A Kinder, Gentler America

We’ve been through some tough years and many folks are still struggling. While recently we’ve seen signs of economic improvement and a decrease in unemployment, increased gas prices and little movement in home real estate values may still be weighing heavy on our minds.


So with this post we’re focusing on positive stories in the news lately. Some of these issues are highly controversial, but even in the wake of great debate, we should recognize the potential for what’s good and what’s possible.


Random Acts of Corporate Compassion

Corporations tend to give away money – at least partly for the tax deduction, but it’s appreciated nonetheless. And, most of the time, they’ll admit when they’ve made a mistake and compensate customers or shareholders in kind. So I enjoyed reading this news story about a compassionate clerk who works for bankrupt American Airlines. She realized a frequent flyer businessman would miss his flight – albeit by and large through his own fault. Regardless, she did some quick thinking to expedite his route to the boarding gate under the radar so as not to upset other customers. You can read about it here:


[CLICK HERE to read, “Is Kindness a Strategy?” at Harvard Business Review, March 22, 2012.]


Sure, her methods may be suspect, but her heart was in the right place. That might be something you could say about a lot of what’s going on in America today. Both the government and large corporations appear to be trying to balance the scales between helping people and still making a profit.


Take, for instance, Bank of America’s pilot plan to help curb the sting of foreclosure by renting houses back to their previous owners. On one hand, it may be aggravating to be a homeowner in this situation. But on the other hand – logistically – avoiding the expense of having to move, providing stability for a family to stay in its home, and the advantage of paying less each month than the previous monthly mortgage … that’s got to be worth something.


[CLICK HERE to read, “BofA Tests an Option to Foreclosure,” at The Wall Street Journal, March 22, 2012.]


Now let’s consider the greatly debated Patient Protection and Affordable Care Act (PPACA)–. The article below points out some interesting improvements underway regardless of whether or not the Act is repealed.


“This is probably the most transformative period I’ve lived through,” says Dr. David Longworth, chairman of the Medicine Institute at Ohio’s Cleveland Clinic. He was referring to the number of insurers, hospitals, and doctors forming alliances and adopting new procedures to provide higher quality care and reign in exploding health care costs. According to the chief clinical officer at insurer UnitedHealthcare, “This changes the business model, changes the reward and payment system for better care and better health at lower cost.”


Granted, for every pro-PPACA article there’s a scathing repudiation, but for now we’re seeking examples of what good can come from what’s generally considered bad – in this case, exploding health care costs. Indeed, if insurers are working with medical providers to bring costs down in the spirit of the current law, well that’s a good thing, right?


[CLICK HERE to read the article, “Obamacare Has Already Transformed U.S. Health Care” at, March 22, 2012.]


And finally, even the IRS is doing its part to become a kinder, gentler government entity. It recently announced penalty relief for qualifying taxpayers through its Fresh Start plan. This latest announcement on the heels of our depressed economy does give one pause to ask, will wonders never cease?


[CLICK HERE to read the article, “IRS cuts penalties; but don’t forget the forms,” at, March 13, 2012.]


Please contact us if you’d like to discuss ways to make the most of your money in 2012.




What Inflation Feels Like

If you exclude gas prices, recent data from the Labor Department reveal that inflation isn’t exactly taking off. In fact, food prices were unchanged for the first time in 19 months. The Labor Department reported that the Consumer Price Index rose 0.4% in February after advancing 0.2% in January. Gasoline accounted for more than 80% of the rise.


But because driving is such a pervasive part of American culture, we can’t ignore the impact higher gas prices have on our personal budget. This is one reason why consumer sentiment sunk lower in mid-March. Against expectations of a small increase, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 74.3 from 75.3 last month. That’s the lowest level thus far this year.


According to Bernard Baumohl, chief global economist at the Economic Outlook Group, gas prices play havoc on consumer sentiment more so than other inflationary signs. “Less than 5% of take-home pay actually goes to paying for gasoline,” Baumohl pointed out in a recent interview with Knowledge@Wharton, “But gasoline prices have a much greater psychological impact on consumers because they see on a daily basis how much the price of gasoline goes up. It’s advertised on so many signs.” The uptick in prices thus has a “palpable impact” on consumers.


[CLICK HERE to read the article, “Consumer Sentiment in U.S. Drops on Gasoline Prices: Economy” at, March 16, 2012.]


[CLICK HERE to read the article, “Beyond the Gas Price Blame Game, a Thorny Case of Supply vs. Demand,” at Knowledge@Wharton, March 14, 2012.]


Was Last Year Really That Bad?

The American Institute of Economic Research (AIER) recently published findings about inflation that may strike closer to home. The entity claims that annual inflation numbers appear more contained due to the impact that technology and globalization have on big-ticket items.


For example, the average inflation rate for 2011 was 3.02%.[1] However, check out the 2011 price increase of some of the every day items we spend money on, courtesy of AIER’s Everyday Price Index (EPI):


·          Ice cream, 9.0%

·          Peanut butter, 27%

·          Beef, 18%

·          Coffee, 19%

·          Video rentals, 15%


Somehow, while we notice we’re paying those higher prices in the grocery store, they don’t aggravate us quite as much as a twenty-cent increase in gas prices.


[CLICK HERE to read, “The EPI Reflects Basic Economic Change” at, March 1, 2012.]


On one hand, we don’t want to pay higher prices at the supermarket and gas pump, because that digs into our already strained household budget. But on a larger scale, we want to promote economic growth – which is why the Federal Reserve Board is keeping base interest rates so low – to help fuel new jobs in the country. Higher prices can at times be highly annoying and inconvenient, but in moderation it’s a good thing.


[CLICK HERE to read, “Gasoline lifts U.S. inflation, dents confidence” at Reuters, March 16, 2012.]


[CLICK HERE to check out an upcoming series of lectures by Fed Chairman Bernanke about the Federal Reserve and the Financial Crisis. You can find out more and access links to the live video at The live lectures are scheduled for 12:45 p.m. ET on March 20, 22, 27, and 29th, with transcripts and video recordings available later.]


The Federal Reserve has observed that the recent spike in oil prices will likely push up inflation – but only temporarily. As such, it predicts that inflation is likely to run at or below its 2% target over the “medium-term.”


Please contact us if you’d like to discuss ways to make the most of your money in 2012.




[1] Bureau of Labor Statistics, 2012.


The Scoop on Rising Oil Prices

Fidelity Investments is taking a positive view of the recent rise in oil prices – saying it’s due to the economic recovery. In recent years, soaring gas prices have often been blamed on rising military conflict in oil-rich nations in the Middle East. But according to Fidelity, recent activity indicates that the current oil rally has more to do with a global economic recovery.


Apparently, global dependence on oil has spurred innovation in new oil production techniques in the United States. In fact, these unconventional technologies (such as fracking) have helped the U.S. become the lowest-cost provider of oil and natural gas in the world, for the first time in 40 years.


[CLICK HERE to read the article, “What’s driving oil prices up?” at Fidelity Viewpoints, March 2, 2012.]


[CLICK HERE to view the video, “Dow CEO: U.S. can be an energy exporter,” at, March 2012.]


Other experts are keeping a closer eye on military turmoil, nonetheless. While there’s recently been an oil embargo on exports from Iran by Western nations, the general opinion is that this is unlikely to have a significant impact on price since other nations, such as China, are lined up to buy Iranian oil. However, since Iran sits on the most globally strategic supply route for oil supply (the Straits of Hormuz in the Persian Gulf), the threat of military conflict remains a huge issue.


[CLICK HERE to read, “Oil and Gasoline Prices Rise Again: How High and How Long?” at Advisor Perspectives, March 8, 2012.]


[CLICK HERE to read the report, “Oil Market Dynamics and the Fear Factor” at CME Group, March 2, 2012.]


Gas Taxes

As if rising oil prices isn’t enough, a new study reveals that some states could stand to update their gas tax to produce more revenue for state construction projects. The 50-state analysis report, conducted by the Institute on Taxation and Economic Policy, calls for some states to modernize their state gas taxes and peg those taxes to grow with the cost of transportation construction. States that were cited as remiss in updating gas taxes include Virginia, Maryland, New Jersey, Massachusetts, Iowa, Oklahoma, South Carolina and Arizona.


[CLICK HERE to read, “Study Sees State Gas Tax Rate Go Down 20%,” at, February 26, 2012.]


For now, it appears we could be in for another few months of more expensive gasoline, but the expectation is that prices will plateau later in the year. Please contact us if you’d like to discuss ways to make the most of your money in 2012.




1 Institute on Taxation and Economic Policy, “Building a Better Gas Tax,” 2012.




Social Media and the IPO World

Facebook, Zynga, Yelp. Words that held no special meaning ten years ago are now daily news headlines. Social media has pervaded nearly every aspect of our society, from the young to the old, from business to consumers, from virtual to mobile – from elementary school students to institutional investors. Currently, social networking is the most popular online activity worldwide.1


More than half of America59%is on a social network.2 In fact, social media is so mainstream that many people have grown tired of it. They check their Facebook wall once or twice a month. They occasionally track blogs and tweets without posting comments. Yet regardless of how active users may be, just by opening an account on a company’s website they become a commodity for that company. And commodities are bought, sold, traded and – as is perfectly demonstrated through the new Facebook IPO – used to set a value for a company’s worth.


Scheduled to hit the sales block in May, Facebook’s proposed public offering values the company at $75 billion to $100 billion. For a start-up founded in 2004 by a college-dropout, that’s a pretty astounding achievement. According to its filing, the social media site boasts 845 million monthly active users who contribute 250 million photo uploads and 2.7 billion comments a day.3


According to a recent article from Wharton, the Facebook IPO will make many of its employees enormously wealthy – and that’s one reason why the IPO may be a tough act to follow. Wharton legal studies and business ethics professor, Kevin Werbach, observed that “It’s difficult to retain employees who have already made millions of dollars on their stock options.” You can read more analysis of the Facebook IPO at the links below.


[CLICK HERE to read the article, “The $100 Billion Facebook Question,” at Knowledge@Wharton Today, February 2, 2012.]


[CLICK HERE to read, “The Ultimate Guide to Facebook’s IPO,” at Bloomberg Businessweek, February 9, 2012.]


[CLICK HERE to view the video, “3 things you don’t know about Facebook,” at, March 2012.]


Zynga is the social gaming developer that hosts “Farmville,” “Cityville,” and “Words with Friends” on Facebook, currently generating 12% of Facebook’s revenues. About 240 million users play a Zynga game at least once a month, a statistic that helped launch its own IPO valued at around $7 billion back in December 2011.4


[CLICK HERE to view the video, “Zynga launching game network,” at, March 2012.]


[CLICK HERE to read, “Zynga Dumps the Training Wheels,” at Bloomberg Businessweek, March 1, 2012.]


Just recently Yelp, an online consumer-reviews site, offered an IPO valued at $900 million. The company’s shares began trading at $15 on Friday, March 2, 2012. The eight-year old global website provides a platform for consumers to share their personal opinions of just about anything, from restaurants and hotels to doctors, churches, high schools and even strip clubs. Yelp attracts 66 million users a month and, by the end of 2011, had posted 25 million personal reviews.5


[CLICK HERE to read, “Yelp soars 66% on first day of trading after IPO,” at USA Today, March 2, 2012.]


[CLICK HERE to view the video, “Yelp IPO soars! Are you kidding me?,” at, March 2, 2012.]


New trends and opportunities hit the market every day. Please contact us if you’d like to discuss suitable alternatives for your financial future.



1 comScore, January 2012.

2 Pew Research, June 16, 2011.

3, February 1, 2012.

4, “Zynga shares close below IPO price,” December 16, 2011.

5 USA Today, “Yelp soars 66% on first day of trading after IPO,” March 2, 2012.





Retirement: The Real Picture

According to a new report from the Employee Benefit Research Institute (EBRI), on average retirees spend about 80% of what working households spend.1 In other words, in retirement you should count only needing about 80% of the annual income that you earn in the decade prior to retiring.

What’s interesting, though, is that you’re more likely to spend more than that 80% during the first phase of retirement, and less than 80% in the latter years. The early years of retirement tend to be the most expensive because new retirees are healthier and more mobile. While daily transportation expenses may decline since you’re no longer commuting to work, you may have increased expenses if you plan on extensive travel. According to the EBRI study, spending on things like vacations and entertainment tend to be higher for younger retirees. 1

[CLICK HERE to read “Are you saving too much for retirement?” at; November 30, 2011.]

[CLICK HERE to read the report, “Expenditure Patterns of Older Americans, 2001-2009,” from Employee Benefit Research Institute, February 2012.]

As you get older, your spending habits will change. For example, early on, most retirees spend about 9%-11% of their income on health care. But once they get around age 85, that percentage increases to about 18%.1 While your health care expenditures may increase, spending on entertainment, transportation, and even clothes and food will likely decrease. Consider these numbers1:

·         The average household headed by someone age 45 to 54 spends 57,788 a year

·         Average expenditures for the 55-to-64 age group are $50,900

·         From age 65 to 75: $41,434

·         Households headed by those over 75: $31,529

That means that even if you do need 80% or more of your working income in your first years of retirement, it’s not likely you’ll need that forever.

Tips for Saving

General wisdom says you should start planning for your retirement when you get your first job and can participate in a 401(k) plan. However, as you get older, you have to ramp up those plans and efforts. The article below from US News & World Report gives you a step-by-step roadmap to follow to properly plan for retirement needs at appropriate times in your life.

[CLICK HERE to read the article, “10 Important Ages for Retirement Planning,” at US News & World Report, February 21, 2012.]

Saving for retirement isn’t easy. One way financial theorist/psychologist Daniel Goldstein advocates staying motivated is by taking a look at your future self. Not just in terms of what you’ll own and be able to do, but also at what you will physically look like. In a published paper, he tested levels of commitment to retirement savings goals by showing participants interactive pictures of themselves that had been aged by 20 or 30 years. Apparently, actually seeing what you may look like as a senior can be very motivating.

If you own an iPhone, iPod touch, or iPad, you can try out this exercise for yourself with an app from AgingBooth. Check it out at the link below.

[CLICK HERE to read the article, “Retirement tips: Here’s how to save more now,”, February 21, 2012.]

[CLICK HERE to download, “AgingBooth,” at PiVi and Co. ($0.99), February 2012.]

Give us a call for help finding ways to both get motivated and plan for your different phases of retirement.


1 Employee Benefit Research Institute, “Expenditure Patterns of Older Americans, 2001-2009,” February 2012.



Follow the Money? How About Follow the Jobs.

Why is the job market recovery so slow?


We know why real estate values remain low: Potential homebuyers can’t commit to buying a house when they’re out of work or afraid they might get laid off.  And then there are workers whose salary increases have been frozen for a couple of years now, or those with a personal debt-to-income ratio that prevents them from qualifying for a new mortgage. There are even people who are gainfully employed but can’t wait to quit their job as soon as some better ones come on to the market. On that front, Pew Research reports that 49% of adults ages 18 to 34 say they have taken a job they didn’t want because of economic conditions.1  Simply stated, there are lots of reasons few people want to buy a home now regardless of how low mortgage rates go or how many tax incentives are offered.


But the job market – what’s its excuse? We’ve heard so much about how companies have reigned in expenses, restructured debt, and produced healthy balance sheets with cash flow. So why aren’t they willing to expand and start hiring?


Last year, the McKinsey Global Institute projected the U.S. would experience five years of “jobless recovery” before getting on its feet again. Five years. That kind of makes the phrase “jobless recovery” a bit of an oxymoron, doesn’t it? How can the economy truly recover without jobs? Everything depends on it – consumer spending, the residential real estate market, business growth and expansion and, subsequently, market returns.


In an article published in the March 2012 issue of the Harvard Business Review, the author points out that:


As in a classic market failure, individual firms are not shouldering the true costs of their actions. They benefit from minimizing their own labor costs while society picks up the tab for their lack of investment in human capital: slow economic growth, unemployment, welfare, and so on. Then there’s the tension between short- and long-term objectives: Activities that make sense for individual firms at one end of the value chain right now (for instance, shipping jobs overseas and cutting costs wherever possible) can backfire at the other end. Down the road, the middle class may not be robust enough to create demand, and the workforce may not be trained well enough to drive innovation.



[CLICK HERE to read, “An economy that works: Job creation and America’s future,” at McKinsey and Company, June 2011.]


[CLICK HERE to read, “A Jobs Compact for America’s Future,” at Harvard Business Review, March 2012.]


For the United States to return to full employment, McKinsey predicts the US economy will need to create 21 million jobs by 2020. Fortunately, there is good news. Certain industries are projected to expand over the next few years, and these are where we can expect job growth.

According to Industry Leaders Magazine, about one-third of job hiring companies expect to add new jobs in the next six months. Sectors slated for job growth include the healthcare, finance, information technology, and skilled labor positions in construction and manufacturing industries.


According to Simply Hired’s 2012 U.S. Employment Outlook, metropolitan areas with the highest increases in new jobs include Raleigh/Durham, Birmingham, Norfolk/Newport News, Louisville, Sacramento and Oklahoma City.


[CLICK HERE to read “Some Big Companies Creating New Jobs in 2012: Which Companies?” at Industry Leaders Magazine; December 16, 2011.]


[CLICK HERE to read the report, “U.S. Employment Outlook, January 2012,” from, January, 2012.]


Please give us a call if you’d like to discuss incorporating a “Follow the Jobs” theme into your investment portfolio.



 1 Pew Research Center, “Young, Underemployed and Optimistic,” February 9, 2012.




Taking Stock of U.S. Stocks

You’ll often hear financial advisors say the biggest investment risk is not having enough money accumulated by the time you retire. That’s all well and good, but it’s not really actionable advice. On the cusp of our nation’s recovery, there are strong reasons to view U.S. equities as the key to the future – both in leading economic growth worldwide and in helping each of us meet our retirement goals.

Warren Buffett certainly thinks so. Fortune magazine has published an adaptation of his most recent letter to Berkshire Hathaway shareholders. It offers a fascinating discussion on how the concept of risk is largely misunderstood – and how he views risks when it comes to making investment decisions.

In a provocative statement, Buffett claims that, “Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as ‘safe.’ In truth they are among the most dangerous of assets.”

He goes on to explain that the combination of personal income taxes and the ‘invisible inflation tax’ (not to mention investment expenses) can strip an investor’s return to the point of little to no real purchasing power. Buffett also takes aim at investment in assets that will never produce anything, but rather rely on the hope that someone else will pay more for them in the future. He asserts that fear of currency collapse is what motivates investors to move to sterile assets, such as gold (which he likens to the widespread investment in Tulips in the 17th century).

An outright fan of long-term equity investing, Buffett presents a strong case for productive assets, such as businesses, farms, or real estate. He believes that in the future, the U.S. population will “move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.”

[CLICK HERE to read, “Warren Buffett: Why stocks beat gold and bonds” at; February 9, 2012.]

Dividend Aristocrats

In its “Investment Ideas for 2012,” Morgan Stanley Smith Barney’s Global Investment Committee (GIC) reinforces Buffett’s position with an endorsement of U.S. large cap growth stocks and ‘Dividend Aristocrats.’ These aristocrats are represented in the S&P 500 Dividend Aristocrats Index, comprised of 42 large-cap, blue-chip companies that have raised dividend payouts annually for at least 25 years. According to the latest GIC report, “In a period of record-low money market and bond yields, dividend-paying equities can offer an attractive source of income.”

[CLICK HEREto read Morgan Stanley Smith Barney’s latest “On the Markets” market commentary; February 2012.]

Tech on Track

One sector on track for stable growth in the near term is information technology. SmartMoney recently posted an article offering four reasons why even risk-averse investors may find this sector more stable than other options. One reason: Since many companies have deferred technology investments since the 2008 financial crisis, they’re ready to increase spending now. According to the article, “Technology has become more of a necessity, and companies can only delay investments for so long. That helps make the sector more stable.”

While you’re at the SmartMoney website, check out this fun tool that gives you an at-a-glance, comparison view of sector performance through various visual filters.

[CLICK HERE to read, “Tech Stocks: Safer Than You Think” at; January 30, 2012.]

[CLICK HERE to tool around with the “Map of the Market” at; February 2012.]

If you’re interested in strengthening your U.S. equity allocation for 2012 and beyond, please contact us to schedule a portfolio review and consultation.


*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.



Annuities Anew: New Proposals, More Options

According to a 2011 Retirement Survey from Wells Fargo & Company, 25% of middle class Americans say they will need to work until at least age 80 to live comfortably in retirement.1

With fewer companies offering pensions in this day and age, there is more reliance on money saved through 401(k) plans to provide income during retirement. However, since defined contribution plans didn’t become mainstream until the 1980s, we are only now witnessing the first wave of retirees expected to draw significantly from this type of plan – and it remains to be seen whether they will provide adequately for today’s longer life spans.

Given the ongoing state of our slow economy, we’re approaching somewhat of a crisis with millions of baby boomers standing at the precipice of retirement. As such, policymakers are thinking the employer plans could use a little tweaking to become a more viable – and reliable – source of income.

The U.S. Departments of the Treasury and Labor recently proposed new rules to boost the potential for employer-sponsored plans to last throughout retirement. There are three specific guidelines:

1.   Make it simpler for defined benefit pension plans to offer a combination of lifetime income and a lump sum distribution – or “partial annuitization.” This would allow retirees to maintain a portion of their savings invested should they need an emergency sum, while at the same time convert the balance to an annuity stream of income that may continue paying out as long as they live.

2.    Make it easier for retirees to convert part of their 401(k) plan to purchase an annuity stream of income starting at age 80 or 85. This is called a “Longevity Annuity.” The reason this matters is because, when assured that you’ll have enough money to last throughout your most senior years, you can use your other assets to budget for a shorter period of retirement – with perhaps a more robust lifestyle.

3.   The guidance defines plan and annuity terms designed to automatically protect spousal rights without requiring spousal consent before the annuity begins. To date, how spousal protection rules apply has been unclear when an employee selects a deferred annuity within a 401(k) plan – and this has discouraged plan sponsors from offering annuity options before now.

[CLICK HERE to read the Treasury Fact Sheet, “Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices” from the US Department of Treasury; February 2, 2012.]

There are a wide variety of annuity contracts on the market – and none of them are simple. This is one product where the advice, “do not try this at home” may be prudent. To determine if an annuity is a good fit for your situation, and to figure out which one to choose – whether as part of an employer plan or one you own independently – it’s important to consult with an experienced advisor. Choices include immediate annuities (start paying out right away), fixed annuities (guarantee a fixed interest rate), variable annuities (rely on investment growth over time before paying out), and indexed annuities (earn a percentage of indexed returns with a guaranteed minimum2).

[CLICK HERE to read “Designing a Monthly Paycheck for Retirement;” from the Society of Actuaries; 2012.]

[CLICK HERE to read “Don’t outlive your savings: How annuities can help” at; February 2, 2012.]

If you’re interesting in learning more about how to convert your retirement savings into a reliable stream of lifetime income, please contact us.


1 Wells Fargo; Wells Fargo Retirement Survey, November 16, 2011.

2 Guarantees are based on the claims-paying ability of the issuing insurance company.




A New Era of Manufacturing

 “We bet on American workers and, tonight, the American auto industry is back.”


That’s a quote from President Obama’s State of the Union Address on January 24, an hour+ plus speech that spanned the scope of America’s critical issues. One of the big messages was his support for a renaissance in domestic manufacturing to revitalize job growth. In his address, the President stated that General Motors is back to being the world’s number-one automaker, Chrysler has grown faster in the U.S. than any major car company, and Ford is investing billions in U.S. plants and factories. All told, over the last three years, the domestic auto industry added nearly 160,000 jobs.


[CLICK HERE to read more about manufacturing-related the tax breaks proposed in the President’s address: “Blueprint for an America Built to Last;”; January 24, 2012.]


Industry Recommendations

The Council on Competitiveness recently published a report in support of its U.S.  Competitiveness Initiative that provides a wide range of recommendations and specific measures policymakers can implement to support the revival of U.S. manufacturing in America. The report offers recommendations on how to:


·         Fuel an innovation and production economy with start-up and scale-up initiatives (includes fiscal, tax, and regulatory reforms)

·         Expand U.S. exports and reduce the trade deficit (includes liberalizing trade with select emerging market countries)

·         Harness the power and potential of American talent (includes immigration reform to attract the world’s brightest to the U.S.)

·         Achieve “next-generation” productivity through innovation in manufacturing

·         Create competitive advantage through “next-generation” supply networks and logistics (includes developing a national strategy for reducing energy demand)


[CLICK HERE to read “Make: An American Manufacturing Movement;” a report from The Council on Competitiveness, December 2011.]


Safety Standards Abroad Lacking

In addition to economic growth, there are other reasons to bring manufacturing jobs back to America. Standards for acceptable worker safety practices are reportedly substantially lower – and life threatening – in many other countries. This was underscored by an explosion at a Chinese Apple iPad factory last year that killed four and injured 18. The cause of the blast was aluminum dust – an issue that the U.S. resolved in domestic plants over a century ago. The pressure on major global manufacturers (such as Apple, Dell, Hewlett-Packard, IBM, Motorola, and others) to improve hazardous conditions could make it more expensive to do business in places like China. Meanwhile, many believe those resources would be better served by transferring them to America to create more jobs in a safer, more stringently regulated environment.


[CLICK HERE to read “In China, Human Costs Are Built Into an iPad” at The New York Times; January 25, 2012.]


The Future of Domestic Manufacturing

The call for “inshoring” manufacturing jobs would mean a change in the skill set of American laborers. Because manufacturing in this country has become leaner and more reliant on technology (hence, the higher cost), tomorrow’s factory worker will require a substantially higher level of skill and knowledge – even advanced degrees – to monitor and modify machine specifications for productivity. Bringing jobs back from overseas is not as simple as it may seem.


[CLICK HERE to read “Will Inshoring Create More Manufacturing Jobs in 2012?” at Manufacturing Executive; December 22, 2011.]


[CLICK HERE to read an in depth study of one manufacturing company that underscores today’s trends, “Making It in America” at The Atlantic; January/February 2012.]


[CLICK HERE to read about one manufacturer’s approach to mentoring skilled workers: “Advancing Manufacturing, Tomorrow and Today;”, January 11, 2012.]


Clearly, the debate for efficiency models in manufacturing and the costs of bringing factory jobs back to America will continue – and the process will be slow. However, many of the companies considering such a move are currently priced at attractive valuations, so – if you’re in it for the long haul – they offer interesting investment options for the larger goal of creating a more self-reliant and sustainable economy. Please give us a call to discuss the potential for incorporating a “Made in America” theme into your portfolio.






Pent-Up Energy

Just recently, the Obama administration rejected the application to build the Keystone XL pipeline, which would stretch 1,700 miles from Canada to the U.S. Gulf Coast. It’s been and looks to continue to be a hot issue, not just for the sake of oil production, but for American jobs as well.

While jobs remain the most significant economic albatross in this country, they probably shouldn’t be the foremost reason for building a cross-country pipeline. But it seems all interested parties have a different agenda. Environmentalists say tar-sands oil production creates more pollution than traditional oil production. Politicians are using the issue as an election-year lightning rod to advance a heated debate over jobs and the environment. The administration says they didn’t have enough time to get all the facts.

[CLICK HERE to read and/or listen to “Rejected Pipeline Becomes Hot-Button Election Issue;”, January 19, 2012.]

But the issue promises to continue, because the production of oil and energy is a mainstay challenge in this country – and all over the world, for that matter. Energy – particularly sustainable energy – is one of the most global issues of the day. After all, there are finite resources on our planet that must be shared by all of its inhabitants.

In recognition of the growing importance of energy resources, the United Nations has dubbed 2012 the “International Year of Sustainable Energy for All.” UN Secretary-General Ban Ki-moon observed at the recent World Future Energy Summit that, “energy is central to everything, from powering economies to combating climate change to underpinning global security.” Stated goals include doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix by 2030.

Interestingly, Nicaragua is committed to reducing its dependence on foreign oil from 80% to 6% within a decade, and wants to become an international leader in renewable technologies by 2016.

[CLICK HERE to read “UN urges achieving sustainable energy for all as International Year kicks off” at; January 16, 2012.]

[CLICK HERE to read “Nicaragua’s Renewable Energy Revolution Underway;”, January 20, 2012.]

Investment Opportunities

When an issue this large focuses global attention, it generally means there’s an opportunity to make money. Not just for self-serving corporations and governments, but for investors as well. Fidelity recently published viewpoints on opportunities within the energy sector, noting that energy stocks tend to perform best at mid and late stages of an economic cycle. It cites three themes for energy prospects in the coming future: (1) the emergence of more productive new drilling techniques; (2) the growth of the liquid natural gas market; and (3) a renaissance in deepwater exploration.

The positive impact of energy innovation is far-reaching, encompassing a cross section of industries, sectors and countries. This smorgasbord of investment opportunities includes energy producers, manufacturers, transportation companies, engineering, construction, technology, Canada, Argentina, and Eastern Europe, among others.

[CLICK HERE to read “Big energy ideas for 2012;”, December 12, 2011.]

In consideration of increasing global demand for energy commodities and services, let’s take a look at your portfolio to see if a pent-up energy allocation at this stage of the market cycle would align with your risk tolerance and investment goals for the future. Feel free to contact us to discuss further.



*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.