Author Archives: Edward Brownlee

TRICARE Fit with Medicare

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At age 65, TRICARE health care plans morph into the TRICARE For Life Medicare supplement plan, also known as TFL. For TFL to function, you must have Medicare Parts A and B. Health care providers bill Medicare as the primary payer and TRICARE as the secondary payer.

If you’re entitled to premium-free Medicare Part A, you must also have Medicare Part B to keep TRICARE, regardless of your age or place of residence (exceptions to this rule are discussed in the Delaying Medicare Part B Enrollment section).

Once you have both Medicare Part A and Part B, you automatically receive TRICARE benefts under TRICARE For Life (TFL). TFL is the health plan for TRICARE benefciaries who have Medicare Part A and Part B. Medicare Part C (Medicare Advantage plans) and Part D (prescription drug coverage) aren’t required for you to have TFL coverage.

Regardless of your age or the age of your spouse, you will not lose TRICARE medical coverage if you do not signup for Medicare. Simply enroll in Medicare and TRICARE For Life. Your window to apply starts three months before the month you turn 65. It lasts seven months.

But don’t wait. Two or three months before your birthday, visit Medicare.gov and enroll. Early enrollment ensures you receive your Medicare card in the mail. Your TFL coverage begins the first day you have both Medicare Parts A and B; there is no separate enrollment paperwork for TRICARE For Life.

Medicare Part A has no premium. Part B has a monthly premium based on your income level. The Part B premium is per person, per month. Medicare uses the last reported tax filing, two years ago, from the IRS to determine your income level. Search “Part B Cost” at Medicare.gov to find your current cost.

If you travel overseas, your TFL converts to TRICARE Select Overseas. You’ll be covered at TRICARE Select rates. You will pay for services overseas out of your own pocket and be reimbursed by TRICARE after you file a claim.

Understanding all the nuances of health care can be tricky. MOAA has subject-matter experts on hand to assist Premium and Life Members. Call  (800) 234-6622 or email msc@moaa.org and we can properly direct you to assistance.

References:

  1. https://www.moaa.org/content/publications-and-media/news-articles/2020-news-articles/you-ask,-moaa-answers-tricare-at-65-and-over/
  2. https://www.tricare.mil/-/media/Files/TRICARE/Publications/BrochuresFlyers/TRICARE_Medicare_Turning_Age_65_Brochure_Feb2023_022123_FINAL_508.pdf

Straight Bourbon Requirements

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Wood and time are the two most expensive items to producing bourbon, and that the most valuable commodity at any distillery is experience.

The terms, KENTUCKY – STRAIGHT – BOURBON – WHISKEY, all mean something on their own, and when they appear together..

Read a bourbon label can be challenging. But if you know the procedures and all that is involved, a bourbon label typically gives you the age, state, and brand.

On May 4th, 1964, Congress passed a resolution designating bourbon as the native spirit of the United States. This resolution codified the industry standards for production and claimed that anything labeled and sold as bourbon had to be made exclusively in the United States. And, this legislation differentiates bourbon from Scotch, Irish, Japanese, and other types of whiskeys.

Here are a few of the basic categories, terms, and general whiskey vocabulary on your bourbon label:

A bourbon whiskey must meet the following qualifications to be considered bourbon:

  1. It must be distilled from a grain mash consisting of at least 51% corn.
  2. It must be distilled at a maximum of 160 proof, and barreled at a maximum of 125 proof.
  3. It must be aged in a new, charred oak container. Additionally, the oak must be virgin, meaning that the container cannot have been used for any other purpose prior to the whiskey entering and the barrel used to age bourbon may only be used once. The industry standard is an American white oak barrel, usually 53 gallons.
  4. Additional flavoring or coloring may not be added to the distilled spirit. Only water, to cut the proof, or bourbon from other barrels may be added to the whiskey.
  5. It must be made in the United States.

The term “straight” bourbon is a legal reference to the liquor’s age. Straight whiskey is aged for a minimum of 2 years. It is rare that a whiskey develops any depth of flavor prior to that 2-year mark.

Proof

Proof, or alcohol by volume (ABV), determines a lot about the juice inside the bottle: flavor profile, mouth feel, aroma and overall strength. Distillers can’t legally sell 100 percent alcohol as Bourbon, so they dilute it with water to the desired ratio. The proof changes slightly while the Bourbon is in the barrel and some evaporation occurs. ABV – Alcohol by Volume, proof (which is 2 times the ABV in the U.S.)

Mash Bill

Mash bill tells you the type of grain the Bourbon is made of. To be Bourbon, whiskey has to contain between 51 and 80 percent corn; distillers augment the corn with various amounts of malted barley, wheat and/or rye,

Single Barrel

This product is a bottling which consists of whiskey from one barrel. No other barrels go into bottling. When purchasing single barrel whiskeys, there will be significant variances between barrels.

Cask Strength

This indicates that water isn’t added to the whiskey after aging, prior to bottling. Typically whiskeys of this sort will be sold at higher than 46% ABV, but there isn’t a minimum. Most other whiskeys are sold between 40-46% ABV as their standard proof.

NCF (Non Chilled-Filtered)

Chill-filtration is the industrial process by which some companies remove congeners from their products. At lower temperature and/or when water is added to whiskey which hasn’t been chill-filtered, the whiskey becomes cloudy. Additionally, there are small particles which are removed by this process to ensure the whiskey is clear of debris. However, these congeners and particles contain flavor and texture and removing them affects the end result.

Age Statement

Increasingly, NAS (no age-statement) whiskeys are a product makes a claim that their whiskey is x number of years old, not a drop of whiskey in the bottling can be younger than that age statement. The product can be older, but it cannot be any younger. With whiskey, if a bottling is stating their whiskey is x number of years old, you can be guaranteed that it is at least that old.

Straight

This term is only used with American whiskeys. It means that the whiskey is aged at least two years in charred new oak barrels (straight corn whiskey can be aged in used charred oak barrels or un-charred new oak). It can be a blend of more than one straight whiskey type (i.e. bourbon, rye, wheat, corn), provided all the whiskey comes from the same state.

Understanding the meaning behind words and phrases on a bourbon label helps the consumer make more informed choices when looking to purchase a valuable product.

Bonded or Bottle-in-Bond

A term which is only used in the United States. Whiskey which is aged for a minimum of four years under government supervision; distilled from one distillery, one distiller, and from one distilling season. The whiskey is also bottled at 50% ABV..

  • The product of one distillation season and one distiller at one distillery
  • It must have been stored (i.e., aged) in a federally bonded warehouse under U.S. government supervision for at least four years
  • Bottled at 100 proof (50% alcohol by volume).
  • The bottled product’s label must identify the distillery (by DSP number) where it was distilled and, if different, where it was bottled.

References:

  1. https://www.artofmanliness.com/living/food-drink/read-bourbon-label/
  2. https://distiller.com/articles/whiskey-label

U.S. Money Supply Drives Inflation

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“Inflation is always and everywhere a monetary phenomenon.” – Milton Friedman

Economist Steve Hanke view has been that the volatile and non-transitory inflation of recent years is chiefly due to changes (a significant increase) in the US money supply, not other factors such as supply-chain disruptions and swings in energy and metal prices.

Hanke, a former economic advisor to Ronald Reagan, served as the president of Toronto Trust Argentina when it was the world’s best-performing market mutual fund in 1995.

“As Milton Friedman taught us long ago, inflation is always and everywhere a monetary phenomenon,” Hanke said. “That’s why our forecast, based off the quantity theory of money, has been so accurate.”

“Inflation is taxation without representation.” ~ Milton Friedman

The veteran economist Hanke and a colleague, John Greenwood, predicted in July 2021 that the headline Consumer Price Index would rise as quickly as 9% on an annualized basis; it peaked at 9.1% a year later. They later forecast the inflation measure would fall to between 2% and 5% by December last year, and it ended the year at 3.4%.

“Money [supply] is the economy’s fuel,” Hanke and Greenwood warned the US economy was “running on fumes” and “on schedule to tank” given its money supply had contracted since March 2022, after growing by a historic 27% in part due to fiscal stimulus measures during the COVID-19 pandemic.

References:

  1. https://markets.businessinsider.com/news/stocks/steve-hanke-stocks-economy-outlook-recession-inflation-forecast-fed-money-2024-1

WWII Hero Charles French

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Navy Mess Specialist 1st Class Petty Officer Charles Jackson French, hailed as the “Human Tugboat”, single-handedly pulled 15 injured sailors through shark-infested waters after a Japanese destroyer attack.

A future U.S. Navy Arleigh Burke-class guided-missile destroyer DDG-142 will be named USS Charles J. French, after Navy Mess Specialist 1st Class Petty Officer Charles Jackson French.

Known for his heroic actions in the Pacific Theater of World War II, French saved 15 of his shipmates after their high-speed transport was sunk in combat during the Battle of Guadalcanal.

Hailed as the “Human Tugboat” and “Hero of the Solomons,” Charles French joined the Navy as a mess attendant before the United States formally entered World War II, and served four years aboard the Hawaii-based heavy cruiser USS Houston (CA 30). French left the service after his tour aboard Houston, but reenlisted four days after the bombing of Pearl Harbor in 1941. He was assigned to USS Gregory (APD 3) in March 1942.

On the night of Sept. 4, 1942, in the vicinity of the Solomon Islands, three Imperial Japanese destroyers and one cruiser opened fire on the Gregory and its sister ship USS Little (APD 4). With his ship sinking and his fellow Sailors in shark-infested waters, the uninjured French gathered injured shipmates on a nearby raft and tied a rope around his waist in order to pull the survivors to safety.

Ensign Robert Adrian, who gradually came to after suffering injuries to his legs and blast fragments in his eyes, attempted to persuade French to join them aboard the raft and out of the shark-infested waters, Adrian later recalled.

French refused, responding that he was more afraid of the Japanese than the sharks. Against a strong current, French swam all night — away from enemy gunfire and the Japanese-held shoreline.

French swam through the night until at sunrise, French and the raft of sailors were spotted by scout aircraft.

For his actions, French was recommended for the Navy Cross. However, due to his race, the cook only received a letter of commendation from Adm. William “Bull” Halsey, the commander of the Southern Pacific Fleet.

After the war, however, French’s story was largely forgotten and omitted from Navy history.

“French is now getting some long-overdue recognition.” ~ SECNAV Carlos Del Toro

“For too long, we did not recognize Petty Officer French appropriately, but we’ve begun to correct that. Recently, we renamed the training pool at Naval Base San Diego after him,” said Secretary of the Navy Carlos Del Toro. “Today, with profound conviction and a heart brimming with long-overdue recognition, I am proud to announce the name of our newest destroyer, DDG 142, will be the USS Charles J. French.”

Previously, Secretary Del Toro posthumously awarded the Navy and Marine Corps Medal to French in May 2022.

References:

  1. https://www.navy.mil/Press-Office/Press-Releases/display-pressreleases/Article/3641986/secnav-del-toro-names-navy-destroyer-for-wwii-hero-charles-french/
  2. https://www.militarytimes.com/news/your-navy/2024/01/15/navy-to-name-destroyer-after-wwii-hero-charles-french/

Berkshire-Hathaway vs. S&P 500

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“An investment of $10,000 in Berkshire Hathaway stock in 1965 would have grown to approximately $355 million by 2022.” ~ Nasdaq

In 2022, Berkshire Hathaway outperformed the market, gaining 4% versus the S&P 500’s 19% drop.

Since Buffett took over in 1965, Berkshire Hathaway has beaten the market 39 out of 58 years. It has underperformed the market the other 19 years.

Since 1964, Berkshire Hathaway stock returns has outperformed the S&P 500 by a significant margin.

According to a report by Nasdaq, an investment of $10,000 in Berkshire Hathaway stock in 1965 would have grown to approximately $355 million by 2022, a compounded annual gain of 19.8%.

In contrast, an investment of $10,000 in the S&P 500 over the same period would have grown to approximately $2.3 million, a compounded annual gain of 9.9%.

Since that time, Berkshire Hathaway stock has gained more than 153 times the S&P 500’s gains over the same time period — good enough to give you roughly $355 million based on a $10,000 investment. That translates to a compounded annual gain of 19.8%, or nearly double the S&P 500’s 9.9% compound annual gain.

It’s worth noting that the above figures are based on past performance and do not guarantee future results.

Additionally, investing in individual stocks can be risky and requires careful consideration of one’s financial goals and risk tolerance.

Warren Buffett, Berkshire-Hathaway’s Chairman and CEO, is an advocate of buying stock in businesses that will last.

References:

  1. https://www.nasdaq.com/articles/you-wont-believe-how-much-more-warren-buffett-has-made-than-the-market-since-1965

Baby Boomers’ Wealth Transfer

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“Experts say baby boomers will transfer over $50 trillion in wealth to their heirs. But for many, health care costs will claim the bulk of that wealth.” ~ NBC News

Baby boomers have experienced decades of wealth-building through real estate and the stock market, but skyrocketing healthcare costs will drain those resources faster for those who aren’t extraordinarily wealthy, according to NBC News.

Healthcare costs for elderly Americans and baby boomers are incredibly expensive and frequently wipe out people’s life savings. Thus, many people hoping that the “wealth transfer” will leave them with a substantial inheritance will end up disappointed because health care for older people in America is very expensive and destroying the transfer of wealth from baby boomers to subsequent generations.

According to the Bureau of Labor Statistics, people under the age of 65 reported spending an average of $5,209 per year on their health care in 2022, while those over 65 reported $7,540 annually.

By 2050, there are expected to be 84 million people over 65, according to the Bureau of Labor Statistics. That’s almost 50% more seniors than there are today.

Thus, the widely held belief that baby boomers are going to transfer tens of trillions of dollars to their heirs over the next few decades may not be entirely true.

The “generational wealth transfer” from Baby Boomers to Generation X and Millennials may not be as large as previously forecasted due to the rising costs of healthcare. The overwhelming cost of health care for older people means most people in those later generations won’t inherit much, even if their elders seem well-off today.

Cerulli estimated that 68% of the wealth transferred between 2020 and 2045 — which includes boomers as well as older generations — will come from U.S. households with at least $1 million in investable assets. And only 6.9% of households have that kind of wealth to begin with, Cerulli added.

References:

  1. https://www.nbcnews.com/business/consumer/generational-wealth-transfer-baby-boomers-cant-save-gen-x-millennials-rcna128099

Google’s “Owner’s Manual for Shareholders.”

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“Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious.” ~ Google founders  Sergey Brin and Larry Page

The founders, Sergey Brin, 31, and Larry Page, 32, launched Google in September 1998 in a friend’s garage in Menlo Park, Calif., naming the company after the mathematical term “googol,” which stands for a 1 followed by 100 zeros. They met in 1995 when they were doctoral students in computer science at Stanford. Both were enthralled with information retrieval and artificial intelligence. The two collaborated in 1996 on a search engine called BackRub, Google’s precursor, which gained notoriety on campus for its ability to analyze the “back links” pointing to a given Web site.

In 2004, Google generated 95 percent of its revenue from advertising. Advertisers buy keywords that launch tiny text ads alongside search results each time someone types those words into Google’s search box and clicks “Google Search.” Advertisers pay the amount they bid for the terms, but only if someone clicks their ads.

In 2004, Google founders  Sergey Brin and Larry Page issued a letter to investors called an “Owner’s Manual for Shareholders.” The seven-page letter was an organizational manifesto crafted by the co-founders to map out Google’s credo as a public company.The letter outlines the company’s goals, warning investors that as a public company, Google will not follow the usual path.

The letter outlines everything from the triumvirate leadership between the co-founders and CEO Eric Schmidt to its promise not to be “evil” by sacrificing its ideals for short-term financial gains. It promises more spending on employee perks such as free meals, a separate voting structure for executives, and avoidance of making financial predictions for Wall Street. Instead, the company will focus on long-term priorities that do not have an immediate effect on earnings.

“If opportunities arise that might cause us to sacrifice short-term results but are in the best long-term interest of our shareholders, we will take those opportunities,” the letter read. “We will have the fortitude to do this. We would request that our shareholders take the long-term view.”

The pair have created a corporate environment that fosters individual creative pursuits while pampering employees with free meals and regular beer bashes.

Here are several Google’s promises and processes as outlined in the owner’s manual:

Managing Wall Street: “Many companies are under pressure to keep their earnings in line with analysts’ forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction.”

Risk vs. reward: “As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small. We encourage our employees, in addition to their regular projects, to spend 20 percent of their time working on what they think will most benefit Google. Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.”

Executive decision-making: “To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike.”

Dual class voting: “While this structure is unusual for technology companies, it is common in the media business and has had a profound importance there. The New York Times Company, the Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures. Media observers frequently point out that dual class ownership has allowed these companies to concentrate on their core, long-term interest in serious news coverage, despite fluctuations in quarterly results.

Googlers: “We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long-term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time.”

Kumbaya: “We aspire to make Google an institution that makes the world a better place. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1 percent of Google’s equity and profits in some form.”

“As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same,” the letter states.

“In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. Sometimes, this pressure has caused companies to manipulate financial results in order to ‘make their quarter.’ In Warren Buffett’s words, ‘We won’t smooth quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.'”

References:

  1. https://abc.xyz/investor/founders-letters/ipo-letter/
  2. https://www.cnet.com/tech/tech-industry/google-files-for-unusual-2-7-billion-ipo/
  3. https://www.cnet.com/tech/tech-industry/co-founders-release-google-owners-manual/
  4. https://blog.google/

Rules to Build Wealth

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Wealth Building mindset and habits rules:

• Everything in life compounds…use it wisely
• Invest in assets
• Always use a margin of safety
• Create great money habits
• Spend what is left after saving
• Set clear financial goals and create a financial plan
• Control your time; learn to say “no” to things that do not align with you vision, values and goals
• Real wealth is created by solving problems
• Have multiple income streams
• Diversify your investments
• Surround yourself with smart people
• Invest in yourself, continue to learn and grow
• Buy income-generating assets
• Financial education is key
• Work for money. Then let money work for you
• Simplify your life and practice gratitude
• Focus on achieving financial freedom
• Track your monthly expenses
• Pay yourself first and focus on your health
• Live below your means; spend less than you earn
• Secure your future income…let your assets produce income while you sleep

Source: Compounding Quality https://x.com/qcompounding/status/1746198458040557966?s=46&t=mF_tsrQnjgviyl62GYfJjw

Create The Life You Want

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How To Create The Life You Want in 2024:

You can make excuses all you want, try to escape reality through whatever makes you forget it for a while, and keep delaying achieving your goals and creating the life you want.

But sooner or later, you’ll realize that You will need to change yourself to get what you want. The longer you stay in denial, the lower your odds are of achieving your goals and creating the life you want.

Source:  Psyche Wizard https://x.com/psychewizard/status/1740995700052431228?s=46&t=mF_tsrQnjgviyl62GYfJjw

Microsoft’s Stock Market Value Higher Than Apple’s

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Microsoft’s stock market value closed higher than Apple’s for the first time since 2021, making it the world’s most valuable company based on market capitalization.

While both technology companies were part of the so-called Magnificent 7’s powerful rally in 2023, their fortunes have diverged year. Microsoft has risen 3.3%, while Apple has dropped 3.4%.

Microsoft has incorporated OpenAI’s technology across its suite of productivity software, a move that helped spark a rebound in its cloud-computing business.

Apple, meanwhile, has been grappling with tepid demand, including for the iPhone, its cash cow. Demand in China, a major market, has slumped as the country’s economy makes a slow recovery from the COVID-19 pandemic and a resurgent Huawei erodes its market share.

Both tech stocks look relatively expensive in terms of price to their expected earnings, a common method of valuing publicly listed companies.

Apple is trading at a forward PE of 28, well above its average of 19 over the past 10 years. Microsoft is trading around 32 times forward earnings, above its 10-year average of 24.

Source: Noel Randewich,  Microsoft edges out Apple as world’s most valuable company, Reuters, January 12, 2024. https://www.yahoo.com/tech/microsoft-edges-apple-worlds-most-232740340.html