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By Leah Dunaief

Leah Dunaief

A friend is planning to retire at the end of the year. His wife is already retired, and we three talked about the future. Since none of us has jobs with pensions, they are understandably trying hard to discern economic trends for the investments they hope will carry them through their golden years. Currently their money is mainly in stocks, which are doing well enough, but they, and the rest of us, have duly noted the disconnect between the stock market and the economy.

The stock market, of course, is not the economy but rather is thought to be one predictor of future economic trends at least six months ahead. There are others as well, and one place to get some insight is the PBS program, “Consuelo Mack WealthTrack.” Mack is the host of this weekly financial program, and in the tradition of “Wall Street with Louis Rukeyser,” which ran on the same channel (13) and in the same time slot (Friday, 7:30 p.m.) from 1970 to 2002, a guest each time discusses with her their area of expertise.

Originally broadcast on Oct. 9, a recent guest was economic guru Nancy Lazar, who spoke of four forces she sees as driving the economy to a powerful comeback. The first is, as you may have guessed, technology, which helps make companies more profitable. Lazar emphasized the importance of reinvestment in their companies by executives in order to stay up to date and to increase productivity.

As an example, she offers the sad story of Sears vs. the strong growth of Amazon. Businesses must keep up or be left behind. Technology, especially software, is a critical driver in a strong recovery. Banks are another example. Their movement to online services has been enabled by software developments and now COVID considerations using that software. And as she points out, the United States is the technology leader.

A second driver is housing, which brings with it so many related businesses and jobs: carpenters, painters, spacklers, roofers, plumbers, electricians, cesspool servicers, landscapers, driveway pavers, furniture and carpeting salesmen, and on and on. Housing is doing well, driven by exceptionally low mortgage interest rates, demand from millennials and now single family homes for COVID refugees from the cities.

A third driver for Lazar is manufacturing. She refers to the Rust Belt as her “favorite emerging market.” Disruption in the supply chains due to the pandemic have made companies aware of how much safer it is to make it here if they are going to sell it here. This has even become something of a national security issue. She counts 176 companies that have moved back to or started up in the United States since the beginning of 2020. States like South Carolina, Tennessee and Alabama have benefited.

And the fourth is capital spending. Lazar believes that the reinvestment that companies have made in their businesses as a result of the huge tax cuts has been underreported and underappreciated. While many companies have indeed increased their dividends and bought back shares, she has tracked reinvestment from some of that windfall and feels that will result in higher productivity, higher profits and more jobs. In order to grow, companies must reinvest, and when they do, the economy grows. A business cycle spurred by reinvestment — building new plants, hiring and training new workers -— lasts 30 years.

Meanwhile, many are out of work and there is a lot of pain. Lazar also recognizes that in every recovery, not all sectors improve. But she advocates for more business reinvestment to produce more jobs and believes that will lower unemployment to half by next year. Without a further stimulus package, she envisions a handoff from government to the private sector as a driver for healing unemployment. Consumers, meanwhile, are turning more conservative, having been hit by two shocks in the last decade: recession in 2008 and COVID now.

While Nancy Lazar is not an investment advisor, but rather an economist, she has pointed out areas that might be ripe for investment. Good luck to us all!

Defendants from Port Jeff, Mount Sinai, Coram, among those indicted

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In a plot that could have been lifted straight from the script of “The Wolf of Wall Street,” six North Shore residents were among 14 indicted in federal court in Brooklyn July 13 for their alleged roles in a $147 million stock manipulation scheme, according to the U.S. Attorney’s Office for the Eastern District of New York.

A press release regarding the indictment alleged the defendants defrauded investors by obtaining shares in five publicly traded companies from insiders at the companies for below-market prices, artificially drove up the prices of the shares, while “aggressively and repeatedly” calling and emailing victims to purchase shares — oftentimes senior citizens — and then sold their own shares between January 2014 and July 2017.

“Manipulating stock prices, as alleged in this case, to appear more attractive to investors, is a deliberate attempt at sabotaging fair market trading,” Assistant Director-in-Charge for the FBI’s New York field office William Sweeney Jr. said in a statement. Sweeney and acting U.S. Attorney Bridget Rohde read the indictments. “Manipulation, at its core, is a true act of deception, especially when the elderly are targeted. This scheme involved an incredible amount of money, more than $147 million. That’s no small change for even the savviest investor. As evidenced by our arrests today, we take these matters seriously, and will continue to pursue those who make victims out of unwitting participants in these schemes.”

Managers of My Street Research — a Melville based investment firm — Erik Matz, 44, of Mount Sinai and Ronald Hardy, 42, of Port Jefferson were among those indicted. They also engaged in a scheme to launder about $14.7 million in proceeds obtained as a result of the scheme, according to Rohde’s office. The government restrained Matz’s Mount Sinai home and seized bank accounts containing alleged criminally obtained money. The attorney representing Matz and Hardy did not respond to a request for comment. A phone message requesting comment from My Street Research was not returned.

Dennis Verderosa, 67, and Emin L. Cohen, 33, both of Coram, and McArthur Jean, 34, of Dix Hills were among those listed as “cold-callers” for the operation.

Cohen’s and Verderosa’s attorneys each declined to comment via email. Jean’s attorney did not respond to a request for comment.

Robert Gilbert, 51, of Cold Spring Harbor and owner of the investment firm Accredited Investor Preview was also among the 14 people indicted.

“We’re still studying the indictment, but Mr. Gilbert is mentioned substantively in only one paragraph,” Gilbert’s attorney Ira Sorkin said in a phone interview. “He has not been incarcerated, and there is no claim any of his assets have been frozen as is the case with some of the others. Until we have a chance to read further into the indictment we will have no further comment.”

The five companies whose stocks were pushed by the “pump-and-dump” scheme were National Waste Management Holdings, Inc., CES Synergies, Inc., Grilled Cheese Truck,  Hydrocarb Energy Corporation and Intelligent Content Enterprises, Inc.

Editor’s note: Anyone victimized by the alleged scheme can contact the writer of this story via email at [email protected]