Is Pushing More and More Businesses into Bankruptcy Is Pushing More and More Businesses into Bankruptcy

If you don’t change, you will become a dinosaur. That should be the lesson that retailers are learning from is the big boy on the block and is stealing more and more market share as consumers gravitate to the ease of shopping on-line.

They are about to unseat Macy’s as the largest seller of clothing. They also have plans to greatly expand their online grocery store delivery.  If they figure that one out, many grocery stores will be out of business.  Further, they are already the #1 retailer of electronics.

So far this year, the number of retailers filing for Chapter 11 bankruptcy protection is headed toward its highest annual tally since the Great Recession.  The number of retailers on Moody’s distressed list is also the highest since the Great Recession.  Bear in mind, this is happening as the economy is growing.  You are seeing a seismic shift in how people shop. This doesn’t even take into account the death spiral at Sears and JC Penny or the other retailers who are closing stores. Consider the following:

Payless is said to be filing bankruptcy very soon with plans to shut down up to 600 stores.

Macys is planning to shut down 168 stores this year

Foot locker plans to close 100 stores in 2017 after closing 41 stores at the end of 2016.

Kohls closed 16 stores in 2016 and is going to reduce square feet in 500 of the 1250 stores and lease that extra square feet to other tenants to reduce expenses

CVS is closing 70 stores not due to but do to the uncertainty of the affordable care act

Abercrombie and Fitch closed 54 stores last year and plans on closing 64 more this year

BCBG will close 118 stores in 2017. They are already under Chapter 11 bankruptcy

HHGreg is closing 3 distributions centers and 88 stores.  They are also under chapter 11 bankruptcy.

Pier 1 plans to close 17 this year after closing 16 last year with plans to close a total of 100 stores by 2019

Staples closed 48 last year and plan on 77 stores this year.

Tiffany & Co. will close 6 stores this year.

The only way that most survive is to develop an online presence.  Unfortunately, dominates that space and almost monopolizes the internet.  Technology and change is a real thing.  Businesses of all types need to pay attention.

Sign of a Bear Market

Sign of a Bear Market

Do you think that stocks are a great investment today? If the answer is yes, you are not alone. A hallmark of the ending of bull markets is extreme optimism. Now I know that sounds counter-intuitive. Wouldn’t everyone being positive be a good thing?  Unfortunately, that is not the case. There is an old saying from economist and writer Humphrey O’Neil. He says when everyone thinks the same way everyone is wrong.

Historically speaking, everyone is over the top enthusiastic right before a bear market starts. It was that way in 2000 and 2007. What about today?  Investor sentiment (being positive) is at levels not seen since 1987.  We all know what happened in 1987.  The second biggest crash in the history of the stock market.

Now I can add to that number.  Margin debt is at 513 billion dollars which is an all time high. Margin debt is particularly important to follow because it is typically at it’s highest right before bear markets start.  When investors are the most optimistic they borrow money against their brokerage accounts and then invest it which creates margin debt.

February data shows that margin debt is at an all-time high.  It is one of the more riskier strategies to invest because margin debt can’t exceed a certain percentage of an account.  Thus, if stocks are declining and the value of a margin account declines then investors are forced to sell stock to keep the percentage of margin debt in line with regulations.  If you have a high percentage of people selling stock to satisfy the percentage of margin debt, then you just have more selling which creates more decline. It is a dangerous loop and one of the main ingredients to the 1929 stock market crash.

Does record margin debt predict a bear market? No, it is just important to know that record levels of margin debt are typically present before a bear market starts.


What Credit Card Companies Don’t Want You to Know

What Credit Card Companies Don’t Want You to Know

The devil is in the details. For credit cards that is the fine print. Unfortunately, you don’t get the real fine print until after you received the card. You think that you did. After all, you read the one page agreement that gives the details. That is only a 10th of what you need to know. The real document is the 18 page card member agreement which is mailed to you after the fact. That describes exactly what they can do. What is worse, you agreed to it when you signed the dotted line.

Here is what you need to know:


How do they apply your payment?  A lot of credit card accounts have debt at two different interest rates. For example, let’s say that you have 5,000 at 15% and 5,000 at 10%. They will take the minimum payment and first pay the interest charges. Then they apply the rest of the minimum payment to the LOWEST interest rate debt to insure you will stay in debt as long as possible. Only if you pay more than the minimum payment will it be applied to the higher interest debt.


They can declare your account is in default if you don’t make your payment or if you are late. Generally speaking, once in default you risk going to collections and have damaging effects to your credit report.


I’ll just quote Citibanks agreement – “We may close or suspend any reason or for no reason.  (yes I didn’t make that up)  If we close or suspend your account, you must pay us all amounts you owe on the account”.


Some more straight forward details. “We don’t guarantee approval of Transactions. We are not liable for those that aren’t approved, even if you have enough available credit on your Account.”


Disputes are resolved by arbitration. In arbitration, you waive the right to go to court or participate in a class action suit. The consumer typically doesn’t fair well in arbitration. Further, you have to pay full legal costs of an attorney. They use arbitration agreements for a reason.


Remember that reward program you signed up for?  “Any benefit, reward, service or feature offered may change or be discontinued at any time for any reason. Separate terms and conditions will describe any exceptions.”  Where do I find those exceptions?


As if the above wasn’t clear enough, they add this language towards the end of the document.  “We may change this Agreement for any reason and at any time, subject to applicable law. This means that we can change rates and fees that apply to your Account. It also means we can add, replace or remove provisions of this Agreement.”


Even the best of the best card companies subject you to these terms. Make one mistake and you’ risk dealing with a debt collector and destroying your credit.


The credit card landscape has a lot more risk than most people know. This is why credit card companies are not up-front.  Chances are you will throw that agreement in the trash once you do receive it.


Simple Way to Reduce Interest Rates and Fees on Your Credit Card Debt

Simple Way to Reduce Interest Rates and Fees on your Credit Card Debt

 A survey conducted by Bankrate shows how easy it is to reduce interest rates and fees. What is the secret? All you have to do is ask. Sound too easy? Look at these survey results:

  •  87% of those who called in and asked for a late charge to be waived had them forgiven.
  •  67% that wanted lower interest rates received them as well
  •  89% of those who asked for a credit limit increase received it
  •  82% hand their annual fee waived or reduced

 Why would banks actually agree to reduced revenue? After all, banks and credit card companies are notorious for ripping off their cardholders through their deceptive practices? (Ironically that we agree to when we sign on the dotted line). There are really two answers. 

 First, very few people make these requests. If a higher percentage of people requested these discounts, it probably wouldn’t happen.

 Second, credit card companies and banks do appreciate a loyal customer who has paid on time and honored their commitment to making the credit card relationship work. After all, in order to get those discounts, a stellar payment history is mandatory. 

 So what do you have to lose? Just ask…

 Now there is one question that you should never ask. I have only seen one example of this happening and one example is enough for me to advise never to ask this question.

 A listener sent me a story stating that she asked the credit card company to make a settlement on her credit card balance. They viewed her as a risk, closed her account, and sent her to collections. Can they really do that? Yes, it is in the fine print. I can’t tell you if that is going on today. Since it is such a low probability that they would negotiate a settlement (near zero) it is not worth taking that risk.

The Yes Scam

The Yes Scam

There is a new scam circulating around and you could easily fall for it.

According to the FCC, the scam begins as soon as a person answers the phone. A recorded voice or an actual person asks: “Can you hear me?” And the consumer responds, “Yes.”

“The caller then records the consumer’s ‘Yes’ response and thus obtains a voice signature. This signature can later be used by the scammers to pretend to be the consumer and authorize fraudulent charges via telephone,” an FCC news release said.

Once again I thought I would go over the 6 tips to preventing identity theft and fraud.

(1)     Make it a habit to continually check your credit card statements and debit card statements for unauthorized charges. Just make it a habit.

(2)     Get Credit Monitoring – your bigger companies like LifeLock say that is not enough  – until they can prove that their system does everything they say it can I think I will stick with credit monitoring.

(3)     Don’t use your car as a locker for purses, wallets, briefcases – Thieves smash windows and can easily steal your belongings.

(4)     Don’t carry sensitive information such social security numbers in your wallet or purse.

(5)     Be intentional when it comes to protecting your identity.  It is a huge problem and you don’t have the luxury of being lazy.

(6)     Golden Rule of identity theft – Don’t respond to anyone who approaches you for information. That would include emails that ask for information, people coming to your door, and most importantly any phone calls. Only give out information when you have verified who they are.

Trump, Republicans, a Party of Chaos

Trump, Republicans, a Party of Chaos

The failure of the healthcare bill vote on Friday by the house speaks volumes about the mess we have in Washington. Let’s break down what the failed vote says about our leadership in Washington.

First, President Trump Blew It

President Trump is all about the optics and results. He is the guy who is going to fix everything. There is some good and bad with that attitude.  First, he is in such a hurry to get a victory he doesn’t take into account this is Washington DC and not corporate America.  He wants to run the country like a business. This is going to be the weakest part of his leadership. You can’t run the country like a business until you get rid of all of the politicians. Politics taints the process. You have to allow for politics. You have to slow down. He rushed it in order to put a notch on his belt in his first 100 days. Can you imagine what that would have looked like?  Instead he might have just set his agenda back.

Second, Paul Ryan Is Not Mature Enough to Be Speaker of the House

How do you have a Republican led Senate, House, and White House and not get something done? That is a failure in leadership. He knows how Washington works. I don’t think that he has the strength in leadership to undertake this position. He demonstrated that during the election. He is just lucky that President Trump is not making him a part of the conversation.

Third, the Democrats Are Not the Only One Concerned About “Draining the Swamp”

It is obvious there is a strong faction in President Trump’s own party that does not want him to succeed. My guess is that they feel threaten by not only his will to get things done but also his threat to clean up Washington politics. What amazes me is that a good percentage of these Republican politicians have mid-year elections and overhauling the healthcare bill could have been a good thing. That is what the Republican base wanted. They could have worked harder to secure the passing of the bill. In addition, if this is the best that they can do when it comes to unity, then there is doubt this Republican control of the house and senate will last.

Fourth, Obamacare Implosion Is Not the Answer

President Trump, in an attempt to control the optics, says he will stand out of the way and let Obamacare implode. That is a horrible answer to fixing healthcare. Guess who gets hurt in that implosion? The voter gets hurt. You pick up the pieces after an implosion. If the system hasn’t imploded, the system is still intact and a little easier to put back together. Although I support President Trump, I don’t care for the thought of continuing high prices and higher prices in healthcare premiums and services.

Finally, Is Obamacare Even Fixable?

Gordan Gekko in the movie Wall Street made a remark to the up and coming broker Bud Fox about some stocks that he was suggesting for Gekko. After rejecting one after another of Fox’s recommendations he said about the final stock recommendation that “it is a dog with different fleas.” That is the same thing about anything the Republicans are bringing to the table. The system is broken. To even come close to fixing it you must start by removing the politics and that is never going to happen.

This might have been a blessing in disguise for President Trump. His healthcare replacement bill appeared to have just as many issues. However, the optics would have been in his favor. Ironically the implosion of Obamacare might be a good thing for him and not for us.

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