Business

ON THE MONEY: When it comes to assets, it’s all about preparation

WAVE NEWSPAPERS — It’s worth noting that on a per capita basis, more Americans became millionaires after the Great Depression than any other time in history

Published

6 years ago

January 11, 2019

John Grace Contributing Columnist

By John L. Grace

About four years before the 2000-02 “tech wreck” where the NASDAQ dropped 80 percent, according to Yahoo Finance, former Federal Reserve chairman Alan Greenspan warned of “irrational exuberance” at a dinner speech.

In an interview with CNN Dec. 17, Greenspan said, “It would be very surprising to see [markets] sort of stabilize here and then take off.”

Greenspan went on to say leading stock indexes may have a little upside left. But that’s only going to make the inevitable drop more painful. So, “at the end of that run, run for cover,” he said.

Now I don’t know if Greenspan is correct, nor do I offer an opinion as to how much time there might be before a major downturn. But I do know that no one needs to foresee the future to prepare for it.

Who told us in 2007 that credit default swaps and sub-prime mortgages could ruin the world as we knew it? So if no one told you about the last crisis, who do you think will alert you in advance of the next one?

Nearly half (48.6 percent) of chief financial officers in the U.S. believe this country will be in recession by the end of next year, according to the Duke University/CFO Global Business Outlook survey released on Dec. 12. The Duke survey also found that 82 percent of CFOs believe that a recession will begin by the end of 2020.

It seems like just a minute ago the CFOs were embracing the mistaken notion that this country could enjoy 4 percent gross domestic product growth. We’ve been saying for some time now what former Fed Reserve Chair Janet Yellen said that, “quite high” levels of corporate debt are “a danger.”

Yellen is absolutely correct with her observation, “High levels of corporate leverage could prolong the downturn and lead to lots of bankruptcies,” she said on CNBC, Dec. 10.

According to me, it’s not about the prediction, it’s all about the preparation. We put far more emphasis on the work necessary to keep client assets intact than attempting to predict what might happen or when it might happen.

I was asked to speak to 100 of my peers recently. I started by asking, how do you think that two-story white house in Mexico Beach, Florida survived Hurricane Michael?

The first answer was, “It was God,” and the second answer offered was, “It’s a miracle.”

I said you can believe what you want to believe, but the third response is the correct answer, “They built it for the big one.”

The point I was making is that just as most houses are built in the same pattern, most portfolios are going to do the same thing at the same time. Like ordinary houses after a Category 4 hurricane, assets could be devastated.

As we see one of the few houses left standing after Hurricane Michael, I did everything I could to inspire my colleagues to approach the task as those homeowners did.

“It’s the first house that either one of us had ever built,” said Dr. Lebron Lackey, one of the homeowners.

The house was built with concrete walls. The foundation included 40-foot pilings. Rebar was placed through all of the walls to increase stability. The additions added about 15 to 20 percent more expense than usual.

In the investment world, cost is king. The lower the cost the better. But that answer addresses a different question. To “run for cover” by keeping your assets intact begin by determining how much loss you can accept. Followed by how active management strategies can be applied on behalf of your personalized goals.

Then look to see what asset classes outside of cash, bonds and stocks can be added to your portfolio. I count eight asset classes at Yale Endowment, for example. A stool with eight legs is simply stronger than a two- or three-legged stool to hold up the weight. Even in a hurricane.

When it comes to cost, it is often the case that you get what you pay for.

Suppose the CFOs are wrong about the severity and the timing. Just suppose it’s not another recession around the corner, because it could turn out to be a worldwide Great Depression II.

Something astrophysicist Michio Kaku said at a 2014 conference I attended should have happened 10 years ago. Act as if another depression is in the cards. If it doesn’t happen, who cares? If it does happen, prepared investors may be able to take advantage of opportunities they never saw coming.

It’s worth noting that on a per capita basis, more Americans became millionaires after the Great Depression than any other time in history. As I wrote just before Thanksgiving: Be thankful for cash. And get ready. Winter is coming.

John L. Grace is president of Investor’s Advantage Corp, a Los Angeles-area financial planning firm that has been helping investors manage wealth and prepare for a more prosperous future since 1979.

His On the Money column runs monthly in The Wave.

John Grace Contributing Columnist

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Oakland Post: Week of October 30 – November 5, 2024

The printed Weekly Edition of the Oakland Post: Week of October 30 – November 5, 2024

Published

22 hours ago

November 1, 2024

Oakland Post

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Business

Chevron Reports Progress in Flaring, Emissions at Community Town Hall

At the first in a series of community town halls on Oct. 16, Chevron Richmond reported a reduction in year-over-year flaring incidents, both in number and duration, and detailed new technologies and processes that will further drive down emissions and heighten community awareness about operations. Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Published

5 days ago

October 28, 2024

Oakland Post

Community member Kathleen Sullivan speaks at the Chevron town hall. Photo courtesy Richmond Standard.

By Mike Aldax

The Richmond Standard

Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Similar town halls will be held twice per year over the next five years as part of a settlement agreement with the Bay Area Air Quality Management District (BAAQMD).

The goal is to increase transparency about flaring and increase opportunities for the community to get answers to their questions about potential impacts to the community.

A key output is the creation of a Community Action Plan, or CAP. The CAP aims to create a two-way dialogue between Chevron and neighbors around flaring and environmental compliance.

“Chevron’s focus in this process is one of learning and engagement,” said Brian Hubinger, public affairs manager at Chevron Richmond. “We felt the most efficient way was to bring together a broad selection of community members rather than just think about what it would take to comply with the settlement agreement.”

The first town hall drew a few dozen members of the community, including Chevron employees, representatives of fence-line neighborhoods and members of local environmental organizations.

During the event, Chevron employees reported that 19 BAAQMD-reportable flaring incidents occurred at the refinery from October 2022 to September 2023 with a total duration of 270 hours. During the same period this year, 18 flaring incidents occurred with a total duration of 159 hours, marking a 41% decrease in duration.

Further gains are expected with the implementation of Flare IQ, set to be installed this year and next on all of the refinery’s flaring systems. Flare IQ is described as a supercomputer with an algorithm that gathers data from operations and enables employees to address potential issues before they occur.

Chevron also reported a 40% decrease in particulate matter emissions since the completion of the refinery modernization project in 2018.

In addition, flare gas volume related to Chevron’s new hydrogen plant project, built as part of the modernization project, decreased by 85% since 2019. The hydrogen plant has also reportedly made the refinery 20% more efficient.

“We’re really proud about that,” said Kris Battleson, manager of health, safety and environment at Chevon Richmond.

Neighborhood council leaders joined the president of the local NAACP in lauding the effort toward transparency and accountability. Among them was Vernon Whitmore, president of the Sante Fe Neighborhood Council and member of the 15-person CAP committee.

“The way we were able to talk openly and freely with Chevron – honestly, bluntly and frankly – while developing this program was very good,” Whitmore said. “And it was something that was well-needed at this time.”

Still, residents are skeptical, including Kathleen Sullivan, a longtime community advocate who also serves on the CAP committee. But she added, “you can’t complain about something and not be involved in the solution.”

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Bay Area

S.F. Mayor London Breed Meets with Black Businesswomen Supporting Her Campaign

San Francisco Mayor London Breed met with 50 supporters at Cafe 22 in San Francisco’s Union Square hosted by cafe owner LaRonda “Sug” Smith, who is also president of the Enterprising Women Networking SF Chapter of the American Business Women’s Association. Wearing a royal blue pantsuit, Breed happily greeted the group of seniors, business owners, and longtime community members.

Published

5 days ago

October 28, 2024

Oakland Post

San Francisco Mayor London Breed addresses her supporters at a Meet and Greet at Cafe 22 on Mason Street in Union Square. Photo By Carla Thomas.

By Carla Thomas

Wearing a royal blue pantsuit, Breed happily greeted the group of seniors, business owners, and longtime community members.

The mayor stated that the race is a close one competing with wealthy opponents, however she feels confident in her track record of accomplishments, qualifications and being a native San Franciscan.

“My opponents may have the money, but I’ve got the people,” she said .

In response to COVID-19’s impact on Black-owned and serving businesses, in 2020 Mayor Breed launched the African American Revolving Loan Fund, providing zero-interest loans of up to $50,000.

In 2022, Mayor Breed ensured the loans nade to 51 businesses were forgiven. Through her ‘Opportunities for All’ initiative she ensured all 13- 24-year-olds have access to paid internships and a career pathway. Since its launch in 2018, the program has made over 10,000 placements. Ninety-five percent were people of color and 23% were African American.

In 2022, Mayor Breed launched the Black 2 San Francisco initiative hosting HBCU, Historically Black Colleges and Universities for summer programming, a part of her downtown economic recovery and revitalization efforts.

Launched in partnership with the San Francisco Department of Public Health and Expecting Justice, Breed provided a monthly income of $600-$1000 to expecting mothers of color to reduce the economic stress that leads to racial birth disparities.

The program was the first of its kind in the nation and will expand from 150 recipients to 425. Breed helped fund a new small business hub at the City’s African American Arts and Cultural District.

In 2021, Mayor Breed proclaimed Juneteenth as an official City holiday, celebrating the Black community’s resilience and emergence from slavery.

Mayor Breed also reinvested $60 million of City funds annually to assist the City’s Black community in breaking a cycle of poverty.

Business training assisted 350 entrepreneurs,

Over 50 businesses entered or renewed leases,
1,000 residents completed workforce training,
Over 50 families and seniors secured mortgages and 6,000 households were provided nutritional support.
1,000 hours of mental health support and 38,000 young people were provided support
Nearly 1,000 youth recieved literacy and mentorship support, and nearly 40 educators were supported.

“A people that are 5% of the population, should not be 40% of the homeless population or condemned to poverty,” said Breed. “It’s not all about the numbers, but the overall disparity.”

Breed says she understands the plight of the underserved and is a mayor for all people but the data shows the African community left behind.

“When you uplift a community, you uplift the City and we invested in the Latino communities and in the Stop Asian Hate movement with resources to address those challenges,” said Breed. “Because ultimately, as mayor, it is my job to serve and protect all of the City.” “I’ve helped over 20,000 exit homelessness and increased our shelter capacity by 70%.”

The attacks Mayor Breed has experienced recently have reminded her that being a Black woman, you have to work twice as hard and yet be unfairly and overly scrutinized. However, Breed says she will continue to fight to lead San Francisco for another term.

“Mayor London Breed is for our people and all people in this city,” said LaRonda Smith who was awarded a proclamation from the mayor’s office. “This city is her community, she cares and has supported so many communities, organizations, and small businesses to prove it.” The event also served a celebration of Cafe 22’s three years in business at 325 Mason St. in San Francisco.

Attendees included business owners Del Seymour of Code Tenderloin, Velma Landers and Idella Hill of the ABWA, and Julianne Banks.