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.

A Turkey For Thanksgiving . . . ?

Longtime economic truism — money goes where it is most appreciated!  In other words, why would I buy a certificate of deposit from a bank with a lower interest rate, when I could get a higher rate at a different bank.  Funds would flow out of the bank with the lower rate and into the bank with the higher rate.  Money goes where it is…

Just Do It !!

It is the duty of financial planners to initiate uncomfortable conversations with their clients.  One of the most difficult is end-of-life planning.  Unless you plan to live forever, it is too important to procrastinate. Let’s make it easier!  First, sit down at your computer.  Second, ask yourself who should make healthcare decisions for you, if you’re unable to do it for yourself.  Now, type that! …

Ancient Writing

As a lifelong gun-lover and owner of many guns, I am appreciative of the Second Amendment, even though it was so poorly-written and has been so badly interpreted by the courts.  The Second Amendment is not in the Bible, nor the Torah, nor the Quran.  Yes, it is important, but it is not sacred.  It was written by mere mortal humans –. centuries ago —…

Thank You, Senator Roth

To my Democratic friends who think Republicans are bad, I offer the example of Senator William Roth of Delaware.  In addition to voting for the Brady bill and for banning semi-automatic weapons, he was also responsible for Roth IRAs, an often overlooked retirement vehicle since 1998. With a traditional IRA, you get an income tax deduction for putting money aside and watching it grow tax-deferred. …

Easy Choice ?

If China has a population of 1.4 billion and the U.S. has 333 million, that means China has about 4.2 citizens for every American. So far, the U.S. has lost about 760 thousand people to Covid.  China admits to less than six thousand dead from Covid.  Outsiders put the Chinese dead at about 125 thousand, which would mean we lost six times as many people…

Expectations

Veterans of President Gerald Ford’s “Whip-Inflation-Now” campaign in 1978 tend to see inflation hiding behind every tree.  Wednesday’s CPI report of 6.2% price increases over the past twelve months vindicated their suspicion.  After all, it is the highest inflation rate in 30 years.  While that concerns me, it does not worry me. If you believe in monetary economics, where increasing money supply causes prices to…

I disagree . . . therefore, I am !

According to Wikipedia, an iconoclast is “one who attacks cherished beliefs.” Aaron Rogers is one of the all-time great football quarterbacks.  He describes himself as a critical thinker.  I would describe him as a mere iconoclast. If I spent the rest of my life studying football 24/7, I would not know 1% of what he knows about football.  However, I doubt if he knows much…

Too Exhausted To See ?

Just because there is always something to be worried about . . . that doesn’t mean you should always be worried. A recent CNN survey reported that 60% of Americans think the economy is doing poorly.  Let’s see?  The latest ISM-Services data is the best since 1997, catching up with ISM-Manufacturing which boomed after the Lockdown ended.  GDP growth was a very robust 6% in…

R.I.P. Bill

Last Halloween, an old Army buddy killed himself.  Even though we hadn’t talked in almost thirty years, he was still a “buddy.”  Indeed, that expression – “old Army buddy” – is so loaded with meaning.  There is a certain bond between “old Army buddies,” not merely a bond between men but also a human bond between memories, emotional memories, and sometimes painful memories. He was…

Q3 Thoughts

For the first two quarters of this year, our economy was growing at a solid 6% annual rate.  However, it slowed to a mere 2% rate in the third quarter.  The drop from 6.7% in Q2 to only 2% in Q3 is a dramatic drop in demand.  Economists blamed the emergence of the Delta variant, the supply chain crisis, and attention-fatigue with the political circus. …

Money and Power

I think the first time in my life that I ever felt small and weak was in 2010, while in Beijing on a tour with the Chamber of Commerce. Among other things, we learned about the Chinese law that all data is property of the government. One afternoon, I skipped the tour for an un-escorted walk around the city.  By accident, I stumbled across the…

Avoiding Good Stocks ?

Do good stocks make a good portfolio?  Not necessarily! One of the more difficult concepts for investors is that good stock selection is different than good portfolio management.  Just because a good company has a good stock, that does not mean it should be bought.  For example, a good pharmaceutical stock should not be bought in a portfolio that is already too heavily weighted in…

Negative Class

My dog is not classy.  In fact, he has no class.  After all, he’s just a dog.  But zero class is still better than negative class! I was appalled when candidate Trump trashed a personal hero to me, the late Senator John McCain.  Now, I am appalled that the former President trashed another personal hero of mine, General Colin Powell.  In fact, it is sickening…

Q3 Column

For those who would like to read my quarterly column in “Inside Business,” you can find it here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-1018-20211018-vroi6ciql5df5opycfm4wlfjfa-story.html#nt=pf-double%20chain~top-headlines~feed-driven%20flex%20feature~automated~unnamed-feature~VROI6CIQL5DF5OPYCFM4WLFJFA~2~2~3~4~art%20yes

Fiduciary Nuances

Most scholars believe The Ten Commandments was written over 2,000 years ago.  However, I believe that, if lawyers and regulators had been writing it, they would still be writing and every tree on this planet would have already been converted to paper. During the Obama Administration, the “Fiduciary Standard” was adopted, and I was a big supporter.  It requires that financial advisors put the interests…

Joyous

Sometimes, you have to push work aside, stop watching the news, prop your feet up and share someone else’s joy . . . When “Star Trek” was a new TV phenomenon, I appreciated the show’s originality but was not impressed by the “pretty-face-actor” William Shatner, playing Captain Kirk. After that role, he was forgettable in many non-blockbusters, but did many “special appearances” during which he…

Creative Rebirth

One of my favorite economists was Joseph Schumpter, who died 71 years ago.  In my opinion, his greatest contribution was his study of  “creative destruction,” which argued that good things happen when bad things happen.  Inefficient industries would be destroyed and replaced by new, more efficient ones.  You’ve probably already heard someone say that capitalism is efficient but cruel. That was part of my thinking…

Translation, Please!

Few subjects are more vexing than immigration.  My religious training is that we are obligated to feed and clothe the poor.  My military training makes me intolerant of rule-breakers.  My economic training asks how much money for how many people for how long before they start paying taxes?  However, my political experience tells me that my Republican friends are utterly obsessed with the immigration problem,…

Featherbedding Redux ?

Today, the post-pandemic economy is being hurt by the supply-chain problems, which have been more severe than expected and will exacerbate inflation pressure.  The delays in shipping are a huge part of the problem.  Nike says shoes imported from China that normally takes 40 days now requires 80 days.  That increases the level of needed working capital, as the shoes have already been paid for…

Catastrophic, No . . . Stupid, Yes

Imagine looking out your window and seeing a bunch of boys playing “cops & robbers” with toy plastic guns.  Then, you realize the immature, incompetent boys have REAL guns.  What could go wrong? That’s the way I see the Congressional debate to raise the debt ceiling.  Republicans are wrong . . . this time!  Democrats were wrong . . . last time!  The out-of-power party…

Here Today . . . Where Tomorrow

Economists tend to be a pompous bunch and easily given to hyperbole. Modern Monetary Theory (MMT) is changing the world – making it better in the short-run.  Of course, that begs the question of how short is short-run, and how long is long-run? As a refresher, MMT explains that nations with a reserve currency, such as the dollar or the euro or the yen, can…

A Digital Tumor

Remember:  if you are not paying for a service, you are not the client.  Instead, YOU are the product!  Somebody is paying money for information about you or for access to you. Readers know I have long believed that Facebook is a cancer on America. Facebook users pay nothing to Facebook.  But they do enter information about themselves, which Facebook then sells to advertisers. Now,…

Buckle Up

September is usually the worse month of the year for the stock market.  But, the worse week of the year is usually the week in September having the third Friday.  Grab your calendar and you’ll see that we’re right now in the middle of worse week all year, historically.  One reason is that the “triple witching” or expiration of futures contracts and other derivatives.  That…

Current Thoughts on Crypto-Currency

I have never seen much value to crypto-currencies like bitcoin, except for criminals and speculators.  However, the collapse of Afghanistan has demonstrated other uses.  Importantly, crypto-currencies are easier to hide from the Taliban than Dollars.  In addition, crypto-currencies allow Afghan citizens in the U.S. to send spendable money to family remaining in Afghanistan without governmental restrictions. Last year, crypto-currency holdings in Afghanistan were among the…

The Persistence of Memory

For twenty years, I have remembered September 11th as the day when I watched the Pentagon burning from my fifth floor office, as the wind pushed the smoke into my wife’s office on the Potomac.  Including the World Trade Center, 2,996 Americans died that day. For eighty years, elderly Americans have remembered the sneak attack on Pearl Harbor on December 7, 1941, when 2,403 Americans…

August Confidence

In early August, the University of Michigan Index of Consumer Sentiment crashed to a ten-year-low.  Not surprising as consumers were weighed down by the Covid surge, rising concern over possible inflation, the fragility of our supply chain, and the painful images of our troops leaving Afghanistan.  It was a depressing month. In late August, the government’s Consumer Confidence Index also fell but  only to a…

A Pox On R’s and D’s

I have voted for Republicans, and I have voted for Democrats, but I’ve never been as disgusted with both as I am right now. Imagine you’re attending the wake or memorial ceremony for your spouse.  As you’re sitting there, with your head bowed, when someone barges into the sanctuary and screams “it is all your fault”!  Seconds later, someone else barges in, screaming “the doctor…

What, Me Worry ?

We’re living during interesting times.  We just learned that GDP growth during the second quarter was a sizzling 6.6% — even better than expected.  Corporate profits surged 9.2% — also much better than expected.  It’s not surprising that the stock markets keep setting new record highs.  What, me worry? The Grim Reaper called Covid still hangs over our economy, of course, but we proved our…

Socratic Conversation?

If the first casualty of military warfare is the truth, then the first casualty of partisan warfare is academic debate. Maybe, the Socratic approach won’t offend. . . ? Assuming Ronald Reagan was correct that America is that shiny city on the hill, does that mean non-Americans will want to be there ? If continued in-migration can be expected, can we channel Nancy Reagan and…

What’s the Point ??

Let’s say you have two neighbors.  Neighbor #1 picks up a baseball bat and hits neighbor #2, before handing the bat to the neighbor he just hit.  Neighbor #2 takes the bat and hits neighbor #1, before handing the bat back to neighbor #1.  As they continue to hit each other, do you think they are just plain stupid? The Federal debt ceiling is equally…

Old Theories Never Die . . .

Famed World War II General Douglas MacArthur said “Old soldiers never die.  They just fade away.”  The same can be said about old theories. In 1986, three professors named Brinson, Hood, & Beebower (BHB) published a research paper entitled “Determinants of Portfolio Performance.”  They showed 93.6% of a portfolio’s performance was determined by the asset allocation.  (A similar 1991 study showed a 91.5% correlation.)  Asset…

That Final Walk

One of my long-running complaints with the financial planning profession is that it has become too academic.  If planners spent less time memorizing IRS Code sections and more time looking into the eyes of their clients, it would be a better world. Estate planning is the most stark example – full of tax and probate advice but void of the world’s most universal emotion.  There…