My Kind of Checklist Guy – Heads New Healthcare Program


Meet Dr. Atul Gawande, a highly experienced surgeon, writer and Harvard professor, who starts this week as the CEO of a new health-care initiative formed by Amazon, Berkshire Hathaway  and JPMorgan Chase. 

So why do I like Dr. Gawande? Well he wrote one of the very best books I ever read, The Checklist Manifesto: How to Get Things Right.  I have already written on how this book influenced me and Boeing, check out that story here. Over the years I bought copies of this book for dozens of my employees, friends and customers. It will truly change your life, and it’s an easy read!

As I read the announcement of Dr. Gawande, I just know he’ll be successful in his new endeavor. I’ll bet that over time he will revolutionize the way Amazon, Berkshire Hathaway and JPMorgan implement healthcare in their businesses. 

“We said at the outset that the degree of difficulty is high and success is going to require an expert’s knowledge, a beginner’s mind, and a long-term orientation,” Amazon Chief Executive Jeff Bezos said in the press release. “Atul embodies all three, and we’re starting strong as we move forward in this challenging and worthwhile endeavor.”

Atul is also well known for a 2009 New Yorker magazine article, “The Cost Conundrum,” that found excessive care was being used in a Texas town, on Medicare’s dime. It’s one of the most influential magazine article of the past decade on the topic of Medicare. Not only was it shocking but Gawande reported, years later that costs had dramatically dropped in the town, saving taxpayers about half a billion dollars! The story goes that Charlie Munger from Berkshire sent $20,000 to him via The New Yorker since he was so impressed by the article. Dr. Gawande donated the money to a charity.

Good luck Dr. Atul Gawande!

The Truth about Social Security & a Simple Fix


The headlines read that Social Security is going broke and will run out of money. How bad is it really? Do you want the truth, “you can’t handle the truth”!


  1. Social Security is going broke and in will be in debt. But so what, the entire country is in DEBT.
  2. Hello! News flash, since 2010 Social Security has paid out more in benefits than collecting in taxes.
  3. Until 2018 the annual Social Security payments were less than the interest on the roughly $3 trillion of “non-marketable” US government bonds held by the SS trust fund. Starting in 2018 payments are exceeding taxes and interest.
  4. No doubt about it, using simple math by some time in the 2030’s the trust fund will be down to $0. So what!
  5. However Social Security benefits paid vs trust and taxes only has a 1.5% of GDP deficit!
  6. The Social Security Trust Fund is an accounting gimmick.
  7. Read below, what does this actually mean and here’s how to fix it.

I won’t bore you with all of the numbers other than to say the entire US economy has been successfully living in a debt environment for many, many years. It works fine so long as you can keep it under control. Social Security trustees calculate that projecting all SS benefit payments less the trust balance, interest and current taxes leaves a running deficit of 1.5% of annual GDP. Of course long range projections of GDP over 20-40 years can be off by a trillion or so. The SS trust uses census calculations, projects births, immigration predictions, GDP, expected interest rates, etc. A lot of black magic!

The general model is that future employees will be paying for the monthly SS benefits for us retirees, and so on and so forth. The SS trust fund is an accounting gimmick. The fund is made up entirely by “special issue” Treasury bonds, with special interest rates. Oh, but wait, the Treasury prints money and sells bonds to investors worldwide. SS however buys “special bonds”. All of this money still resides within the US government. If the Treasury wants to, they can just increase the interest rate they pay to the SS trust on these “special bonds”.

The entire issue has little to do with the Social Security trust fund itself! How solvent is the entire US government, forget about just the Social Security piece! The government finds a way to live in debt to pay for Medicare (it too has a “trust fund” running out of money), Medicaid, defense, and salaries for the jillions of federal workers who produce NOTHING. This is nothing more than a general US economy  and debt situation. 

The real issue is that we should be concerned about our ability to manage the entire US debt, one way is by growing GDP and let taxes rebalance the equation. Here is an analogy, a family of 4 earns $100,000 a year. They have debt, including a mortgage, car payment and a small student loan. If their annual debt payment is say $20,000 a year are they in trouble? No, of course not. But if that debt payment is $60,000 a year, wow, that’s a real problem. Let’s say the same family has set aside an investment account for the kid’s education and add money to it each month (the equivalent of the SS trust). Nobody would consider the education fund as being completely separate from the parents overall spending and debt issues, right! If that same family with $60,000 in debt has a $250,000 annual income, they’d be fine (increase GDP example)!

Simple Fixes for Social Security:

Social Security is just another government funded program, like ALL government programs it runs on tax dollars. The SS trust is only as good and sound as the entire US economy over time. The US economy is only as sound as US businesses and US worker productivity (the definition of GDP).

Here are some simple things to do to completely FIX the problem:
1. Eliminate the taxable earnings cap over say the next 10 years. Right now SS deductions are capped at reaching $128,400.

2. Gradually raise the Social Security “full retirement age” FRA. Take it from the current 67 to 68, maybe a month at a time.

3. Raise SS taxes from 6.2% to 7.2% over a 10 year time frame.

4. Optional additional steps – suspend Social Security payments to any family earning more than say $2-3 million a year. Maybe even eliminate Social Security for families with over $10 million in liquid net worth.

These above items would not only completely fund the Social Security program for the next 50-100 years but it would also provide a surplus to increase payouts to the poor who get minimal Social Security benefits.


Rules for my Cash Machine Income Plan


I am retired and 70 years old, my investment goals have changed. I’m now in the “distribution” phase of my financial plan, I no longer have a paycheck. I use my Cash Machine IRA account to “fill the gap” between our Income and Expenses. My goal is a reliable, reasonable monthly cash flow. Our Income includes Social Security (I waited till 70 to build its value) and pensions. My Expenses includes a comfortable life style that my wife and I chose and enjoy, financial help for family members and charitable contributions. It just so happens that my “fill the gap” requirement is almost the same as my IRA Required Minimum Distribution. I withdrawal about half of my Cash Machine dividends to “fill the gap”, the other half or so gets reinvested in more of the same dividend stocks. I will never add any new cash to the Cash Machine account, won’t need to. The final balance of my Cash Machine will go into my Estate Plan when I pass away.

I developed some rules that I continually reference so that I don’t get side tracked by watching CNBC or the “noise” of the days to day stock market. This plan takes a lot of discipline for sure. I want to sleep well at night and not have money worries.

My Cash Machine Rules:

  1. Portfolio value, capital gains and % yield are not my goals, highly predictable monthly income is my goal.
  2. I only look at my monthly cash flow, I don’t watch the portfolio value.
  3. I only buy and hold stocks (minor adjustments are OK), I don’t trim shares for income, only add as I wish.
  4. I only invest in higher yielding stocks or ETF’s that pay 3%+ in dividends. I own equity and debt(bonds, loans).
  5. I diversify to spread my risks.
  6. The principle value of the Cash Machine account should never be much less than it is today in my 25 year plan. It may actually grow substantially.
  7. In an up market or with stocks that outperform, I will add more. Known as the “beat and raise” concept.
  8. In a down market when my portfolio value drops I’ll switch to “buy on the dips”.
  9. I try and remember that market changes do not take away my shares or income, just “perceived value”.
  10. The higher the yield, the lower the growth rate, overall growth is not a goal, monthly income is.

This Cash Machine portfolio and plan has been at least 5 years in the making, it took a complete change in mindset and a lot of patience. It consists of 32 stock, divided up among sectors I’m familiar with. I don’t invest in anything I don’t understand. 

I go with the higher yield investments, 3% or more, and the dividends that do get reinvested are generating more income. This method will generate more overall consistent income than a “dividend growth” strategy where say a 1-2% yielding company  might have 20% dividend growth. If that company can sustain the dividend growth for a number of years then it may work out, but I’ll still be ahead because I will still be adding to higher yielding companies. The math of compounding dividends is quite significant. In recent years the entire value of this portfolio has grown nicely.

I can also sleep at night, knowing that when (not if) we have a market down cycle and my portfolio value decreases, my dividends will be coming my way every month. This  will add balance and actually prevent my portfolio value from dropping as low as the market does. The more dividends you have coming in every month, the more balance that is being added to your account. Some of my stocks have been paying uninterrupted dividends for over 10 years.

So far my experience has been that the longer I’ve owned this Cash Machine the fewer positions I have, 30 or so positions is enough. Over time I have companies that perform very well and some that don’t, and I have found that owning more of what is working is better than owning less and having that money tied up in non-performing companies. So I sell weakness and buy strength. It often takes time to determine strength from weakness. I never feel under pressure to make all my changes at once. I try and stick with my plan and build on it. Patience is difficult.

Further disclosure. In addition to my Cash Machine account I have a taxable account that I view as my legacy account. I started this account in my 20’s and have consistently added to it. In that account I hold high growth stocks, most of which don’t pay dividends. This account is the core of our Estate Plan that will someday pass to my family and charities. In addition, we maintain ROTH accounts and a cash emergency reserve of about 3 years. My goal in retirement is to carefully plan and enjoy my volunteer work. Giving back to the world for all of my blessings is important while I still have my health. 

Building a Cash Machine is not difficult. You might want to try it. 

My Cash Machine investments are shown below.


Here is What a Good Economy Looks Like!

The most hated bull market ever! Sit back and just enjoy it!



  1. The overall global economy is good. Corporate revenues and profits are strong.
  2. Worldwide events have caused spikes in volatility but the market keeps climbing.
  3. Tax reductions have yet to be really felt yet.
  4. Trump has been good for business and the market.
  5. Everyone benefits in one way or another as the “pie” gets bigger.

This bull stock market has been the most hated ever! The above chart shows the S&P 500 Index plotted against a measure of anxiety. The anxiety measurement is the VIX index divided by the 10 year treasury yield. Notice the spikes, or lack of spikes for geopolitical events that have taken place. 

So even with the background noise of the 10 year treasury rising above 3%, North Korea, inflation, Trump tariff’s, China and other distractions we are all making money if we have invested wisely.

The reason for this is simple, the economy is pretty strong AND corporate profits are rising. See the chart below for corporate profits.



Forget It – You Just Aren’t Getting a Raise


Due to long term conditions in the workforce, you just are never going to get a raise. After reading this you’ll understand why and what choices you have if you want to make substantially more money.

Why No Raises:
Most Americans improve their economic status based on their salary at work, not through their investments or any social programs. Going back to the 1970’s wages, adjusted for inflation, for the typical worker have been flat as a pancake, rising only .2% a year. That’s not 2% but .2%, as in an increase of $100 a year for a $50,000 salary!

Have all worker’s been effected? Absolutely not. Since the late 1970’s large salary increases have been distributed to the workers at the top of the salary scale, whereas the bottom workers have seen a loss or at least stagnation. Better educated workers have seen their rate of increase improve over lesser educated workers.

The economy has grown substantially, the stock market has skyrocketed. The Dow Jones Industrial Average was $4,931 in January 1970, in 2018 it hit $26,000! Your retirement plan has benefited just not you real earnings.

So why haven’t real wages increased over the last several decades? There are a whole list of reasons.

  1. Wages typically increase as overall worker productivity also increases. Except for the time period around 200 – 2004, real worker productivity has been stagnate. All the computers and technology is already in place, workers are no longer more productive.
  2. Up until just recently minimum wages have been flat for many, many years. For example the current Federal minimum wage of $7.25 has been in place since 2009! State minimum wages haven’t done much better.
  3. Our good old fashion manufacturing jobs are a small percentage of the overall workforce. These jobs were exported to other countries. Unions no longer carry the weight of prior years. Today’s heavy industry is being dominated my robots and technology. We gave up manufacturing for a services economy.
  4. People no longer are mobile, they won’t take a risk of leaving their current job for a new job, even for a raise. In addition, people no longer relocate geographically as a means to earn more money.
  5. The 2007 recession forced management to reduce expenses and they haven’t lost that mindset 10 years later. With little or no real inflation, there is no reason to increase wages.

How to Get a Higher Salary:
It’s pretty simple, to get a higher wage, become more valuable to someone who is interested in profits. Businesses pay people more money when they can directly align the employee’s performance to an improvement in the bottom line. If you work for the government, school system or a not for profit, this just won’t work.


  1. Learn a new skill that is worth more than your current skill, even in your existing business. Your company pays more as you advance up the “value chain”.
  2. Become the strongest supporter of the company, the best employee, the hardest worker. You get the idea, a business pays more for these people.
  3. Go into sales or become billable. Sales and billable people can get paid based on their contribution to profits. Sales has always carried a negative connotation, however professional sales is a very important and rewarding experience.
  4. Take a job that includes travel if you can. These employees are more valuable and get paid more.
  5. Work for companies that are growth oriented or have high profit margins. Technology and healthcare come to mind. Also profitable businesses like mid-large size law firms can afford to pay well. Low margin and small businesses just might not be able to pay more.
  6. Become a manager and keep moving up in your business or another one. If you have leadership skills use them at work. Most businesses thrive on leadership skills.
  7. Always be competitive, if you don’t tell your boss or company how valuable you are and what you contribute no one else will tell them either.
  8. If none of these appeal to you consider starting your own business, maybe part-time at first. Many small businesses are what I call “job replacement” businesses.

If none of the above work for you, just be happy to have a job and don’t expect a raise anytime soon!




A Simpler Option for a Guaranteed Income – Low Income Workers


Although I don’t believe in providing a “guaranteed wage” as a social program, I do believe there is a simple way to increase the income of lower wage WORKERS! Expand the Earned Income Tax Credit program. Reward those that work and file taxes as a way to reduce poverty. EITC actually encourages working, the higher your income the more EITC you get within various ranges.

I usually don’t write about this topic but as we end tax season some things have become pretty apparent to me. There are many lower income workers that are struggling to make ends meet. These are couples with small families and single mom’s, they struggle to provide a living and a better future for their children. These are workers that are stuck in the lower paying jobs, many under $15/hr. Even workers making $15/hr, about $30,000 a year (about 2,080 work hours per year), find it quite difficult to cover healthcare, rent, food, transportation and basic essentials.

There is however a potential answer to help along these lower wage earners, a system that is somewhat already in place. Our new tax law taking effect in 2018 provides low wage earners with additional increases in valuable tax credits like Child Tax Credit (CTC) and Earned Income Tax Credit (EITC). As valuable as these tax credits are they can be enhance and distributed in a far more meaningful way. I’ll explain the distribution after this example.

Example: A single mother, we’ll call her Mary, has one dependent and is filing her 2017 tax return as Head of Household. Mary earned $26,000 (about $13/hr) in 2017. After standard deductions, 2 exemptions and the Child Tax Credit, Mary would currently owe NO Federal taxes. She would be entitled to about $2,100 in Earned Income Tax Credit and an additional $100 in additional CTC. A $2,200 refundable credit PLUS the withholding tax taken from her paycheck, let’s assume 10%. This refund to Mary of $4.600 is a major event in her life. Under the new 2018 tax law she would get a slightly bigger refund. By the way, the EIC encourages workers to earn more money, not less. This is not food stamps or welfare, you need to work to get these credits.

So, how can this process be enhanced to better accommodate low income workers like Mary and her family?

A Simple Solution:

  1. Allow all employer’s to identify their low income employees with family members and change the IRS withholding tables to allow for $0 Federal tax withholdings. As in Mary’s example, she won’t owe Federal tax anyhow. Her monthly cash flow would improve by over $200!
  2. Allow the same employers to advance fund the Earned Income Credit to employees like Mary in her paycheck. This might sound difficult, but it may be simple. We’ll assume that the employer is already making quarterly withholding payments (form 941) along with Social Security and Medicare. There should be plenty of cash here to pre-fund employees like Mary’s EITC.
  3. We’ll assume Mary would prefer to have an extra $400/mo in cash instead of a one-time refund check a year later.
  4. Congress should further improve the Earned Income Tax Credit calculations maybe even double it.
  5. We need to plug the gap where a single wage earner, working full-time, year round at the federal minimum wage currently does not qualify for EITC.
  6. More individual states should adopt an EITC at the state level. Currently 29 states and the District of Columbia have EITC’s. However, a few of these states make their EITC “not refundable”. Meaning that you can only apply their EITC against actual state taxes.
  7. It was estimated that in 2016, 20% of eligible workers did NOT claim their EITC.

Moving the working poor out of poverty makes sense for all of us. It’s hard to cheat this system.


Bitcoin Mining – May not be Profitable for most of Us

You’ve probably heard the stories of how a friend is “mining” bitcoins and making money. The bitcoin market is quickly changing both in the value of the coins and the ability to “mine” them at a profit. Recent reports have indicated that mining profits are currently less than half what they were in December 2017. So before you invest a few thousand in that mining rig, you might want to look deeper. Of course, the fact that the bitcoin itself is down to about $8,600 today (Coinbase) doesn’t help.

Today new bitcoins are created/earned through an energy-intensive “mining” process that uses high computing power to solve a complex mathematical equation. As a matter of fact, the equation is so complex that it is best processed not by a traditional computer CPU chip but by a multiple number of computer graphic chips (GPU’s). Graphic chips can do complex math because math is just a series of calculations that can be done in parallel, there is no “logic” type statements like a CPU handles (for example: if this, then this task). Therefore a current bitcoin rig is actually a simple computer motherboard, and a series of high level graphic cards with massive cooling. These are computer gaming cards strung together in a single “rig”. These rigs can then be slipped into large rack systems and become huge data centers. This complex math is called a “hash”, think of it as figuring a combination to a lock.

As time goes by there is a pre-established formula as to how many bitcoins will be rewarded for completing blocks. These reward rates are cut in half every 4 years, until all bitcoins have been used up. In addition, the more miners the more competition.

An 8 GPU mining rig.

A crypto mining data center.

The mining process help proves an anonymous miner used the process the network agreed upon to build a “blockchain” record of transactions. The successful miner who does all of this first then get a small fee and a tiny piece of a bitcoin as a reward for successfully completing the equation.

The average transaction fee mentioned above has fallen below 50 cents from as high as $34 in late December, according to If you are mining other currencies other than bitcoin the fee portion may be pennies.

If you want to make money mining Bitcoin or another crypto currency you need to compete with the big data centers. A bitcoin miner in China has very cheap electricity produced by hydropower. The rule of thumb to be able to compete with Chinese miners is to have electricity costs of 4 cents or less per kilowatt hour. Chinese miners also have an incentive to produce bitcoins regardless of cost because it allows them to send money overseas and evade the government’s capital controls. Four out of the five largest bitcoin “mining pools” in the world are Chinese, according

So before you go out and buy your bitcoin rig from Amazon:

You might want to consider your electric bill, it will be huge and since you won’t be the first to solve the math equation, you probably won’t make any money after buying all of this equipment. If you are still interested you can Google search on various calculators to see estimates of income you can generate.

The Most Impactful Things I learned as a President/CEO – Part 1 – A Unique Focus on People

Preparing for a company meeting, we had a canvas wall covering made for the event.

I spent 30 years as a senior executive running software/service businesses. During those years I experienced almost everything imaginable from taking a tiny business from 8 to 100 employees in 5 years while going public and making INC 100 to rolling up a series of competitors to become a market leader.

During my last 15 years or so before retiring as President/CEO I made major changes in my own thinking which resulted in a complete business makeover. Most of this I learned not from seminars, books or consultants, but from my own employees and customers. They taught and I listened!

Unique Focus on People. Outsiders would always ask, what is your #1 priority, the obvious executive answer would be “the bottom line”.  I would always surprise them with “my people”. Sooner, rather than later, the success of a business will come down to its people. Over 30 years technology changed many, many times, we had multiple business cycles like the pre-Y2K boom only to then experience the 2000 market crash. Much of this was beyond my control, what I did control was our strategy and how we treated employees.

It was always my job to make sure that our managers were empowered to hire people that would fit our culture. I wanted to hire executives reporting to me that were smarter than me, at first I thought it was a little intimidating. I learned that if I was going to be the smartest person in the room, we were in trouble, I needed smarter people.

We gave people real jobs, held them accountable, and allowed them to do things they felt were “fun”. Our employees were programmers, business analyst, consultants, sales people and admin. By the way, we had NO secretaries or “assistants”! You wanted coffee, get off your butt and go get it!

Traditional turnover in technology is quite high. However, our average employee had been with the company for over 13 years, we had almost no turnover. Over the years we actually hired back many people who had left the company and wanted to rejoin. We weren’t the highest paying company, although our average salary was mid-upper 5 figures. In order to keep talented, high-performance people, we had a “fun factor”. We would ask an employee, what do you consider “fun work”, and then find ways to match them up with a job closely aligned to what was “fun” for them. If you just couldn’t have “fun” within our company, you belonged somewhere else.

It’s also about the environment, even first level managers could order pizza for their staff anytime they wanted. Every Friday was a company breakfast or lunch day. Once a month we had an “all hands” company lunch meeting across all locations with dial-in conferencing. Each department proudly presented their accomplishments, I provided the company’s complete financials, we had no secrets. I remember our annual kick-off meeting in January 2009, employees all knew friends and neighbors who were being laid-off, we were in a major recession. I told the company I had no plans for a lay-off, however they had to find a way to meet our profit goal for the year. You see, we had a profit sharing program (except executives), the employees got their profit share, before executives (including me) got our bonuses. My concern wasn’t the executive bonuses, but that the employees would earn their profit share that year.  Guess what, under difficult conditions, we again had a record breaking profit year, and the employees were very proud of the profit share distribution they earned. Employees came first, our #1 priority. Lesson learned, great employees will always make the CEO look good!

Annual Meeting of Staff. Every year we celebrated people who “stayed with the company”. You’ve probably experienced an after work party where a well-liked employee would leave the company and everyone would go out for drinks. I just could never get it, we are celebrating you quitting the team. I didn’t attend many of these events in my career. We did however throw an annual bash to honor those employees who “stayed with the company”. For every 5 year milestone with the company you were awarded a valuable gift that evening. This was always a catered event and it was a time for fun and games. The employees ran the event, I of course was always invited. Each year the teams would select a theme months ahead of time and then plan how every employee would get a novel award. We had a “Survivor” night after the TV show, a number of “super heroes” nights, etc. Each event was memorable.  Even our remote working employees were welcome to fly in and get honored. We would also invite the Chairman of the Board of our holding company and other holding company presidents. It was a fun time to “roast” our out for town executive guests. What was the message? We celebrate the people who stay with the company! I didn’t invent the Annual Meeting of Staff, but I made sure that ours was always memorable.

Years after retirement, I still cherish Annual Meetings of Staff “awards” I received.  

Training Clients & Employees.  I believed the more training people had the more they would excel and the happier they would be, and the same with my clients. The cost of training can be quite high, but there were ways to manage the costs and turn it into an investment. A key element of employee training is to first have well defined processes and procedures. People feel much more comfortable when they clearly understand the requirements of their job. We empowered employees and their managers to “own the process”. Here is what we need as the “output”, now tell us how to achieve it, let the team write their job descriptions and procedures.  Top down instructions are nowhere near as effective as teams just taking responsibility.

You will notice that I mentioned “training” clients, might sound a little strange, right. Not at all, we “trained” our customers what to expect from us, how to trust us. The customers knew that our teams would work around the clock, if necessary, to solve problems. Most of our projects were complex, yearlong engagements. These were major, mission-critical software implementations and detailed data conversions. We billed these clients both fixed fees and a lot of billable hours, but we didn’t “nickel and dime” them. I had a “no surprise rule”, if a client had a critical problem I wanted to first hear about it from my own staff, including our plan to resolve the issue. If a client ever felt the need to “call the president”, they would be impressed that I was already aware of both the issue and our plan of attack. I use to tell our customers, “if you ever get a bill from us that you think is unreasonable or a surprise, you call me immediately”! I seldom got calls, and we billed aggressively. Why no calls, the clients knew we were honest, hardworking people. The final proof of my happy-client story is that over the years we changed our terms of sale to be “payment by ACH – Debit by the 15th”. Meaning that we emailed bills to clients or they could download them from our web site, and on the 15th of the month we would reach into their bank account and pay ourselves for the entire amount of the invoice. Almost 50% of our cash flow came from ACH payments. We carried almost no accounts receivable. How many businesses could implement this program? You can if you have clients that trust you!

Perfect Attendance – The “Carriers”.  Many companies have “sick days” and the employees look at them as another form of “vacation days”. Have you heard, I think I’ll take a sick day today? Probably not sick, just needs some personal time off.  We didn’t have “sick” days, if you were sick, stay home. Yes, if you totally abused the policy the manager would come talk to you. We did provide a generous vacation policy. The costs to a business of employees being out “sick” can be pretty substantial. So, we invented the Perfect Attendance Club. If you had perfect attendance for the quarter you’d get a free lunch with the president in a conference room at one of the offices. The 2nd consecutive quarter the lunch got a little fancier, the 3rd quarter, we’d go out to a local restaurant for lunch. Now, if you had a full year of perfect attendance you would get recognized at the Annual Meeting of Staff and invited out to a very nice restaurant for an evening of “anything you wanted to order” and nice drinks. It was a major event. I use to enjoy my trips around the country doing these Perfect Attendance dinners.

The most amazing thing happened, people weren’t sick anymore! Every year we had a very high percentage of employees who made it to the Perfect Attendance Club. It was pretty much the same people every quarter and every year. We got the name “The Carriers”, we never got sick, we just “carried” the germs to all the others. In my 20 years with RainMaker I never took a sick day! If I was that sick, I’d use a vacation day, no way was I missing out on the “Club”! By the way, the costs savings to the business were substantial!

So what should a CEO’s #1 priority be? People!

They will teach, you just have to listen.

World’s Leading Oil Producer – USA …. Really!!


This month U S oil production exceeded any other country in the world, yes  … including Saudi Arabia and Russia. The US now produces 10 million barrels a day and could hit a high of 11 million a day by the end of the year. This major change of events is due to US use of high technology to continually improve shale oil production, commonly called fracking. Where as many OPEC countries and Russia have cut back production to help raise the price of oil, the US has taken advantage of this gap to quickly add fracking drill rigs. The boom times are back for US shale oil, but this time the shale oil producers are cautiously watching their financials, to the delight of investors.

The US is slowly becoming a self-sufficient oil consumer, and over the next several years become a “net oil exporter” There are an estimated 7,000 additional shale wells that have been drilled but not completed, a tremendous backlog.

So what is the next step for US oil and natural gas …. major exports! Just recently the first supertanker pulled up to a Louisiana offshore oil port and did a test loading of oil. Once the process is tested and approved the US could export massive amounts of oil on these supertankers to lucrative overseas markets. These supertankers can carry 2 million barrels of oil and the Louisiana “LOOP” is the only deep-water port that can currently handle these huge vessels.

The US government lifted the ban on oil exports in 2015 and the gulf coast has responded with an increase in oil exporting. However, the use of supertankers takes this to a whole new level. In 2017 exports reached a high of 2 million barrels a day. China is the 2nd largest buyer of US oil after Canada.

How far is the US from being 100% self-sufficient? Pretty close, currently the US is a “net importer” of oil at about 3.5 million barrels a day, that gap will close shortly.

Does this mean oil and gasoline will get cheaper for those of us in the US? No, probably not. The rest of the world set’s the price of oil and US providers have no incentive to discount the price of oil here at home when they can export it at a higher price. The good news is that at least the US is no longer being held hostage to OPEC for our sources of energy.


Getting “Called Away”!


Just this last week I had my 3rd preferred stock or baby bond called away this year. I just can’t remember the last time I had a preferred or bond called away other than at an expiration date. Luckily it was a small position in my IRA, I had bought it at a discount under par a year or so ago and immediately sold it for a few pennies over the redemption price. I’ll take the 8% dividend. 

Here is the email from Fidelity:

As you can see the original call date was still 2 years out. So why would Star Bulk call this 8% baby bond (exchange traded debt), ticket SBLKL, which was trading at slightly above par? What they did was to anticipate a higher cost of future money and extend out the “loan” so to speak.  To do this they previously released a 8.30% senior note due 2022, ticker SBLKZ.  This new issue is callable on 05/15/2019, and matures on 11/15/2022. The transaction extended debt out 3 years at a cost of .3% extra on the interest side. 

The message here is that there is still a lot of money available even to companies out on the risk curve like Star Bulk by those of us seeking higher yields. These companies see interest rates rising in the future are willing to pay up now to lock in the cash they need. 

I took my proceeds from the sale and added to my position in Main Street Capital, ticker MAIN, a BDC with an excellent track record. The yield is a little lower but there is a lot of room for capital appreciation. Here is a pretty nice chart, and the chart does not include a 7% yield (including 1-2 special dividends every year)