News

iPhone 6 and Apple Stock

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I wasn’t going to write this post, but I’ve gotten just enough emails and messages on the subject of what the new iPhone 6 and iPhone 6 Plus means for Apple stock that I thought I’d post some quick thoughts for readers here. First, the old saying in investing is to buy the rumor and sell the news. As with all Wall Street wisdom, this is a gross oversimplification and only partially true. However, consider that the time to buy the POTENTIAL of the new iPhone and Apple Watch was BEFORE the big event. The risk, of course, was that if the information was disappointing, the stock would have likely taken a  downturn. As it was, people, and analysts, seemed pleased with what they saw, and the stock has already reacted positively. What this means, is that if you wanted to invest for the short-term based on the fact that felt Apple’s new technology would be good, you are too late. Now, if you are looking to invest in Apple NOW, for the short-term, your investment will depend on: a) How well the products are received by the real consumer. – Potential risks here involve a new “antenna-gate” type of …

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Cost of Raising a Child

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Every year, the United States Department of Agriculture publishes a report about how much it costs to raise a child until age 18 in America. Of course, the information is only an average, and even then, to make any sort of calculation, a lot of assumptions have to be made. After all, raising a child is a very personal experience and the cost varies a lot based on the choices you make, not to mention variations based on where you live. It obviously takes a lot of time to compile all the necessary data, so the report with numbers for 2013, was just released here in fall of 2014. You can find the full-report, or cute graphics containing the official report’s details at the USDA’s website. Raising A Child Costs Money It’s no surprise to any parent that kids can be expensive. Of course, there is food and clothing. Then, there is education, insurance, school supplies, birthday parties, and so on and so on. So, how much does it cost to raise a child from birth to 18? The report breaks out various categories, but the quick version is this: Urban West $261,330 Urban Midwest $240,570 Urban Northeast $282,480 Urban …

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Second Quarter GDP Stays Good

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We’ve talked a bit about the economic numbers that came out this summer. In large part this is because the economy is in a transition period. After a seemingly unending drift (upward, but drifting nonetheless), the economy might, MIGHT, finally be sputtering to life. However, economic numbers can be tricky. Earlier this year, the GDP numbers unexpectedly showed a major contraction. Most analysts dismissed this as an abberition due to the harsh weather experienced in the Northeast during the first quarter. At the half way point of the year, the economy looked like it was at least heading in the right direction. When the second quarter numbers came out, they were pretty good, but there was fear that the revisions might not be so pleasant. Revised Second Quarter GDP In order to produce numbers for each quarter without a significant delay, economic reports are released based upon preliminary data. It is accepted that these numbers are likely to be revised later as economic figures that aren’t as readily available come in. Typically, the adjustments to numbers like the GDP are relatively small. Big adjustments are unusual and come with lengthy explanations about what went wrong. The final numbers are issued …

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U.S. Economy Update

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It seems that there is a never ending stream of economic data coming from all directions. Actually, that is true. However, it usually isn’t as dynamic as it has recently been. Typically, the economy moves in one direction, at one speed for a certain period and then adjusts and moves in a mostly predictable manner yet again. However, with the U.S. economy still recovering slowly from the Great Recession, things seem to be a little more erratic. The latest economic data, released Wednesday, suggests a big bounce back from the surprising decline from earlier this year. If you remember, the beginning of the year, a major weather system in the northeast knocked the economic recovery off track, and led to a mixed mid-year review of the American economy. While every major economist at the time considered the dip to be a temporary phenomenon, things got even trickier when the already down news was revised further downward. The latest data suggest that the recovery is back on track for this year, at least. The U.S. economy grew at an annual pace of 4 percent in the second quarter. (There is a misconception that this means the economy actual grew the full …

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Why Raising Minimum Wage Doesn’t Hurt Anything

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Minimum Wage Worker

Recently, several news outlets reported that Vermont is raising its minimum wage and will now become the state with the highest minimum wage in the nation. Seattle is looking to raise its minimum wage to nearly $15 per hour. Before these events dozens of states and cities had already raised their minimum wage above the federal minimum wage of  $7.25 per hour. The Colorado minimum wage is now $8.00 per hour and $4.98 per hour for “tipped” employees. This wage is indexed for inflation, so it will continue to rise as the economy expands. As is often the case, before any of these increases, opponents predicted doom, massive layoffs and closing businesses. In the case of various cities raising their minimum wage higher than the rest of the state, many opponent experts claimed that businesses would flee the cities raising wages. None of that ever happened. Why Higher Minimum Wage Doesn’t Affect Businesses The argument against minimum wage goes something like this: Businesses will flee to areas with lower minimum wages Businesses will fire workers or cut employee hours Businesses will raise prices The economy will suffer The fact is, however, that after all of these states and cities raised the minimum …

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Fastest Growth in America

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The government puts out all kinds of information in various reports that are published throughout the year. Some of that information is carefully followed and dissected, such as unemployment numbers and economic reports. Others are completely ignored. But, the best ones are the reports that some reporter sees and concocts a grabbing headline around. Is North Dakota Really the Fastest Growing? The fun with headlines not withstanding, the biggest issue with many news reports about government numbers is that they provide so little context, to a readership that already has such a weak grasp on the math itself. The latest “big news” is that North Dakota has the fastest growing county in the U.S. by population. The key piece of information is that this statistic is not only by population, but also by percentage. For those of you with a firm grasp on the mathematics of statistics, and percentages in general, it comes as no surprise that the biggest percentage gains come the easiest from the lowest starting values. In other words, if you put a turtle in a shopping cart, you can increase his average speed by 1000 percent. If you change the top speed of a race car …

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What Are Expected Earnings?

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It’s earnings season again, and interest in running high in many companies including technology giants like Amazon, Apple, Facebook, and so on. With each earnings report, there is typically commentary noting how the company’s actual reported earnings ended up comparing to the expected earnings. This phrasing comes up so often, that most investors are used to the terminology long before they actually make any investments, but it is useful to understand just what expected earnings are, and who it is that generates those estimates. How Companies Report Earnings Publicly traded companies are required to issue financial reports about their company on a regular basis. These earnings reports are generated and published each quarter. In addition, companies generate an annual financial report, which typically accompanies the fourth quarter earnings report. There are very specific rules that govern when and how a company can disclose “material information.” A company’s financial information is most definately material. The basic rule is that companies may not make any disclosure of material information without doing so publicly. Just what counts as public has evolved slowly over the last few years, but the basic point is that all investors must get the same information at the same …

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Stock Market Records Is It Time to Buy

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Nothing gets the financial press in tizzy quite like a run of “up days” for the stock market. And, nothing gets the mainstream media interested in the financial media’s excitement like a new RECORD! Dow Jones Record High The Dow Jones Industrial Average has notched some record high closes lately. The S&P 500 Index isn’t far behind, within striking distance of its record high as well. So, what do these new stock market records mean for smart investors? First, the recent stock market records are a lesson to be learned for long-term investors such as retirement investors. When the market looked terrifying in  2008 many people sold off stocks in their 401k plans and other retirement savings, often after much of the damage had already been done. That was a foolish strategy then, but now, five years later, those investors are officially the fools. You were better off to have just stayed put. Harsh? Maybe, but if you are investing for retirement or other long-term horizons, this is a critical lesson to learn. In a recent discussion someone said to me that he was sure he did better by getting out when things were bad and getting back in now …

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Finance Gourmet iPad WordPress App

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Did you know that there is a WordPress app for the iPad? I didn’t. While it doesn’t look like I’ll be able to type fast enough to write long personal finance advice blog posts, it does look like a handy little tool for keeping an eye on things and making smaller updates. Well, I guess this is a successful test of a new finance blog tool.

Why Facebook Doesn’t Count as Public Disclosure

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Reed Hastings’ post on Facebook does not count as public disclosure according to the SEC. The agency sent a notice to Hastings and Facebook to that effect soon after the post. Since then, Hastings’ defense has centered around the contention that the information was not material. No claim that a Facebook post is public has been made. Facebook Is Not Public Disclosure Regulation FD requires that publicly traded companies disclose all material information publicly. It prevents the practice of selectively telling Wall Street analysts or other people news about the company. While the technology community thinks otherwise, the SEC does not consider a post on Facebook as public for this purpose. The SEC published guidance in 2008 regarding the disclosure of material information online by publicly traded companies. A central tenet of that piece was that the company must make it clear that is does, and will, publish such information online. In addition, the company must make it clear WHERE such information will be published. Finally, investors must EXPECT that material information will be posted in such a location. Since 2008, most publicly traded companies have gone on to include in their traditional printed materials a notice stating that the …

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