Various Responses to Readers

Malcolm Berko
Tue, 22 Jan 2019 21:00:00 -0800
Lifestyle

Dear Readers: The following are answers to recent letters received at my post office box from readers who did not include a stamped self-addressed envelope. I'll list the cities where the questions came from after my answers.

In response to a question from Moline, Ill.: Over the past few dozen years, plaintiffs' lawyers have asked me to appear as an expert witness for investors suing brokerages because their salesmen allegedly sold unsuitable investments and thus caused the clients significant losses. I won't do the "expert witness" thing, because in my experience, most hearings are semi-fixed in advance of the presented facts. I've been in this business since 1963 and watched a lot of water go over the dam. Because I know nearly every way brokers can skin their customers, I know that 90 percent of the time, the brokerages and brokers are guilty as sin. Still, the brokerages and brokers almost always win.
Updated: Wed Jan 23, 2019

Dear Readers: The following are answers to recent letters received at my post office box from readers who did not include a stamped self-addressed envelope. I'll list the cities where the questions came from after my answers.

In response to a question from Moline, Ill.: Over the past few dozen years, plaintiffs' lawyers have asked me to appear as an expert witness for investors suing brokerages because their salesmen allegedly sold unsuitable investments and thus caused the clients significant losses. I won't do the "expert witness" thing, because in my experience, most hearings are semi-fixed in advance of the presented facts. I've been in this business since 1963 and watched a lot of water go over the dam. Because I know nearly every way brokers can skin their customers, I know that 90 percent of the time, the brokerages and brokers are guilty as sin. Still, the brokerages and brokers almost always win.

In response to a question from Ann Arbor, Mich.: Yes, many of the 6,000 franchised Starbucks stores sell wine and beer, and approximately 8,500 of the 9,000 company stores also sell alcohol. Starbucks is rated a "buy" by 24 of Wall Street's 33 analysts who follow the stock. They believe that SBUX ($66) sells beer and wine because that's the only way to encourage customers to spend $7 for a cup of coffee. In the recent market drop, SBUX fell by only about 3 points. Nonetheless, I disagree with the Street's assessment. Though SBUX's shares just dribbled on the downside, I believe that they will only dribble on the upside and doubt they will trade above $72 in 2019.

In response to a question from Indianapolis: Bernie Sanders has good intentions and fervently believes that the government must be more active in providing significant amounts of social, educational and financial services for Americans. Elizabeth Warren wants the government to do more to help the consumer. She wants a $22 minimum wage, wants corporations to be taxed at Clinton-era rates and advocates a minimum national income for every citizen. She believes that we need more financial regulation and that the government must be more proactive in meeting the needs of its citizens. Barney Frank, Janet Napolitano, Sonia Sotomayor, Harry Reid, Hillary Clinton, Nancy Pelosi, Chuck Grassley and others have worked to make our government more protective of the voters. They urge more government involvement in controlling the banking system, pharmaceuticals, health care, education, land use, retirement plans, transportation, housing, workplace safety, child care, food production, the airwaves, the environment, family planning, etc. Well, anyone who believes he and his family can live a decent life with Washington to look after them ought to take a good look at the American Indian.

In response to a question from Fort Lauderdale, Fla.: Money-losing Yahoo, which employed the most oafish people I've ever talked to, was purchased by Verizon in 2017 for the princely sum of $4.8 billion. What a blunder it turned out to be, because many of Yahoo's oafs remained with the company. After the merger, the dimwits changed Yahoo's name to Oath. Ballerina Marissa Mayer, who frolicked around Yahoo as CEO for several years, was given a $23 million severance package. But a year later, the oafs at Oath are still generating losses. Verizon is now trying to unload Oath, which includes money-losing Yahoo and AOL, another big blooper of a purchase ($4.4 billion in 2015).

In response to a question from Detroit: Gift of College gift cards are roguishly promoted as a way for a friend or a family member to help a homie or a loved one pay for college. Because the GOC card can be redeemed only in a 529 savings plan or to pay off student debt, Aunt Tillie will know that her gift can't be spent on pizza, pretzels and pot. In any event, the GOC card is a massive rip-off. The company charges $3.95 (16 percent) for a $25 card, and if you want the card mailed to a relative, it will cost you another $1.95. (Although, the fee for a $50 GOC card is $4.95, or under 10 percent, and a $100 GOC card will cost an additional $5.95, which is less than 6 percent.) There are so many ways to skin the public, and financial grifters are hard at work finding more.