Market Musings Blog

Giving To Charity on the Cheap

Ever wonder how you can make a difference even if you don’t have a lot of extra cash? Here are a few ways we give to charity that don’t require a fat checkbook:

Kiva. Cascade Investment Advisors keeps funds on deposit with Kiva perpetually. We originally sent Kiva $1000, and that was spread among lots of loans. A loan can be made for as little as $25. Most of the loans benefit enterprising folks in South America, Europe, and the Middle East, but Kiva also has a new division making loans in the US. Recipients tend to be very good at repayment, and just a little goes a very long ways when you’re talking about Ecuador or Guatemala. Check it out here:

4Ocean. One of my pet peeves is trash in the oceans, which is reaching outrageous proportions and killing sea life. 4Ocean was started by two guys who went to Bali to surf and saw fishermen coming back with no fish, but lots of plastic, which they then tossed back into the sea. These two started a company that employs fishermen and others to extract the plastic, recycle it, and/or dispose of it responsibly. The results have been impressive. 4Ocean is not a nonprofit, but for as little as $20 you can do your part: If you love animals, this one is brilliant. FreeKibble was started by a grade schooler in Bend, Oregon several years ago. The idea is to answer a couple of trivia questions – one about dogs and one about cats – and whether you are right or not, donates kibble meals to shelter pets. A tie-up with Halo pet food assures the donations, and you can play every day. This one entails absolutely no money out of your pocket! Here is the website:

Happy Giving!

What Slowdown?

While tariffs and threats about tariffs are being blamed for a slowdown in manufacturing indexes, job and earnings growth, lagging auto and home sales etc etc, it is entirely possible that weather is the real culprit. Stocks have swooned off highs and the bond market is acting like the next recession is upon us, but a consistent factor mentioned in earnings conference calls lately is weather. Some companies are referring to the fact that their deliveries through and to the midwestern US were severely hampered in the last few months, depressing earnings. In our office, we waited an extra month for delivery of two replacement windows this spring. Andersen Windows is not alone.

The media have carried stories about towns along rivers having no access to the other side of the river without engaging in a 2 1/2 hour drive to a higher bridge, and other towns completely losing their tourist populations this spring. Likewise, farmers are underwater, literally.

It is possible that the slowdown that we see now will be repaired as the year moves forward. Should that be the case, look out for a foray upwards in yield on bonds, and possibly, a re-establishment of the bull market in stocks.

Why Did the Market Do That?

The media loves to ascribe a reason for every significant stock market move. Humans feel better if there is an answer to ‘why?’ How many times have you read something like, “Stocks fall on worries over trade”, or “Stocks down on concern about inflation”? The reality is, no one really knows why the market moves one way or another from day to day. Stock investors tend to be forward-looking; consequently, prices are not necessarily responding to today’s news. Or, if today’s news is affecting prices, it’s often something completely unrelated to splashy headlines.

We have made the point a number of times that interest rates impact stock prices. Another important factor is earnings from bellwether stocks such as Amazon, Apple, or Boeing. Sometimes this type of news is buried in the back pages of the paper.

So when you hear the nightly business news, ascribing today’s market move to a tweet, spend a little time looking at earnings reports or Fed announcements, and you might find the real reason the market moved.

Will We Ever Build Housing Like We Used To?

The US has been building far fewer single family homes in this economic cycle than we did from the 1960s to the early 2000s. Part of this is blamed on the Great Recession and its impact on millennial buyers. But there are signs that this is about to change.

Recently, Brookings published a study – one they routinely update – on where millennials are moving (see here ). Migration patterns show some surprising statistics. Both California and New York are experiencing net out-migration; Illinois, New Jersey and Massachusetts are on that list too. Inside the numbers, Sacramento and San Francisco are still drawing the young educated crowd, but overall numbers are down for the Golden State. Portland is a big draw, ranking number seven on the city list. But Minneapolis, Kansas City, and Columbus OH rank 14th, 20th and 12th on the list so it’s not all about coastal cities.

The big winner by a long shot is Texas, with millennials moving to Austin, Houston and Dallas in droves. Houston ranks first in the city list, and Texas ranks number one in the state list with Washington (Seattle) a very distant second. Too, the top winners this time around are nearly the same as just after the Great Recession, but their gains are accelerating.

A common theme among many, though not all, of the destinations for young people is cheap housing. Millennials have been slow to marry, and slow to have children, but that’s starting to change. At the same time, this cohort – one of the largest population bulges the US has ever seen – has a lot of student debt and a lasting impression of what can happen when housing goes bad. If you’re young, just married and not terribly wealthy, what do you do if you want a house? The answer lies in where millennials are moving – and we think it indicates that housing is about to gear upward on a long term basis. Beneficiaries of this move might be housing stocks, but looking at housing related bonds, wood and other building products, and furnishings might be a worthwhile exercise in the next couple of years.

Smart Ways to Save Money

No matter how wealthy you are, it’s worth a little effort to save money on everyday items. Here’s a few ideas to try:

  • If you carry credit card balances, look for a card that offers 0% APR for balance transfers for as long as possible. Capital One and Discover, who won’t let you borrow much by the way, frequently have offers that extend for longer than one year. Mind the fact that these all charge a ‘balance transfer fee’, usually about 3%. Still, if you are paying more than that to carry a balance, 3% sounds pretty good. When you make the transfer, do not use the card for anything else: usually, if you do, you subject the entire balance to a higher charge. With 0% APR, all of your payment goes to reducing your debt, so make your payments as high as possible.
  • Audit your phone bill and your cable bill regularly. Frequently, services ‘show up’ without your explicit permission; even if that’s not the case, you may find that you’re paying for something you never use. Also, call these companies, to ask about a better deal. My internet provider dropped its requirement that I purchase a data line months before I noticed it; this shaved over $20 a month off its cost, and the company was kind enough to back date my bill! Ditto with cable. Here, you may have to play hardball. I’ve found that when I mention that if I can’t get a better deal, I’ll switch to Sling TV, I am transferred to the ‘customer loyalty team’ where they’ll bend over backwards to get me a better deal. Or, you could just switch to Sling anyway.
  • Ask about bundling your home, auto and other insurance if you don’t already. If you do, shop around for a better deal anyway. (Use a broker if this drives you nuts.) Insurance companies hike your rates slowly over time, and it’s possible that your rate has become higher than if you had a new policy from a different provider who is hungrier for your business.
  • When you want to buy something, enforce a 10 day rule: wait 10 days to see if you still really want the item. Often, purchases are impulses, and 10 days on ice is enough to discourage the purchase altogether.
  • Particularly now that short term interest rates have risen, quit keeping excess money in a checking account and look around for a certificate of deposit or at least a money market fund. Talk to your bank to see what they are willing to offer.

For more ideas, simply run an internet search on ‘ways to save money’ and look for something that resonates. In one case, I saw that a couple ditched their Starbucks habit in lieu of buying an expensive but fun coffee machine, and investing in really good coffee. In a short while, making exotic coffee drinks at home paid for itself.