The Steve Pomeranz Show

With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL

For their final show together, Steve and Terry Story interviewed each other, sharing some of their personal lives with listeners.

They began the conversation by recounting a funny story about how they first met. After being introduced by a mutual friend, they discovered that they were actually working in the same building, just two floors apart.

How Did Terry Get Into Real Estate?

Terry told listeners that she first got into the real estate business 31 long years ago when she and her husband relocated to Boca Raton from Miami. Although she came from a real estate family, at the time she was working with Norwegian Cruise Lines in the travel industry,. Terry noted, ”I’m grateful not to be in the cruise line business right now.”

Since she had gotten her real estate license while in college, her father encouraged her to give the business a try when she moved to Boca Raton. Terry said, “I jumped in with both feet, fell in love with it, and I did really well. I was ‘Rookie of the Year’ my first year.” That was an amazing feat, given the fact that she didn’t know a single person in Boca Raton when she started out.

Terry mentioned one characteristic of her professional career that she and Steve share. She said, “Starting young really gives you an advantage because when you start in a real estate career, you have to have money in the bank in order to spend the money to do the proper marketing of yourself and get established.”

Steve immediately replied that it was the same in his business as a financial advisor. He said, “In my business, too, it takes at least two years to build up enough of a clientele to even make a living, so starting young is definitely good.”

From Coldwell Banker To Keller Williams

Terry’s been mentioned so many times on the show as being with Keller Williams Realty that it may seem like she’s been there forever, but, in fact, she spent her first 29 years in the business at Coldwell Banker and only the last three with Keller Williams. When Steve asked her about the difference between the two firms, Terry explained her preference for Keller Williams. “The main difference is that it’s almost like an employee-employer relationship when you’re with a company like Coldwell Banker. When you’re with Keller Williams, it’s more of a partnership. We have profit sharing, which is a huge difference—50% of our office profit is shared among the agents.”

Terry’s Personal Life

Steve asked Terry to share some of her personal life. She related that she has two daughters, both in their early twenties. One daughter followed her into the real estate business where she is flourishing and her other daughter is a nurse. Both Terry and her husband are native Floridians—he from Fort Lauderdale and she from Miami. Like many Florida families, much of what they do for fun revolves around the water—boating, fishing, diving, sailing, water skiing. According to Terry, “Our weekend passion is taking the boat out.”

Finally Learning Some Things About Steve

When it was time for Terry to ask Steve some questions, the first thing she noted was that he’s never really talked about himself on the show. She asked him why that is. Steve explained, “Well, the show has really never been about me. It’s always been focused on the listener. It was never meant to be a vanity project or a vehicle to talk about myself. We have enough of that around us today already. I just really wanted to help people, to stick with the facts, and to get a chance to meet more people and learn more.”

Steve’s natural curiosity has been a driving force behind the show, as he’s always had a thirst for knowledge. He shared with Terry: “I love to learn about the world. I travel a lot, and I love to read.

With Christine Benz, Personal Finance Editor at Morningstar.com and author of The Morningstar Guide to Mutual Funds: Five Star Strategies for Success

Steve spoke with Christine Benz, Personal Finance Editor at Morningstar and the author of “Morningstar’s 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances” and the “Morningstar Guide to Mutual Funds: Five Star Strategies for Success”, to get some insights for retirees on how to handle the current low-yield environment.

The Bucket Strategy

Steve started off their conversation by asking Christine straight out how, in such a low-yield environment, people expecting to live off their yield income can manage to get by. He laid out the current situation on yields, saying, “The 10-year Treasury is around 0.6., 0.7%. Short-term CDs are in the 1% range, maybe 2%. So, that probably means, after taxes, losing money to inflation.” Christine replied that “It’s been an ongoing challenge over the past several decades where we’ve had yields on safe investments go lower and lower and lower. That’s left income-oriented retirees with the option of either subsisting on less or gravitating to higher risk, higher income-producing securities. I think that there are other ways to think about building cash flow in retirement that don’t involve exclusively income distribution.”

Steve then asked her to explain what she calls “the bucket strategy.” Christine credits Coral Gables financial planner Harold Evensky as a strong influence in developing the strategy which she explained to listeners: “The basic idea is that you’re kind of structuring your portfolio as a series of buckets. In bucket one, you’ve got cash—CDs, money market accounts, what you have in your checking account, etc. The idea is to have in there two years’ worth of expected withdrawals that you can subsist on when your portfolio isn’t kicking off enough income to meet your living expenses.” She went on to explain bucket two: “Once you’ve developed bucket one, then you’re kind of stepping out on the risk spectrum. With bucket two, you’ve got a portfolio of high quality short and intermediate-term bonds. You’re taking more risks, but you’re potentially picking up a little higher income. The goal is to build yourself a runway with buckets one and two of roughly 10 years’ worth of portfolio withdrawals in safe investments.”

To combat the current extremely low-yield situation, Christine further suggested, “I think you can potentially add some corporate bonds into the mix to potentially pick up a slightly higher yield. You might also think about adding some dividend producing equities.”

Seek Professional Advice

Steve remarked about how much the yield environment has changed over the years. “When I started in the business in 1981, the yields on fixed income were considerably higher than the dividend yields on stocks. But in recent history, that has turned around 180 degrees. We now see a higher yield on the average stock, let’s say 2%+, than we do on US Treasuries and on some corporate bonds as well.” He asked Christine if people can manage to keep up with inflation with a 10-year runway composed mostly of bonds paying less than 2%.

Her advice was to get professional advice, explaining that each individual’s personal financial situation and needs are different. “It’s very personal – run the numbers and see how your retirement portfolio sustainability looks. It may be that 10 years’ worth of cash flows in very...

Well, folks, this is our final show, and I want to wrap up my long tenure by sharing some of the most important lessons I have learned over these many years.

First, however, I want to thank everyone currently involved in its production. First, there is Brian Zeikowitz, my engineer. Brian has been with me since 2008 and, poor guy, he’s been listening to every word of the show, every week, to make sure I sound much smarter than I am. As a matter of fact, when we were discussing the show’s end, he reminded me of a story I told which made an impression on him, and it’s one that I had totally forgotten. So I would like to share it with you.

Back in 1987, I had been a stockbroker for six years, working at Merrill Lynch at the time and was still struggling to get on my feet and build a clientele. Of course, you may remember that 1987 turned out to be a very challenging year because of the 25% market crash on October 22nd. This crash was totally unexpected and reminded everyone of the 1929 Stock Market Crash which ushered in the Great Depression. So everyone was scared and shaken. Unfortunately, I was a casualty of bad timing because on October 1st, I had closed on a new, bigger home and my costs had risen dramatically. That year and the few that followed created a tsunami of events for me, a combination of high expenses combined with lower income similar to what is going on with a lot of folks today due to the Covid-19 crisis.

In order to keep everything going, I used my credit cards and any other debt I could muster to stay afloat. And I was not alone. A lot of my fellow brokers in the business were in trouble too and some of them decided to file for bankruptcy the following year. I was tempted. It was easy to do, and I noticed that those who did were still able to get a loan to buy cars and other things and it didn’t seem like it had much in the way of serious consequences.

So, I thought hard about it and finally decided not to do it, though it would have relieved me of much pressure and anxiety. My reasons? First and foremost, I felt I owed this money and it should be paid back. Now I know it’s not possible for everyone to adopt this attitude, but I was still earning a living and slowly building a clientele, and I had hope that this difficult time would eventually improve. I hoped it wouldn’t turn out to be a race to the finish however, so it was pretty nerve-wracking.

Also, I didn’t really know what the true future effects of a bankruptcy would be. There’s a lot of unforeseen consequences that can happen when you make big decisions like that.

So, here’s my point to the story. Eight years later, in 1996, after being so unhappy with the sales culture of the brokerage business, I desperately want to change the way I did business.

Fortunately, an opportunity arose which allowed me to start my own fee-only financial planning and advisory business and create my own culture. However, there was one caveat and guess what that was? In order to head up a firm as an investment advisor, I would not have been allowed had I declared bankruptcy. Wow, I thought, I really missed that bullet!

All that followed, a business that I loved, my great clients, and this radio show, would not have happened had I taken the other course of action.

So, the bottom line is: You never know what the consequences would have been for me had I taken the easier way out.

Okay, before I get into today’s commentary, I want to thank a few people who have been a tremendous help to me. First, my producer, Erica Stimolo. We are a small operation here, and Erica is the chief cook and bottle washer, and I have relied on her common sense to help guide me week after week. Happily, Erica has accepted a new position with my former investment firm and all will be okay. My editor, Carol Malzone, who is also my partner in life, has transported our website and weekly update into the literary light.

How the top marketers (and politicians?) continue to entice us to buy their ideas.

With Rocky Mengle, Author and Tax Editor for Kiplinger

This week, Steve spoke with Rocky Mengle, author and tax editor for Kiplinger Personal Finance, about the numerous tax changes stemming from the coronavirus pandemic of 2020. These changes are mostly specific to 2020 and can help you out a lot financially.

Due Dates For Taxes

One of the most important things for tax filers to understand is that the due dates for filing federal taxes have changed. Rocky explained, “Any federal tax due date previously scheduled from April 1st to July 14th has been extended to July 15th. This covers, of course, your income tax and your 1040. It also covers estimated tax payments that would have been due April 15th or June 15th.” Additionally, gift and self-employment taxes, as well as IRA and health savings account contributions for 2019, can be made up until July 15th.

But, let’s say that you’ve already submitted your taxes for 2019. It’s not too late to make a contribution to your IRA, but you will have to file an amended tax return in order to get the credit for the deduction. Rocky added, “And be sure that you tell your IRA custodian that you want that applied to 2019.”

Stimulus Checks

The government’s stimulus checks are designed to help ease the burden many families are feeling in the midst of growing unemployment rates. But what do those checks mean in terms of how you file your taxes? Steve asked Rocky to explain it.

“The money you receive in your stimulus check isn’t taxable; you’re not going to be bumped into a higher tax bracket. In fact, there’s a chance that you might even get a slightly higher tax credit for 2020 because it kind of mirrors the stimulus check calculation. But if your stimulus check isn’t as much as your 2020 tax credit, you’ll get the difference back when you file your return,” Rocky said.

Charitable Donations And Student Loan Payments

With all the craziness and hardship that 2020 has brought, there is some good news in terms of charitable donations and for people who are employed by a company that helps pay off student loans.

Rocky informed listeners, “There’s a new above-the-line tax deduction in terms of charitable donations and you don’t have to itemize. It’s for up to $300 worth of cash donations. This only applies to 2020. On top of that, for people who do itemize, the cap on Schedule A cash donations has been removed. That means you can donate and deduct up to 100% of your adjusted gross income on Schedule A itemized deductions for your 2020 return.” Steve added that this is excellent news for charities that were worried about a drop in donations this year.

The good news doesn’t stop there. Rocky noted that “If you’re lucky enough to have an employer that will pay off some of your student loan, that amount will not be taxable income to you, the worker. It’s capped at $5,250.”

2020 Changes For Retirees

There are some changes this year for retirees as well. Retirees age 72 and over normally have to take required minimum distributions (RMDs) from their retirement accounts. However, the government passed an RMD Waiver for 2020. Rocky said, “You get a break from that this year. For 2020, you don’t have to take any RMDs if you don’t need the money.”

There’s also a great change if you need to take a loan from your 401(k). “There’s usually a cap on how much you can take,” Rocky said. “Instead of only being able to take 50% of the account balance, up until September 23rd of this year, you can take out the full balance.”

And penalties for early withdrawals from retirement accounts have also been relaxed for 2020.

With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL

During this week’s Real Estate Roundup, Steve spoke with Terry Story, a 31-year veteran at Keller Williams, about how the real estate industry is adjusting to innovatively conduct business during the coronavirus pandemic.

Realtors Getting Innovative

Steve first asked Terry to talk about one big change in the real estate industry—big conference calls between agents all across the country. “We have giant conference calls each week. We try to find out what each agent is hearing and seeing. A lot of agents have started doing webinars to show first-time buyers what their options are or straight-out buyers that we can still get them into the home they want, pandemic or no pandemic.” Terry shared. The most important thing about this innovative approach is that the essential information still gets to the potential client while practicing social distancing.

Terry, herself, decided to get ahead of the game by carefully tracking home sales in Palm Beach County. “As realtors, we’re foot soldiers,” she said. “We know what’s going on in the industry before any reports reflect it. With this information, I can spot a trend before it’s reported as a trend.”

How Buyers Can Help Themselves

Getting innovative during this pandemic is something you can and should do, too, if you’re a prospective home buyer.

Terry explained, “You’re going to have an area in mind. You can get a real sense of the neighborhoods in that area without ever leaving your car. Drive around. Use Google maps to find spots of interest such as restaurants, shops, and schools. Pay attention to things like traffic patterns. Remember that once you move, traffic is going to get heavier once everyone can be out and about freely. And use online databases for neighborhood data and statistics.” Steve added that using Google maps to actually see what a neighborhood looks like can be a big help to someone looking for a new home.

Getting proactive now will help you get a sense of what it would be like to live in different areas. This will help you narrow down what homes are actually of interest to you. Then, once you’ve settled on a neighborhood that meets your needs, call a realtor to get professional advice. They’ll be able to help you find homes that will work for you and set up virtual tours.

To learn more about buying or selling a home, check out Keller Williams.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

With Sam Stovall, Managing Director of US Equity Strategy at CFRA Research; author of The Seven Rules of Wall Street: Crash-Tested Investment Strategies That Beat the Market

Steve spoke with Sam Stovall, Managing Director of US Equity Strategy at CFRA Research, about the current state of the stock market and whether he thinks the worst is behind us. Sam has been a market analyst for many years, so he’s seen his fair share of both bull and bear markets. Sam is also the author of the book, The Seven Rules of Wall Street: Crash-Tested Investment Strategies That Beat the Market.

Is The Worst Behind Us?

Steve started their conversation by observing that “The economy is still shut down, yet the stock market has rebounded and stabilized to a large degree.” He asked Sam if we’re really seeing a healthy rebound overall or if it’s just the top dozen or so large-cap stocks that have recovered.

Sam replied by saying, “Well, we are seeing a large number of companies that are moving above their 10-week moving average and also climbing above their 200-day moving average. While it does appear as if it’s the largest tech behemoths that are driving the market, I would tend to say that the breadth of the recovery is expanding, which is a positive for the overall market.”

Steve then stated that the market usually precedes a rise or fall in the economy by about seven months and asked Sam if he thinks that’s probably going to be the case again this time. Sam said he thinks the market’s March 23rd low is likely the bottom, noting that we’ve seen an impressive rally of about 30% since then. He thinks there’s less likelihood of a second major sell-off to a double bottom, primarily because of one key factor. “What’s happening today that did not happen in the past, like with the 2008 crash, is the very rapid stimulus response by the Federal Reserve.”

Steve also raised the question of whether the stimulus is really going into the economy or just into the stock market. Sam said that he disagrees with analysts who are saying the stimulus money is just creating liquidity in the market, noting that the largest stock market investors aren’t the people receiving stimulus checks.

He added that he thinks the market is at the point where it’s looking on down the road and considering where we’re likely to be six months to a year from now. Sam’s forecast from CFRA Research is “We expect to see 30% gains for the large caps next year, 40% for mid-caps, and 60% for small-cap stocks.”

Strong Sectors In A Bear Market

Since we’ve reached the month of May, Steve asked Sam about the old market adage, “Sell in May and go away” that has been reflected in the market’s performance since 1990, showing on average that the market has experienced its biggest gains—6.5%—between November and April, while only rising an average of 1.8% between May and October.

Sam offered listeners some deeper insight by adding that in two out of three years since 1990, the sectors of consumer staples and healthcare have significantly outperformed the overall market during that May to October period. He said, “I would rather stick with those defensive sectors where the demand for products and services remains fairly stable.” Steve asked if Sam would include major tech stocks, such as Microsoft and Apple, in that group of defensive stocks. Sam replied that he would include large, stable tech companies,

For those of you who weren’t around for last week’s announcement, I just want to let you know that after 19 years of weekly shows I have decided to retire because, as the saying goes “I have the two essentials of retirement—much to live on and much to live for.”

Today’s program will be the second of the final three, with our last airing on May 24th. In the meantime, I will be keeping you up to date on the investment world during this crazy time as well as re-playing some of our favorite shows from over the years.

I will be keeping the website active with all the past episodes, so if you want to hear something again or get in touch, you can contact me there. Stevepomeranz.com

Before I get to today’s commentary, there are some people I want to thank.

First is Jerry Carr. Jerry was the station manager at WXEL until his retirement and absolutely the gatekeeper who enabled me to start airing way back in 2001. Without Jerry’s professionalism and foresight, I would not have had the great radio and investment career that I have had.

Assisting him were Wendy and Ross Cooper. The two of them were always encouraging me and always there to help smooth out any rough patches. By the way, after Wendy left WXEL, she worked as my assistant and radio show producer for a number of years, and she did a great job.

My wonderful program director at WXEL, Joanna-Marie Kaye, and my numerous engineers:  Steve Cody, Caroline Breder-Watts, John Zuletta, Rochelle Frederick, and of course, Tissy, one of the sweetest most gracious persons I have ever met. Unfortunately, she passed away at way too young an age.

Needless to say, there were and are a lot of people to whom I owe a great debt.

Now to my commentary….

What’s Eating Warren Buffett: Part 2

Last week I pointed out the unusual behavior of our Oracle from Omaha, in as much as his public statements have been totally out of character. Normally, as I said last week, Buffett’s announcements are full of optimism and dedicated to the proposition that one should always be buying when others are fearful.

But this was not apparent during his hours spent delivering his talk at the Berkshire annual meeting last week nor was it on view during his interview with Andy Serwer from Yahoo Finance.

First and foremost, Buffett’s war chest, which was $125 billion at the end of the year, has not decreased at all. As a matter of fact, it has increased to $137 Billion.

Some of the increase we know about. He spoke at length about his sale of four major airlines and why he considered the purchases to be a mistake. He originally liked the idea that he could purchase about $7-8 billion dollars of airline stocks and earn $1 billion a year in return from earnings and dividends. All of that came to a screeching halt as travel disintegrated to zero, causing the companies to bleed billions of dollars and requiring them to borrow and issue new stock just to stay in the air.

He spent a lot of time talking about the economic history of our country, even to the tune of estimating what America was worth in the 1770s. He then moved on to the America that endured the devastations of the Civil War, the Great Depression, World Wars I & II, and up to the present.

He repeated the idea of the great American tailwind, in which American businesses benefit from our country’s work ethic, innovation, and expertise. This characteristically leads him to admonish us to Never Bet Against America.

But in my opinion, it’s what he didn’t say that was most important. He did not say that even though he believed in this country’s economic future that he was buying that future at today’s prices. Let me repeat that another way.

Which States Are Being Hardest Hit By The Coronavirus? What's Eating Warren Buffett? And More

With Jill Gonzalez, Personal Finance guru and Spokesperson for WalletHub.com

Steve talked with Jill Gonzalez, personal finance guru and spokesperson for Wallethub.com, to learn how much greater the impact of the coronavirus is in some states than in others along with the specific ways in which the various states are affected.

Jill is an expert in personal finance and investing and Wallethub did extensive research to find out which states are the most shut down and suffering the heaviest from the coronavirus pandemic.

Which States Are Shut Down The Most?

Jill explained that Wallethub’s study looked at six different metrics showing the decrease in visits to various types of places due to the coronavirus. Categories that were measured included retail stores, recreation areas, grocery stores, and workplaces. States were graded on a scale of 0 to 100.

Steve informed listeners that the state experiencing the most severe coronavirus shutdown overall is Hawaii which has a score of 92. Jill attributes Hawaii’s high score primarily to the fact that the state is so heavily reliant on travel and tourism, two industries that have virtually ground to a standstill. She noted that one interesting finding of the study was that even trips to grocery stores have declined by approximately 60% in Hawaii.

Number two on the list of hardest-hit states is—not surprisingly—New York. According to Jill, “In New York, people are still going to places like grocery stores, but everything else is pretty much a no-go. New York has seen the largest decline in the retail and recreation industries, along with usage of public transportation.” She remarked that the huge drop-off in people using public transportation is really hard to fathom for a city like New York, where so many people traditionally use the subway system.

Jill believes that New York City is one area where some of the changes brought about by the coronavirus are likely to have lingering, permanent effects on how people work and live. For example, she expects that many people who have transitioned from working in an office to working at home will continue being telecommuters even when the “shelter in place” restrictions are lifted.

How Is Florida Doing?

When Steve specifically asked where Florida ranked, Jill replied that it came in as the 6th hardest-hit state. Like Hawaii, a lot of Florida’s economy is driven by the travel and tourism industries. She added that another reason for Florida’s high ranking is the large elderly population there. She said, “I think the elderly are trying to keep themselves safe, not really venturing out as much,” and she added, “Florida is an interesting case. We see reports on the news of very crowded beaches while at the same time a lot of elderly communities are really locking down.”

Steve expressed some skepticism about how widespread the use of the beaches is, reporting that in the South Florida area where he resides, all of the parks and beaches are still closed.

States Suffering The Least From The Coronavirus

So, which states are on the other end of the scale, the ones that are the least shut down? As of the first of May, the state that’s the least shut down is Nebraska, followed by Kansas, Arkansas, Kentucky, Iowa, Alabama, and Ohio. Jill summed the situation up by saying, “There are a lot of Midwestern and Southern states that are showing the lowest level of shutdown or economic slowdown. And some of those states are already starting to reopen, at least partially.”

Red States Versus Blue States

Steve ran down some of the analysis done by industry rather than just by state. He told listeners, “The states seeing the biggest hits to the retail industry and the recreation industry are—in order,