Employee Stock Purchasing Plan and ACATS

Dec 10, 2016
Financial Safety

There is a saying in investing, you get what you don't pay for. That is because the stocks, bonds, and mutual funds that you purchase are all the same; the difference is the fees and services that you pay for. A unique type of purchase is the Employee Stock Purchasing Plan (ESPP). Employee Stock Purchasing Plans offer a lot of positive benefits but if you are not careful, they may cost you more than you think.

My company's ESPP will match $0.15 for every $1 up to the first $1800 I invest.  The company is large, unlikely to experience large growth, and offers a dividend yield of 2.85. Maxing out the ESPP was a no brainer for me. Getting a match of $0.15 meant that I was essentially getting a 15% return on investment immediately. Maxing out the $1800 contribution would earn me $270.

 However, there are drawbacks to the ESPP. The first is that we are buying a single company's stocks, which are more risky than diversified portfolio. When the company does well, then great; but if they struggle, then it is likely that the lost will wipe out any gains even from the company match.
Unlike other plans, this ESPP will purchase the shares at market price during the pay period rather than the lowest price within a 3 month period. This means that the purchase price is more likely to fluctuate, where it could be bought too high when all the employees in the program buy resulting in fewer shares acquired. All purchases are done at market prices, you are not able to set limits or other conditions for purchasing or selling. The company uses the broker Computershare to manage the purchase and sells of it's shares. Computershare does not charge for the purchasing of shares, but they do charge $25.50 for each sell transaction along with a $0.25 fee for each share being sold. The company's stocks are $70 a share at the moment, so if I had bought and sold the shares right away, that $1800+$270 would get me 29 shares. Selling those 29 shares would cost about $33, much higher than most transaction fees from other brokers.

Fortunately the Financial Industry Regulatory Authority has a program for transferring shares between different brokers, the Automated Customer Account Transfer Service (ACATS). If I can have Computershare purchase the shares, then transfer the shares to another broker when I sell, I can potentially save $33 annually on service fees alone. Unfortunately my current broker Robinhood does not currently accept ACATS transfers into the account. But I did find out that Vanguard does accept shares and does NOT charge any fees for accepting shares, and also that Computershare does not charge fees for sending out shares. So I will soon have my shares sent to Vanguard so that I will not have to pay as large of a fee when selling shares.

Kate Spade

Nov 28, 2016

Grabbed a few shares of Kate Spade (KATE) today. Kate Spade is a sub luxury brand, think of it like a more affordable version of Louis Vuitton. KATE recently dropped by 11.4% putting it's trailing 12 month P/E at 16.41. To me, this appears to be a decent deal, despite all the doom and gloom. The numbers do not appear to be in KATE's favor but I bought these shares on a gut hunch. My wife had wanted a Kate Spade bag, but instead of buying her the product I am buying shares so that if she ends up getting a bag, I can recoup a tiny fraction of what  she spent.

KATE has been downgraded to market perform from outperform, rated as Moderate Buy by TipRanks Analyst Consensus, Thomson Reuters, S&P Capital IQ 3 star, SmartConsensus Report of Hold, And market Edge Second Opinion of Avoid.

Self Reflection Sunday

November sure is an expensive month. With all this talk about Black Friday and great deals and savings, we always end up spending more than we were planning for. Historically Black Friday got its name because that was when stores went from being the red ( losing money) to being in the black ( making money). Of course for people to make money, shoppers have to give up their money. I was very aware of this but I did not escape this holiday financially unscathed. I bought a new laptop, something I find to be a necessity because my current laptop due to its age has prevented me from completing my coding lessons and has dragged when analyzing investments. My hope is that this new laptop will give me the tools necessary to achieve my goals.

My goal moving forward is to use up every dollar of my pay check. I have created an emergency fund so now I am ready to invest more. Every investor has stated that investing early is key to retiring early. Financial goal is to achieve a net worth of $0 by 2018.

Holiday events and parties have hit my workout routine. That combined with cold rainy weather meant that I did not workout this past week. I will get back to working out 3 times a week.

Toastmaster + Big Game

Nov 24, 2016

 

The days leading up to a holiday are always crazy, Thanksgiving was no exception. Despite being late on posting yours past week was actually quite eventful. Last Saturday I got a chance to visit my alma mater for the big rivalry game against Stanfurd ( yes that is the official spelling). It was a cold rainy day but my wife and I were determined to go. We donned our Cal football gear, threw a rain poncho on and made our way to the bleachers. The game started out exciting with Cal scoring a touchdown on their very first try. We were pumped up despite the weather. As the game progressed on, the night grew colder and the rain picked up. Unfortunately this was also the time Stanfurd pulled into the lead. We kept cheering and hollering, pretty much to the point that the guys next to us were getting annoyed. That's okay though, he was a Stanfurd fan. Unfortunately our efforts did not end in a win for Cal but we still had a blast. I was so happy that my wife stuck It out for all 4 quarters and she's not even a football fan.

On Tuesday I had another Toastmasters speech. Unfortunately because I was at the game I did not get to rehearse my speech enough. As such I did not win best speaker for the night. The following was the speech I delivered. My evaluator noted that I had trailed off on parts of my speech. However I did not notice when I had made my delivery; and if I cannot identify the issue then I cannot improve. I will video record my next speech so I can watch it.

"
America’s healthcare system is broken. As a country, we spend more on healthcare than every other nation on this earth. We are struggling as a nation to manage long term health conditions like diabetes. Each year the cost of health care just seems to get higher, premiums costs more, and insurances cover less. Every politician has spoken about the danger of this collapsing system, yet healthcare remains unaffordable to too many. Luckily your friendly neighborhood pharmacist can help provide care and bring down the cost. Pharmacists are medical experts that can help save you and the system both directly and indirectly.

Pharmacists are highly trained medical experts that have a doctorate degree focusing on the appropriate use of medicine. That means that pharmacists help to ensure you are receiving the proper type of medication. And if a medication is too costly, many times we can help you find an appropriate alternative. The differences in nearly identical products can be astonishing. For patients with diabetes for example, one type of insulin may cost $270 a vial, while another may be as low as $25, less than a tenth of the price! So in a world of ever increasing costs, wouldn’t you want to have a $25 product if it works just as well? Insulin is just one example, there are dozens if not hundreds of examples where simply talking to your pharmacists can actually save you a lot of money. 

The bigger impact that pharmacists have is actually the indirect cost savings. Study after study have shown that involving a pharmacist in your health can save a substantial amount of money. A recent study where there was a transition of care from a hospital to a community pharmacy like the one next door, there a reduction in hospitalization of 36.5% and the annual cost saving from avoiding readmissions was $6.6 million. This was a pilot program implemented in only one state, imagine what can be accomplished if it was implemented nationwide. Pharmacists are able to accomplish these types of results because we can help people stay on  top of their medications, we know that people who forget to take their medications are more likely to end up in the hospital. We reduce the number of unnecessary medications, medications that may be taken for years without the patient understanding why. And we reduce the risk of dangerous drug interactions, where you may want to know if you heart medication and your asthma medication are fighting each other, or if that supplement Dr Oz is recommending may actually render your birth control ineffective.

However there are barriers to pharmacists providing exceptional care. Part of the challenge is understanding the value that a Pharmacist can bring and fully integrating a Pharmacist in your health. One of the biggest is that we do not have the authority to prescribe. So if I know that you can save hundreds on dollars every month by switching your insulin product, I could not do that for you. I have to ask you provider, who then has to ok it, then I can make the switch. These added steps and inefficiencies end up delaying care and increase the cost of services. Pharmacists around the U.S have been pushing for these types of prescriptive authority so that we can offer better care for our patients. We have seen some success with the introduction of immunizations and providing birth control. The ultimate goal is to get basic care and medication in the pharmacy and make it more cost effective than an expensive hospital visit. Eventually you may be able to get lab tests ordered, get your asthma and allergy therapies, birth control, immunizations, and  more without having the long waits and high costs of an office visit. 

The cost of healthcare in the U.S is far too high. Pharmacists can play a large role in reducing the overall cost and burden to the healthcare system by providing cost effective alternative therapies, reducing medication related errors, and unnecessary hospital readmissions. Hopefully soon, prescriptive authority will allow us to provide greater care for our patients, so that if you have healthcare needs, all you have to do is see your friendly neighborhood pharmacist.
"

Toastmaster Tuesday

Nov 15, 2016
Social Safety

In this week's Toastmasters meeting, I had the honor of doing the Pledge & Invocation as well as evaluate a speaker.

At the beginning of each meeting, we recite the Pledge of Allegiance, just like we did back in grade school. At first it was uncomfortable doing the pledge during meetings, I had not done it in years. I joined in anyhow and I figure it was a good way to practice public speaking. We literally recite the same phrases week after week, words that were familiar to everyone. This time however I felt that the pledge held special significance. Toastmasters is not a political organization, it discourages speaking about politics, religion, and sex in any matter that can offend others; including any attempt to sway anyone towards or away from a political or religious leaning. However, the members of Toastmasters are affected by politics, and this past election still had an impact on the mood. This was the first meeting after the presidential elections and there was some tension in the air. But when we started reciting the Pledge of Allegiance, things started to feel more normal. We were all supporting the same flag, and for all of our difference, that will always remain the same. After leading the pledge, it was time for the invocation. For the invocation, I wanted to address the source of the tension in the room, the results of the election. If we listened to all the rhetoric in the media, we would think that everyone was either a bigot or a whiny millennial. We would justify our hatred and disdain towards those that were not like us. In our county, it was pretty closely split between those who voted Democrat versus Republican. If we were to believe what we heard on the media, it would mean that the person sitting next to each of us voted differently and was either bigot or whiny. Yet looking around we saw no demons, no hatred, we just saw a strong supportive environment. I implore that each member grab coffee with one of their neighbors that voted differently than they did. They would not have to discuss politics, even very mundane topics will help humanize the other side.

For the evaluation portion, I had a tough job. I was to evaluate a seasoned pro at Toastmasters. She is one of the members that I idolized. She has won hundreds of ribbons and dozens of awards. She conveyed power and enthusiasm for the organization and in every speech that she did. She has  over a decade of experience under her belt and she continues to improve each day. I thought to myself, what in the world can I offer this amazing person. I took a deep breath, and prepared for my task at hand. Before her speech even began, she wanted to set the scene like a banquet dinner. She passed out cookies, cupcakes, and light refreshments for the club. Then as she spoke. It was evident that she was a pro as what she does, hitting all the dramatic notes and pauses with ease. But as she spoke, I noticed something else happening. She began swaying her body, rocking back and forth. If I had saw this motion in a newcomer, I would have thought it was nerves, it was odd that this professional was doing this. At the conclusion, the speaker received a hardy round of applause, again for what was an amazing speech. It was now my turn to take the stage to offer my evaluation of her speech. I congratulated and recognized how she set the scene and her power when she spoke. Then I brought up the swaying and rocking that she had done, the room was agasp. Here I was this newbie of only a few months giving advice to a veteran. My stomach sank, and I had to gather my composure. But everything I had said was true, and the room had to agree. I ended the evaluation with another praise of her speaking abilities to finish off on a high note. After the meeting, I learned that the speaker was having a rough day and she had been rocking to relieve pain in her joints. She had done it subconsciously, and did not even realize that she did it. She thanked me for letting her know, and acknowledge that it was distracting while she was speaking. I was speechless. What in the world was I supposed to say when a such a major figure thanks you for your criticism. I was simultaneously frightened and honored.

I cannot get enough of Toastmasters in my life. It is amazing what these people are able to do and I am willing to give up my Tuesday nights to be there. It is worth every dollar knowing that we all share something in common, and that even the seasoned veterans will offer advice and humility.

Waiting for Oskar Schindler

Nov 14, 2016

I was discussing with a friend on Facebook about the recent elections. He was actively dismissing concerns by a number of minorities about the anxiety and fear they are sensing. It made me curious as to how he as saw the election because he had felt that a number of stories were fabricated and blown out of proportion. Throughout this discussion he said "If I'm wrong, and crazy, racist lunatics start persecuting people like the Nazis did to the Jews, with the full force of government, I'll play Oskar Schindler."

Oskar Schindler was a benevolent Nazi sympathizer. He was credited with saving hundreds of Jews during world war 2. Although likely intended to be reassuring, this statement was incredibly terrifying. 

To his credit, there have been fake news on attacks involving bad actors on both sides. However that does not diminish the number of people using this election as an excuse to act out violently. As proof I pointed to the number of people who had voted for the KKK member David Duke running for senator. David Duke had garnered over 58,000 votes. The Southern Poverty Law Center had estimated the number of klan members to be at 8,000 in the country. In years past KKK membership was declining to the point of non existence, but now it had grown and they had gotten enough votes to get into a political ballot. If the number of KKK members in one state is 7 times more than what was predicted to be in the entire country, then the actual number in the country was likely to be in the hundreds of thousands. Again my friend was not worried and dismissed it, yes KKK was bad but unlikely to be that bad he said. It must be nice to be in a position where the number of klan members is multiple folds higher than predicted and not be concerned. Unfortunately many people that live in this country including Asians, blacks, Latinos, and homosexuals may not have that luxury. We do not have the luxury of wait and see because what we have seen it in the past and the results we devastating. Even if the risk is small the results can be extremely severe and therefore warrant attention. 

My friend thought he would be Oskar Schindler if all hell breaks lose. This tells me that there would have to be a near genocide for this guy to do anything, I sure hope people do something far sooner but that is not in my control. The statement also underlies another message: they will come for everyone but not me. Again this must be a comforting thought that many minorities do not get to enjoy.

Oskar Schindler was a benevolent Nazi sympathizer but that is like saying someone is kindly slave owner. At the end of the day he was still a Nazi member, and at the end of the day we do not need Nazis. We do not need more Oskar Schindlers in this world. I do not want to be on his coveted list. I will not wait for Oskar Schindler.

President Trump

Nov 8, 2016

I will be the first to admit I never saw this coming. I still believe Trump is a terrible human being and if he runs the country like a business then he will put profits ahead of people. There will be lots of angry people and those people will find out what they have to lose. With that said I have to admire what he has accomplished.

One year ago, no one thought he had a chance. News pundits and comedians alike watched gleefully as he entered the race, ready for zingers and eye catching headlines. They salivated and hung on to every politically incorrect statement made and every lie uttered. They predicted over and over again that his campaign would end. They said it would end after insulting the family of a gold star military member, they were wrong. They said it would end after claiming John McCain was not a hero because he was captured, they were wrong. They were wrong when he demeaned women, the disabled, and minorities. Trump was able to sustain his campaign despite doing what would have been career enders for others.

Trump did not lose out on too many votes from those he insulted. Among Latinos he won 29% of the vote. That meant despite threatening to build a wall, deport millions, and repeated insults, almost a third believed he was a better candidate than Clinton. Clinton took the lead on black and women voters but those margins were less than predicted. The same was true of young voters. Trump did extremely well with whites and those without a college degree, far exceeding what was predicted. He even converted historically blue states, the complete opposite of what the pundits had thought. In the end he solidified far more voters than he scared away.

At this point the Democratic party will have to reassess their position on the country. They had the most qualified candidate on the ballot, the support of a popular sitting president, more unity within the party, celebrity endorsements, more campaign money, and an opponent who was terrible on paper and the Democrats still lost. Democrats had squandered every advantage and had taken their electorate for granted. There were too many empty promises, too little accomplished, to put more Democrats in power. Working class whites, men and women were for a Trump. The margin of difference was huge.

Not only did Trump win the presidency, republicans also won the house, senate, and soon the supreme court. This is a glowing sign that the American public disapproves of everything they see happening. Trump has attacked a number of sitting politicians and it will be interesting to see how he runs his administration.

Trump is either the hypocrite in chief or a master tactician. Every insult he hurled at his opponent can be said about him. He attacks Clinton's charity despite using his own charity to enrich himself. He talks about Bill Clinton's affairs despite being married 4 times, numerous sexual assault cases, and bragging about groping women. He complains about the system being rigged and potentially not conceding so that his opponent could not make such a claim when he won. It was as if he had put his opponents in the defensive so much that they could not attack him on those same flaws, his flaws arguably were much more severe.

We are in unprecedented times ahead. The stock market has crashed, news organizations and many people are struggling to come to terms with the results, and xenophobia is likely going to spike. As a minority there is a chance that I will suffer or witness hostility yet to come. But I am not leaving, not running away to Canada. This is my country, my home, and I will define what it is to be American.

Trump is a terrible human being. He has accomplished a great deal but his message of anger and hostility is frightening. The times ahead will be uncertain.