Archive for the ‘Financial’ Category

CNN Money Tries to Cast Shadow On Gun Manufacturers

April 18, 2013

CNN Money published this article today:

Gun stocks lag after gun control bill fails

The article starts with a very ominous statement:

Gun sales have been driven by many new buyers, including women, who feared more gun restrictions. But with this incentive gone, the industry could be in trouble.

The author then tries to use statistics to convince you of this fact. I love statistics, because they allow liars to paint themselves into obvious corners. The article lists five companies, and their recent change in stock prices, from best to worst:

Company Stock Price Change
Smith & Wesson gained 1.3%
Ruger lost less than 1%
Olin Corp. lost 1.2%
Alliant Techsystems lost over 2%
Cabela’s lost almost 5%

First, you can’t measure ANYTHING on a single day’s stock movement. But let’s say you can. The theory is that gun/ammo sales have been hurt by the end of the “gun scare”, right? Then why is it that the three companies that sell guns/ammo exclusively have done the best out of these five, one of them even gaining stock price? In fact, the two that have dropped the most only get a *portion* of their sales from guns and ammo.

You’d think if gun/ammo sales were dropping off, the companies who ONLY deal in guns and ammo would be hit the worst, and companies who sell lots of other things might be affected very little, if at all.  But the reverse is true.

Why would the interwebs lie?

CNN is left-leaning, and this article is in their Money/Investing section. What better way to try to force a drop in stock for the companies you think are “evil”, than to take advantage of an arbitrary dip to try to scare shareholders into panic selling?

Government Health Insurance Hurts Self Sufficiency

August 3, 2009

Why is it that every time the private sector fails, it the fearful are so willing to let the federal government take over?  Socialism is like the parent of a child who got a speeding ticket, deciding the best course of action is to take away the car and do all the driving from now on.  Currently on the list is health care.

I consider the government to be the servant of the people, and like any potential employee, I’d like to see some references.  Let’s see…the government has handled retirement (Social Security),  and education.  Social Security is near insolvent, largely because somebody decided the first generation should receive benefits without actually contributing much, if anything.  Not to mention, the SSA has employees and offices all over the country, costing money that could otherwise be invested in individual retirement accounts.  How about education?  I’ve never heard of a private school that underperformed its local public counterparts, because it has to be accountable.  If it didn’t work, people wouldn’t pay for it.  Yet, private school or not, we’re all forced to pay for public schools.

My point is this: the government should be regulating important things, not running them.  Setup ground rules for any investment plan marked as “retirement”.  Set minimum educational requirements for anything calling itself a school.  Then get the hell out of the way.  I’d like to share a couple of personal examples of why government-run health care is a bad, bad idea.

It’s not as great as it sounds.

Growing up military, I know exactly what socialized health care looks like. It means a bad tooth gets pulled instead of a crown. The words “adequate and practical” come to mind. It won’t be the more generous health insurance most are used to, even if most of us complain about our current coverage.

Let’s face it, most of the things we call necessities are actually luxuries.  You can live just fine missing a few teeth.  You don’t need the latest artificial limb from space age composites.  I dare say the top 20% of luxury medical care probably accounts for 80% of healthcare costs today.

It’s not as cheap as it sounds.

I also have a big problem with the government that makes, interprets, and enforces law competing with private business. Once upon a time, I briefly worked as a manager for a county records department. Theory: one unified department could store and digitize county documents (warehouses full) cheaper than each department doing it for themselves. Counties still had the option of hiring private firms, just as people would have the option to choose private OR government health insurance.

We couldn’t compete with private firms because we were paying county employees $30K a year (10 years ago) to literally sit there and push paper through a scanner all day. So the department head would bid a fraction of what it cost us. It didn’t matter to him – we were a government agency, so tax revenue made up the difference. The problem with any “business” that has ready access to tax dollars is that it can charge whatever it wants, and taxpayers pick up the rest. Eventually competitors die, and you no longer have other options.

It’s not as competent as it sounds.

People like to point to high CEO salaries and severances as evidence of corporate corruption.  What those people don’t understand is that if you’re a large corporation, you want the cream of the crop running your company, and there’s high demand for that person who can pilot a company to success.  The severance is necessary, too.  CEO’s put their heads on the chopping block with every decision, and are fired on a dime if stockholders lose confidence.  Would you take a job with such high risk without some promise of security?

Government positions have set pay grades, so it’s a whole different ballpark.  Don’t get me wrong, there are some amazing people in government, and they’re the reason the broken system gives even the appearance of working.  But those people are the exception, and even they have their limits.  Why would you work as an agency director with all the stress of a CEO  for a couple hundred thousand, when you could be a CEO and make millions?  The government simply can’t afford to hire the best candidate for the job.

Don’t be fooled into thinking the government can solve healthcare by taking it over.  It’s never been successful before.  The evidence is there.  I agree our healthcare system is broken, but let’s look to fix the system instead of running home to our collective socialist mother.

The answer.

Chances are, you don’t have insurance.  You have a payment plan for medical services.  Do you get doctor visits and prescriptions for free, or near free?  That’s a payment plan.  You simply have a contract with your coworkers to split the bill evenly, and you’re paying an enormous markup for a company to manage it for you.  Think about it: insurance companies take your premiums, pay the agreed amount on your claims, and have billions left over for overhead and profit.

What you need is a true insurance plan.  You have a high deductible, and a low premium.  You cover most of your medical expenses yourself, averaging far less than what you would have paid an insurance company to pay them on your behalf.  In the event of an unforeseen catastrophe, you pay up to your plan max, and the insurance company covers the rest.  These plans do exist, but the one piece of the puzzle that still makes it tough is the fact that most people have the more socialized version.

Let me explain the industry term Usual, Customary, and Reasonable to you.  When I processed dental claims for a living,  a plan would have percentages it pays out for different services, based on UCR – the typical amount a dentist in that area charges for a service.  Better plans would pay out 90-100% of UCR for a given procedure.  Cheaper plans paid less.

How did we determine UCR?  It’s the average of what dentists in the area are charging for procedures.  As dental insurance became more popular, prices for services went up.  Since prices went up across the board, UCR went up, which means insurance paid dentists more.  Here’s the flaw: every time dentists raise their rates, insurance companies raise what they’ll pay, and pass the cost along to the patients.  The patient never wins in this scenario.

Gradually, individual insurance plans are becoming more affordable.  More people are working mobilly, or on a contract basis, and as this happens traditional employer health coverage will be replaced by plans that meet your specific needs.  Your coverage will no longer be determined by who you work for.  Why should it?

Financial Survival: Severance Pay and Employee Notice

July 28, 2009

A recent NY Times article about Gannett cutting severence pay was alarming.  A major newspaper company I’ve never heard of had a generous severance package (1 week per year of employment) during previous layoffs, and now they’re changing to a state-funded unemployment.  In most cases, people faired just as well or better, but researchers were quick to find the handful of people that were getting “screwed”.  These included people in real trouble, who didn’t qualify for state unemployment because of part-time side gigs they have.  It also included people who found another job quickly, but were miffed that they only got 1 week of unemployment pay instead of the 10 weeks of severance pay they would have gotten under the old policy.

Here’s what I think is fair.  Companies should be able to make whatever severance packages they want, but it should work both ways.  If a company offers 2 week severance to all employees, then they have every right to require two weeks notice when an employee quits.  When I say require, I mean any shortfall should be taken out of the final paycheck.  Companies are usually in a better position to make good, so I’d say if a company wants to offer *additional* severance, go ahead.  But they should be able to require up to an equal commitment from their employees.

If this seems unfair, remember that this is legally the case right now.  Companies are not legally required to give you a dime when you’re let go, and you’re not legally required to give any notice when you quit.  It comes down to accountability.  We need to be able to financially support ourselves during times of unemployment.  We shouldn’t expect to go our whole lives gainfully employed with no breaks.

I’m almost just as guilty as most – I don’t have enough saved up yet to be unemployed for 6 months, which I feel is a realistic number in this economy.  I’m not quite as guilty though, because I can at least see my own responsibility and I’m working to fix it.  I probably have a more enlightened take on this, because I’m a freelancer.  I’m used to occasional work gaps, and I’ve had to weather tough times.  I have much more personal responsibility for my income than most people, and that’s how I like it.

The real lesson of this article, even though they choose not to say it explicitly, is that we each need to be responsible for providing for ourselves.  That’s capitalism – we reap the rewards every day, and we need to take the responsibility as well.  Companies don’t owe us anything for working for them, other than the compensation we’ve been getting all along.  If you work for a company each pay cycle, and they pay you according to your agreed arrangement, then your obligation to each other is fulfilled.  Anything above that is gravy, and you should be prepared to go without it.