WILLIS: New intention going bust, and now new calls for a taxpayer bailout.
Also should this government force young people to save for retirement? People are taking the idea seriously. What do you think?
And the unseen risks for parents who want to give their house to their kids.
We're watching out for you on "THE WILLIS REPORT."
(END VIDEO CLIP)
WILLIS: Well, the deadline for filing your taxes if you haven't already is just over 24 hours away. Yes, here we go again. The good news is the chance of getting audited by the IRS is lowest in years. The bad news if you need to get in touch with the taxman, well, good luck because millions of phone calls are going unanswered this year.
With us now Mattie Duppler from Americans for Tax Reform and Scott Hodge, president of the Tax foundation.
Welcome to you both.
Mattie, I will start with you. OK, so if the IRS is not picking up its telephone, how do we get help?
MATTIE DUPPLER, AMERICANS FOR TAX REFORM: That is good question. Hopefully a lot of your viewers filed given we are 24 hours away.
But this is the interesting proposition here. The fact that the IRS is not able to complete its most basic responsibilities which helping the American taxpayer know their liability and fulfill it. And then we also hear from the left this time of year about how we need to give the IRS more responsibility. So right now we're looking at Obamacare coming into full effect and IRS not knowing how to handle, most even basic requirement giving tax information you need for health care out and secure.
But also we hear a lot of times from the left, because file something so difficult and because so many people have problems wit, we should nationalize it. Have the federal government around IRS pay our taxes.
WILLIS: You know, not this year. Not in the next 24 hours, that's for damn sure. I don't think that is going to happen.
But Scott to you, you know. Look, 80,000 pages of tax codes, regulations as Mattie is saying it is hugely complicated. And now
big changes this year. And I think a lot of people if you haven't gone through this already, you may be paying more particularly if you are a well to do household, 200,000 in income or more. Tell us what is changing and so very different this year?
SCOTT HODGE, PRESIDENT, TAX FOUNDATION: Well, especially for higher income people, they're paying higher tax rates as a result of the fiscal cliff deal that was signed last year. And so, the top rate will go from 35 percent to 39.6 percent for those above 250,000 and so in income. But then those people also pay higher tax rates on their capital gains and dividend income.
The other thing they will see, this is kind of stealthy, is that a lot of their deductions will be phased out or reduced after they hit certain thresholds, say, over $360,000 a year in income. So there are a lot of things going on here. Higher rates and fewer deductions for higher income individuals.
WILLIS: Well, I have to tell you, Mattie. You know, you're paying more for your investments, right? I think that is probably bad for the stock market. You are paying more on your income. Let me tell you, Obamacare, it is what they call the American tax relief act, ha, ha, no, it wasn't.
Mattie, when you look at this, do you think people are getting a little sticker shock this year?
DUPPLER: Well, I think so. And you know, Scott is talking a lot about the high income earners and where they're getting hit. But there is a lot of average American families who are really going to feel a big tax burden this year with a lot of these new health care taxes. You know, things like, the FSA, the flexible spending account that used to be unlimited under federal law, now has a cap on it. That is pretty severe. That is $2500, and this is something that families use to pay for braces for kids. It is something that families with special needs kids use for school tuition which can be tens of thousands of dollars. So that is certainly something that a middle America -- an average
American family is going to feel.
Other things like deductions for health care, that kind of haircut this time around too. So, a lot of Obamacare tax hikes that have not gone into effect that went into effect this year and next year are really going to be hitting average American families and they will be feeling the squeeze.
WILLIS: You know, that's a great point.
Scott to you. Mattie was mentioning earlier the fact there would be fewer audits this year. I guess that is good news. But you know, the reality is they can come back to you anytime? What is the window, seven years? I mean, look. They can come back later and say, you know, we missed this last year. But this year we're coming back to you on your 2013 filing. They just, they get a free pass, don't they?
HODGE: The IRS does get a free pass because really the onus is on us to prove our innocence, not on them to prove that we're guilty.
WILLIS: And they have a lot of power.
HODGE: And they do. And you know, the IRS spends $5 billion a year on enforcement, to try to wring the last dollar of taxes out of all of us, even though more and more of us are either filing electronically, that we're filing with software, or we're paying someone else, a professional for instance, to do our tax returns. And yes, the IRS is increasing their enforcement budget to get, the every last dollar out of every taxpayer.
WILLIS: Every last dollar out of every taxpayer. The folks most likely to be audited, Mattie, mostly small business people or who gets that audit?
DUPPLER: Well, it is something that I think particularly prevalent over the last week. You saw last week house ways and means
chairman Dave Camp release records that showed Lois Lerner, who was the head of the IRS tax- exempt division looking at can serve tiff groups for audits. And this is something that comes out of IRS' own inspector general said back in May that when they were selecting groups for audits, 100 percent of the groups they ended up selecting is right-leaning groups.
So your small business may not be safe if you, perhaps, donated to a candidate, attend ad rally or even in some cases had a facebook post that made you seem conservative. This is information that the IRS is asking from people. And so, this is, you know, this is something that, major concern I think to anyone who is politically active but any American who cares about their -- has to be concerned about the IRS.
WILLIS: Mattie, you are so right. And we should ask our viewers if you find yourself in that situation, Gerriwillis.com, to send us an email.
Before you guys go, I have to tell folks about the top excuses for not paying taxes because they're pretty darn funny. Listen to this. Filing taxes is voluntary and I don't care to volunteer. True or false, Mattie.
DUPPLER: Unfortunately it is false.
WILLIS: How about this one? There is no gross income when I exchange labor for money, so I owe no income taxes.
HODGE: Wesley snipes tried that one. It didn't work for him.
(LAUGHTER)
WILLIS: How about this? The Federal Reserve notes are not real currency, if you get paid in dollars you won't owe taxes, Mattie?
DUPPLER: Well, we just saw too in Bitcoin. You are going to have a tax liability there as well. But I don't think that is going to
fly either.
WILLIS: How about this. This is really tricky. I'm not a sate citizen, not a U.S. citizen so I don't owe any federal taxes -- Scott?
HODGE: No, that doesn't fly either with the IRS or the courts. People have gone to jail for that one.
WILLIS: And Mattie, hey, taxes are unconstitutional.
DUPPLER: I don't think this argument is the most fun but the court again and again told us that is not the case.
WILLIS: Well. The dog ate my open work I guess.
Mattie and Scott, thanks for coming on tonight. Great to see you guys. Thanks so much for your information.
DUPPLER: Yes, thanks, Gerri.
HODGE: You bet.
WILLIS: And if you want more details on filing your taxes go to our Web site, Gerriwillis.com. And check out my blogs where you find all kind of relevant tax info.
Well, from taxes to phones, consumers are getting ripped off. We are not taking these outrageous fees anymore. Those are the words, not of consumer organization but the CEO of T-Mobile. He wants to do away with data overage fees for smartphones and wants his competitors to follow suit.
For more on this, and a real look, DynaLink Telecommunications CEO Larry Fishelson.
Larry, is this marketing hype or is this reality?
LARRY FISHELSON, CEO, DYNALINK TELECOMMUNICATIONS: Gerri, this is pure marketing hype. At the end of the day, the business is made in the cellular business is like the insurance business on breakage. So, what they want to do, is they want to get you to pay more in a set fee instead after smaller amount and then get charged after that.
So the whole idea is to drive you up to the next level. Because what happens is, they start throttling you down as you start to use the usage. And what they're doing is, they're not giving you anything, they are not giving you limited usage. They are only giving you choice now to either go down to no data, or you finished on the 2G network or you have to pay to go to the higher amount bucket.
So this is lot of smoke and mirrors. This is also T-Mobile. When they went ahead came out with unlimited plan, they quietly added up to $80, another $10 for it because they said it cost them more money.
So, this is really nothing but a marketing ploy for a company whose stock has went down 11 percent after the last quarter. The costs are going way up.
WILLIS: Well, I think he has one thing right. Overage penalty, AT&T, Verizon, Sprint a billion dollars a year. So people are really paying the price.
FISHELSON: Yes.
WILLIS: The question is this new plan really going to benefiting consumers and you say?
FISHELSON: The new plan is not going to benefit consumers. But if you really want to get lower on overage, then charge less money on overage. It is nice to get people the choice, where if they want to pay a la carte, they can pay a la carte or they can pay for what is called the insurance model. So all they really
need to do is charge for a less, a lower amount on the overage who says they have to charge for higher amount.
I agree the high amounts are no good. So you should really look at amount that you're using and go ahead and base it on that. Because everybody is going to spend the money. Money is made in the sale or business on pure breakage, which is the amount that you're paying for that you're not fully using. And this drives them to that.
WILLIS: So here's what the T-Mobile CEO, John Legere said. Overage penalties from AT&T, Verizon and Sprint take more than incredible one billion dollars out of consumers' pockets every year. It's time to Show these companies that we are not going to take these outrageous fees lying down anymore.
And as you know, John Legere shows up in t-shirt and jeans. He looks like a regular guy. But you say he is just another marketer.
FISHELSON: This is marketing ploy. Like I said, if he wants to do it, give everybody the choice and lower the fees on the overage. Why not do that? But, once again this is from a company that just went ahead and added $10 very quietly on the unlimited plan.
WILLIS: You know what I think is interesting? Is that, we're all moving to huge need for data, right?
FISHELSON: Yes.
WILLIS: I mean, at the end of the day and it seems to me like, there is nowhere for these bills to go but up?
FISHELSON: Well, the bills are going up but at the end of the day, you are getting more data for your money than you did before. So, net-net you will be paying less overall but, with the constraints of the new world, you are going to be paying more but you are going to be using more to do everything on your
smartphones.
But you need to be careful as a consumer. You need to pay for the amount that you're using and a lot of people pay for the amounts over that they're not using and that is where they --
WILLIS: So your point is really, you should analyze your usage.
FISHELSON: Analyze your usage because everything you're doing in the world now is going to be on your smartphone. You're going to be eventually going to mobile payments. Right now, e-commerce is only 10 percent. It will be going up a lot more. You will be using it on your phones. Analyze your bill what you want to use.
WILLIS: All right, Larry Fishelson, vanguard of the future. Thanks for coming on the show. Good to see you.
FISHELSON: You too.
WILLIS: And we have more and more coming this hour, including how do you do that? Deciding if you should give your home to the kids? What does that entail?
And we have the pitfalls you need to consider before signing on the dotted line.
Next, listen to this, my friend, union pensions are in the red. And so, are they going to go to Congress with their handout? It seems like pressure is rising. Is this next taxpayer bailout?
Stay with us.
(COMMERCIAL BREAK)
WILLIS: Taxpayers could soon be on the hook for another bailout. Union pension plans, union pension plans, they're going bust and our next guest says you could wind up picking up the
tab. Dan Mitchell, senior fellow at CATO institute joins me now with details.
Dan, great to have you back here. Good to see you. So as I understand, a 10 percent of these multiemployer plans, these are pension plans for unions, of the 1500 total, 10 percent will run out of money in the near term, in the next few years. How big is this? How does it get fixed? Are taxpayers on the hook?
DAN MITCHELL, SENIOR FELLOW, CATO INSTITUTE: We already have a government department, pension benefit guaranty corporation, that exists to bailout and take over these underfunded and bankrupt pension plans almost all of which are associated with unionized plans. And according to the numbers on the PBGC Web site the unfunded liabilities is tens of billions of dollars. So where is that going to come from? Taxpayers unfortunately probably do have their necks on chopping block.
WILLIS: Yes. But Dan, just a slight tweak to what you said there, my understanding is that these specific plans, this flavor of plan, is not supposed to be bankrolled by PGBC. It is not supposed to be bankrolled by taxpayers. And yet, I certainly expect the queries, the requests, the demands for money to start piling up. Do you?
MITCHELL: Well, you have the single employer plans. You have the multiemployer plan. PBGC is involved with some. But the key thing to understand is, that any defined benefit system, which means that some employer at some point in time, promises we're going to give you x automatically, when there is really not the amount of savings, funding as they call it, to back it up, means somebody will be left holding the bag.
And whether it is PGBC which of course ultimately means taxpayers and the healthy pension plans that are paying premiums to there, whether it means just a general taxpayer bailout. And let's not forget, we're not even counting all the state and local government employee defined benefit plans, not to
mention the biggie, Social Security! Which is defined benefit plan that is trillions of dollars in the red in the long run.
WILLIS: Exactly right, Dan. And we keep saying PGBC. What we mean is the Pension Benefit Guaranty Corporation and we fund it.
I want to mention this one specific plan that was really described in detail in Sunday's "New York Times." It is called the teamsters central states plan. It has 400,000 members. They take in about $700 million every year. But they pay out $2.8 billion, $2.8 billion. They are nowhere near where they need to be to be payments so they promised to Americans all over the country.
And the irony of this particular fund in the '60s and '70's, it was a virtual bank for organized crime. So, you know, these plans don't necessarily have the best reputation and certainly now their reputation is suffering even more as they can't make the payments that they promised. What is the solution for this kind of thing?
MITCHELL: Unfortunately, there is not a whole lot we can do about the fact that we're already in a deep hole. So somebody is going to get hurt. It is probably to some degree going to be the people who thought, the workers who thought they could rely on these plans. But as we have already talked about, taxpayers might get hit. And there is lot of cross redistribution. So healthy pension plans are probably going to subsidize the unhealthy ones.
But here is the good news. I don't want to sound like I'm a bearer of bad news. The good news is that the market has largely dealt with this because over time there has been a big shift to defined contribution plans.
WILLIS: 401(k).
MITCHELL: IRAs and 401(k)s. You put money in an account. It is yours. It is your private property. There is not some pension
plan someplace that might be mis-investing it or corruption with organized crime and unions. And so, I think IRAs and 401(k)s, some people on the left don't like them because they turn workers into capitalists. But I think they're much, much safer because the only people that are going to take it away might be government taxing it at some point in the future. But that is whole separate problem.
WILLIS: That is my fear. Well, it is true there has been a change, but in reality, 10 million Americans rely on this specific multiemployer pension plan for their, for their retirement.
And I'm saying tonight, Dan Mitchell, that I bet you, my last bottom dollar, that taxpayers are going to be asked to help, even though right now they are legally not on the look for this.
Thanks for coming on the show, Dan. Good to see you.
MITCHELL: Thank you.
WILLIS: And coming up later in the show, there is a new push to get the government to force, to force young people to save for retirement. Unbelievable.
And how do you do that? Deciding to give your kids the key to your house. Should you sell it to them? We have unseen dangers coming up next.
(COMMERCIAL BREAK)
WILLIS: Heads up, mom and dad, giving your kids a house, giving it to them can result in some serious tax penalties. How to avoid them in 60 seconds.
(COMMERCIAL BREAK)
WILLIS: What is the old saying, no good deed goes unpunished? That doesn't have to be the case for parents that want to leave
the kid the house. So, how do you go about giving you're your home without a big tax bill?
Joining me now, Veronica Dagher, wealth advisor columnist for "The Wall Street Journal."
Veronica, welcome to the show. Great to have you here. What do you think, and I know there are lots of emotional dangers to this, but what do you think are the big financial dangers?
VERONICA DAGHER, WEALTH ADVISOR COLUMNIST, THE WALL STREET JOURNAL: There is lot of financial dangers. Well, first of all if you give the house to the kids while you're still alive and that kid gets divorced, your ex, you know, daughter-in-law or son-in-law can get a claim on that half. Not to mention, if your kid is not so good with their bills, creditors might come after them. They could also go after that house. You personally too. A lot of people want to do reverse -
WILLIS: You know what they will say? They are going to say my kids would never be bad with their money. There is such a great couple. They never get divorced.
DAGHER: Sure.
WILLIS: You have to be more realistic.
DAGHER: You have to be more realistic. So think about it as like how much do you really know about your kids finances besides what they tell you? I mean, recently did another story, and all of sudden the parents found out their kid owed $50,000 worth of bills. So, you never know what you're looking at.
WILLIS: So, I know a lot of people do this because they want to qualify for Medicaid. Is that the right thing to do?
DAGHER: Yes, you know, Medicaid is sort of on to people for this. So, if you transfer the house within five years of applying for
long-term care benefits through Medicaid, Medicaid is going to say no, you can't do that they will render you ineligible, or at least inflict a penalty on you.
WILLIS: five-year-look back.
DAGHER: Five-year look back. So you know, Medicaid is on to this. And said this will not work for you. You also going to think about if you want to get a reverse mortgage one day, if you do this, if you transfer the whole home within your lifetime, you can't get the reverse mortgage. And that is huge problem because people may be relying on that money for future income.
WILLIS: And we cover that a lot, the reverse mortgage. You know, some people think it's a good idea. Others think it a bad idea. But you know, there has to be more tax implications, the death tax, the gift tax. Am I going to incur kinds of taxes by simply giving away my house?
DAGHER: Yes. You can get hit with a lot of taxes and your heirs too. You're much better off in most cases giving house as part of the normal inheritance. Unless you fall outside of the exclusions of the IRS. And for people to fall outside of that they need really largest states like, you know, over $10 million. It really depends on the federal and also the state tax levels.
But in general, most people, most average Americans are going to be much better leaving their home outright when they die to their kids.
WILLIS: So you don't recommend this? You think this is a bad idea?
DAGHER: I think if your name is Buffet or Gates perhaps it's a great idea but for most people it is not going to be a good idea. If you do do it though, it is really, really complicated. So if you're going to do it, you want to think about trusts and somebody's trusts can be very complicated. You want to make sure you work
with --
WILLIS: Get professional help.
DAGHER: Big-time.
WILLIS: OK. Good advice. I know a lot of people think about doing it. They think it will be easy and reality is not so much.
DAGHER: Not so much.
WILLIS: All right, Veronica, thanks for coming on tonight.
DAGHER: Thanks, Gerri.
WILLIS: And still to come our financial panel is covering your assets, how to protect your money during the market's wild and bumpy ride. We're up today but tomorrow we don't know.
And the latest idea from the former car czar, why Steve Rattner, former Wall Street investment banker wants the government to order, force young people to save for their retirement, coming up.
(COMMERCIAL BREAK)
WILLIS: This next one is a lulu. Saving people from themselves, that's what Obama's former car czar, Steve Rattner, says he wants to do by having the government, the federal government, force young people to save for retirement. Got a young person here tonight to see what he thinks of this idea, Charlie Kirk, founder and executive director of "Turning Point USA." Charlie, do you think the government should force young people to save?
CHARLIE KIRK, "TURNING POINT USA": No, this is totally ridiculous. And if you look at Ratner's article, you know, he has a good intention, he wants to get young people to save for the future, but what he doesn't analyze is why young people aren't saving. The metrics are correct, young people are not saving, it's
because they're too worried about surviving in this economy. They don't have the dispensable or disposable income to save in 401(k)-type platforms, and to say that what his proposal is, is that we should pass a bill that 9 percent of the income of Millennials should now go towards some oligarchic type of 401(k) system is ridiculous, and to say that he could save us from ourselves is totally preposterous.
WILLIS: OK, at nine percent you probably wouldn't be eating dinner. OK. So let's take a look at the metrics, you mentioned them. So, workers under 25, 43 percent are saying they contribute 4.3 percent of their income on average. Once you go a little older, workers 25 to 34, 62 percent are saving, they contribute 5.5 percent of their income on average. And then you go to 45 plus, people in that age group, 70 percent are certainly saving, and they contribute 8.7 percent of income on average. You know, Charlie, it sounds to me that Steve Ratner is just trying to overcome what is really just human nature. You don't really think about these issues, these problems until you get older.
KIRK: Correct. Right. And even further into that, there have been studied shown, and CNBC released one recently and so did an independent consumer index that showed that my generation millennials is the most fiscally conservative and financially conservative with their money since the Great Depression. They're maxing out. They don't have this extra income to put in diversified assets or portfolios, and the reason is because that they are skyrocketing student loans, with the new Obamacare mandates, skyrocketing health care premiums, and they're underemployed on an across the level. So, I don't exactly know where he's going to find this extra income. And you're right. There's a cultural component to it. Young people are just less likely to save for the future, and that's always to be understood when you go into these kind of financial conversations.
WILLIS: Is there any reason to think that the federal government
should be involved in retirement savings? Should the federal government be devising programs like myRA, to get people to save? Or should they just get out of the business altogether?
KIRK: You know, I say get out of the business altogether. They're very noble ideas, but let's look at Social Security. You know, Social Security is supposed to be this great idea and that's worked for millions of Americans for a long time, but it's not solvent. It's going to go bankrupt the next eight years if decisions are not made, and that was kind of supposed to be retirement-supplemented income. And when Millennials are polled, half of Millennials, people of my age, even think they'll see a dime out of Social Security. So to think that, you know, Ratner's proposal will somehow make this wonderful, robust retirement account for my generation is totally preposterous, and for him to take the kind of tone that, oh, we can save you with some policy prescriptions I just think is totally, in my opinion, thinks that he can kind of dictate through this kind of legislation which I totally reject.
WILLIS: I think there would be a huge uprising. I think, you know, the folks who protested against Wall Street, that you ain't seen nothing yet if you force people to set aside nine percent of their income, because they don't have it. What's a better plan? I mean how do we encourage young people to save? Is it some kind of government program? Is it mom and dad? Is it a better economy where people earn more and feel like they can set aside more?
KIRK: Yeah. I think it's a mixture of all that. You know there needs to be a cultural component that we need to save more, but also if you look at young people 18 to 32, we're underemployed, we're being mandated now to pay for health insurance that we really don't think will benefit from us - and you know, benefit our generation. I always like to say we're borrowing money we don't have to give to students to study things that don't matter to find jobs that don't exist. And that's really what's happening right now. As young people are going into markets, they have degrees that don't have a lot of relevancy. Their jobs out there, that are
disappearing, and then when you say that all of a sudden they're resurrecting this idea that, oh, we have youth unemployment at all-time highs, young people have skyrocketing tax premiums. Hey, let's put another nine percent tax for retirement. I don't know where he's getting this from. The best solution for long-term diversified assets and retirement accounts is a prosperous, booming economy, and we've got to get government out of the way, and my generation's suffering because of the ails of big government.
WILLIS: Yeah, my reaction to this was, OK, let's force them to save for retirement, let's force them to pay for health care, let's force them to be nice to mom and dad. Gee, what else can we add to this list? They're just going to love us. It's a little too in your face government, I think. Charlie, thanks for coming on this show. So good to see you.
KIRK: Great to see you, thank you.
WILLIS: And now we want to know what you think. Here's our question tonight, should the government force young people to save for retirement? Log on to Gerriwillis.com and vote on the right-hand side of the screen. I'll share the results at the end of tonight's show.
And time now for a look at stories you're clicking on on Foxbusiness.com. Retail sales ringing up the biggest gains since 2012. The Congress department reporting retail sales jumping 1.1 percent last month. It signals consumers' willingness to spend after a harsh winter. And this is the biggest jump since September 2012. Better than expected retail sales and earnings fromCitigroup pushed stocks higher. The markets rebounding today after a big selloff last week. And Staples was launching a 3D printing pilot program, the office supply chain is partnering with3D systems to create 3D printing centers in New York and California. The program is aimed at small businesses and consumers. Hmm. Google has fined drone maker Titan Airspace,
buying the maker of high altitude drones to expand Internet access in developing areas. The Internet search giant is declining to reveal how much it paid for the startup. Initial commercial operations are expected to begin next year. And those are some of the hot stories right now on foxbusiness.com.
Coming up later in the show, we have the latest in the GM recall scandal, and we are covering your assets. Stocks continuing their roller coaster ride. Where should you put your money? Our panel gives their advice, coming up.
(COMMERCIAL BREAK)
WILLIS: Doesn't today feel better than last week? We have nice stock rally today after that roller coaster ride last week. The market gained back some of the lost ground in light of news of an increase in retail sales and Citigroup earnings unexpectedly rising, but is this the calm before the storm? We're covering your assets tonight with Dan Ferris, editor and analyst at Stansberry Research, Bayridge Financial CEO Shane Siederman and A&G Capital President Hilary Kramer. Hilary, I'll start with you. So, what do you make of this move today? Is it sustainable?
HILARY KRAMER, A&G CAPITAL PRESIDENT: Yes. We had a mini correction, and we have another few months to go of a nice bull market run. This was enough to just shake out some of the hedge funds and get some of the margin out of the market and hopefully wake up individual investors to be careful.
WILLIS: Be careful. Shane?
SHANE SIEDERMAN, BAYRIDGE FINANCIAL CEO: I disagree. I, Hillary's one of the best, but in this particular instance, I totally disagree. I believe we have taxes at 30-year highs right now, and when you take a look at the tax man and you see the consumer makes up, what, 66 percent of the economy, I just want to believe these P.E. ratios will get a little bit on the high side, and I believe that if we get a consolidation, it may be wise.
WILLIS: There's still billions and billions on the sidelines, hundreds of billions of dollars, but more than that, investors have to go to equities. We have to, all of us.
(CROSSTALK)
WILLIS: Give him a chance to chime in. He's the remote. Harder to get to. Dan, what do you say?
DAN FERRIS, STANSBERRY RESEARCH ANALYST: Well, I think that we shouldn't make decisions about buying and selling equities based on a single bit of data in the news on any particular day of the week. And I think ....
WILLIS: But do you think that stocks are overvalued or undervalued right now?
FERRIS: I think a lot of them are overvalued right now, and a lot of them are fairly valued too. I think bargains are very difficult to find right now overall.
WILLIS: So, does everybody here think that we're in a stock-picking market? It's not the kind of market where you want to buy indexes. Hilary?
KRAMER: Right now it is both a stock picker's market and an index market. For example, on buying the ....
WILLIS: Choose one. Choose one.
KRAMER: Okay. I would do individual stocks.
WILLIS: OK.
KRAMER: However, the biotechs have been completely decimated, really, like, everyone ...
WILLIS: It's a bear market.
KRAMER: So, if you want to do an index there in IBB, it's time, because there's a lot of short sellers who are going to get squeezed out of that, but otherwise, pick your stocks. There's lots of value plays left.
WILLIS: Shane, one of our experts last week told me that they thought that the hedge fund money was in all these momentum stocks out there, and that's what was driving the selling, because these guys wanted to move out, and you say?
SIEDERMAN: I'm not a big fan of the hedge funds. They usually trade them the day to the month to the current - too much to the current news. I'm more like with Dan - I mean I don't want to agree with Dan across the board, but I'll tell you, Dan's right on the -- he's right on the money here. I think what you've got to do is you've got to pick individual stocks. There are some that are fairly priced. There's some that are way overvalued, and that's why I'm willing to sit on the sidelines.
WILLIS: Stock picker's environment, it sounds like.
SIEDERMAN: Yep.
WILLIS: Dan, to you, there's a study out that says individual investors, people like me, make bad decisions and we never get it right. This is a Dow Bar (ph) study about-losing - money losing behavior among individual investors. What do you make of it?
FERRIS: I love the Dow Bar study. I think it's brilliant because it shows that human nature never changes and that no matter what happens, at this moment in time we have more information, investors have more information than they've ever had. They have more chances to get it right, in effect, than they ever have, and yet the basic human nature, you're right, Gerri, it never, ever changes. And 99 percent of all the people within the sound of my voice have no business trying to pick individual stocks. They should just put their money --
WILLIS: No, and everyone, in everyone's portfolio there is a place. Maybe it's five percent, ten percent or 20 percent of your portfolio.
FERRIS: Couldn't disagree more.
WILLIS: There's room to pick stocks, and you can make a lot of money picking stocks and then balance the rest of the portfolio. There's a place for fixed income, there's a place for cash. There's a place for -- individual stock picking has made a lot of people very rich, especially if you invest in what you know or you have an edge in a particular area. You can make a lot of money.
WILLIS: Shane, what do you say? I hear this all the time, oh, the stock market is way too complicated for you, poor little individual investor.
SIEDERMAN: It's like anything else, I think Dan is right to a certain aspect. Here's - there's a reason why 90 percent of the people are poor and middle class and only ten percent are super wealthy. And part of the reason is that they don't have discipline for good habits, right? And they don't educate themselves. I always encourage my clients to read books, you know, whether it's -- and I'm not endorsing a book, but the millionaire next door's a perfect example of anybody in college or high school should read the book.
WILLIS: Would be happy that you said that on our show. But you bring up a really good point that we never make in this panel that we probably should, and that's this, that it's not about picking the right stock, it's about being regular and investing regularly over time. Hilary, what do you think of that philosophy?
KRAMER: Absolutely, Gerri, because individual investors try to be like an institution. The difference is individual investors, it's their money, it's your money, it's our money, but institutions it's somebody else's money, so it's OK to lose. They're still going to make a return because they get a percentage off those assets,
so individuals need to be steady and in it for the long term. There's a lot of individuals ....
WILLIS: That's the only advantage we have in the marketplace because everybody else is jumping up and down like a yo-yo. Dan, to you, what's your comment?
FERRIS: My comment is you're right. We do have an advantage in the marketplace, which is that we're not institutions, so we can sit on the sidelines in cash, we can be very careful, and maybe we can learn to pick stocks. I'm just saying that most people won't learn to pick stocks. Not that they can't, they simply won't.
WILLIS: All right, Shane, I want to ask you about these insiders in technology selling stock. Jeff Bezos from Amazon, obviously, Cheryl Sandberg of Facebook, we've heard a lot about Cheryl Sandberg, but some of these other executives who were selling, what do you make of this? Does this tell us something about the way we should regard tech stocks at this time?
FERRIS: I believe the smartest money in the last two decades has went to Silicon Valley and has gotten kept in Wall Street. If you take a look at the -- there's a major red flag. Why are they selling the smartest guys out there? Maybe I'm wrong, but I think the P.E. ratios have gotten a little bit out of whack. I do agree with Hilary, there's a lot of cash out there. The private equity, smartest money, they were selling everything.
KRAMER: Right, but we're talking about stocks like Facebook. Facebook is overvalued. Stocks like Twitter, I mean, yes, Twitter is down from 72 into the 40s right now, but Twitter going lower for sure. There's still lots of other good stocks, but Silicon Valley, their selling tells us that, yes, those specific stocks are high. However, people sell stocks for a lot of reasons that work in companies or have ...
WILLIS: That's true. There's a lot of personal ...
KRAMER: What you want to watch for are those that are buying stocks. You only buy stocks if you're an insider and go back in and build your position if you think that stock's going up, but you can sell even if there's good momentum, and it's not your company.
WILLIS: Dan, last word on this. Are you taking any - this as a signal that some of these tech CEOs are selling?
FERRIS: Not at all. I agree with Hilary. Insiders sell for a gazillion reasons, but they only buy for one.
WILLIS: OK. Dan, Shane and Hillary, thanks for coming on the show tonight. Great job, interesting stuff. Well.
Investing in the markets can be a gamble, but the odds could be worse. The old saying at the casino is the house always wins, you've heard that, right? And while that may not always be the case, some games are stacked in the house's favor. In tonight's top five casino games with the biggest house advantages, coming up at number five, roulette, the game of pure chance gives the casino more than a fighting chance to take your money, the house has up to an eight percent advantage. Number four, video poker. This game is growing in popularity, and it gives the house up to a 12 percent advantage. Number three, craps. Have you ever played that? Craps is the fastest moving of the casino table games, and depending on the bet, you can give the house the advantage of up to 17 percent. Number two, Wheel of Fortune. Unfortunately, Vanna White can't help you there. This slot game is considered a sucker's game, and it's easy to see why. The game gives the house up to a 24 percent advantage, and the number one casino game with the biggest house advantage is Keno. You can find this lottery sell game in almost any casino in the world, it gives the house up to a 35 percent advantage. Casino games that tend to give the player a fighting chance, back rat and black jack. Those are the two things you want to play.
Still to come, my "Two Cents More" and, next, we take a look at that revealing email to GM CEO Mary Barra. What did she really know about the steering problems and what happens now? Stay with us.
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WILLIS: Coming up, the latest on General Motors controversial recall. What's next for the auto giant? We'll fill you in two minutes.
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WILLIS: Well, you've seen it, auto recalls on a record pace. This as General Motors lies in the center of a controversy with massive recalls of 2.6 million vehicles. Other automakers are trying to avoid the same fallout as GM. With more on this, auto expert and car coach Lauren Fix. Thanks for coming on. Always good to have you here.
LAUREN FIX: Thank you.
WILLIS: We've been talking a lot about GM, and last week we got a controversial email that seemed to indicate that Mary Barra might have known more than she said about the problem at the center of the recall that we've been covering so intensively.
FIX: Right.
WILLIS: Lots of people climbing onboard, Senator Blumenthal saying, hey, you know, you've got -- this is a real problem, Mary Barra needs to tell what she knows and -- she was running safety at the time.
FIX: And global vehicle teams. So she knew a lot of what was going on. But remember, you were at the top. And then we're also finding documents - - I spent the weekend doing a lot of research. Lots and lots of - there's 250,000 documents. And I
can't read it all, I'm not a speed reader, but I did find some other interesting information.
WILLIS: Let's hear it.
FIX: First off, there's a gentleman named Brian Stauffer (ph) who actually was at the low end level of engineering and said, jeez, you know, we have this problem, let's try and research why this is going on. Everywhere he went, electrical stopped him, people at engineering stopped him and then, of course, the Giorgio (ph) guy got let go on pay, another gentleman Mr.Oltman (ph).
WILLIS: What do you mean stopped him?
FIX: Well, they just of - made it difficult for him to get the facts.
WILLIS: So, this was a guy who was searching for an answer and was blocked at every instance for getting it.
FIX: Look I just say, the delay in getting data, we'll get it to you, he didn't get it and as he moved there, he was there for 29 years. This gentleman actually stood up and made a case of one of the deaths, he made a statement, and now he's no longer with GM. I assume he retired after 29 years. I don't think --
WILLIS: We don't know where he is.
FIX: We don't know. But - yeah.
WILLIS: You know, we look at this situation with GM, and it's really shaken the company up. Mary Barra is on the defenses, for sure, and she's new to the job. Is this the biggest recall problem you've ever seen?
FIX: It is one of the biggest ones. Recently the study that came out today of all the manufacturers, per hundred cars, who has the most recalls? Now, you'd naturally think because of this it's GM, but it's actually Toyota. And - more recalls. And Honda's in
the mix, and Volvo is in the mix. And even Ford is in the mix.
WILLIS: Well, everybody is making more recalls now because I think they're afraid of being the next GM.
FIX: Right. There's also the Trade Act of 2000 which is about recalls and regulations that are required, and these manufacturers have to follow this. But now if I were a manufacturer and we had a little problem, I would be on it right away because if you're not, you're the next one in the news, and nobody can take that hit when it comes to market share, when it comes to keeping their customers. You have to be honest and straightforward.
WILLIS: Quickly.
FIX: Yes.
WILLIS: What would you tell consumers tonight?
FIX: I would tell them if you don't know if your car is on the list, please, call your local dealer, find out if your car is on the list. And if you're thinking about buying a car, that's why you do your research, that's why you go out there and find out about safety recalls, technical service bulletins, crash test ratings not just from NHTSA, but from IIHS. Do your research, print out your paperwork before you buy a car and, you know what? You have to check on a used car too. Don't assume that somebody else did it. It's on you, it's your responsibility.
WILLIS: Nhtsa.gov is a great place to go.
FIX: Yes, yes.
WILLIS: Lauren, thanks for coming on the show. It's always so good to see you. Thank you so much.
FIX: Thank you. And we'll be right back with my "Two Cents
More" and the answer to our question of the day, should the government force young people to save for retirement? Force them? Stay with us.
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WILLIS: Steve Ratner is urging the government to help the young people out there save for their golden years. But should the government force young people to save for retirement? Here's what some of you are posting on my Facebook page. Carla writes this, "No. And as much as I believe in saving for retirement, I also believe that as an adult, it is my responsibility to do that, not the government's. More reliance on the government is a bad thing." Thank you, Carla. And Jim says this, "We already forced this. It's called Social Security. Look how well that worked out." Nice.
We also asked the question on GerriWillis.com. 13 percent said yes, 87 percent said no. Be sure to log onto gerriwillis.com for our online question every weekday. And here are some of your emails about our segment last week on smart watches. Remember that? Richard from Wyoming writes this, the so-called smart watches may be all the rage, but as far as my needs are, they can stay in the store." And C.D. from Texas agrees, "A Mickey Mouse watch is as smart as a watch needs to be." That's pretty funny. I love hearing from you. Send me an email. Go to gerriwillis.com.
And finally, at the top of the show, we talked about the big news for consumers today. It is tax day tomorrow, right? And if you still haven't gotten around to getting the job done, there is good news, you can postpone the final filing of your tax forms. The bad news is you cannot put off paying. The IRS requires that you pay what you estimate you owe or at the very least pay something. And come up with the schedule of payments. The procrastination form number is 4868 and can be found on the IRS website. Irs.gov.
And, you know, what's worth noting today the tax freedom day, that's the first day on a calendar that you can start working for yourself rather than Uncle Sam is April 21, three days later than last year. Seems to get later every year because it gets later every year. That is right. And that's "My Two Cents More." And that's it for "THE WILLIS REPORT." Have a great night. And we will see you back here tomorrow.
