Thoughts on The State of the Union Address

by, Bill Miller, CIO, Brinker Capital

One of our political consultants, ISI, titled their recap, “State Of The Union Has Many Goals, Few Concrete Proposals.” Goldman Sachs wrote, “State of the Union: New Proposals, but No Big Surprises.” ISI continued, “In fact, it’s an exaggeration to call most of them proposals; most could be better described as goals or even platitudes. We know investors will be looking for the concrete details from the speech. At this point, there aren’t any.” Goldman Sachs concluded, “…the President will submit his budget to Congress on February 13. It is likely to include greater detail on the proposals in the President’s speech…”

So stay tuned, I will update you after February 13^th.

In the meantime, please read highlights from 13D Research, a reputable think-tank. The title is, “Can America remain the world’s engine of innovation without manufacturing?” The analysis goes to the heart of what the President’s State of the Union should have addressed.

I quote,

Between 2001 and 2010, U.S. companies closed more than 42,000 factories, eliminating more than 5.5 million jobs. About a third of the country’s once-mighty manufacturing sector has disappeared.  The loss of textile and toy production to low-cost producers has had devastating impact, but more painful still is the weakening of tomorrow’s manufacturing muscle—alternative-energy technologies, specialty chemicals, and electronics, among others.

The number of high-tech manufacturing jobs in the United States has declined by 28% in the past decade, according to a recent report by the National Science Board.  Most of these jobs have migrated to Asia—not because wages are so much lower, but because governments there are more accommodating. Turned off by a myriad of factors in the U.S.—high corporate taxes, low incentives, a lack of skilled workers, confusing paperwork and constant uncertainty about government policies—manufacturers are gravitating elsewhere. And once the manufacturing of a product moves abroad, the innovative energy around that product will soon follow.

Caro Pope recently penned a three-part series for Bloomberg on the forces chipping away at Americas’ manufacturing edge. His conclusion—industries are leaving the U.S. not in search of cheaper workers, but of more supportive governments. Pope recounts an exchange with the head of Silicon Valley’s hottest clean-technology startups.

“I’d love to make this product in America. But I’m afraid I won’t be able to.”

“Wages?” I ask.

His dark eyebrows arch as if I were clueless, then he explains the reality of running a fab—an electronics fabrication factory. “Wages have nothing to do with it. The total wage burden in a fab is 10 percent. When I move a fab to Asia, I might lose 10 percent of my product just in theft.”

I’m startled. “So what is it?”

“Everything else. Taxes, infrastructure, workforce training, permits, health care. The last company that proposed a fab on Long Island went to Taiwan because they were told that in a drought their water supply would be in the queue after the golf courses.”¹

In my opinion, the President’s State of the Union Address offered little investment value to the public.

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¹ “What I Learned This Week.” 13D Research. January 26, 2012. St. Thomas, USVI.

Brinker Capital and eMoney Join Forces with Philadelphia Wings Lacrosse to Support The Wounded Warriors Project

On Saturday, January 21, 2012, the Philadelphia Wings were hosts to the Washington Stealth in an American Heroes celebration of professional lacrosse.   Brinker Capital and eMoney provided the Wings with commemorative camouflage jerseys that were auctioned after the game.  Auction proceeds will benefit the Wounded Warriors Project, a non-profit organization that seeks to honor and empower injured veterans.  A check will be presented to the Wounded Warriors project during the February 4, 2012 Wings game.

21 Jan 2012: Philadelphia Wings vs Washington Stealth at Wachovia Center Philadelphia, PA Mandatory Credit:Todd Bauders/ContrastPhotography.com © Contrast Photography http://www.contrastphotography.com email: Contrasttodd@gmail.com

Brinker Capital Market Commentary: January 20

Hope glided down Wall Street on the winter wind, filling the spaces begrudgingly vacated by uncertainty as positive economic data from both the European and North American continents combined with the increasing probability of more accommodative monetary policy being adopted in China to further displace the fear lingering in the marketplace and reaffirm optimism’s current position of prominence.

Click here for the full Market Commentary

Pearls of Wisdom for Women

In 2009, women controlled 27% of global wealth, which is roughly 20.2 trillion U.S. dollars. This segment is expected to grow at 8% per year between the end of 2009 and 2014.¹

Times have changed. Gone are the days where women stay at home to raise their families and their husbands are the breadwinners. Today, women are more active in the workforce and more involved in family finances. The amount of women in the workforce is now almost equal to the number of men in the workforce, and their earnings constitute a growing share of family income. Women have also caught up to men in college attendance, and younger women are now more likely than younger men to have a college or master’s degree.²

Despite the evolving role of women, a disconnect still exists between many financial advisors and their clients. A recent survey conducted by Brinker Capital revealed some of the major areas that are leaving female clients on an uneven playing field.³

Knowledge of Investing⁴
Female clients feel less knowledgeable than men in most key areas of finance and investing. (% rating themselves extremely/very knowledgeable)

• Personal Finance: Women 19%; Men 32%
• Investing: Women 12%, Men 33%
• Understanding the Financial Markets: Women 10%; Men 26%
• Estate Planning: Women 18%, Men 26%

Building Knowledge⁴
Females working with female advisors appear to believe that their female advisor works more actively to build their financial knowledge.

• 63% of females with female advisors feel their advisor works with them to build knowledge.
• 47% of females with male advisors feel their advisor works with them to build knowledge.

So What Can You Do?

• The most important step is to create a financial plan with your advisor that contains your specific goals. This should be reviewed annually to ensure accuracy.
• Have your family involved so they are familiar with your financial advisor, including having access to important documents.
• Finally, if you don’t understand something – ask questions.

¹ July 2010 Leveling the Playing Field: Upgrading the Wealth Management Experience for Women prepared by The Boston Consulting Group.
² March 2010 Women in America Report prepared by the U.S. Department of Commerce.
³ Brinker Capital Survey conducted in 2010 by an independent firm, Client Opinions. Base of respondents was 323 participants, 57% female, 43% male.
⁴ Statements and statistics mentioned in this section were generated based on the responses of the Brinker Capital Survey.