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US Brokerage Websites Perform Poorly to High Trading Activity

Can brokerage websites handle massive customer visits?

Tuesday was a bad day for the websites of several US brokerage firms. In the wake of Monday’s record stock market drop of 1,175 points, several websites either crashed or operated painfully slowly as customers took action the following day.

Fidelity said late Tuesday morning that they finally overcame what were intermittent technical glitches on its website. Earlier that morning customers were greeted with the following message when they tried to access Fidelity’s website: “Our homepage is temporarily unavailable but don’t worry, we’re working quickly to fix this problem.”

Visitors to the Ameritrade website saw this message on Tuesday: “Due to volatile market conditions we are currently experiencing slowness on our web platform.” The company recommended customers try a mobile app or other related company website for information or access.

The social media platform Twitter hosted complaints from those trying to get into the Merrill Edge website which is operated by Bank of America. A spokesman issued the following statement: “Our systems remain operational. Some clients reported slowness logging into My Merrill and Merrill Edge due to unprecedented trading volume.”

Monday’s crash was the largest point drop in stock market history. On Tuesday the market opened down an additional 500 points but rallied during the first half hour of trading to climb back into positive territory. By noon on Tuesday the market was up by 52 points.

Back in November Fidelity experienced some down time on their website that disallowed customers from reaching their online accounts. The company offered free trades by way of compensation.

On Monday several brokerages experienced temporary issues of sluggishness on their websites, such as T.Rowe Price and TD Ameritrade. The issues were quickly resolved.

Changing Cannabis Trends Offer Investment Opportunities

The movement to legalize recreational marijuana is growing across the country, and with it is an influx of capital into the industry.

It is twenty years since pot became legal for medical use in California in 1996. Recreational use began in 2012 in Colorado and Washington, and today there are 30 states that allow medical marijuana and nine that either passed recreational initiatives or already have them in effect. This trend is sending a clear message to entrepreneurs and investors, and top Wall Street talent is joining the party.

The legal cannabis industry is now valued at about $8 billion, but it is expected to triple by 2021 in annual sales, to $22.6 billion. If that comes to pass, then the marijuana industry will be substantially larger than the US’s most profitable sports organization. The National Football League had $13 billion in revenue in 2017, and expects to reach $25 billion by 2027.

During 2017 there were at least 27 venture capital investment funds in pot firms. Compare that to 10 similar funds in 2016 and 9 ventures in 2015. The money flowing into the industry is helping pay about 150,000 salaries in the legal weed industry, representing 20% job growth this past year.

Some of the companies are finding exclusive niches, such as Défoncé Chocolatier, founded by Eric Eslao, a company that makes pot-infused artisanal chocolates, which sell for $20 per bar.

This is not to say that there are no hoops that still need to be jumped through. The federal government still views possession of marijuana as a crime, making banks a bit fearful of doing business with cannabis companies. These companies get by with either using cash only or paying large bank fees for the privilege of having accounts.

Major US Payment Processor Buying UK-based Worldpay

A merger is under way between two rival payment processing firms: the US-based Vantiv and the UK-based Worldpay. Vantiv has submitted a formal offer to purchase Worldpay for close to £8bn ($10.4bn). The offer was made after many weeks of negotiating terms of the deal, including the relocation of UK employees when the merger is implemented.

The deal values Worldpay’s shares at $5.16. When the deal is finalized Worldpay’s headquarters will move to Vantiv’s home, Cincinnati, Ohio, in the USA. As a single entity, the company expects it will be able to process about $1.5 trillion worth of payments and about 40 billion individual transactions per year. This should bring the company’s revenue up to about $3.2 billion/year.

Vitav has grown by leaps and bounds of late, becoming the largest payment processing company in the United States after its acquisition of Mercury Payment Systems and Moneris Solutions. The company is now ready to broaden its base in the European market with the purchase of Worldpay.

Worldpay not only processes traditional payments from brick and mortar shops; they also work in the growing e-commerce space, a market Vantiv would like access to. Due to the huge growth of spending on-line companies that facilitate online payments, like Worldpay, are ripe picks for well-established payment companies as a way for them to reach into the internet marketplace.

Vantiv predicts that the takeover will boost their annual savings to about $200million by the end of the third year. This will be offset against the cost of integrating Worldpay into Vantiv, which is expected to come to about $330 million, almost all over the first two years.

Parents Paying Less for Kids College Fees

Nassau Hall, the original building and current administration building of Princeton University. Photo courtesy of Wikipedia.

Despite an improved economy and record-high stock market, parents are chipping in less for their kids’ college tuition than they have in the past.

That is according to a new study published by Sallie Mae, “How America Pays for College,” its tenth annual report.

Parents’ share of the tab for college fell to 23 percent, down from 29 percent of the average amount an ordinary family pays for college. In dollars that comes to $5,527 out of an average $23,757 yearly cost.

That number is the lowest its been since 2009, the smallest figure since the launch of the yearly study.

So where is the rest of the money for higher education coming from? Student loans have climbed to pay for 19 percent of the cost, compared to 13 percent in the past. The Sallie Mae report does not address the reasons for the changes, but there is some speculation.

“It could be price sensitivity,” says Mark Kantrowitz, publisher of Cappex.com, a college financing resource. “Parents may be telling students, if you want to go to that more expensive school, you’ll have to pay for it.”

Sallie Mae’s population seems to be lacking in planning ahead for college fees. The report reveals that 9 out of 10 respondents expect their kids to go to college, but only 4 of 10 budget for it.

There was some good news in the study. The report showed that 69 percent disregarded some colleges from their list under consideration because of the high price, a number significantly higher than the 58 percent of ten years ago.

Clearly, families that did plan for college for their kids, with savings plans like the 529 plan, getting to college is less troublesome.

Parents who save a little bit each month over time have a reasonable, fixed amount available to spend on college. If their kids want to spend more, then they will have to face larger loans when they graduate.

Ford Launching New Financing Scheme to Attract Young Drivers

Ford Motor Company will begin to offer a new type of car purchasing plan which will be a kind of middle ground between a traditional car finance program and a car hire agreement, which could be a model for the way cars will be purchased in the future.

The car manufacturing giant will start offering finance deals for as short a term as one month to buyers in the US who are not interested, or cannot afford longer, yearly leases. The “variable-term leases with flexible payment options” will combine maintenance, insurance and towing services into one monthly premium which can either be renewed or opted out of each month.

The hi-tech company Canvas will run the program, but Ford’s US consumer financial credit provider Ford Motor Credit, will back up the scheme. David McClelland, executive vice president of marketing and sales at Ford Motor Credit said his company “recognized the need for financial services and technology to facilitate our future vision.”

Canvas, formerly Breeze, was purchased by Ford at the end of 2016. The tech company is expert in providing short-term vehicle finance to drivers working for Lyft, Uber and others. Ford is using Canvas’s web-based platform, as well as their familiarity with short-term leasing, to attract a broader range of customers. The program is hoping to attract young drivers, especially those who would otherwise not be eligible for auto financing.

CEO of Canvas, Ned Ryan said, “Our mission is to identify, test and launch financial products that meet the changing needs of consumers. We’re addressing the void in the consumer space between daily rentals and long-term (financial) commitments.”

Kick the Bad Habits of Poor People

There is more to increasing wealth than having a good job and a budget. Avoiding the pitfalls of some bad habits can also go a long way in helping you achieve your financial goals more quickly and easily.

Having bad physical habits can do more than just harm your health. For instance, one study on people who smoke found that the net worth of heavy smokers was $8,300 less than non-smokers. Moderate smokers saw a $2,000 differential. The average effect of smoking on wealth was a 4 percent decrease for each year the person smoked, the approximate number spent each year on cigarettes. This study did not examine the negative effect smoking has on the cost of health insurance, and the extra time spent at the doctor. In other words, stop smoking and you will significantly improve your financial situation.
Who your friends are and what their financial habits are can have a huge effect on a person’s own habits. If your friends spend their weekends drinking, eating at expensive restaurants, and shopping at the mall, there is a good chance that you will, too. Start hanging out with people that spend their time and money wisely, and some of that wisdom, and wealth-building habits, should rub-off on you.
The way your parents raised you is a big influence on your own money habits. Unfortunately, you can’t pick your parents, but you can make a conscious choice to make different choices when it comes to your own money. Take a closer look. Did one or both of your parents gamble too much? Drink? Max out their credit cards? Don’t let their bad lifestyles effect you negatively. Rather use them as examples of what not to do, and you can go beyond them in your ability to build your own, and your family’s financial security.

Higher Prices will Benefit Partners at Starbucks

Starbucks customers will be paying about 30 cents more for their coffee soon. Patrons should be pleased to know than rather than filling the pockets of executives at Starbucks, the increased revenue will be used to give employees a pay raise of at least 5 percent beginning in October.

Starbucks is famous for making the development of its employees a high priority. Workers at the coffee house giant are fondly referred to as ‘partners,’ and they have a nice list of benefits offered to those partners, including comprehensive health care benefits, stock rewards, tuition reimbursements, and training. The company also offers development opportunities to its employees.

Finance Professionals Facing Pay Cuts After New Regulations Kick In

After long-delays it looks like regulators will finally have their way; legislation to restrict bonuses were proposed by financial services watchdogs are about to come into practice.

Payouts are being limited as one of the last parts of the Dodd-Frank reforms which were instituted to prevent financial disasters. The new rules will apply to a wider range of employees at large banks and not just the top tier execs, in addition to those working at other kinds of institutions.

The new rules will mostly affect those who are designated as “significant risk-takers.” They include those on the top 5 percent of earners at the largest banks or others who put at risk large amounts of an institutions capital.

Keane Buys Trican’s US Division in a $247 Million Deal

Despite the precipitous drop in oil prices, the Keane Group will purchase the US division of a Canadian oil field services company in a bid to grow the company.

James Stewart, CEO of Keane, said that the purchase will more than double the size of the small oil field company.

Last month the two companies, Keane and Trican Well Services, a pressure pumping business based in Calgary, announced that they were in advanced negotiations discussing purchase. The final agreement features Keane paying $200 million in cash for Trican, plus a 10 percent stake in the shares of Keane Group Holdings. The total value of the deal equals $247 million. The deal should be finalized by the middle of March.

“We’ve been a small, well-capitalized completion services company,” Stewart said. “And now is a good time to consolidate. We’re in a unique position … to potentially roll up more companies.”

The finalization of the deal will allow Keane improved access in the Eagle Ford Shale in South Texas and some of Oklahoma and Kansas. It will also allow Keane a stronger presence in the Permian Basin in West Texas and the Bakken Shale in North Dakota.

“As the market rebounds, we’ll be well positioned,” Stewart said, emphasizing the importance of the “untapped potential” still remaining in the Permian.

Learn About Finance from Halloween Candy

Not only is Halloween a great day for kids and their dentists, it also presents a wonderful opportunity to teach the next generation about managing money.

Many people don’t realize that Halloween is often and expensive occasion for families. The National Retailer Federation says that consumers will most likely spend almost $7 billion on all the trappings of a “proper” Halloween. Into the budget go items such as decorations, costumes, and candy. Even pets sometimes get costumes- to the tune of $350 million. The NRF says that each shopper will spend an average of $74 on the holiday.

Don’t despair. Get your kids in on the planning, and you can teach them some great lessons about watching where their money is going.

1. Comparison shopping- using great apps like ShopSavvy or RedLaser, or by simply comparing prices on-line and in stores, children can learn that there is often a great deal of variance in what stores charge for their goods.

2. Never pay retail- watch for specials, reduced-price sales and other events that can slash prices way down.

3. Buying in bulk- stores like Sam’s Club or Costco discount items when purchased in larger quantities. This is a great way to buy all the candy you need.

4. Delayed gratification- one great lesson to impart to children is the importance of not acting impulsively, especially when it comes to spending money. If you see something you like, but don’t really need, wait a day or two, or even longer, and see if its appeal hasn’t faded. This is a great way to save lots of money.

You can decide ahead of time with your children how much money you think a reasonable amount to spend on Halloween, and curb spending to match your budget. This is a great lesson in the value of hard-earned dollars versus the frivolous nature of a holiday like Halloween.