acquiring TD Ameritrade (TD), subject to various approvals.  Since TD acts as custodian of the assets of…

Over the Summer and Fall, our economic data slowly got weaker and weaker.  For the last few months, the data has been looking a little brighter .  But the Index of Leading Economic Indicators (LEI) is still flashing bright red.  It has dropped for three straight months, primarily due to the recession in manufacturing.  The last time the LEI dropped three straight months was in…

The three great mysteries are (1) why does it take so long to build a road, (2) why are window curtains so expensive, and (3) why doesn’t everyone value their privacy? Earlier this month, Google announced that it was buying Fitbit, whose devices record exercise data on wearers.  Quickly and quietly, thousands of Fitbit users threw their devices in the trash, because they simply don’t…

The best book on financial planning to hit bookstores in 2007 was undoubtedly The Number by Lee Eisenberg.  For those willing to study the possibilities, it was a great resource.  While I would always encourage a person to read this excellent book, I suspect the mere title of the book has created an interesting, continuing problem. A perception has developed that there was one magic number…

Dreams are born in experience and can consume the mind. My late mother’s father died young, and she was raised by her mother in a tiny white clapboard house.  It was slightly below grade and close to a relatively busy road, as busy as roads get in the boondocks.  She was sensitive to her standard of living and suspected people passing by their house judged…

I was a thirteen-year-old paperboy, riding my heavy-duty bicycle with a huge basket on my front handlebars, where I carried the newspapers.  One cool morning, I had delivered all the papers and was returning home, when an pickup truck slowly passed me.  The back of the truck was full of walnuts and four young blacks, who began pelting me with the walnuts.  I tipped over…

Normal or “retail” investors are not permitted to invest in some of the most profitable/risky opportunities.  Those opportunities are normally referred to as private placements and were limited to investors with a net worth (excluding home value) of $1 million or annual income above $200 thousand ($300K for couples).  These investors are called Accredited Investors.  With the current bull run in the stock market, more…

Goldman Sachs has been a legendary investment firm since 1869. There is no firm on Wall Street that I respect more and trust less. The quality of their research definitely deserves respect! Last week, they announced that market conditions were too similar to 2007 and recommended investors rotate out of stocks.  In other words, dump your stocks! Conversely, I do respect AND do trust Warren…

The current economy is doing great, and the stock market keeps setting new record highs.  So, why are charitable contribution by individuals down by 3.8%? The Trump Tax Cut doubled the standard deduction to $24,400 for married couples.  Unless regular itemized deductions plus charitable deductions exceed that amount, a taxpayer is better off taking the standard deduction and saving the money normally given to charity. …

How does an economist entertain himself, when his wife is travelling?  They study weird stuff, of course. I noticed the Obituary section of our local newspaper was larger than normal and deserved a little analysis.  There were 44 deaths to report.  Of those, only 31 reported their age or year of birth.  Their average age was 73.4 years.  Of the total of 44 deaths, 23…

In 1972, $98 was a lot of money to me, but I bought a handheld Texas Instruments calculator anyway.  It was amazing, because it could add, subtract, multiply and divide so much quicker than I could.  Today, a short walk through Best Buy seems like a different planet.  Not just the acceleration in technology change, but the variety of technology products has increased enormously. When…

The President has been arguing that China needs a trade deal more than the U.S. needs a deal.  He correctly pointed that that China’s external debt has increased dramatically from $1.3 trillion to $2.0 trillion in only three years.  That is not a “fake fact” but can be misinterpreted.  However, because most financial crises begin with external national debt, we must first evaluate if risk…

All I want for Christmas . . . is an end to all this impeachment coverage on the news.  Of course, it is important, but it is not the only important news.  Whatever happened to the Kurds?  Why did the French president call NATO “brain-dead”?  Why has the Russian economy NOT collapsed?  Is there life after BREXIT?  Did you hear they discovered a new strain…

Like a hot shower at the end of a long day, Friday’s monthly report on the labor market was simply refreshing.  Following the slow drain of a lingering trade war, declining GDP growth, a badly weakened manufacturing sector, a major strike at GM, falling consumer confidence, and slowing job creation, our country still produced 128 thousand jobs in the month of October.  Economists expected only…

I love reading anything by George Will.  He neither thinks nor writes in cliches.  He has long been a serious conservative thinker and was a frequent contributor on Fox News, back when it was a reliably conservative news network. His most recent column is “What if hate is stronger than party affiliation?”  He discusses the thoughts of Jonathon Rauch in conservative National Affairs, about hating…

Something doesn’t add up?  Generally speaking, when people put more money into the stock market, it goes up.  When people take money out of the stock market, it goes down.  According to Bank of America, investors are now the most bearish they’ve been since 2008.  In fact, they’re withdrawn $322 billion from the market in the last six months.  That’s not surprising since consumer confidence…

Because I have such great respect for General Jim Mattis, a good friend bought me a copy of Mattis’ latest book, Call Sign Chaos.  He was the first Secretary of Defense under President Trump, lasting almost two years before resigning in protest.  The title of this book comes from the humorous acronym given to him by his troops that means “Colonel has an outstanding suggestion.” …

I found myself having dinner with five other men one night last week.  Five of us had gray or white hair.  One had long, oily blonde hair that curled over his collar.  His expensive but too-large clothes reeked of cigarette smoke.  He offered up a bottle of Napa red by VGS that was indeed very good.  As he passed the bottle, he mentioned his wine…

What should corporations do with their profit?  They can use it to increase cash on their balance sheet, which increases the book value per share.  Or, they can use the cash to reduce debt, which also increases the book value of their stock.  Or, they can use it to pay bonuses to executives and employees.  Or, they can use to it to pay dividends to…