Boy, Do We Get Mail…

Today’s presidential inauguration prompted me earlier this week to re-watch Frank Capra’s political melodrama Mr. Smith Goes to Washington (1939). In this iconic movie, public opinion is symbolized by overflowing baskets of letters. In my case, the apt image would be a rapidly filling email inbox.

I’ve been overwhelmed lately with letters from readers… and that’s a good thing. My high volume of reader email shows that this daily newsletter is grabbing your attention in a meaningful way.

I strive to create an interactive community with readers, because your questions and feedback help make this newsletter more relevant to your investment needs.

You’ve got questions; we’ve got answers…


Now’s a good time to dive into my figurative “mailbag.” Here are my answers to a few timely letters that stood out:

“I was checking the chart on GWPH; thought I might wait for a pull back. But looking again the candlestick had morphed to a hammer so I expect it to go up now. I wanted to say thanks for a stock I knew nothing about that looks as though it has good potential.” — Jon D.

Glad you agree with my assessment of G.W. Pharmaceuticals (NSDQ: GWPH). This biotech is the best-of-breed stock to profit from the fast rise of the medicinal marijuana industry.

Lots of risky small-cap penny stocks have sprouted up amid the canna-business “green rush.” However, G.W. Pharmaceuticals is a different type of marijuana business and should outlast the industry’s ups and downs.

Based in London, G.W. Pharmaceuticals discovers, develops, and markets cannabinoid prescription medicines for the treatment of chronic diseases and ailments. That means it’s likely to continue selling its products even if there’s a push back against recreational marijuana use under a Trump administration.

The company’s chief product is Sativex, an oromucosal spray for the treatment of multiple sclerosis, cancer pain and other hard-to-treat maladies for which doctors are urgently seeking non-opioid solutions.

“I will reach full retirement age (FRA) for Social Security this July. My spouse is not yet FRA. Can I file and suspend so my spouse can file for half of my benefit?” — Gil B.

File-and-suspend once was a sweet and simple strategy. Upon reaching full retirement age, typically 66, the beneficiary could file to claim Social Security, but then immediately “suspend” it by asking to stop getting the regular monthly income. However, because the beneficiary filed, he or she made the spouse eligible for a “spousal benefit” that was half of the beneficiary’s benefit.

However, the Bipartisan Budget Act of 2015 got rid of this option for most future Social Security recipients. The rationale among congressional lawmakers was that “file-and-suspend” was a loophole unfairly used by wealthier retirees. The upshot: Effective May 1, 2016, the new rules bar file-and-suspend for people born after April 30, 1950.

“You advise investing in small caps now. What’s your opinion of OGES?”— David L.

Oakridge Global Energy Solutions (OTC: OGES) manufactures batteries for golf cars, local electric vehicles, radio controlled vehicles, hand held devices, power tools, living space power, energy storage systems, starter motors, and underwater applications.

Energy storage management is a booming business, but OGES is a penny stock with a tiny capitalization of only $71.46 million, scant revenue and no profits. Buyer beware.

“I live in Connecticut and I’m considering investing in a Connecticut Higher Education Trust (CHET) 529 account for my grandsons. However, I’ve heard some horror stories about this route, particularly with respect to investing in stocks. Someone even remarked that the only positive aspect of this investment is that the broker gets his/her commission and fees, even if one’s account is diminished by the behavior of the market. Any comments?”— Jim G.

The greatest benefit of a 529 plan is that the money in the investment can grow tax-free as long as the distributions are strictly used to cover qualifying expenses. Those expenses include any tuition or fees at an institution of higher learning, books and computer equipment needed for study, and room and board.

One of the major drawbacks is limited choice. You don’t control the investment choices in a 529 plan and you’re completely dependent on a program manager. The other disadvantage is that the plan could hurt financial aid chances, even if the account is held by a grand parent.

“First, thanks for acknowledging that either child rearing or working outside the home may be personally important for some people, and how that importance justifies the cost and benefits of whatever is chosen.

Still, there are other reasons for both spouses to work. It can give both spouses the ability to maximize their personal saving and retirement investments.  Yes, any non-working spouse should open a spousal IRA (it amazes me the number of people who don’t), but having separate 401(k)s and deferred compensation programs can also be empowering — and helps build wealth regardless of what happens to or with the other spouse.” — Lisa H.

Lisa, your point is well taken. On the topic of two-paycheck households, there is no universal solution. Every family must do what’s right for them.

I’ll answer more of your letters next week. Need to get on your soapbox? You can reach me at: — John Persinos

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We don’t just receive emails… we send them, too.

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