A Real Living Wage Plan

When I began working, I earned $3.10 an hour. It was 1980 and I was just happy to have spending money. In 1981, the minimum wage was raised to $3.35 an hour and it stayed there until 1990 when President Bush raised the minimum wage to $3.80 an hour.

The minimum wage has always been used as a political football. The minimum wage was first instituted by FDR. It was not set to rise with inflation on purpose, requiring congressional action to be changed. Interesting… a Democrat set the federal minimum wage at $0.25 per hour regardless of the rate of inflation. In 1939, FDR raised the rate to $0.30

FDR, a Democrat, initiated the minimum wage and raised it once in seven years (initiated in 1938 and served until 1945 when he died in office). Truman, also a Democrat, raised the minimum wage twice in eight years.

Eisenhower, a Republican, only raised the minimum wage once in eight years. Kennedy, a Democrat, raised the minimum wage twice in a shortened term of three years. Johnson, a Democrat, raised the minimum wage twice in six years and only towards the last two years of his second term.

Nixon, a Republican, only raised the minimum wage once in his scandal shortened second term. Ford, a Republican, who only served three years, raised the minimum wage twice. Carter, a Democrat, raised the minimum wage every year of his presidency as he had to deal with some of the highest inflation rates in history.

Reagan, a Republican, interestingly, never raised the minimum wage. Reagan’s genius was in cutting taxes, which had a more favorable impact on workers and businesses than raising the minimum wage. Bust 41, a Republican, raised the minimum wage twice in his single term. He made the mistake of say “Read my lips. No… New… Taxes” words he came to eat as the Democrats trapped him into raising taxes.

Clinton, a Democrat, raised the minimum wage twice in his two terms with one of those increases happening in an election year. Bush 43, a Republican, raised the minimum wage twice in his two terms, both times towards the end of his presidency as the housing bubble was about to pop. Interestingly, Obama only addressed the minimum wage issue once in eight years.

In seven Democrat administrations, the minimum wage was raised fourteen times. In five Republican administrations, the minimum wage was raised eight times. Considering the numbers, I wonder if looking at them that way truly tells the story. I always say, know what you measure and measure what you know. If I had to venture a guess, I would say that the minimum wage is nothing more than a political football.

An interesting history to say the least, but if politicians were really serious about the doing something that would show how important a minimum wage is, I believe they need to think differently about how to address the needs of lower income workers.

I submit to you, the reader, and to every state and federal politician, my plan for helping the lower income earning. Instead of forcing employers to pay $15 per hour for entry level jobs, which has been proven to impact the small business owners the hardest, why not change the federal and state tax codes to ensure every working person gets to keep the wages he or she earns up to what would be considered a living wage? Think about that.

The prevailing philosophy concerning what constitutes a living wage is clearly focused on $15 an hour. Then why does the federal government and every state that has an income tax, stop taxing income until it surpasses the equivalent of the sum of the living wage?

At $15 an hour, a full-time employee working 40 hours a week would make $31,200 annually.  So, my living wage plan is simple. Don’t tax incomes until after the income exceeds $31,200. I mean if politicians are serious about helping low income earnings, why should they tax any income under the amount of the living wage?

Politicians are not serious about meeting the needs of the lower income workers. They use the minimum wage as a political issue, that somehow their benevolence in raising the minimum wage addresses the needs of the lower income worker. Imagine if those making $31,200 could keep $31,200. How many people could live on $31,200 a year?

Those with incomes greater than $100,000 annually pay 80.6% of all federal taxes. Those earning less than $30,000 annually pay 1.4% of the federal taxes. While those in what is considered middle class paying 18.1% of all federal taxes. If those who are making the least pay the lowest percentage of federal taxes, then the impact of changing the tax policy (at least on the federal level) to make the first $31,200 absolutely, unequivocally tax free, would not cause huge federal budget problem.

I don’t know, maybe doing this takes away the power of the political conversation that can be used as a differentiator between Republicans and Democrats. I don’t get the feeling that either party really cares about the worker. What they really care about is the worker’s vote, because your income does not equal a vote unless the politicians can make you believe that they really care about how much you make.

RISK! Who Invited You?

Risk! The one word every investor wants to avoid, but knows cannot be avoided if he or she wants to increase his or her return on investment. In a recent conversation, I was asked “How does someone avoid risk and still make a solid return?” The simple answer is – One doesn’t. But there are some things an investor can do to mitigate risk.

To mitigating risk is to reduce the impact of risk upon your portfolio. And that is the mindset that you must have if you want to be a successful investor. Mitigate over eliminate because to eliminate risk is to eliminate ROI. Even if you were to hide your money in a mattress, you have not eliminated risk. For the final frontier in the risk spectrum is inflation, and from that no one can hide.

However, one can mitigate inflation but growing his or her investments at a rate greater than inflation. The problem is that to do so requires that the investor assumes more risk; market risk and the risk associated with the geo-political realities of the times in which we live. There are so many overt and covert risk factors that an investor must navigate, it is almost insane to try to list each one. But there are some basic risk factors that an investor should consider when purchasing stocks.

Recently, a friend asked me to look at a specific stock and give him my opinion. This is something I have gotten in the habit of doing for free since opinions cost me nothing and within a few minutes of my review, I can usually form an opinion. As it turned out, the stock was an ADR (American Depository Receipt). This is simply a negotiable certificate issued by a U.S. bank representing a specified number of shares it holds in a foreign stock traded on a U.S. exchange. The underlying security is held by a U.S. financial institution overseas. (But that is another blog altogether.)

After doing a little research, I informed my friend of the underlying risks associated with this type of investment. I explained to him the exchange rate risks, foreign tax risks, and the country of origin economic and political risks. I did not share with him a buy or avoid opinion, I merely explained the additional risks which are associated with ADRs.

When I am assessing risk, I always ask myself 2 questions. 1. What are the reasons why I should own this stock? I look first, at the opportunities that owning the stock will afford me. Notice the question is not “Why do I want to own this stock?” but rather, “What are the reasons why I should own the stock?” That is a very important distinction. It shifts the focus from feelings to facts. That is the first defense against risk. Emotional investing introduces too much risk into the equation.

The second question is probably obvious to you by now, but I will share it anyway. “What are the reason why I shouldn’t own the stock?” The first question looks at the opportunity and the second looks at the risks associated with the stock. In order to answer these questions, an investor needs to learn how to analyze, not just the company, but the sector, the industry, and the economic cycles, and many other external factors that can impact the price of a stock and its potential for ROI.

A seasoned investor learns to look beyond the risk to see the opportunity. In a way, risk is a kin to emotions… emotions are real, but they are real bad decision makers. Risk is real, but it is a real bad decision maker if it is the sole reason why you choose to buy or avoid an investment. Risk can be mitigated. Remember, to mitigate means to reduce or lessen the impact of a given reality upon your experience.

But how does one mitigate risk? The answer is so simple it might surprise you. Are you ready for it? I can give it to you in a single word… STRATEGY! This year I have committed to executing an options and merger/acquisition strategy. There are systemic risks associated with these strategies, but there are ways to reduce even systemic risks inherent to a strategy. Believe it or not, even strategies include risk. Name one military strategy that was void of risk. There are none. Risk is a product of variables and every investment decision has a number of variables within it.

The way to mitigate the risk associated with a strategic plan is establish rules that govern how you are going to deploy the strategy. So you mitigate risk by conducting in depth research on the company, its sector and industry, recent news reports, analyst’s opinions, market research, P/E ratios, earnings reports and calls, BiB comparisons, product pipelines, foreign exposure, etc.

Based on your findings, you develop a strategic plan on market entrance and an exit strategy if the environment changes. To reduce the risks inherent to your strategies, you establish a set of ground rules that govern how your strategies are to be implemented.  If all of this seems to be too overwhelming, welcome to the world of investing. And how do you mitigate the risk associated with being overwhelmed? I recommend you work with a strategic financial coach before choosing a financial advisor.

Some people will have to work with a CFP or financial advisor, but that can actually introduce a new risk into your investing equation. If you have the intellectual ability to, the time necessary, and the will to succeed, a strategic financial coach will be enough. The strategic financial coach works on a fee only basis and is not paid to make decisions for you. He or she is there to provide guidance, not pressure.

Risk comes in all shapes and sizes. It comes in all forms and fashions. It is ever-present in every life decision. There are two ways to deal with risk: lessen its impact on ROI or move away from it totally. The question is “Do you want to be crushed by risk or do you want to crush risk?” You will never be able to escape it, but you can learn to live with it and learn how to use it to your advantage. You see, as you learn how to mitigate risk, you become a lot less emotional about your money. Then, when everyone else is reacting with emotions, you can calmly move in and capitalize on the opportunity, which lies just behind the risk everyone else is trying to avoid.  

Is Brink's Company (NYSE: BCO) a backdoor cannabis play?

There are several off-shoot players in the cannabis industry that an investor can own without the high risk of owning cannabis stocks. Cannabis is not yet a profitable industry and will likely suffer a lot of growing pains as the players jockey for superiority. But investors can get a piece of the action by “dancing around the edges” without owning the stocks of Canopy Growth, Medmen, Cronos, Tilray, and the numerous other pot-players.

Beverage companies are looking at cannabis infused drinks. Companies such as Miracle-Gro provide for the growing needs of cannabis companies. And then there are companies that are channels for CBD type products such as vape oils and cannabis infused candies.

However, when an investor looks at cannabis, he or she should see green; and I don’t mean the color of the weed. I mean the color of cash. There are two aspects of the cannabis industry that one must consider, and both of them have to do with assets. Cash and product.

Who knows where this industry will take the casual recreational user and the necessary medical user, but one thing is sure, investors know where the industry leads as more and more states and countries legalize its use.

That is why Canopy Growth Corp., who already has a cash source through Constellation Brands, Inc. (NYSE: STZ), has opted for armored trucks to provide secure logistics and cash management services. I spend a couple of years working for the company Brink’s Co. recently acquired and I know that secure cash management services means money vault operations and logistics means the transportation of a highly valuable asset.

Playing the off-shoots reduces the risk associated with cannabis stocks because typically, companies that partner with pure cannabis plays have other revenue streams that can absorb any short term volatility. The trick, of course, is determining which off-shoot company has the best association. 

Brink’s Company handles millions of dollars of cash assets every day and billions pass through their money vaults every year. This means a cannabis play only increases that volume.

If you decide that the transport game is the way to play cannabis, then Brink’s Company might very well be the right one. Brink’s Company offers vaulting and inventory management for a variety of commodities, including precious metals, banknotes, numismatics, personal data, and now you can add cannabis.

It is important to do your due diligence before investing in any company. Once you have made the decision to expose your financial assets to the risk associated with cannabis, you have a lot more homework to do. The industry is so new that many of the risks are still undiscovered. Imagine a fire at a storage facility… all of your assets would go up in smoke.

Don’t over commit any financial resources to pursuing the profit of pot. All of these companies are speculative and should not make up a significant portion of your portfolio. Placing a side bet on the off-shoots can provide a small amount of security while providing you some exposure to the potential upside of the industry.

Let me say one more thing about Brink’s and the armored car industry. Fundamentally, it is a transport stock. The only difference between armored car services and the other carriers in the transport industry is the type of cargo that is being transported. So, if you are interested in investing in the transportation industry, Brink’s Company might be a company at which you look. It may be classified in the Industrial Sector and the Security & Protection Services Industry, fundamentally, it is a transportation stock.

If investing in the off-shoot players in the cannabis industry intrigues you, why not consider making some green with those who provide vaulting and inventory management for the greenest industry around.

Singularity: A Mindset Of The Poor

PART 4 of 10

Have you ever heard the phrase “There is more than one way to skin a cat?” As a child, I thought “How cruel. Who would ever what to skin cats?” I thought that because I was familiar with the feline version of “cats,” but I was not familiar with the aquatic version. It wasn’t until years later when I was introduced to fishing that I learned that “cats” was short for “catfish.” Then it all made sense.

My singularity of thought that “cats” were literal felines kept me from understanding the principles of the statement. The principles: You can accomplish the same goal many different ways and doing something differently does not make it wrong. It just makes it different. Those principles are very applicable to personal financial management. You can accomplish the goal of building wealth many different ways and if what you are doing is different from the experts, it doesn’t mean you’re wrong. You’re just doing it differently.

Generally speaking, personal financial management has certain principles that lead towards wealth. Budget your money, have an emergency fund, and don’t spend more than you make. All of this is common sense, but it must not be so common because so many people are living paycheck to paycheck.

In an article published on August 24^th, 2017 in the personal finance section of cnbc.com, statistics showed that nearly 10 percent of those making $100,000 or more say they can’t make ends meet. Seriously? A six figure salary doesn’t exempt you from struggling financially? Well, who knew?

The article went on to say “Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year, according to a recent report from CareerBuilder. Overall, 71 percent of all U.S. workers said they're now in debt, up from 68 percent a year ago, CareerBuilder said. While 46 percent said their debt is manageable, 56 percent said they were in over their heads. 

About 56 percent also save $100 or less each month, according to CareerBuilder.[i]

So, if common sense states to have a budget, an emergency fund, and don’t spend more than you earn, why do we have statistics such as those stated in the article? I suggest that most people learned one way to do personal finance and have never entertained the idea that maybe there was a better more effective way. Even when statistics proves that we don’t know what we are doing, we still continue to do it, because it is all we know.

Well, I have made it my person challenge to change the way people “do personal finance.” I have develop, not a plan, but a strategic process that if applied, will radically change the way people do personal finance. I have merged my study of martial arts and personal finance to create an innovative process for personal money management. The Financial Black Belt’s Financial Self-Defense Training Series teaches individuals how to overcome the roadblock of singularity.

When a perspective student enters a Dojang (a term used in Korean martial arts that refers to a formal training hall) for the first time, he or she is a no belt. The instructor is usually a Fifth-Degree Black Belt typically referred to as a Master. He or she is a master because he or she has been training for years. I am fortunate that my instructor, Master Joe Borucki, is a Seventh-Degree Black Belt, who has been studying for over 25 years.

No student would enter the Dojang thinking that he or she knows more than the instructor. I think the reason why 78 percent of full-time workers said they live paycheck to paycheck, 71 percent of all U.S. workers said they're now in debt, and 56 percent also save $100 or less each month is because they believe they are the “master.” They have entered the Dojang of financial management believing that they know more than the instructor.

The Financial Black Belt’s Financial Self-Defense Training Series applies the same discipline and training techniques as martial arts. Belts are awarded to those who show a level of proficiency in the different financial milestones associated to each belt. Even after a student achieves the level of First Degree Financial Black Belt, he or she still does not know more than the instructor.

In Part 1 of this series, I explained how to overcome the roadblock of financial ignorance. In Part 2, I talked about overcoming emotionality. In Part 3, I discussed overcoming procrastination. Overcoming Singularity requires you to change the financial behaviors that have become ingrained in your belief system which rejects information that does not align with what you have learned about finances. Those who have become statistics as reported by Jessica Dickler, need to do something radical to improve their financial reality.

The answer to singularity is plurality. Singularity, as it relates to personal financial management, is the state, fact, quality, or condition of having one source of behavior. Plurality is the state, fact, quality, or condition of having multiple sources of behavior. I began with a popular saying and so I end. When all you have is a hammer, every problem looks like a nail. Personal financial problems are not all nails. If you want to build a house, you need more than a hammer.

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[i] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html Most Americans live paycheck to paycheck by Jessica Dickler Published 10:15 AM ET Thu, 24 Aug 2017  |Updated 8:17 AM ET Wed, 30 Aug 2017