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Free Falls, Free College & Earnings Season

The opinions expressed by columnists are their own and do not necessarily represent the views of

One thing we have learned is that markets are not hard-wired like nature to do what we expect them to do. We expect Monarch butterflies to fly up to 3,000 miles in its fall migration to Mexico, salmon to swim upstream where they spawn on gravel beds, and the great migration of the vast numbers of wildebeest and zebra to run through the Serengeti’s plains.


For years, investment pros have told us to brace for the great bond rotation and it has not happened. In fact, it appears to be the exact opposite. It is puzzling that this has been a winning trade for so long yet we were told the ‘Great Rotation’ would be a migration from bonds to stocks, and not the other way around.


President Obama posted a video in a social media network from Air Force One, touting a new program to make community colleges free for the first two years.

The federal government (75%) and state governments (25%) would cover tuition.

I have and will continue to cover the topic of education in my commentaries, because it is the first step to making money, and changing one’s life to a kind of economic freedom that is sweet and worthwhile.

Numbers do not lie: look at how dramatically one’s average lifetime earnings can increase based on education levels:

Education LevelAverage
Lifetime Earnings
Professional degree$4.2 million
Doctoral degree$3.5 million
Master's degree$2.8 million
Bachelor's degree$2.4 million
Associate's degree$1.8 million
Some college$1.6 million
High school graduate$1.4 million
Non-high school graduate$1 million

Here’s the rub. The community college route could be ten times less expensive than the private school route, yet arduous in other ways.

Not only does it take longer to attain a four- year degree, there is a sizable attrition rate.

Higher Education4 Year Degree% Dropout
Community College71 months39%
Public55 months17%
Private50 months16%

Organizations that actually work with underprivileged youth for higher education actually frown upon the community college route.

If the intention is to change the economic trajectory of Breakthrough students (i.e., end the cycle of poverty), then having Breakthrough students begin their post-secondary educations at four-year colleges is the best way to ensure they complete their bachelor’s degrees.

-Breakthrough Collaborative

Buying Votes?

These kinds of proposals always seem to come around just ahead of the state of the union or election time. Is President Obama just buying votes? Under President Bush, student loans climbed 76%; under Obama, 463%; close to a trillion dollars… is this just a political gimmick for the youth vote?

Earnings Season

Earnings season began last night with the release of results from Alcoa (AA), which posted a strong number that beat the street and offered encouraging guidance. However, the last 3 months have seen a dramatic decline in expectations for every sector in the market.

How could gas drop, the gross domestic product (GDP) surge, and hundreds of thousands of jobs be created, and earnings estimates collapse?

Monday, UBS lowered its earnings estimates on the banks, yet still considers Bank of America (BAC), Citigroup, and Morgan Stanley a Buy... how can you cut estimates in the case of Citibank to $0.04 from $0.18, and still say it's cool?

The earnings game is fickle and curious, but it is the best chance we get to delve into the health of publicly traded companies. I wish these were only twice a year, nevertheless, hold onto your hat.


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