Berko: Helping the kids through the tough times
By Malcolm Berko Taking Stock August 16, 2013 10:06PM
Updated: September 19, 2013 10:09AM
Dear Mr. Berko: Our daughter just lost her $26,000-a-year job because she wouldn’t cover her tattoos. Now our son-in-law, who works for the school system in Lafayette, Ind., has had his hours cut from 35 hours a week to 28. They lowered his hours so that under the new health care rules, the school won’t have to pay for his health insurance. This also lowered his income by $4,000 a year, and now Mom and I have to help them. We will have to make their new house payments ($1,146 a month) until our daughter finds another job or our son-in-law can get full-time hours with the school system. We have enclosed our $545,000 portfolio of 37 issues. We don’t use a stockbroker and want your thoughts on which stocks to sell so we can raise the money our kids need. My wife and I are both retired civil service employees with good pensions and have no debts.
Dear GL: That’s called collateral damage. According to Assistant Superintendent John Layton, Lafayette School Corp. reduced the working hours for 235 employees, essentially making them part-timers, saving the system and taxpayers nearly $2.5 million. Under the Affordable Care Act, employers with more than 50 full-time people (defined as anyone working 30 or more hours a week) must provide health insurance for all their employees.
Like it or not, health care will never be affordable. Congress and its vested interests will make certain of that.
It’s apparent that you don’t have a stockbroker, because you have a great growth and income portfolio, and frankly, there’s not too much I would sell. However, it’s time to take your profit on Yahoo (YHOO-$28.88). Though earnings have improved markedly under the new CEO (anybody can cut costs), revenues hardly have budged since she entered the starting gate a year ago. The growth in competition for online advertising revenue has increased much faster than the growth in advertising revenues. Advertising prices are declining, and so are profit margins for Google and the like. Sell YHOO.
I also recommend that you sell Microsoft (MSFT-$32.82). You bought MSFT 10 years ago at $33, and it’s still about $33. Sell PPL (PPL-$32.66), formerly Pennsylvania Power & Light, and take your small loss. Annaly Capital Management (NLY-$12.71), with a 12.5 percent yield, is facing strong headwinds in a rising interest rate market. Dividends have been falling steadily in the past three years, and the current $1.60 dividend should fall to $1.45 next year. Take your loss now, before it falls further.
Finally, sell Strayer Education (STRA-$47.62) and be thankful that you have only a small loss. STRA shares have tumbled more than 100 points in the past year.
Address questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email email@example.com.