Gary Allen on Business – Sunday, March 12, 2017 – Podcast Now Available

The Good Old Days

Good Old Days_ManI often hear about the good old days when everyone in the land had a pension that lasted a lifetime. These good old days come up when people complain about 401(k) plans and how they have failed America. However, were the good old days really that good? I don’t profess to have all the answers, but this memory of the good old days seems to be a bit hazy at best. 

First of all, only about half of American workers were covered by pensions. This is hardly comforting to the other half that did not have a pension. And on top of that, just how secure are those old pensions? The answer right now is a big shakier than many remember. Those old pensions are still the same pensions we are living with today. 

The reality is many of those pensions are significantly underfunded. The problem of under-funding is present in public and private pension systems. And the scary thing is the PBGC, which is the safety net behind pensions is also running out of money.

In the first segment of the program, I cover the current health of the pension system in the United States. Don’t worry, it can be fixed, but it is going to take a lot of effort and sacrifice.

KryptoniteIn segment two, I cover the exciting topic of the fine print. Investment disclosures are something that everyone struggles with. There have been many attempts at trying to develop more effective and simpler disclosures but it does not seem to matter. For whatever reason, disclosures appear to contain some kind of fatal dose of Kryptonite that renders investors oblivious to the risks involved. Unfortunately, I don’t have any simple answer to fix this problem. Caveat emptor still reigns supreme when it comes to purchasing investments.

In segment three, I respond to an excellent question from podcast listener Randy. He had a great question about when is it appropriate to invest in a stable value fund. Most listeners know, I am not a fan of stable value funds, but sometimes you don’t have much choice.

Finally, in segment four, in the remaining time I have, I cover some of the issues or problems that I see with stable value funds. The perceived safety and guarantee of stable value funds make them very attractive to retirement plan participants. It is my opinion that most people would do better if they did not commit their savings to these high cost, low return vehicles.   

It was the dreaded spring-forward Daylight Savings Time weekend… so I know many of you may have missed the broadcast. That’s why we have this podcast. I hope you enjoy the program – Gary 

CONTACT INFORMATION

If you have a question for Gary or would like to chat with him, the best way is to contact him through email. Gary’s Email  gallen@prudentllc.com.

If you are not the emailing type, you can always try to reach him via telephone at 916.436.8331.

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Gary Allen on Business – Sunday, March 5, 2017 – Podcast Now Available

The Health of the US Stock Market

Where Have All The Public Companies Gone?

Business man

On the program this week, I talk about the concerns raised by a trio of professors regarding the health of capitalism in the United States. The professors are calling into question one of the basic tenets of capitalism, the idea of creative destruction. Their argument is America is headed towards a system of winner take all. This is where large companies continue to gain market share and dominate their industry. They argue the primary cause for this is a lack of anti-trust regulation and enforcement. In the first segment of the program, I give you my thoughts on why I think they are off base with this argument. HINT – I think it is a byproduct of the artificially low interest rates that we have experienced for a decade. 

Here is a link to the article by Jason Zweig that I mentioned at the beginning of the segment. Jason Zweig Article

In segment two, I spend time talking about one of the few initial public offerings in recent months. Snap Inc. of Snap Chat fame enjoyed a snap, crackle and pop opening (who could resist) on its public debut.

Segment three is another take on the “success” of the Snap IPO. Why does Wall Street continue to dominate the IPO process and the pricing structure? Snap, which burns money at an incredible rate, sure could have used an extra billion dollars that Wall Street passed on to its best clients by pricing the IPO below what the public market would pay just a few minutes later. 

Finally, in segment four, I cover, what in my opinion is one of the worst investments for most retirement plan savers. The funds are called many things, but they are commonly known as Stable Value Funds. I believe that most people would reject this investment if they truly understood how it worked. Let me put it to you another way. Would you be interested in an investment where you lock in a low rate of return and give up approximately 75% of the profit that your money generates? It is called spread income and it is not disclosed anywhere to retirement plan participants (Employees) or plan sponsors (Employer). Spread income makes Stable Value Funds the most profitable portion of a retirement plan vendor’s business. And that profit comes at your expense!

I hope you enjoy this week’s program! – Gary

Gary’s Contact Information

If you would like to contact Gary about your financial situation, the best way to reach him is via email at Gary’s Email gallen@prudentllc.com. You can try to reach him at his office, but he is often on the move! 916.436.8331.

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Gary Allen on Business: New Podcast Available – Sunday, February 19, 2017

The Story of the Pencil and More

cartoon-pencils

Segment 1

How can the story of a simple pencil provide someone with an understanding of financial markets? Find out in the first segment of my program. It is an interesting story about knowledge, experience, pricing and human ingenuity.

You can read the short paper on the pencil by economist Leonard Read here:   The Pencil Essay

Segment 2

In this segment I cover some of the basics regarding the new 529 ABLE programs that are springing up around the country. 529 ABLE accounts represent a revolutionary way for disabled people to manage their finances. If you have not heard of 529 ABLE accounts you need to. Listen to this segment to get a quick overview of the new program and how it can fundamentally change the financial life of a disabled person. 

In the segmemiable-logont, I mention the State of Michigan’s new 529 ABLE program. My firm is the investment manager and investment advisor associated with that program. The program is a federal program, which means it is available to anyone that lives in the Unites States. You do not have to be a resident of Michigan to enjoy the benefits of the program.

If you would like more information on the Michigan 529 ABLE program you can visit there website at: Michigan 529 ABLE Savings Program

Segment 3

modern and historic architecture at college campusThe cost of higher learning (college) continues to skyrocket. In this segment, I spend a few minutes talking about the cost and how to plan for it. This is a high level look at the challenge parents face and how to approach this liability from a logical perspective. Ultimately, the answer is save as much as you can early, invest it aggressively, and then transition into lower risk (as measured by volatility) as college approaches. This is not personal advice, just a formula to consider for new parents. 

Segment 4

In the final segment, I spend time explaining the overarching formula of financial life. The trade-off between spending and saving… and the role of human capital and financial capital. Finally, near the end of the program, I provide an explanation of stocks and bonds. What they represent and what you should expect. 

I hope you enjoy the program!

Gary

CONTACT INFORMATION

If you would like to contact Gary, the best way is through this form.

You can also reach Gary via his work email at gallen@prudentllc.com.

 

PODCAST – Gary Allen on Business: Original air date – Sunday, February 19, 2017

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Gary Allen on Business: Sunday, July 31, 2016: Podcast Now Available

The Organic Coup Interview

On the program this week an interesting story about a new startup in the fast food industry. The Organic Coup is America’s first certified organic fast food restaurant. The mission is a big one, in fact a revolution in the fast food industry. The upstart promises fast, healthy, organic food that promises to reinvent the concept of fast food.

The_Organic_Coup_Dennis___Erica.0The driving force behind the company are two former Costco executives without restaurant experience. However, Erica Welton is a well-known executive considered to be one of the most influential organic food individuals in the country. Erica was at the center of turning Costco into the world’s largest organic retailer. Her partner is long-time Costco executive Dennis Hoover.

The two represent an excellent partnership between Welton’s vision for the company and Hoover’s deep operational experience running Costco’s crucial Northern California region for many years.

While the two do not have direct restaurant experience, it is easy to see in the interview that Costco’s passion for excellence, quality and efficiency are key factors in the startup. In addition, the organic supply chain relationships developed by Welton are crucial for the company’s ability to scale up from its current three locations to as many as ten by the end of the year.Many more company owned restaurants are planned over the next few years.

The combination of clean, healthy, fresh food with the efficiency of Costco and an aspiration to match In-N-Out Burger’s service could be a disruptive force in the fast food industry. Only time will tell if Welton and Hoover with their team can scale and execute on the mission, but so far so good. 

On a personal note, everyone (including me) at KNBR 680 & 1050, KGO 810, KSFO 560 and 107.7 the Bone who tried their signature organic fried chicken sandwich gave it a big thumbs up. That is a huge endorsement since radio stations live on fast food 24/7. 

SPECIAL GUEST

Jim SinegalJim Sinegal – Former CEO and Co-Founder of Costco

It was a real coup (pun intended) to have Jim Sinegal of Costco fame call into the program to talk about his business experiences and his connection to The Organic Coup. The retailing legend offers some excellent advice to business owners and employees in segment three of the program. 

FURTHER INFORMATION

signature-sandwichThe company currently has three locations (Pleasanton, San Francisco, Pleasant Hill) with more to come in the near future. You can find more information about The Organic Coup at www.theorganiccoup.com.

CONTACT INFORMATION – Gary Allen

If you would like to contact Gary or have a question for him email is the best method. His email address is gallen@prudentllc.com or you can try to contact him at 916.436.8331. 

PODCAST

Sunday, July 31, 2016

The Organic Coup

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Gary Allen on Business: Sunday, May 15, 2016 – Podcast Now Available

Jim Cramer of Booyah Fame Mainly Delivers “Boo”

Jim CramerJim Cramer of Mad Money fame on CNBC has popularized fame with his fast paced show that has its roots in the production values of the Jerry Springer show. You may laugh, but Cramer’s Mad Money show is the brainchild of Susan Krakower, the former producer of the over the top Jerry Springer show. If you think about Springer, sports talk radio and a touch of a traditional financial show, you have the secret sauce that became Mad Money.

The show has seen a ratings decline in recent years but the frenetic energy remains. Adding some spice, this weekend a new movie titled Money Monster starring George Clooney has opened across America. But the focus of my story on the show this week is a research report that also was released on Friday. That report from researchers at the Wharton School of Business look into the track record of Cramer’s stock picks.

It may come as a surprise to some, but I was not caught off guard by the results of the research report. Bottom line, Cramer has not done well compared to the S&P 500 with his charitable fund. While Cramer is just one example, he is the poster child for “smart” active management. At this point the numbers are in and Cramer like most of his peers trail the returns of the stock market.

The Living Wage Movement For A Few

Protest

Everywhere you turn these days, people are protesting for a living wage. Currently, the living wage benchmark according to the protestors and their supports is $15 per hour. However, the part of the story that most protestors are missing is who will be left working once $15 per hour becomes reality.

Fast food workers are some of the primary protestors pressuring employers to raise the minimum wage to $15. Too often companies are vilified for underpaying their workers and having profits that are too large. Are there companies that take advantage of their workers, of course, but I never remember anyone until now talking about a fast food job being a place to work to support a family of four. 

Fast food jobs and most retail jobs have traditionally been entry level positions for young and or unskilled workers to enter the workforce. In my opinion, the majority of the workers currently protesting for $15 per hour will be worse off if they achieve their goal. The reason is simple, automation will replace most of the jobs and they will be unemployed. A fraction of the current workers will be left earning $15 per hour watching customers order and pay for their own meals at self-service kiosks, while a couple folks will be left in the back feeding machines that prepare most of the food. Wendy’s this week became the first major fast food chain that said it will install these kiosks this year at all of its locations.

The problem is not $15 per hour for entry level jobs. The problem is too many low or unskilled workers who do not have access to training or education opportunities to improve themselves.  

Gary Allen on Business – Sunday, May 15, 2016 – Podcast

The Cramer story and $15 for the few highlight the show this week. Hope you enjoy the podcast. – Gary 

CONTACT GARY:

If you would like to contact Gary, the best way is through email at gallen@prudentllc.com. Or you can try to reach him at his office at 916.436.8331.

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Gary Allen on Business – Sunday, March 6, 2016 – Podcast Now Available

are you ready with related words cloud hand drawing on whiteboar

So many questions about investing and retirement…

Common Questions I Often Hear About Investing…

Is it a good time to be in the market? What about timing the market? When is a good time to get in or get out of the market?

All of these questions are somewhat similar because they are asking if I have some kind of ability to know in advance what it going to happen. Unfortunately, I don’t have that power and by the way nobody else does either. Although Andrew Bogut of the Warriors predicted a Curry 3-pointer before he dropped one in… but aside from that, no one has the ability to predict the future with any certainty.

Later in the program, I cover the total wealth equation, which is a combination of human capital and financial capital. If you can understand this basic concept, it provides you with a much clearer understanding of the trade offs in life between spending and saving.

Finally, I spend time discussing how Wall Street and most firms have been wrong about your number for so long. Most financial firms talk about building wealth and reaching for some big number. That number represents a nest egg of wealth. However, for retirement, the real number should be income. People need an income to survive. Wealth is not tied to inflation or retirement and is a difficult concept for people to understand. Next week on the program, I will dive deeper into this important concept.

I hope you enjoy the program this week. As always, thank you for listening to my program on KNBR.Thanks to my great product Justine for always doing a great job.

If you have any questions or would like to contact me, email is usually the best gallen@prudentllc.com or you can try to call, but I am often unavailable 916.436.8331.

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Gary Allen on Business, Sunday, January 17, 2016 – Podcast Now Available

Stock Market Jitters… Stock Market Predictions 2016… What To Do?

Bear Market

The New Year has not been kind to financial markets. In the back of people’s minds I sense fear of another meltdown like 2007-2009. Unfortunately, no has that answer until after the fact. That is why it is so important to make sure your investments are aligned to your individual circumstances. Depending on someone to time the market or to pick individual securities only adds to the level of risk you face. 

On the program this week, I cover the market downturn as well as the abysmal record of Wall Street and other financial professionals (United Kingdom and Australia) for predicting market returns. 

Since it is the beginning of the year, I do provide you with a list of 10 forecasts that I feel very comfortable about. These forecasts provide you with some of the reasons why it is so hard for market prognosticators to provide any value.

Finally in the last segment, I remind people to focus on what they can control and not to worry or focus on what you cannot. In this segment, I give you a sneak peek at a project we have been working on for a while. We feel that Wall Street and its beat the market mantra has led so many people down the wrong path. Hopefully, soon, we can let you know about a completely different path that should provide investors a better chance at success.

I hope you enjoy the program this week. – Gary

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