Five Topics

Whenever someone asks “How are you doing?” If they know me they will know, stay away from those five topics. These five are currently on my mind and beware you will get an ear full.

1). The state of sports – Tiger is a prima donna; Division I college athletic administration is a disaster; No matter how slow, I still love to watch baseball; Red Wings miss the playoffs, so what, hockey is still the best sport; Golf, frustrating but a necessary evil.

2). Business management 101 – Don’t pass the buck.

3). Family – I wish I could see them all every day; It is not what we have in life, but who we have in our life that matters; I do not like to see any one in my family sad.

4). Higher Education - One of the unique features of an institution of higher education is that it is not run according to the traditional corporate management top-down model.  Critical to understanding how a college or university operates is to grasp the concept of shared governance. According to the American Association of University Professors (AAUP), governance of higher education institutions traditionally has been a responsibility shared by faculty, administrators, and trustees. Sure, and I am going to win the $502 million Mega Million Lottery this Friday evening.

5). Teaching – Students get it.

COLLEGE CHRONICLES - One of the most important charts about the economy the last ten years:

TAX TIME - Need some help this tax season? RR goes over whether a Roth or pre-tax 401(k) is right for you.

1. Taxes – pay them now or pay them later?

Both Roth and pre-tax contributions offer the benefit of tax-sheltered growth while you’re working. When you contribute with pre-tax dollars, qualified withdrawals in retirement are taxed as ordinary income. By contrast, Roth contributions invest post-tax dollars, meaning qualified withdrawals come out tax free.

There are calculators that can help you determine the tradeoffs—check to see if your employer offers one on your plan’s website. But one of the most important variables is your estimated tax rate during retirement. If you think your tax rate will be lower in retirement than during your working years, it may make sense to go with a pre-tax contribution.

Alternatively, you might choose the Roth option if you expect your savings to generate a higher income in retirement than you currently take home. And remember, the total amount you withdraw in retirement will likely be greater than any amount you contributed, given the power of compounding returns.

2. Will your choice impact how much you save?

The choice between a Roth or pre-tax contribution will make a difference in your take home pay. All else being equal, when you make a Roth contribution, your take home pay will be lower than the same contribution made with pre-tax dollars. If a larger paycheck today will encourage you to save more than you would otherwise, you may be better off sticking with a pre-tax contribution.

A recent study from the Harvard Business School, however, shows that most people contribute the same amount to a 401(k) regardless of which contribution type they make. This is likely because most of us invest based on a fixed percentage of our pay (such as 10%), rather than by trying to optimize both our take home pay and our retirement savings.

3. How important is future tax flexibility?

Perhaps the best choice you can make is to not pick one over the other, especially since future tax rates are hard to predict. If your employer offers both options, you can always divide your contributions between Roth and pre-tax. That can give you some tax benefit today while enabling you to diversify your potential sources of income—including how much is subject to tax—when you’re retired. Many financial planners refer to this as “tax diversification” and, like investment diversification, can pay dividends today and down the road.

Please note that regardless of which path you choose, any eligible employer match may be contributed pre-tax. Make sure to reach out your employer or recordkeeper for specific plan details.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Lara Logan (47) Greenwich, CT.; Henry Paulson (72) Chicago, IL.

WHAT IS ON YOUR PHONE? – The author of this Blog was recently asked what is on his phone?

Favorite Instagram photo filter: None. Never use them.

Favorite emoji: 😎

Craziest place you’ve left your phone: Women’s wash room, don’t tell my wife! Seriously, I loaned it to a student to call her Mom for a ride, she left it in the wash room.

Alarm settings: 5:30 a.m.

Number of contacts in phone: 905

Favorite podcast: “Fresh Air” from WHYY, the Peabody Award-winning weekday magazine of contemporary arts and issues, is one of public radio's most popular programs. Hosted by Terry Gross, the show features intimate conversations with today's biggest luminaries.

Most-surprising app you depend on: SimplyRain for sleep. The app is just rain sounds, white noise that I fall asleep to almost every night. Silly, but it works.

At what battery percentage do you feel compelled to charge your phone? 20 to 30 percent.

Are there times when you try to stay off your phone entirely? I try to adhere to the 45-minute rule – when you wake up, wait at least 45 minutes to check your phone, and at night, take your last look at least 45 minutes before you go to sleep.

What is your phone wallpaper? 

THE END OF THE TECH BOOM? - Investors, always willing to believe in technology companies, spent the last three years piling into their shares with abandon. Now the intellectual underpinnings of that rally are being tested.

Exhibit A: Facebook, down 20 percent from its recent high.

Exhibit B: Nvidia, off 12 percent from its recent high.

Exhibit C: Tesla, not a tech stock but in the FANG+ (technology) index.

Concerns about Tesla’s ability to fund itself can also be seen in the trading of its debt.

Tesla can’t simply cut spending to solve its cash challenge if it hopes to ramp up production. The company has racked up about $10 billion in long-term debt and has $23 billion in total liabilities. To survive long term, Tesla needs to stop over promising and to scale back its ambitions to goals it actually can achieve. Right now, though, it just needs more money.

After the Uber incident in Arizona, those companies may take a more realistic look at what they have to spend to create a technology that is efficient and safe, and conclude that they have to pull out of the race or pare back. Users of social media and regulators may prevent social media companies from sharing so much of their data with advertisers, and that could restrain revenue growth.

And if the passion for two or three big tech companies wanes, the cooling may spread.

MARKET WEEK – Investors predicting an imminent boom in U.S. capital spending may be getting ahead of themselves.

Many economists have said that strong corporate earnings, borrowing costs that remain at historically low levels and the U.S. tax-code overhaul should encourage companies to invest more in growing their own businesses -- a boon for the broader economy.

Yet recent data suggest a murkier outlook for business investment in items like new machinery and vehicles. On Tuesday, for example, a survey released by the National Federation of Independent Business showed small-business owners’ plans for capital spending were unchanged in February.

This was despite an overall reading on business optimism that rose to a 35-year high. What's more, capital-spending plans remain below the level reached last summer before a string of hurricanes hit the U.S. in August and September.

“It’s very odd given that businesses are saying that they're super optimistic about growth,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “You would have thought that given all those conditions they would be rushing to invest in capital spending.”

Other data on capital spending have also sent mixed signals. A widely watched proxy for business investment--new orders for nondefense capital goods, excluding aircraft--fell in both December and January. Economists have noted that the metric tends to be volatile from month-to-month.

The outlook isn’t uniformly dour, though. The Business Roundtable CEO Economic Outlook report, a quarterly survey of CEOs of large U.S. companies, showed 68% of companies plan to increase capital investment, compared with 49% at the end of last year.

JACK ASS OF THE MONTH - Fox News host Laura Ingraham (Dartmouth ’85) taunted a Parkland shooting survivor in a Wednesday- ­morning tweet about his college applications being rejected: “David Hogg Rejected By Four Colleges To Which He Applied and whines about it. (Dinged by UCLA with a 4.1 GPA...totally predictable given acceptance rates.)"

Ingraham had faced immediate backlash over her original tweet Wednesday from those shocked by her attack on a teenager who had survived the mass shooting in Parkland, Fla. Some of them reminded Ingraham, simply, that she was a mother. Hogg’s 14-year-old sister accused the Fox News host of stooping to a “real low” to boost her ratings.

The shooting in Florida — one of several school attacks in 2018 — left 17 students and staff members dead, and it galvanized a new generation of activists, including many teenagers from Parkland.

Hogg has been one of the most vocal, speaking at the March for Our Lives rally against gun violence in Washington. Since the shooting, the teen has appeared frequently on television and rallied his growing number of Twitter followers to become civically engaged if they are frustrated with the status quo.

Within 24 hours, several companies responded — among them the pet food brand Nutrish and the home goods retailer Wayfair — announcing over Twitter and in media interviews that they would pull their ads from Ingraham’s show.

By Thursday afternoon, Ingraham apologized. “On reflection, in the spirit of Holy Week, I apologize for any upset or hurt my tweet caused him or any of the brave victims of Parkland,” she tweeted.

For this Laura Ingraham is the first Jack Ass of the Month winner for 2018, well done.

YOU CAN’T MAKE THIS UP: President Trump gave a speech in Ohio yesterday (Thursday). It was billed as remarks about his infrastructure plan. But he touched on a variety of topics that have nothing to do with the measures he's proposed:

- Advocated a war crime

- Ad-libbed major announcements about Syria and the Koreas

- Said he doesn’t know what community college is

- Mentioned Tiffany!!!

- Lied a lot

- Concluded with sitcom ratings

2018 MAJOR LEAGUE BASEBALL TOP SEVEN TEAMS –

1). Houston Astros, will repeat as World Series Champions

2). New York Yankees – will lose to the Astros in the ALCS

3). Washington Nationals – will lose to the Astros in the World Series

4). Boston Red Sox

5). Chicago Cubs

6). Los Angeles Dodgers

7). Cleveland Indians

2018 MAJOR LEAGUE BASEBALL BOTTOM SEVEN TEAMS –

24). Chicago White Sox

25). Detroit Tigers

26). Atlanta Braves

27). Cincinnati Reds

28). Kansas City Royals

29). Tampa Bay Rays

30). Miami Marlins

SWAMI’S WEEK TOP PICKS –

College Hockey Pick of the Week – Thursday 4/5, 8:30 PM CT ESPN2: The National Semi-Final; University of Michigan Wolverines (22-14-3) vs. Notre Dame University Fighting Irish (27-9-2). An all Big Ten semifinal, The Irish win 5-3. Then they win the National Championship on Saturday (April 7) 4-3, over the Ohio State Buckeyes.  Season to date (11-6)

NHL Pick of the Week – Friday 3/30, 7:00 PM PT, FSW: Los Angeles Kings (42-28-7) vs. Anaheim Ducks (39-25-13), a battle for one of the final playoff spots in the Western Conference, Kings win in OT 3 – 2.  Season to date (11-3).

NBA Pick of the Week – Saturday 3/31 7:00 PM EDT, ESPN: Toronto Raptors (55-20) vs. Boston Celtics (52-23), who is the best team in the East? Tonight it is Boston, 92 – 87. Season to date (4-1)

SCIAC GAME OF THE WEEK – Baseball, Friday March 30: University of La Verne Leopards (16-9) vs. Occidental College No Football Program (14-9), a battle for first place in the SCIAC standings, La Verne win 6 – 3. Why? Three of the starters take Professor H’s Personal Finance class. They will be prepared.

Season to Date (11 - 5)

ON THIS DATE - Production started on the Ford Mustang in 1964. Introduced to the public on April 17, the first one was sold 3 days earlier to Captain Stanley Tucker of Newfoundland (pic). Car now resides in The Henry Ford Museum in Dearborn, MI.

DRIVING THE WEEKEND – The First Quarter 2018:

Until now, markets looked at President Trump, and at the tech sector, and saw good times. Now, markets are looking at Trump and tech and seeing risk.

With stock markets closed today for Good Friday, the first quarter of 2018 is in the books, with the Dow Jones Industrial Average and S&P 500 in the red for the quarter, and Facebook and Google down.

President Trump’s impulsive crashing around on issues has started to affect market psychology. The economy's fundamentals, and corporate performance, are strong. But he is the x factor.  

A tweet by Neil Irwin of the N.Y. Times Upshot captures the Street zeitgeist: "It seems like markets are settling into a new groove in which modest news creates outsized swings in prices, whether for tech stocks or companies vulnerable to a trade war. The baseline assumption that 'it will all be OK' isn’t there anymore."

Even before this week's swing by Amazon, The Economist was warning: "'Fasten your seat belts. It’s going to be a bumpy night.' Those famous lines of Bette Davis in 'All About Eve' may turn out to be the motto for the markets in 2018."

And The Wall Street Journal's Greg Ip sees a volatile new normal: "Since early February inflation, interest rates, Facebook problems, White House turnover and trade have all been blamed for investor anxiety. It may simply be that years of preternatural calm, induced by rock-bottom interest rates and symbolized by the market’s low 'fear gauge' (VIX), are over."

When the stock market was booming, Trump obsessed about it as a kind of applause meter for his policies. And Treasury Secretary Steve Mnuchin has referred to the markets as an economic report card for the administration. Rink Rats grades:

If so, I guess we'd call Q1 a gentleman's C.

Big stock takeaway from the quarter is that volatility is back, after having been absent for almost all of 2017.

Trump tweets or actual White House policy decisions seem to have much more potential to carry (at least short-term) Wall Street consequences than they did last year, when almost everything was met with a shrug and a buy.

SCIENCE - Stephen W. Hawking, the Cambridge University physicist and best-selling author who roamed the cosmos from a wheelchair, ... died earlier this month at his home in Cambridge, England. He was 76.

Michio Kaku, a professor of theoretical physics at the City University of New York: “Not since Albert Einstein has a scientist so captured the public imagination and endeared himself to tens of millions of people around the world."

"Dr. Hawking did that largely through his book 'A Brief History of Time: From the Big Bang to Black Holes,' published in 1988. It has sold more than 10 million copies and inspired a documentary film by Errol Morris. The 2014 film about his life, 'The Theory of Everything,' was nominated for several Academy Awards and Eddie Redmayne, who played Dr. Hawking, won the Oscar for best actor."

"As a graduate student in 1963, he learned he had amyotrophic lateral sclerosis, a neuromuscular wasting disease also known as Lou Gehrig’s disease. He was given only a few years to live."

Next Blog: Dear Rink Rats, Spring break.

Until next time, Adios

Claremont, California

March 30, 2018

#VIII-25-367

CARTOON OF THE WEEK – Tom Cheney, The New Yorker