Jason White, Economics Ph.D., CFA Affiliate Member & Portfolio Manager of $100 Million

Top 10 Key Elements of Good Manager

2012-03-04T09:54:00.000-06:00

Jason White, MBA, Ph.D. firmly believes business, government and society should collectively learn and practice these morale building ideas. It is always the right time to do the right thing.

2012-03-03T13:30:00.000-06:00

Jason White, MBA, Ph.D.For 2012, the 401(k) contribution limit increased $500 (from $16,500 to $17,000). While $500 may not seem like much, over the course of a couple of decades these added dollars can mean tens of thousands of dollars more for retirement or other long-range savings goals.

What's the State of the Economy?

2012-02-26T14:47:00.000-06:00

Economic Indicators Dashboard powered by Russell Investments

You can use the dashboard to show your clients how the current economy, based on these indicators, compares to more historically typical conditions and to show them which direction the market seems to be moving.
If the top four indicators — the market indicators — are moving toward the typical range, conditions may be improving. Market indicators can provide guidance about what's to come, though they are less accurate than economic indicators.
The bottom four indicators — the economic indicators — generally tell us what's already happened, and often follow the trend of the market indicators by several quarters. The importance of economic indicators are their ability to confirm that a pattern is occurring or is about to occur.
Even if the market indicators are moving toward typical, the economic indicators may still be moving away. Historically, the economic indicators have followed the market indicators in coming months.

http://www.russell.com/Helping-Advisors/Markets/EconomicIndicatorsDashboard.aspx

The Boom and Bust Cycle of Agriculture

2012-02-19T16:22:00.000-06:00

U.S. agriculture is notorious for its boom and bust cycles. During the past 100 years, shifts in U.S. agricultural export activity triggered fluctuations in agricultural profits. Soaring wartime food demand during the 1910s and 1940s boosted U.S. agricultural exports and farm prosperity. A spike in U.S. agricultural exports during the 1970s sparked another surge in U.S. farm incomes. At the same time, low interest rates quickly translated rising incomes into booming farmland values, especially during the 1910s and 1970s when farmers used debt to finance their investments. These golden eras of a booming farm economy, however, quickly faded as economic and financial market conditions changed.
Today, U.S. agriculture is in the midst of another farm boom. Farm incomes are swelling due to record high exports and strong biofuels demand. Simultaneously, with historically low interest rates, farmland values have soared to record highs. While current conditions echo the rhythms of the past, farmers have hesitated to accumulate debt in financing.....

The Next Bubble?

2012-02-18T08:58:00.000-06:00

News from the 10th District of the Federal Reserve.....Robust bidding by farmers spurred record high land values, which enticed more landowners to place farmland up for auction. Nonirrigated cropland values in the District jumped almost 9 percent during the last three months of 2011 and were 25 percent higher than year-ago levels. District bankers noted an increasing number of absentee landowners were putting their farms up for sale and attributed much of the auction activity to landowners seeking top-dollar prices. Farmers were the main buyers, and the share of land purchased by farmers has grown during the past few years. Still, outside investor interest in farmland for rental income or capital gains remained high, with farmland sales for recreational or development use dwindling. About a third of District bankers expected both the price and the amount of farmland offered for sale to rise further in 2012.

http://www.kansascityfed.org/publicat/research/indicatorsdata/agcredit/AGCR4Q11.pdf

The Jobs Picture Continue to Improve!

2012-02-17T08:24:00.000-06:00

An unexpected decline in new claims for jobless benefits and increased home building suggest the U.S. economic recovery remained durable at the start of the year, easing pressure on the Federal Reserve to add stimulus and risk higher inflation.
Jobless claims fell by 13,000 to a seasonally adjusted 348,000 last week, the lowest level in nearly four years, while January housing starts rose by 1.5% to a seasonally adjusted annual rate of 699,000 from December.

The positive government data Thursday fuel a debate among Fed policy makers whether to give more gas to an economy growing only modestly more than two years after the end of a deep recession.
Offsetting the decline in claims and the increase in starts was another report showing prices producers pay for goods and services rose more than expected last month when volatile food and energy costs are stripped away. Overall producer prices inched up 0.1% but core prices climbed 0.4%, which could concern those at the central bank who are worried about inflation.

Minutes of the Fed's January meeting, released Wednesday, revealed officials appeared divided over launching another round of bond buying that would seek to spur investment by pushing down long-term interest rates.

For those who support additional stimulus, the unemployment rate, while improving, remains elevated. Home construction rose in January, but the increase was below expectations and doesn't change the fact builders face competition from a steady stream of deeply discounted foreclosures and other previously occupied homes. Economists tended to attribute January's increase to a mild winter.
Also, even with the improvement, the housing sector makes up only a small part of gross domestic product, the broad gauge of economic activity in the U.S.

"I don't expect a large boost to growth from the construction sector but up is a lot better than down," said Joel Naroff, of Naroff Economic Advisors inHolland, Pa. "The housing starts and unemployment claims numbers add to the belief that the economy is shifting gears."

The Fed has said it expects modest economic growth and benign inflation this year, with concerns that Europe's sovereign-debt crisis could cause countries to slash their budgets and hurt U.S. exports.
Amid concerns in financial circles that the Fed's easy-money policies might spark inflation down the road, Naroff cited negatives in the producer price index data, and said the report "does imply that the inflation risk is toward the upside, not the downside."

The monthly jump in core inflation, however, could reflect beginning-of-the- year price increases for drugs and other goods rather than an accelerating trend, said Nigel Gault, chief U.S. economist with IHS Global Insight.

"In recent years, a large chunk of each year's increase in drug prices has been pushed through in January," he said. Pharmaceuticals prices, up 2.0% last month, accounted for about 40% of the core increase.

Eric Morath and Jeffrey Sparshott contributed to this article.

By Jeff Bater and Alan Zibel, Dow Jones Newswires; 202-862-9249, jeff.bater@ dowjones.com

(END) Dow Jones Newswires

Happy Valentines!!!

2012-02-14T11:40:00.000-06:00

Happy Valentines Day from the trenches of Wall Street and Academia!

- JTW

Entrepreneurial Heroism

2012-02-11T16:59:00.000-06:00

There are two views on entrepreneurship in America: the first (largely feigned), that it is a pure virtue like freedom of speech or religion, and the second (real) attitude that it is largely a game for the naïve. Steve Jobs, Mark Zuckerberg, and Michael Dell make fine fodder for commencement speeches, but when parents and career counselors thrust graduates into the job market, the default isn’t entrepreneurship, it’s corporate serfdom. Entrepreneurship is a deviation, an occupation for heroes, heroic for the reasons it can’t be recommended: it’s just too unsafe. But the conventional position is nonsense; building new companies is far more sensible than the practical will admit.
First, entrepreneurship is not riskier than working at a big bank or law firm, a fact vividly underscored by the de facto nationalization of the banking sector and mass layoffs of the last few years. An especially pungent comparison exists between the classically “safe” job of lawyering versus starting a new enterprise. What could be safer than a career at a century-old white shoe firm (aside from the fact that less than a third make partner)? Lots of things, actually. Few law students even get the chance to buy the losing lottery ticket: the government estimates that 215,417 jobs for attorneys will open between 2008 and 2018 and in the same decade, there will be over 430,000 new legal graduates so only half will get to practice in their chosen field (at substantial opportunity and tuition costs). By contrast, of 5,000 businesses started in 2004, almost 56% were still in business in 2010, despite suffering through a brutal economic downturn. Even as venture capitalists predisposed to have faith in new ventures, we were somewhat surprised that entrepreneurship has such favorable odds (the traditional rule of thumb in venture is that 4 out of 5 companies will flounder, although VC-backed tech companies may be somewhat riskier than the entire universe of new companies).

Another consideration: you can actually make real money with new companies. The actual money entailed in entrepreneurship can dwarf the outcomes from legitimate toil at established businesses. A quarter of first-time venture-backed firms are acquired for at least $50 million or file for an IPO. That’s not a guarantee that every early worker makes a fortune, but it suggests the odds are better than we would intuit. And in a world that has structurally shifted to bimodal outcomes, why not shoot for the mode that allows you to build wealth? Facebook, like Google and others before it, will make an army of millionaires. They won’t be the last to do so.

Maybe the most important point about entrepreneurship is that people who start or join new companies tend to actually like what they are doing. (“Outcome-independent decision making”, in consulting parlance). In addition to the psychic merits of working on the personally meaningful, in an economy where low-wage, high-skill overseas workers and no-wage machines encroach ever more rapidly, it is essential to compete both in input and output. Workers motivated by financial incentives alone struggle to perform at the level of the true believer. Caring about one’s job isn’t a hippie luxury; it is a necessity in a ruthlessly competitive world.

Not everyone is suited to join a new company. But as a society we can’t discourage those who are so inclined from joining, especially in a persistently stalled economy. We need to reconcile the realities and the rhetoric: entrepreneurship is everything we hope it to be.

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PULSE: States, banks to announce $25 billion deal: source

2012-02-09T12:39:00.000-06:00

PULSE: States, banks to announce $25 billion deal: source

Federal and State officials reached a $25 billion settlement with five big banks over foreclosure
practices. The deal includes fines as well as cash payments to borrowers
impacted by foreclosure between September 2008 and December 2011. On the news,
Citigroup C was down 0.4%, JPMorgan Chase JPM was off 0.7%, Wells Fargo WFC was down 0.7% while Bank of America BAC was up nearly 1%. Ally Financial was also
involved in the settlement.

Dan Danford, CFP, Named One of America's Elite Financial Advisors

2012-02-06T19:32:00.000-06:00

Of the hundreds of thousands of financial professionals practicing in the United States, Dan Danford, founder of Family Investment Center in 1998, and my partner since 2005 received an incrediblely distinguished award for his professionalism, service and dedication to the investment profession on behalf our client families. It is my distinct honor and pleasure to work with him and our staff on a daily basis to assist client families in fulfilling their individual dreams financial success can facilitate. Bravo, Dan!!!!

2012-02-04T14:38:00.000-06:00

Missouri Small Business Profile Released by the Small Business Administration (SBA)

In 2009, Missouri was home to 490,763 small businesses, representing 97.6 percent of all employers and 48.1 percent of the private-sector workforce. As a large part of the state’s economy, these businesses are central to Missouri’s economic health and well-being. This SBA profile uses the latest available data to illustrate the status of Missouri’s small

The latest payroll report from the Bureau of Labor Statistics

2012-02-03T11:01:00.000-06:00

I expressed optimism yesterday that our tepid recovery was accelerating according to my forecasting, and today's release is almost enough for me to drop "tepid" as a descriptor. Payrolls up 243,000 and an unemployment rate of 8.3%. Watch for unemployment rate stickiness

Capitalism, Unemployment and Entrepreneurship

2012-02-02T16:29:00.002-06:00

My good friend Frank Veeman, retiring Director of the Small Business Development Center programs in Maryville, Chillicothe and St. Jospeh, pulled the following CRITICAL data from ADP on the importance of boot-strapping ENTREPRENEURSHIP to American Capitalism and employment. The latest ADP report showed large businesses with 500 employees or more added just 3,000 employees to their staffs in January, while medium-size businesses added 72,000 workers and small businesses that employ fewer than 50 workers hired 95,000 new workers.

US Jobless Claims Fall; Productivity Rises

2012-02-02T14:40:00.000-06:00

US Jobless Claims Fall; Productivity Rises

Today's decline in initial jobless claims makes me mildly optimistic for decent job growth in tomorrow's unemployment report, maybe +200,000 for the Groundhog!

ADP: January Private-Sector Jobs +170K, As Expected

2012-02-01T12:02:00.000-06:00

ADP: January Private-Sector Jobs +170K, As Expected

This should carry over into the Friday jobs numbers, but the unempoloyment rate will start to remain stubborn as discouraged workers re-enter the labor force.

Financial solidarity - Life News Story - St. Joseph

2012-01-30T08:45:00.000-06:00

Financial solidarity - Life News Story - St. Joseph

My good friend, business partner and CFP, Dan Danford, has some outstanding advice in this column. He recently published a refereeed article in the Journal of Financial Therapy as well. - JTW

PULSE: IMF cuts world growth outlook as euro fears rise

2012-01-25T03:40:00.000-06:00

PULSE: IMF cuts world growth outlook as euro fears rise

While the IMF did trim global economic growth forecasts by a considerable amount, their U.S. economic forecast for 2012 and 2013 remained unchanged. Yet another signal that we are gaining footing domestically and will likely stay near the top of the heap in this temporary "new normal" environment. - JTW

Northwest Missouri State University

2012-01-17T11:20:00.000-06:00

A new Sheriff is coming to town at Northwest Missouri State University .....

The unemployment rate still sucks

2011-09-02T14:46:00.002-05:00

Bureau of Labor Statistics

The latest Employment Situation news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/empsit.pdf and also archived at http://www.bls.gov/news.release/archives/empsit_09022011.pdf. Highlights are below.
Payroll employment unchanged (0) in August; unemployment rate holds at 9.1%
09/02/2011
Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent. Employment in most major industries changed little. Health care continued to add jobs; a decline in information employment reflected a strike. Government employment continued to trend down. HTML \| PDF \| Commissioner's Statement

Northwest Alumni Magazine

2011-09-01T13:48:00.000-05:00

I was honored to have the opportunity to pen "Dear Friends" welcome letter in the most issue of the Northwest Alumni Magazine!

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B0yg0DpfukxuZDVlYjc1MDgtYTQzZS00YmM1LTg4OTItYzBhMTg0OGUxZGUx&hl=en_US

A Few Chuckles and some Wincing....

2011-08-29T06:00:00.000-05:00

The 2011 Mind-Set of Faculty (Born Before 1980)

As an antidote to Beloit College's annual Mindset List (the latest version is being released this week), designed to orient faculty and administrators to the cultural touchstones that have shaped the lives of incoming freshmen, I hereby offer, for the benefit of students and administrators, a similar list of characteristics of faculty members who were born before 1980 and who teach at public institutions. Are faculty members' mind-sets less important than students'? If you prick our mind-sets, do they not bleed?

1. The faculty members freshmen will encounter are likely teaching more and larger classes and doing more "service" than ever before at the same pay or less as faculty were three or four years ago.

2. A growing percentage of faculty members rarely meet in person the students they are teaching, thanks to absentee learning, more commonly known as online education.

3. Freshmen will encounter some faculty members who first used "iPhone" as a noun and a verb, as in "I will phone, I have phoned," etc.

4. Faculty members who have been teaching for more than a decade are most likely indifferent to the Kardashians, celebrity-wannabe housewives, desperate or otherwise, from any city or county on either coast, especially the ones from New Jersey.

5. Those same faculty members are regarded by many parents, administrators, and state legislators as lazy, inefficient, and unaccountable. If it were not for all the work the faculty members must do, they would have the time to live down to those expectations.

6. The faculty members freshmen will encounter in the classroom are probably untenured and working part time, with many employed at more than one institution and feeling loyalty to no employer.

7. Faculty members born before 1970—we have to reach back a bit further here—are usually willing to help students learn how to pretend to give a damn about their education, and are involved in less absentee teaching and learning than their younger colleagues. (This issue is addressed here.)

8. Faculty members born before 1980 said "Wii" to express the euphoria they felt as children when sledding down a hill.

9. Faculty members born before 1980 rarely feel a need to respond immediately to anything and have particularly "procrastinaty" reactions to messages that students label "urgent."

10. Faculty members born before 1980 remember a world in which people lived entire days without access to bottled water.

11. Faculty members born before 1980 (and who didn't live in Seattle) remember a world without Starbucks, in which people made their own coffee each morning. In those days, tap water was potable and "barista" was not yet a word typically spoken outside of Italy.

12. Freshmen will encounter some faculty members who used to work at institutions where faculty governance did not require the inclusion of administrators, advisory boards, and regents in academic decisions.

13. Faculty members born before 1980 grew up during a time when "like" represented the beginning of a simile, rather than a piece of verbal confetti.

14. Many faculty members prefer Mae to Kanye West.

15. Faculty members who have been teaching for more than a decade remember when C was an average grade students received in courses, because it represented an ancient concept called "satisfactory."

16. Faculty members who have been teaching for more than a decade do not refer to students as "customers," and to anyone as a "stakeholder" (not even Buffy, if those faculty members even know who Buffy is).

17. Faculty members born before 1980 remember when the word "chancellor" referred to a short German person with a mustache. (In a way, it usually still does.)

18. Freshmen will encounter some faculty members who can recollect a time when sports coaches were other faculty members who were not receiving million-dollar salaries. (See here what the world of student athletes has become.)

19. The same faculty members can recall when stadiums were built without sky boxes for indulged alumni, and when tailgating meant that you were following too closely behind someone while driving on the highway, all the while neither talking on a cellphone nor texting.

20. We (i.e., the "they" the Beloit people use to refer to anyone older who is not "you" freshmen) never used libraries as restaurants or coffee shops. We faced books; we did not facebook.

21. The "you" that is you will eventually become the "they" that is us.

22. "We" never promoted Jonas Brothers-like/Palinesque abstinence campaigns, which is why some of "you" are here, able to read this list. You're welcome.

By Bruce Krajewski, writer and translator. He also works as a professor of English at Texas Woman's University.

Investment Strategy from one of my All-time Favorite Analyst & Economist!

2011-08-19T19:42:00.000-05:00

Abby Joseph Cohen, the legendary investment strategist, recently told the media that she finds U.S. markets priced for no economic growth at all for several years to come. In the long term, she says, that prospect is nowhere near likely. She notes that corporate balance sheets remain strong and some are still creating jobs. For more, please read:

Financial Character Traits

2010-10-24T04:42:00.001-05:00

In a previous column, I attempted to apply what many of us believe to be good character traits, but in the context of our personal financial lives. I am using a list from several years ago that became known as the Northwest Missouri Culture of Character Traits. I have previously written about responsibility, respect, self-control and citizenship.

Compassion shows caring for others with kindness. Do we financially support community and charity? Time is money as they say, so that counts too. When the Ministry Center is accepting donations, do we give some of the good stuff, or do we contribute the lima beans more often than not. If religion is something we value, do we tithe (contributing 10% of income earned) to our Church, as scripture indicates we should. Or perhaps, are we working toward tithing – which is wonderful! Many of us feel financially compassionate toward charity and religion, but are we really doing our fair share?

My family’s personal monetary commitment to tithe and charity is better than it used to be, but still below the bible’s guidance. Giver and receiver benefit most when gifts are given happily, even eagerly, for all to truly enjoy fellowship and caring that stems from the act of giving.

Tolerance demonstrates an acceptance of differences and the uniqueness of others, while celebrating the common ground we share. Every one of us has different financial goals, savings proclivities, spending habits and risk versus reward tolerances. I may be a big spender, while my neighbor is much more frugal. Does that financial difference make one of us a better person than the other? – clearly not. Financial tolerance recognizes that not all of us value and treat wealth and money in the same way, and that is OK.

Honesty is being truthful in what we say and do. Are we always honest with our family, friends, associates and clients? Perhaps more importantly, are we completely honest with ourselves? Do we sometimes sugar-coat the risks of an investment opportunity by overstate potential rewards, and ignoring the real risk of loss? This Great Recession has been difficult for those who may not have clearly understood their own reactions to loss and volatility.

Cooperation champions working together toward a common goal. Families do this all the time. They may institute a program of thrift, pinching pennies to save for various goals: a house; a new car; a college education; a retirement; or maybe a dream vacation. Having cooperative advisors on a personal and professional level can make life so much easier and more rewarding.

That’s eight financial character traits down with four more to go in my next column. See you soon!

JTW

Financial Character Traits, Part 1

2010-10-24T04:41:00.002-05:00

This is the first of a three-part series of columns dedicated to fostering certain financial character traits. We have all seen these behaviors in others as well as ourselves.

Responsibility is defined as “taking ownership of what you say and do.” Likely, we all probably need to save more than we do, and we certainly are masters at preaching to our children regarding the merits of saving for future goals and for the challenges in life. We talk about Responsible practices like: saving for a rainy day; saving for retirement; having a cushion of savings in the event of job loss or disability; saving for the college expenses of our children or our children’s children, etc. Are we practicing such financial discipline in our own lives by taking Responsibility for our personal or family savings program?

Respect means “treating others with courtesy and honor.” Do we look down on others who may not have the asset total we do? Does our bankroll give us a right to be snooty, rude or elitist? Certainly not! We were born into this world naked, and we shall exit it the same way when our time comes. While we are here, we should strive to treat all persons with Respect, regardless of financial position or other material difference.

Self-control refers to “having control over one’s actions, words and emotions.” I see this as a close cousin of Respect, but it could also refer to our demeanor regarding our investments. Are we riding high when the stock market does well and in the doldrums when the Dow is not as rosy? Do we trade frivolously or attempt to time the market through such futile activities as day-trading and the like? Do we chase the hot stock tip or try to find a get-rich-quick scheme? Financial Self-control means having a long-range financial plan and sticking to it, regardless of the distractions and temptations that may come along.

Citizenship is “being loyal to your school, community and country.” Are we good Citizens as investors? Do we always vote our stock proxies, or do we cast them into the wastebasket, leaving the task of board oversight to other shareholders? Evidence indicates most of us choose the latter. A good corporate (shareholder) Citizen takes an active interest in the investment position(s) s/he holds and is educated about what those investments are designed to do – and what they are not designed to do as well.

JTW

Warren Buffett: God’s Gift to Philanthropy

2010-09-06T19:47:00.000-05:00

Byline: Dr. Jason White is Director of Investments at Family Investment Center and an Economics, Ph.D. at Northwest Missouri State University

I was thinking back on my utter amazement when I first heard about and attempted to digest the scope and meaning of the largest philanthropic pledge in the history of mankind. In 2006, Warren Buffett had decided to give away the vast majority of his fortune, to the tune of over $40 billion. His plan was to donate 5% of his shares in Berkshire Hathaway annually, or about $1.5 billion based on 2006 share prices, to five (5) charitable organizations, with the lion’s share flowing to the Bill and Melinda Gates Foundation.

Wow – talk about role models!

Of course, the story made huge news at the time with coverage all over the print and broadcast media for several weeks. Our local papers, the Associated Press, The Wall Street Journal, CNBC-TV, and my favorite rich-guy illustrated magazine, Fortune, all weighed in on the details of the plan and speculated on what this gift meant for Berkshire Hathaway, the Buffett family, and the future of philanthropy in society.

Let me try to put the magnitude of this gift into some historical perspective, if it is even possible to do so. The July 10, 2006 issue of Fortune carried a tremendous article on the Buffett gift that I encourage you to look up and read if you are interested in the details of the arrangement. The three most charitable philanthropists in history, Andrew Carnegie, John D. Rockefeller and John D. Rockefeller, Jr. gave a combined estimated $19.8 billion dollars to charitable causes over the years spanning 1889-1960, measured in 2006 dollars. Buffett alone is personally giving away more than double that amount with a much shorter time table. Amazing!

With hindsight, it was probably not a coincidental event when Bill Gates also announced in 2006 that he would be stepping down as Chief Executive Officer of the Microsoft Corporation in order to focus more time and attention to the work of the Bill and Melinda Gates Foundation. Of the estimated $5 billion annual gift from Buffett, 83% goes directly to the Gates Foundation with specific instructions that the funds should be used immediately in support of the Gates Foundation mission. Bill and Melinda have focused their charitable work on three distinct global scourges: HIV/AIDS, tuberculosis, malaria, and some assorted other human health threats.

Half of the remaining 17% of Buffett’s annual gift goes to the Susan Thompson Buffett foundation, formerly known as the Buffett foundation, but renamed after Warren’s wife Susie died many years ago. The remaining 8.5% is donated to three separate charitable foundations, each run by one of Buffett’s children.

So there is the plan. $5 billion a year split among five (5) separate charities. Even with the unprecedented size of this gift, it will still take decades for Buffett to give it all away at a $5-billion per year pace. However, don’t assume that Buffett is planning on shutting out his family entirely from inheriting a piece of his wealth. I researched Buffett’s comments from the past on inherited wealth. Going all the way back to a September 29, 1986 Fortune article, Buffett was quoted as saying “…a very rich person should leave his kids enough to do anything, but not enough to do nothing.” I am certain his heirs will be well provided for, and I really respect his personal values regarding monetary success.

What a legendary, wise, generous and beautiful man Warren Buffett is. The world will miss his living example terribly when God decides to call him home.

JTW