Tuesday, September 1, 2015

All American Labor Day

Let's be real here, shall we? Part of the reason that the American economy continues to be in the doldrums is because we are still not fully aware of the positive impact of buying small, buying local, and buying American. So here is what I think we should be focusing on this Labor Day in 2015. As barbeques and parties will be all the "thing" to do, our tables and our parties should be littered with American made goods, and with local produce, local brews, and American fare all the way, to the extent we possibly can. Believe it or not, but the impact of spending on small, local, and American is huge in the grander scheme of things.

Let's start with cheese. Why not find a local cheese shop to supply the cheese for your big Labor Day party. I will recommend the West Allis Cheese & Sausage Shop for any cheese needs for your big party day, or sausage, sauerkraut, or whatever else might be your fancy. Barring that, find a store near you that sells great cheese but is not a big chain. Around where I live currently there is nothing other than The Cheesekeeper, a fantastic shop with knowledgeable and friendly operators who always get the job done right.

Onto the meat. Find a local shop that does meat the right way. They are everywhere, you just have to look. But buying from them is always better than buying from the big grocery chains, especially if they happen to be the big national ones. Back home in West Allis I always loved the great service and great quality of meats offered by Rupena's Fine Foods. Currently there are two very small and very local shops I buy my meats from. Schneider's Quality Meats in Waterloo, IL, and B&D Meats in Freeburg, IL. The point is that these kinds of places exist, and all you have to do is look for them. B&D is actually a bit of an adventure. It is in the middle of nowhere, and to get there you have to drive on a very desolate rock road to arrive. Their service is excellent, their prices are reasonable, and they are helpful and friendly. Even if there is a slight premium to their goods, I am willing to pay because helping small and local business happens to be very important to me. I want places like Rupena's and B&D to be around to provide an alternative to the Schnuck's, Shop and Saves, Krogers, and Pick 'N Saves of the world.

Oh yeah. And Walmart.

Want a great dessert to serve your party guests? Why not try a small and local bakery? Around my part of the world that would be none other than Eckert's. Not only do they have great desserts, but fine produce, some quality meats, and many other delectable little treats. It's pricey. But it is also worth it.

How about an all American brew? Where I live there is Schlafly, but of course Samuel Adams happens to be the last, largest, truly American company that brews beer these days. Why not have a few of their brews in the cooler for your guests?

As for what you will cook this great American fare on? Why not take a look at the Made in USA lines offered by Huntington Gas Grills which happen to be readily available through another great American company that often has American made goods on their shelves, Menard's.

This Labor Day I say be it plates, plastic ware, food, or brews, the more you can make it all American and all local, the more you will do for your community, the economy, American jobs, small business, and the more hurt you can put on the big box stores and major national chains. Making America great again is about Americans realizing what is important, restoring competition, and keeping the little guy in a position to give the bigger guys a run for their money.

Does it cost more? Sometimes. Yes. But the real cost is not in what you pay today. It is in what you pay in what the big wants from you because the little guys are not in the game to offer an alternative. This Labor Day think local. Think small. And think American.

Sunday, August 30, 2015

You're Crazy To Sell Your Stocks In A Down Market

The reality is that it hurts to see your portfolio value take a tumble. Even the most hardened, seasoned investor is going to more than cringe a bit at the sight of declining values. But the one thing I always stress, and the one thing I think everyone invested in the markets should bear in mind with absolution is that the markets always come back. What's more, the markets also tend to come back higher than where they left off before the tumble.

The key for me is not in what is happening in the micro. But what is bound to happen in the macro. I buy companies for a reason, and that is that I think the companies are worth more than what their current share prices are. I am buying the future valuation of the company as I see it. Not the near term valuation. The reality is that the future is sometimes hard to see when everything else in the near term seems to be a mess. When the entire markets are taking a spill, the future is going to be even harder to grasp when it comes to any given stock, but you still have to see beyond that. You have to see the macro.

When the markets tumble this is effectively putting stocks on sale. If it happens to be a solid company. And of course you buy it because you believe it truly is a solid company. Unless the future fundamentals of the company are falling with the markets, there is no reason to sell. In fact, there is an even bigger reason to buy more in the selloff.

About eight years ago when the markets took their biggest hit since the infamous Crash of 1929, it was damned painful to watch. There were more than a few occasions when I thought to myself, this is it. We're done. The markets are done and I will never see my money ever again.

I could not have been more wrong. And luckily there was another side of me that knew, despite the grand mess before my eyes, that I was indeed wrong. The markets would come back. The money would not be lost forever. In fact, what was before my eyes was a terrifying mess of epic proportions, but it was also a major opportunity to make money I never could have made had the mess not happened.

I bought all the way down despite my better judgment. And I also bought all the way back up. What I did essentially was try and forget about the rotten, empty pit in my stomach and just keep on doing what I always did. Find good companies to buy whose fundamentals looked strong for their future.

...and then wait.

Friday, August 21, 2015

Stock Market Correction No Big Deal

Without a doubt there are more than a few investors clutching at their hair and ripping it out in painful clumps at the sight of the DOW which has plummeted more than 800 points in just two days. And of course other indexes are falling handily as well.

For those who have no hair, they may just be tearing their eyeballs out.

I don't mean to make total light of the situation. It is painful for anyone to watch their portfolios lose hard earned cash. I don't like it anymore than anyone else. But these things are also inevitable, especially since the stock market has done extremely well for at least the last four or more years. At some point things simply have to turn back to a bit of reality. And the reality is that the markets are and were largely overbought.

And really, the selloffs in the markets are really due to panic, not necessarily sound financials. Earnings reports have not been that bad folks.

There is the issue with China devaluing their currency. There is the issue of the recent Greek crisis and the question as to whether or not Greece is really out of the woods. There is unrest with regard to Iran, and the entire Middle East. There is an upcoming potential change of characters in the political world. And there was a recent pull back in jobs data, and of course there is talk of the Fed upping interest rates.

So I get the unease.

But time and time again markets have fallen and risen back up, and then some. And I see no reason why this would not be more of the same. This is normal for the markets to do this, and because it does happen I always say it is a good idea to buy into the upswings in the markets, but leave enough cash behind so that when the markets lose their tailwind you can buy into the panic and cash in on the other end of it.

Investors are on a selling frenzy. As for me, I will be bargain hunting. Now is the time to buy. Not panic. The stock market correction hurts. But really it is no big deal. But it is a potentially big opportunity. Opportunities like this don't come around often. This opportunity has taken four long years to come around. I say pounce on it.

Sunday, July 19, 2015

What The Heck Is A Daily Consumption Rate?

When you think of how money is spent, there are two ways of looking at it. The obvious way is thinking of it in terms of how much money you spend directly when you pay for something. The other way is thinking of it in terms of how the the things you spend money on are consumed. The rate of consumption ultimately determines how much something actually costs.

Think of your consumption rate as an electric meter. Each and every second an amount of power is being consumed, and as a result the meter is turning and accounting for the consumption. In a given year you may pay an ultimate amount for the energy you use. But the cost is not in the total. The cost is in the rate of consumption. Paying attention to the rate of consumption is the key to understanding how far the money you ultimately spend will go. It is also the key to determining how you can slow down the rate of consumption. In other words, if you don't understand why something is costing more, you will never understand how to make something cost less.

The daily consumption rate is nothing more than a system of cost averaging. The trick is in keeping the average as low as possible. How do you that? If you take advantage of short term savings on the buying side, and pay attention to how you consume things, you will ultimately save money on the consumption side.

In the simplest of terms let's take a pound of pork to provide an example of what I am driving at. You can buy a pound of pork for $3.00 when you need it for a pork dinner. Or you can wait until a pound of pork is on sale for $2, and buy five pounds of it instead of just one, and freeze what you will not immediately consume. Your average cost of a pound of pork has been reduced by $1 per pound, and while the direct cost was more because you bought more, the actual cost considering time depreciation has reduced significantly the actual average cost you will pay for your pork over time.

How long you can make something you buy last, of course, also greatly impacts how much you ultimately spend on something. Let's take my 2001 Ford Explorer Sport Trac as an example. In 2003 I bought my truck for roughly $20,000 if you take into account the interest I paid for the loan I took out. If I would have kept my truck for just five years, my daily consumption rate would have been $10.96 per day. Because I have kept my truck for 12 years, my daily consumption rate for a vehicle has been reduced to $4.57 per day.

Granted, there are other costs associated with owning a vehicle to account for such as gas, insurance, and maintenance. But the simple concept behind the math remains the same. The overall cost of something is determined not just by how much you paid for it ultimately, but by how long you have made it last, or ultimately how you have consumed it over a specific time period.

Let's go back to that pork example for a moment, shall we? There is total consumption and partial consumption to account for.

If I buy a pound of pork for $2, and I eat only 3/4 of a pound of it, and throw away the other 1/4 pound, I have effectively increased the cost of my pork by 25%. My $2 pound of pork has now cost me, in effect, $2.50 per pound because throwing something away and not using it is the same as consuming it even if I did not eat it entirely, or use the leftover pork to incorporate it into another meal. I will have to buy more pork to make up the difference. Using the electric meter example, whether or not I am in a room to see the light, the meter will turn regardless and the cost of my lighting in a room I am occupying will cost me more. My daily consumption rate is being increased by how I am consuming my energy.

When you begin to think of money spent in terms of consumption rather than in terms of what you spend at the register, suddenly you find that money becomes more and more plentiful. And for those who like to make the argument that they cannot afford to save, perhaps what they are failing to pay attention to is their daily consumption rate. If you ate a pound of pork a day on sale, there alone you'd find you'd have saved $365 on pork in a year. Apply the daily consumption rate concept to everything you buy and consume, and the total savings become enormous.

Sunday, July 12, 2015

When The Mustard Farts, Make A Marinade

Mustard is one of those items we tend to have in our refrigerators that is bursting with flavor and goes well with just about any kind of meat you might be cooking. Being one who likes to save every single penny I can, I cannot just simply take my farting mustard container and throw it into the garbage and call it done. Instead, when the mustard farts, I make a marinade.

Do you know that on average an "empty" mustard container contains about 2-3 teaspoons of mustard in it still? Imagine in a lifetime how much mustard you might be throwing away? And while you may not miss the pennies in the short term, over a lifetime you're basically tossing money right into the garbage bin.

Instead of tossing your empty mustard containers, why not rinse them into a marinade?

First, measure up a 1/2 cup of wine of choice. Bring out your "empty" mustard container and pour in a little bit of the wine. Close her up and shake. You'll bring out all of the residual mustard left in the container. Pour it into your mix. Voila! You've saved a few pennies rinsing your mustard out and you'll have a fantastic marinade to boot.

What you will need:

  • An "empty" mustard container
  • 1/2 cup wine
  • 1/4 cup olive oil
  • 1 ounce apple cider vinegar
  • 2 tablespoons Worcestershire sauce
  • 1 ounce soy sauce
As I said, shake out the excess mustard and dump it into the mix. Add the other ingredients and whisk it all together. Add your meat and marinade. Trust me, you will save money and have a fantastic meal to boot.