OFF TO THE RACES

One of America’s more influential financial planners, Ric Edelman, recently advocated that successful securities investment should consist of a broad diversification of mutual funds, mimicking, he said, horserace gambling where you bet on every horse in every race.  It’s a fascinating concept; evidently Mr. Edelman is far too wise to have ever succumbed to racetrack betting.

Though it’s true that betting on every horse in a race guarantees you’ll pick the winner, it also assures you’ll lose money.  The racetrack industry operates on the pari-mutuel system, whereby a betting pool of those who select the horses finishing in the first three places share the total amount bet, minus a predetermined percentage for the management.  So betting on all the horses will result in a return of the amount bet—less the track’s take.

There’s a moral here: Only the track can be certain of a profit.  There’s an even more profound moral as it relates to investment in broadly diversified mutual funds through a financial planner.  Both the mutual funds and financial planners are positioned as is the track, in that they take their percentage off the top regardless of how the securities finish the race.

I subscribe to a different style of investment.  If corporate securities are your choice, you’ll do better to avoid the funds and the financial advisers and choose your own stocks and bonds.  Select corporations with lower price-earnings ratios that show consistent profits and which pass a portion on in quarterly dividends.  You then review your personally-managed portfolio regularly, disposing of those which fail to meet these requirements.  Admittedly, this method of investment will require both time and attention on your part, as well as initial uncertainty . . . and possibly some mishaps along the way.  However, if you’re unwilling to become personally involved in your own financial achievement, you’ll likely live to regret that decision.

Understand one basic precept: No one out there has the same interest in your wellbeing as you do.  Placing your financial future in the hands of another, no matter how favorably recommended they may be, is an invitation to untold misery.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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AUTISM: AN INTENSIFYING SCOURGE

Autism: The very word strikes fear into the hearts of parents.  As the National Autism Association informs us, this neurodevelopmental disorder can occur in all ethnic, socioeconomic and age groups.  As for symptoms, there seems to be no human malfunction which cannot be attributed to this ailment, be it impairment of social skills, linguistic development, behavioral characteristics or personal sensitivities.  Whatever problem you may perceive in your offspring, it must be autism.

Fortunately we live in a nation now making every effort to combat this affliction.  The federal funding law for autism, first enacted in 2006 and regularly renewed, provides over $3 billion annually for research, services, training and monitoring by the National Institutes of Health and affiliated agencies.  In addition, scientific research grants from countless foundations ensure no shortage of contributions.  If autism can be combated by money alone, the ailment will soon be a thing of the past.

As I scan the 86 listed autism symptoms, they include: makes honest, but inappropriate observations; often uses short, incomplete sentences; may have a very high vocabulary; difficulty with loud or sudden sounds; perfectionism in certain areas; tends to tune out when being reprimanded; high skills in some areas and low in others; excellent rote memory in some areas.  As I reflect back on my youth, I recall exhibiting these very characteristics.  Could it be I suffered from autism before the ailment had been discovered?  Luckily I outgrew it without diagnosis or treatment.

One thing is clear: Thanks to continual investigation by those organizations devoted to its diagnosis and treatment, autism is becoming ever more recognized.  I’ve just learned that the number of children ages 3 to 17 previously diagnosed has increased in the past year from 1 in 68 to 1 in 45.  How can that be?  It’s because the agency designated to report on those afflicted with the ailment manipulated the format on their questionnaire so that what was previously reported as “developmental disability” became categorized as “autism spectral disorder.”  When you want to verify that some trait has become more prevalent, this is how it’s done.

A final thought: There are fortunes to be made on autism.  Whether or not any autism sufferers actually benefit from the cascade of revenue will be incidental.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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THE SCHOOL WARS GO ON

A teachers’ union official minces no words: “Our public school system is now up for sale to special interests.”  In rebuttal, the representative of a New York hedge fund responds: “Within 24 hours of the parents lawfully petitioning their own government to transform a chronically failing school, district officials chose to hide in a back room.”  And this portrays the conflict over whether to convert a standard public school into a charter school.

 

What are charter schools?  The criteria vary, but generally they differ from traditional schools in that parents are given options with regard to the schools their children attend and the rules under which they function.  Many are nonprofit, in which the teachers need not meet certification standards nor be dues-paying members of a union.  The claim is that students in charter schools will do better than in ordinary public schools.  Perhaps they do, but it’s uncertain whether it’s a matter of cause or effect.

The belligerents phrase their arguments in grandiose ways: “Children of working-class families possess the right to demand quality education,” as opposed to “Parents must have the ability to transform their chronically underperforming schools.”   But the conflict is far more profound than the hyperbole suggests.  The root of the problem is that massive amounts of taxpayer dollars follow the student, where under the formulas predicated upon Average Daily Attendance (ADA), fortunes will flow to those whose schools can be governmentally sanctioned.  It’s this perennial conflict over the money which causes the battle to rage on as it does.

I contend it doesn’t matter much how a school functions or whether the faculty is particularly competent.  Bright and motivated students will do well while those that are dull and lethargic will do poorly.  In this regard, nothing will ever change.

There’s a fundamental flaw in the American public school system which the professional educator dare not acknowledge.  It’s that there are millions of youngsters impressed into the system that have no legitimate reason to be there.  Legions of youths will grace the seats of countless classrooms and never learn much of anything.  The simple fact is that it’s designed to operate in exactly this manner.

 

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

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RESIST THE SALE PITCH

Since the 1920s, when marketing developed into an art, the American public has been deluged with a cascade of ingeniously foisted merchandise.  Examples are endless.  If you’ve recently tuned into the radio talk shows, you’ll learn that the advertisers currently promoting My Pillow, are touting it as a superb product which will ensure the soundest and most comfortable sleep possible.  They don’t mention it sells for $58; you should note that a competitor, Wamsutta, sells a remarkably fine pillow for $19.  This is the way the world of advertising operates.

Ingenious marketing is now a part of the presidential nomination process.  One of the Republican candidates—Donald Trump—is, if nothing else, a master of marketing.  I recall my involvement several years ago attending his 3-hour seminar, billed as a unique perspective into the art of investment.  To my dismay, the entire period was devoted both to extolling the wealth and personal virtues of Mr. Trump, as well as peddling a several-thousand-dollar follow-up seminar.  It was the hardest sell I’d ever experienced and induced many naive attendees at the event to sign up.

Apparently deviousness in marketing goes hand in hand with general unreliability.  It’s certainly evident in Mr. Trump’s case.  You should be aware that on 9/3/15 he signed a loyalty pledge to the Republican Party that he would support the Republican nominee in the 2016 general election, thereby ruling out a possible third-party or independent run.  At an event at Trump Tower in New York, surrounded by backers, he vowed: “I will be totally pledging my allegiance to the Republican Party and the conservative principles for which it stands.”  Nonetheless, this didn’t dissuade him from announcing on 11/21/15, at a rally in Birmingham, Alabama, that he would be open to running for president as an independent if he concludes Republicans aren’t treating him “fairly.”  You may interpret this as you choose.

I don’t deny Mr. Trump has certain abilities.  He’s rich; he’s confident; he’s most certainly forceful.  Perhaps these traits are sufficient, so that forthrightness and dependability become unimportant qualities in the President of the United States.  If so, then I have the perfect slogan for his campaign: “Put your confidence in a man who knows what the word confidence means.  Donald Trump . . . a real confidence man.”

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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THE DEATH PENALTY REVISITED

The legal establishment is once again split over the death penalty.  On 11/12/15 the 9th U.S. Circuit Court of Appeals ruled that, while the 1995 death sentence of convicted murderer Ernest Dewayne Jones cannot be challenged, neither, on a variety of convoluted procedural grounds, can it be dismissed.  This ruling guarantees Jones’ appeals will probably continue until his death of old age.  And so, with proponents and opponents of the death penalty continuing to fight it out, I have a few questions.

Is it unreasonable to execute a sadistic murderer who has proven to be a perpetual threat to the public?  Apparently it is.  The delaying tactics by advocates for death row inmates have so delayed executions that it’s now claimed these very delays cause executions to have become unreasonably infrequent, thereby in violation of the Eighth Amendment’s prohibition of cruel and unusual punishment.

How is society benefitted by providing lifetime room and board—at $47,000 per year per inmate in California—to prisoners who must never be released?  If nothing else, it certainly provides employment for a lot of people.  The list includes prison officials and guards, attorneys to handle the continual death penalty appeals, physicians and medical staff, food service providers to feed the confinees, psychiatrists and psychologists to ensure mental oversight for those permanently incarcerated, for those who operate non-profit foundations which continuously lobby for and against capital punishment, as well as innumerable hangers-on, who merely feed off the uncertainty.

And finally, is our nation more humane when it locks up a person for life?  It can be argued that confining a prisoner to a cell, allowing only minimal contact with other humans and offering no respite to a life behind bars, is far more diabolical than a quick and relatively painless death.  I’m not certain which I would find more onerous.

A final thought: The death penalty must either stay or go; it cannot continue to hang in limbo.  If it stays, its execution must mimic that of 19th century Judge Isaac Parker, the “Hanging Judge,” who, when he declared that the accused  “be hanged by the neck until dead,” was, in fact, promptly hanged by the neck until dead.  However, if society is no longer capable of such forcefulness, then capital punishment should end.  It’s better we base our policies on reality rather than contrived illusion.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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THE MONTHLY PRIME RATE RITUAL

During an appearance before the House Financial Services Committee on 11/4/15, Federal Reserve Chairwoman Janet Yellen commented as follows on the possibility of an interest rate hike:

"What the committee has been expecting is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2 percent target over the medium term.  If the incoming information supports that expectation, then our statement indicates that December would be a live possibility."

If, in fact, an increase is in the offing, in which a key rate will be raised from its record low of near zero, it will be the Fed’s first rate hike in nearly a decade.

Despite Ms. Yellen’s assurances, our economy is not vibrant, nor is the nation experiencing “improvements in the labor market.”  Jobs are disappearing, with an actual unemployment rate now exceeding 20%.  Traditional sources of income for many Americans no longer exist.  Interest on savings is gone; stock dividends are meager; pensions are becoming a thing of the past.  Many citizens are struggling to exist.

As for the federal funds rate, it’s the U.S. national debt, now approaching $18 trillion, which is the elephant in the room.  If that rate is significantly increased, Uncle Sam finds himself awash in payments which he cannot service without incurring further debt.  This potential vicious cycle explains why the rate has remained where it is.

At some point political considerations become the dominate factor.  If the administration must validate the economy’s health, expect a token increase of perhaps ¼%, followed by media ballyhoo as though a cataclysm shook the earth to its core.  For a brief interval market indices will vibrate violently, amidst irrational prognostications from countless authorities and experts.  Thereafter we’ll return to business as usual.

This is the sort of nonsense in which both the government and the investment world are based.  It’s summarized in Shakespeare’s Macbeth: “. . . a tale, told by an idiot, full of sound and fury, signifying nothing.”

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

 

THE SCHOLASTIC JUNGLE

In the academic world nearby, I’m witnessing a brouhaha at California State University Fullerton.  A mathematics instructor, Alain Bourget, is under reprimand for refusing to assign the school’s designated textbook for his linear algebra course.  Perhaps it’s more than coincidence that the coauthors of the officially approved textbook are the chairman and vice chairman of the mathematics department and that the book sells for $180 at the campus bookstore.  Associate Professor Bourget selected instead two texts he considered superior, one for $76 and the other free.

In an earlier era the cost of higher education caused few concerns.  Tuition seemed affordable and the price of textbooks reasonable.  A university degree could be obtained for what an average student, with the help of supporting parents, might scrape together from the household budget.  This is no longer the case.  With the inexorable rise in tuitions, together with the conspiratorial nature of textbook publishing, many collegians now graduate with tens of thousands of dollars in student loan debt.

Prof Bourget handled things badly.  Only an employee asking to be fired flagrantly derails his boss’s gravy train.  He should have assigned the prescribed text, while deviously suggesting to his class that the other books might be equally helpful.

Let me add a thought on the matter of textbooks on complex subjects.  For a number of years I taught inorganic chemistry at a local community college.  The subject, by its nature, is heavy on mathematical problem-solving.  Some of the concepts are not easily grasped and many students find this subject to be their academic graveyard.  One bit of advice I gave my classes often proved to make a difference.  I suggested if my detailed solution of a problem, together with the explanation in the text, failed to make it clear—and often it didn’t—then they needed to make a trip to the library to find other textbooks on the same subject.  Usually, each book’s explanation of the solution employed a slightly different slant, so the student might obtain a more three dimensional view, as it were.  In many instances it worked splendidly..

A final word: Perhaps things are improving in the world of academia.  Online courses and texts to be downloaded on the cheap may make education once again affordable.  At least we can hope.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

 

TESLA: SECOND THOUGHTS

On 10/20/15, the automotive world received an unexpected jolt when influential Consumer Reports withdrew its recommendation for Tesla’s Model S electric sport sedan.  This $100,000 luxury vehicle, that previously enjoyed rave reviews from all quarters, was faulted for a new-car reliability prediction of “worse-than-average.”  Among the maladies are defects with the drivetrain, power equipment and charging equipment.  In addition, owner complaints are reported concerning body and sunroof squeaks, rattles, leaks, and door handles which fail to function properly.  The news resulted in a 7% drop in the firm’s common stock on that day.

Tesla Motors, Inc. is a unique company in many ways.  Its controlling investor and Board Chairman, Elon Musk, took charge in 2004 and transformed the fledgling firm into a highly regarded corporate powerhouse.  In all its years it never generated a profit from the production and sales of autos.  Nonetheless, it has raised hundreds of millions of dollars from public stock sales, from the marketing of “Zero Emission Vehicle Credits”—a California legislative device designed to penalize auto makers for not manufacturing and marketing electric vehicles—as well as from occasional vehicle sales to well-heeled green energy enthusiasts.  Thanks to the active support of the federal government, as well as favorable media attention, and particularly the result of Mr. Musk’s most effective public relations campaign, its stock price soared over the past five years from its 2010 IPO opening price of $10 to over $200 per share.

To date Tesla has performed spectacularly.  How a company which never produced a commercially viable vehicle, nor earned an actual profit, propelled itself into the automotive forefront is a tribute to inspired promotion.  Most certainly government, with its granting of credits and preferences, is the key to Tesla’s achievement, though  it’s uncertain when that assistance may end.  Non-emission vehicles have joined the list with other government-subsidized programs, and quasi-governmental operations can drag on unprofitably for years, subject only to political considerations.

A final thought: To survive, Tesla Motors must, at some point, market a vehicle which actually generates a profit.  It can only exist on PR hype and anti-fossil obsession for so long.  It must produce a saleable product before the public loses its fascination.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

 

 

   

 

NASA'S RED DREAM

Word just released is that data collected on two astronauts currently halfway through a yearlong mission on the International Space Station will assist NASA scientists preparing for a proposed manned mission to Mars.  The likelihood that water may exist on the planet—and thus the possibility of life forms—is the impetus behind this most recent effort.  It’s this fixation on water which fuels the research enthusiasm.

NASA’s Mars Exploration Program (MEP) is nothing new.  Formed in 1993, MEP employed orbital spacecraft and Mars rovers, as well as countless scientists and technicians, in the search for life on the Red Planet.  To date the efforts have been less than fruitful.   Roughly two-thirds of all spacecraft bound for Mars failed before any observation occurred.

Nonetheless the quest for the origin of life goes on, and there is no bit of trivia too insignificant not to be cited as a basis for renewed endeavor.  Said John Grunsfeld, Associate Administrator of NASA’s Science Mission Directorate: “Our quest on Mars has been to ‘follow the water,’ in our search for life in the universe, and now we have convincing science that validates what we’ve long suspected.”  These sentiments are seconded by Michael Meyer, the lead scientist for MEP, who declared: “It seems that the more we study Mars, the more we learn how life could be supported and where there are resources to support life in the future.”

We have a problem: In addition to water, life also requires sources of energy to survive.  A prevalence of superoxides on Mars makes life at the surface of the planet unlikely, ruling out sunlight.  This relegates any carbon-based life forms to the subsurface, with an energy source of geothermal or chemical.  Whatever forms of life may be encountered will not resemble the creatures from Orson Welles’ War of the Worlds.  Instead, they’ll be primitive and lackluster.

Irrespective of revelations—or lack of them—the odyssey will continue.    If nothing of consequence materializes, something will be conjured up and exploited, for as with any government program, perpetuation is the primary aim.  It’s just such a project as this which bolsters NASA’s 2015 budget of $17.4 billion.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

 

WELCOME TO A PERPETUAL DEPRESSED ECONOMY

On 10/2/15, the U.S. Bureau of Labor Statistics announced the good news: a national unemployment rate of 5.1%—the lowest since April 2008.  The favorable report didn’t have much time to gather accolades, for on the following day a lead story in the New York Times announced “LACKLUSTER JOBS REPORT RAISES CONCERNS.”

How can it be that unemployment is approaching record lows while reports from credible analysts reveal that the employment market is experiencing “very low levels of job creation and wage growth [which] isn’t budging”?  It’s easily explained.  When it comes to reporting, the numbers thrown about by Labor Department spokesmen bear no relation to reality.  In short, the federal government is faking it.  But why, you ask?  Because a strong economy with a vibrant labor force and low unemployment makes the administration, and all its departments, look good.  It’s as basic as that.

How’s it done?  It’s a matter of manipulating the numbers.  Unemployment is reportable in a variety of ways.  The government category, known as U3, lists only persons without a job who have actively looked for work during the prior four weeks   This is how they create the 5.1% rate.  A realistic method would actually count employable people without full-time work.  But instead they ignore those who’ve been vainly searching for employment for months, as well as others that have simply given up looking.  If all such jobless, or marginally employed persons, were to be counted, we’d probably see no less than 20% of the potential workforce without meaningful employment.

What does the future hold?  It’s my belief many of the jobs lost over the past decade or so are gone for good.  In particular, those low-skilled employees whose functions have been replaced by technology or by the export of their occupations to countries which boast slave-wage salaries are becoming essentially unemployable.  Despite the trickery which the Labor Department employs in contriving favorable jobs reports, the truth will eventually become impossible to hide as more and more citizens find themselves without a viable means of support.

 

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

 

 

 

 

 

THE BEST OF INTENTIONS

On 9/25/15, with the banging of General Assembly President Mogens Lykketoft’s gavel, the United Nations embarked on a momentous project.  The representatives of that international body dedicated themselves to a 15-year program titled “Transforming our World.”  The very first of its seventeen goals is “End poverty in all its forms everywhere.”  To implement that, along with the sixteen other equally ambitious proposals, is a call to raise $3.5 to $5.0 trillion each year until 2030.

The items on the to-do list, which include reducing inequality within and among countries, end hunger, and ensure healthy lives for all, are certainly well-intended.  To accomplish any of these feats could be described as miraculous.  And the fact the United Nations possesses not even a small fraction of the funds called for makes it all the more challenging.  How will they raise the money?  Can programs be coordinated within each country?  Will the dollars flow so not to be confiscated by the bureaucracies?

Merely ending poverty everywhere raises questions which are answered with a few statistics.  In this world some 3 billion persons are living on no more than $912 annually.  The U.S. upper limit of poverty is $24,230 per year for a family of four—or $6,058 per person.  Thus, to bring each of those 3 billion out of poverty—U.S. style—requires $5,146 additional.  $3 billion times $5,146: That amount totals $15.4 trillion.  From day one, ending poverty is over budget by more than $10 trillion per year.

Where, then, does the United States fit into this scenario?  On September 28th, President Obama appeared before the UN to offer a powerful endorsement of the 15-year program to eradicate poverty.  How many dollars will eventually be extracted from the American taxpayer is conjectural, but as with every such noble crusade, money will flow.  Whether the recipients will be the poverty-stricken of the globe is uncertain, but if history repeats itself, most of the loot will end up in the pockets of the world’s demagogues and tyrants.  It’s a sad reality that charitable endeavors are normally badly planned and grotesquely executed.  Rarely do deserving parties share in the largesse.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

WHY LAWS ARE MADE

Do you ever shudder at a law you consider bad and wonder how it came to be?  You’re not alone; this is one of mankind’s perennial questions.  There’s an answer: Laws are enacted to bestow benefits of one sort or another, and invariably the persons who reap the benefits are the ones who enact the laws.  Consider a pair of examples.

Several years ago California enacted Proposition 30, which increased state income tax rates on residents with annual incomes over $250,000.  Currently, a group advocating children’s health proposes the law be amended to impose higher rates for “super-earners” who make more than $2 million.  Although the proponents hope to have a hand in spending the money, it’s unlikely any of them are among the super-earners who’ll pay the tax.

Consider another law just enacted, Senate Bill 358, the “California Fair Pay Act,” which purports to ensure women receive pay comparable to men for doing the same work.  Note that the 1949 California Equal Pay Act, as well as the federal Equal Pay Act of 1963, provides the same guarantees.  Thanks to the effectiveness of current laws, few complaints are heard.  In recent years the California Labor Commissioner received only a handful of complaints: six in 2010, seven in 2011 and eight in 2012.

So why this new law?  It’s that another wrinkle is added to the Labor Code, wherein the employer must “affirmatively demonstrate” how any pay differential is based on work that is “substantially similar.”  These new provisions will make it far easier for claimants to extract favorable settlements from their employers.  And who benefits from this new law?  Consider one of its principal sponsors, Equal Rights Advocates, a San Francisco advocacy group, which derives income by representing women claiming to be underpaid by their employers.  As litigation had dried up, something had to be done to spur business; SB 358 fills the bill.

Criticism of the imperfect workings of the law is as old as civilization itself, with examples found both in Shakespeare’s Hamlet and Dickens’ Oliver Twist.  However, a most poignant observation on the subject may be attributed to German Chancellor Otto von Bismarck, who said: “Laws are like sausages.  You should never see them made.”

 

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

 

 

 

 

 

 

 

 

 

 

 

 

 

WELLNESS: THE FINANCIAL COMPONENT

It’s pretty well established that physical health and mental wellbeing are closely interwoven, with estimates that as many as half the ailments from which we suffer are psychosomatic.  What is less recognized is that a primary cause of mental anguish is financial.  Is it unreasonable to expect that bill collectors beating on the door cause migraine headaches . . . and God knows what else?

Just as physical and mental wellbeing do not come without active pursuit, neither does financial health.  The person, whose MasterCard borrowing consistently approaches the credit limit while incurring massive interest charges through minimum payments, is inviting a case of ulcers.  Similarly, a need to sport the latest model BMW on a budget that justifies nothing more expensive than a 2010 Toyota Corolla, will guarantee perpetual stress, with all the accompanying symptoms. 

With that said, keep your step brisk and your smile broad by adhering to the following rules:

●You purchase nothing by credit card that cannot be paid in full at month’s end, without interest payments.

●Your trusted financial advisor is the face that smiles back at you each morning from the looking glass.

●Your only automotive vehicles are owned outright, with no borrowing of any sort.

●You do not go into hock to finance the education of your offspring.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

OUTLAWING ADDICTION

The reformers are hard at work.  One of the measures just approved by the California State Senate will raise the age for buying tobacco products to 21.  There’s no denying that tobacco is a harmful substance, and it’s equally true that as persons age they’re less likely to begin the smoking habit.  If these were the only factors, the rule might make sense, but as with most well-meaning but overbearing edicts, human nature is ignored.

Why a sixteen-year-old smokes can mostly be explained in sociological terms.  As a two-pack-a-day teenage smoker, I still recall the need that my cigarette filled.  It provided me with the confidence, sophistication and maturity which I otherwise lacked.  It never concerned me that every package I purchased was in violation of some law.  Likewise, no amount of lecturing or horror stories would have caused me to swear off.  Only when my psyche no longer needed what my weed provided, would I end the habit.  Luckily, that time arrived.  With a bit of revelation I came to terms with reality shortly after turning nineteen.  I needed neither counseling nor a phasing out period.  I quit cold turkey.

When it comes to abiding by oppressive regulations, I doubt young people today are much different than we were.  Most certainly, increasing the age at which cigarettes may be purchased from 18 to 21 will not induce a twenty-year-old addict to stop smoking.  What it more likely will do is simply reinforce the anti-law-abiding attitude that more and more afflicts our society.  It has been said, and rightly so, that the enactment of unenforceable laws do little more than increase the number of lawbreakers. 

A final thought: I don’t fault our state legislators for enacting inane legislation.  In most cases they’re merely responding to the demands of an inane constituency.  This, of course, explains why the statute books are filled with the many senseless laws with which we’re plagued.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

ANOTHER VIEW OF ALZHEIMER'S

The latest research report from the National Institutes of Health reveals that being overweight or obese at age fifty increases the risk that a person may develop Alzheimer’s disease in later years.  They’ve concluded that more midlife pounds translate to an earlier onset of the disease.

You may be certain that the research which went into this finding did not come cheaply.  You may be equally certain that the follow-up studies, which will survey hundreds of thousands of participants over a period of decades, while scrutinizing every aspect of human existence, will eventually run into the billions of dollars.  Fortunately, donations from nonprofit foundations together with government grants will ensure this vital program is fully funded.  You should understand that had the study encompassed such parochial matters as dementia or senility, it would never have gotten off the ground.  However, the magic word Alzheimer’s guarantees an unlimited budget.

In an analysis I conducted several years ago, I suggested that one possible cause of dementia might result from long-term deprivation of oxygen to the brain.  If this is the case, then middle-age weight gain can well be a factor.  As the body adds fat, two things happen.  First, the individual slows down, so that the circulatory system pumps less oxygen-carrying blood to all parts of the body.  Secondly, the accumulating fat is not restricted to the body’s mid-section; it also lines the walls of the blood vessels, specifically the two carotid arteries which transmit blood to the brain.  The effect of both actions: a long-term reduction of oxygen to the brain, accompanied by increased symptoms of Alzheimer’s disease.

 

Is it possible the research studies to be undertaken might focus on the simple effect I’ve postulated?  Not a chance!  To conclude that so simple a factor as I’ve proposed could be accurate would destroy an entire research industry—and disrupt the cascade of dollars which then flow to the thousands of deserving beneficiaries.  No, the studies to be conducted will be as complex and imponderable as can be devised.  And the ultimate findings will merely raise further questions which can then be addressed only by further research . . . ad infinitum . . .ad infinitum.

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/

COLLEGE ON THE CHEAP

With the 2016 elections in full swing, it’s time for the candidates to propose the traditional raids on the federal treasury.  In emulation of Franklin Roosevelt’s 1936 New Deal, Lyndon Johnson’s 1964 Medicaid and George Bush’s 2004 Part D Medicare, the Democratic presidential frontrunner Hillary Clinton advocates a $350 billion 10-year plan to make college education more affordable.

It’s true that attaining a college degree can cost a fortune.  Room, board, fees and tuition at Northwestern University in Evanston, Illinois, now runs $62,500 per year.  If you prefer Duke U, Durham, N.C., plan to fork out $67,650.  And for this, after four years, you get a diploma which may or may not entitle you to a job.  Richard Vedder, an Ohio University economist and expert on college costs declared: “Colleges and universities may be the least cost-effective institutions in the United States.”

So what will throwing another $350 billion at the schools accomplish?  If history is any guide, colleges will simply raise tuition costs.  There’s nothing unusual about this; the third-payer system in effect in health care over the years is further evidence that as the money supply increases, the cost of the service goes up to match it.

As with most financial problems, the solution is not to be found in a government program. It’s the individual whose money is at stake that must craft the remedy.  In this case, a suitable method is already available.  The student does not attend an overpriced ivory tower.  While living at home, spend your freshman and sophomore years at a local community college; as a junior and senior attend a convenient state university.  Summer jobs may generate enough money that, by living on the cheap, you can avoid student loans, for going into debt is a killer. 

You’ll be told a degree not earned at an exalted university is inferior and stigmatizes the recipient.  That’s bunk!  For the motivated student, the route I suggest provides as fine an education as four years at Harvard or Princeton.  Scholastic benefit is dependent upon the student’s effort, not the credentials of the faculty or the attractiveness of the campus.  Without a doubt, spending a bundle you don’t have on an expensive school makes as little sense as “Zero to sixty in three seconds.”

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 In addition to this Straight Talk by Al Jacobs, I’m now generating a monthly Financial Newsletter.  It normally appears the first of each month and may be viewed on my website.  Click onto http://www.onthemoneytrail.net/