Warren, Elvis, Jeff and TINA

“You gave the world a lot of joy; Now that ain’t bad for a country boy.”“Hound Dog Man” as performed by Roy Orbison

You know you’re really famous when people know you by your first name. Everyone knows who Oprah is. Elvis Presley was perhaps the first celebrity I can recall who simply went by his first name. Madonna, Bono, and Shaq are all members of the “No Second Name Needed Club”.

What, I wonder, is the most important one-word name in investing? Is it Warren (as in Buffett)? Or Jeff (as in Bezos)? They’re close to the top of the list, but the most important name in investing is actually a woman’s name (and not a person at all): TINA.

Graduating with an 'A' in Financial Literacy

“American history and practical math… you study ‘em hard and hopin’ to pass.” — “School Days” as performed by Chuck Berry

An increasing number of states are now requiring students to pass a course in financial literacy before graduation. Let's take a moment and design a basic curriculum.

We’ll start with the importance of saving. Then we’ll discuss the concept of compound interest. Say a student saves $1,000 babysitting or lawn mowing over the summer and invests it. Imagine it earns 5% annually; then he or she will have $1,050. That $50 profit, and the $1,000 principal, gets compounded each and every year thereafter. We’ll emphasize that initiating the investment process at age 18 vs. age 28 makes an incredible difference over the long run…

Trade Wars, Taxes, Spending and Travis Tritt

“Well, you must be from the city; ‘Cause you sure ain’t from round here; There ain’t no smoke free section… We don’t sell no import beer.” - “When in Rome” as performed by Travis Tritt

The U.S. trade deficit with China reached an all-time high of $419 billion last year. That’s a little less than half of our overall $891 billion total trade deficit.
 
In an effort to reduce the trade deficit, last September we imposed tariffs on hundreds of billions of dollars of Chinese merchandise and certain imports from other countries as well. China and other trade partners like Mexico and the EU responded by laying tariffs on a smaller but still significant amount of U.S. products. We briefly considered escalating tariffs but action was delayed as negotiations proceeded.

Some domestic industries have been damaged more than others by our new tariff policy. Farmers, for instance, are hurting badly as a result of freshly imposed retaliatory tariffs. As Iowa Senator Chuck Grassley wrote recently in the Wall Street Journal: “Mexican tariffs on U.S. pork…have lowered the value of live hogs by $12 an animal. Iowa is the top pork-producing state in the country. That means jobs, wages and communities are hurt every day these tariffs continue….”

Sandwiched Boomers Face Financial Disruptions

"People seemed to be content; Fifty dollars paid the rent... Those were the days." - "Those Were The Days" as performed by Carroll O'Connor and Jean Stapleton

That parents and grandparents wish to financially assist their offspring is as natural as mountain snowmelt turning into spring water. We remember how poor we were in our salad years. We think back to our own sparsely furnished small starter home, and we remember scraping by and saving to make mortgage payments and buy groceries. And we desire to trim the rough edges of our children's experience by providing financial assistance. After all, who doesn't want to help their children or grandchildren achieve a better life?

That said, a recent article in Barron's entitled "The Parent Trap: Your Kids Could Be Ruining Your Retirement Plans" details some frightening financial scenarios. Just under 80% of parents say they provide some type of financial support to their adult children. The combined total is somewhere in the neighborhood of $500 billion annually. That figure is double what American parents are contributing to retirement accounts; that’s difficult to grasp, but true.

Capital Gains Trouble, Wealth Taxes and Nat King Cole

"Moments, springtime, Eiffel Tower... Funny taxis, kids at play." "Azure-te" as performed by George Shearing and Nat King Cole

A new proposal calls for unrealized investment gains to be taxed annually, based on how much they've grown in value each year. Investment gains are currently taxed only when assets are sold, so if enacted, this proposal would mark a major departure from the methods currently used to tax wealth. The burden on investors, and the negative impact on markets, would be significant.

A dollar earned through investing has traditionally been taxed preferably to a dollar earned through employment income. Additionally, the gains on investment appreciation remain untaxed until the asset is sold. The new proposal would not only eliminate this unrealized “carry,” it would tax those paper gains at ordinary income tax rates which cap out at 37%, not at lower capital gains rates.

Boomers, Migrating Millennials and Student Debt

"It's not that we don't care...We just know that the fight ain't fair." "Waiting on the World to Change" as performed by John Mayer

Recently someone shared a comedy skit with me, one that poked fun at both millennials and baby boomers. Stereotypes abounded. The millennials were portrayed as self-involved, resentful, interruptive and angry. Boomers were cast as selfish, entitled and dismissive of the economic plight facing younger citizens.

Comedy often reflects deep divisions in our culture. Many of the conflicts between these two age groups are rooted in economics. Millennials are saddled with massive student loan debt due to the skyrocketing costs of college tuition and a largely unaffordable starter housing market. Many came of age during the Great Recession and believe the boomer generation has usurped an unfair share of government benefits and society’s wealth.

The Springtime of Our Nonagenarian Years

"If we're dead we can't do much. But as long as we’re alive, we can still tap dance, we can still crack a joke, we can still sing a song, we can still tell a story.” — Filmmaker and comedian Mel Brooks

Carl Reiner knows a few nonagenarians (people aged 90 to 99). At 96, he's one himself. It's not unusual for people aged 90 to know others their own age. But the ones Reiner associates with are witty, active and engaged. I learned this watching a documentary Reiner hosts entitled "If You're Not in the Obit, Eat Breakfast." Reiner interviews Mel Brooks, now age 92; Betty White, age 97; Dick Van Dyke, age 93; and Norman Lear, age 96.  Reiner also interviews Ida Keeling, now 103, who began running at age 67 to combat depression after two of her children were killed.Watching Dick Van Dyke dance and listening to Reiner, Brooks and Lear harmonize through an old show tune is inspiring. Ida Keeling's workout regimen is uplifting. (And even includes push-ups). "You've got to be the boss of your body," she says. Not all of us can enjoy the health and vitality that these folks do. Chronic pain, dementia, strokes, heart attacks and physical limitations are only too real.  That said, there's life out there for all of us, at any age. To embrace it, we need the right mindset.

Retraining, The G.I. Bill and The Beatles

"If you get too cold I’ll tax the heat... ‘If you take a walk, I’ll tax your feet.""Taxman" as performed by The Beatles

If a business owner or entrepreneur can become wildly wealthy, good for him or her. Applying overly aggressive tax rates to the 0.1% or even the 1%, many of whom are new arrivals in this elite income category, makes no sense for our economy. How, then, do we deal with wealth and income inequality?

Economic Growth and Tax Law Correlations

"Tax the rich...feed the poor... ‘Til there are no rich no more?" — "I'd Love to Change the World" as performed by Ten Years After

Should we soak the rich to solve wealth and income inequality?  European nations attempted to and found their tax policies ineffective. Seeking more friendly tax havens, many of their wealthier citizens simply moved their businesses and residences abroad. Levying a wealth tax on Americans would likely produce similar results. In an era when the U.S. is struggling to keep businesses operating here at home, tax law changes which drive them elsewhere will likely prove counterproductive to our national economic goals.

Shutdown - Markets Crave Stability and Certainty

"Houston, we have a problem." — from Astronaut Jim Lovell (Tom Hanks) speaking to Flight Director Gene Kranz (Ed Harris) in the movie “Apollo 13”

While rewatching this Ron Howard classic recently, I was reminded of the bold initiatives that characterized our space program and inspired Americans everywhere. As most know who followed the flight of the Odyssey in 1970 or watched the movie, our engineers, scientists and astronauts brought the damaged spacecraft home utilizing less amperage than is used by a small kitchen coffee maker. That Lovell, Haise and Swigert returned to splashdown safely is a miracle, a true milestone in the annals of American ingenuity.

China has now successfully landed a "rover" on the far side of the moon. So while we are still ahead of China in space exploration, it's obvious that they're making headway.