THE FUTURE OF SELF-DRIVING CARS

Despite the injurious rules and regulations laid down by this nation’s most populous state, the self-driving car is here to stay.  A most recent attempt by Uber Technologies Inc. to conduct operational tests of 16 self-driving Volvos on the streets of San Francisco was halted by California’s Department of Motor Vehicles when, on December 21, they revoked their permit issued a week earlier on a pretext relating to the definition of “autonomous.”  However, within twenty-four hours the vehicles were en route to Arizona, where Governor Doug Ducey welcomed Uber’s planned testing program and criticized California for its “burdensome” laws.

It’s understandable why driverless vehicles incur government hostility in areas where they threaten politically powerful groups, in this case the Teamsters Union and lobbyists representing firms which profit from the employment of drivers.  A standard response to innovations of this sort has always been through regulatory machinations of one sort or another, which makes the planned enterprise technically or economically infeasible.  I recall seeing articles from the early twentieth century where local ordinances prohibited a motor vehicle from driving on a road unless it was preceded by a person walking ahead of it waving a red lantern.  As you might guess, these rules were instigated by the then influential horse industry which didn’t want competition.

Let me bring you up to date on the development and progress of what’s known as the autonomous car.  Thus far four states enacted laws permitting operation and testing of such vehicles on public roads.  Nevada’s went into effect in 2012, with the first license issued to a Toyota Prius.  Florida became second, California third, and finally Michigan in December 2013.  In May 2014, Google presented their concept for a fully functioning prototype, with neither steering wheels nor pedals, and plans to offer these cars to the public in 2020.  A spokesman announced in June 2015 their testing teams drove over one million miles, essentially driverless, with no serious hazardous events.

A final thought: Although I welcome the concept of the driverless car, I’m fearful America may find itself with a massive unemployment it cannot sustain.  I realize in the past that technology solved the problem of job loss; I’m not so confident our economy is capable of withstanding this particular “advancement.”

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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.roadwaytoprosperity.com/

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ALL HAIL THE FEDERAL RESERVE

The article’s headline asks the pertinent question: “What does the Fed rate increase mean to you?”  From this point on it’s anyone’s guess as to its significance for each of us.  In case you’re not aware, on December 13, 2016, the Federal Reserve boosted the key interest rate by a modest 0.25%—the first increase since December 2015, which was itself the first in a full decade.  This 25-basis point hike now puts the federal funds target rate between 0.05% and 0.75%.  With the official U.S. unemployment rate toying at 5% for more than a year, the Fed held off hiking rates on the fear such action would spur an undesirable inflation.  But now, with Fed Chair Janet Yellen’s hint that several 2017 rate increases may be in the offing, it appears rising interest rates are off and running.

I’ll now repeat the question—what does it mean to you?  The answer is not an easy one; it depends upon who you are and where you fit into the economic structure.  Let’s presume you’re a typical consumer who makes purchases on your credit card and carries over a balance from month to month.  If the 2015 rate increase is any guide, you’ll soon find an additional quarter percent increase tacked onto your payments.  Before we leave this topic, let me suggest you pay the full unpaid balance on your credit card each month so you’re charged no interest.  That’s the way to go.

For you homeowners with a mortgage, if your loan has an adjustable rate, an increase in both rate and payments are in store for you.  And if Ms. Yellen’s avowed future increases come to pass, you might check in to see if a change to a fixed rate loan is possible while rates are still at near-historic lows.  I can only wish you good luck.

Finally, did I come across someone with an interest-bearing money market account, or—horrors!—a bank savings account?  To you I can only offer condolences.  Sorry, but a rate increase won’t help you.  The financial institutions discovered some years ago the average depositors needn’t be compensated in any way.  After all, where else can they put their dollar bills?  It’s for this reason your Chase Bank savings account pays one-hundredth of one percent per annum, with most of the others not much better.

A final thought: On average, things aren’t so bad for most of us.  With interest rates well below those of the past, we can live life a little more cheaply and a little less frantically.  So, enjoy while you can.

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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.roadwaytoprosperity.com/

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A RETURN TO INVESTMENT BASICS

Over the past many years I’ve reviewed the articles and tuned into the presentations offered by the investment experts.  Though there was once a time when such advice by the professionals varied, those days are long behind us.  With few exceptions, the only recommendation you’ll now receive from the nation’s anointed financial planers is uniformly consistent.  The recommendation:  (1) Select a fiduciary as your advisor to whom you’ll deliver your assets.  (2) The advisor will select a portfolio of mutual and/or exchange traded funds into which your assets will be placed.  (3) You’ll take no active interest in your account, but rather count upon the rise in the market over time to guarantee a prosperous future.  (4) As your net worth rises and falls with the vagaries of the market, you will remain invested in this manner until your retirement.

Imagine my surprise this week when I stumbled upon an article suggesting a different method for long term investment.  The author is Arielle O’Shea, an investing writer for NerdWallet, who has been writing about personal finance for more than a decade.  In response to a query on how a $10,000 windfall might be profitably invested, she offered the following comments:  “Maybe you want to invest in stocks.  Go for it.  Set aside a small chunk of money to play the market.  Stock buying requires researching stocks—if you’re going to own a piece of a company, you want to know what you’re getting into.  So make sure you’re up to the task.”

I approve of Ms. O’Shea’s suggestion.  This is the method I chose some years ago when I took charge of a trust portfolio, which I then operated successfully for 21¾ years.  I selected companies in healthy industries with a history of stable or increasing earnings, a generous portion regularly passed on as dividends.  I preferred companies with reasonably low price-earnings (P-E) ratios, and reviewed the portfolio every several months so to dispose of those no longer meeting the criteria.  The system worked well, in that both dividend income and asset value increased handsomely over time.  Though aspects of the market have changed over the years, I believe specific stock choice is still the best approach.

A final thought: If you’re reasonably astute and organized, you’ll find no better handler of your financial affairs than yourself.  No one else will match your interest in your own well-being.  Investment concepts can be learned and with trial and error you’ll soon get the hang of it.

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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.roadwaytoprosperity.com/

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GOOD HEALTH FOR THE TAKING

The full page presentation titled “refresh your memory,” with a striking view of a sliced pomegranate, looked so impressive, I didn’t realize at first glance it was an advertisement.  Even so, the opening sentence, emblazoned in red, couldn’t help but draw my attention: “Learn about this preliminary research on pomegranate polyphenol antioxidants and memory and cognition.”  The message thereafter referred to research suggesting the beneficial effects of “increased verbal memory performance and increased functional brain activity . . . on a group of older adults with age-related memory complaints.” 

Let’s change subjects a bit.  On the matter of beverages, I happen to enjoy the tart flavor of unsweetened cranberry juice and drink it regularly.  I admit being drawn to it when I learned, at least a half century ago, it could be beneficial in combating urinary tract infection.  It has only recently been revealed that cranberry juice has no such preventive qualities whatever.  Apparently the implication of its benefits can be credited to the cranberry industry and the wily advertising agency they employed.

I’ll now go back many decades to my birth state, Wisconsin, known as America’s Dairyland.  Not only did the billboards read “Every body should drink a quart of milk daily,” but the slogan became sponsored by the state  . . . thanks, presumably, to successful lobbying by the powerful dairy industry.  Though we’re now aware of the cardiovascular problems such a regimen causes, I suspect that line sold a lot of milk.

So where does this pomegranate ad fit into the picture?  I’ve reviewed it word for word to see if it makes any blatantly deceptive claims as to the implied curative powers.  Although it suggests the ingredients “are known to help combat unstable molecules that can cause damage to your body,” it follows up with “These are early scientific findings on cognitive health . . . not yet adequately studied.”  Evidently the pomegranate industry is making certain there are no representations which might lead to a successful lawsuit claiming fraudulent advertisement.  The words, chosen skillfully, should sell the fruit.

A final thought: You may expect to see more and more such craftily phrased pitches for any number of products.  Though the day of the snake oil salesman is long past, he’s been replaced by a far more convincing team of researchers and linguists.   To avoid being taken advantage of, you must investigate each offering closely.

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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.roadwaytoprosperity.com/

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