Strategic Finances

The Great Depression....

2008-11-21T19:03:00.001-05:00

Guest Post: The Great Depression, as I remember

By Walter Stoiber

The Great Depression began on Thursday, Oct. 24th, 1929. It would become known as “Black Thursday,” and rightfully so. The stock market crashed, and a record 13 million shares were traded that day. Some of the larger banks tried to help by buying shares at above the quoted prices. It didn’t work. Several corporations suffering today — General Motors (GM), General Electric (GE), Sears (SHLD) — were in dire straits. Some companies’ stocks dropped 50%. After five days, banks began to close. Most depositors were left “holding the bag,” and an empty one at that!

We were an average blue-collar family in Altoona, Pa. My father worked at the silk mill, as a shipping clerk and later as a supervisor. As businesses in Altoona cut back and then closed entirely, the silk mill did too. My father had a backup career, giving piano lessons and playing in a five-piece band for weddings and other events. As the Depression got worse, though, those things were no longer affordable. He took a job as an insurance agent. But people didn’t have the money to buy more insurance.

I was in the sixth grade in 1929. I got a job at our grocery store, stocking shelves for 25 or 50 cents a day, plus a bag of penny candy. My sister, Charlotte, who was in the third grade, helped Mother with chores and meals and made her own doll clothes out of odds and ends. Mother was a great cook. She got vegetables from other families in our neighborhood and made soup. Our butcher would give us soup bones (leaving a little meat on it), free of charge. He remembered that we were good customers in good times.

We couldn’t go to the movies on Saturdays anymore. But we kids had no trouble finding fun things to do. We had a makeshift baseball diamond in the city park. There were eight or 10 of us, and not everyone had a glove. So we would just keep swapping. A ball lasted us a long time. When the cover came off, we would get black friction tape and wrap the ball with it. Eventually we would all have to contribute the pennies we had saved to buy a new ball.

We also had a favorite swimming hole about 10 miles away. We would ride there on our bicycles. Somehow everybody managed to have their own bike. My father’s friend had an old bike gathering dust in his basement, so he gave it to me. We had to work on it, but it lasted me a long time. We also made our own scooters. We’d get a wooden soap box from the grocery store, a three-foot piece of 2×4, and a pair of old roller skates. Soon we were set to go.

Things didn’t get easier for a long time, but we managed. My last two years in high school, I got two part time jobs — ushering at the State Theater, for 25 cents an hour, and delivering special-delivery letters and small packages on my bike for the Altoona Post Office. I was paid a percentage of the postage, and sometimes I made $4 on a weekend! When my father was no longer with us, we couldn’t afford the $35 a month to stay in our home. Luckily, we got an apartment across from the Dutch Kitchen, where my mother got a waitress job. My mother liked her job and made good tips. On a good day, she would make as much as $10.

We got through it. In 1932 Franklin D. Roosevelt was elected our 32nd president and brought with him a number of wonderful programs and signs of recovery. I graduated from high school in1935 and went to work as a meter reader for Penn Edison. Charlotte graduated three years later and got a job as a secretary. Things just seemed to get better as time went on.

So now it’s 2008. We’re now in the midst of another financial crisis — this one global — brought about presumably by “the powers that be” on Wall Street and in the upper echelons of the federal government. A classic display of selfishness, greed, and politics. I’m 91 years old, and I sure don’t want to see another Great Depression. But I wouldn’t part with the experience I had 80 years ago. I learned that we could do without things that we thought we had to have. I learned how to “stretch” a dollar. And I learned that the words on the back of the dollar bill, “In God We Trust,” have merit. Hoping and praying isn’t all we need to do, but it helps.

Walter Stoiber is my uncle and an amazingly healthy 91-year-old. He lives with his wife, Dorothy, in Boardman, Ohio, outside of Youngstown. Charlotte, his sister and my mother, died at 87 in January.

Really? How much worse can it get?

2008-11-21T07:50:00.001-05:00

It seems like the current situation that's going on in the world is pretty bad, and they're saying it can get worse??

Its tough to say being someone who did not live through the great depression, but is it going to get that bad? It has seemed like all you have heard on the news over the past months has been bad news, or very pessimistic outloos on the economy, but there is always that one persn out of the group who is optimistic. If you are like me, you will probably take the side of the optimistic one because it makes you feel better about what's going on, even thought he or she may be grossly out numbered, and it makes no statistical sense to take their side, it makes you feel better. At least that's how it is for me, I like to try to make sense of everything optimistic and throw all the rules on statistics out the door and claim the pessimists are missing out on a great opportunity!

Here's an article from msn money.

Economists: US is in recession and will get worse

ANN ARBOR, Mich. (AP) - The U.S. economy is in a recession that will worsen until mid-2009, University of Michigan economists said Thursday in their annual national economic forecast.
They expect the recession to bottom out in the middle part of next year, but say the country will see only modest economic growth in 2010 with unemployment above 8 percent throughout that year.

They expect the nation to lose about 2.4 million jobs over the next 18 months.

Michigan economist Joan Crary characterized the recession as "moderately severe," but said she expects a stimulus package put in place early next year will keep it from becoming worse.

"We're not forecasting economic catastrophe," Crary said. "We expect the set of policies put in place will be successful."

Among the policies she expects to see are stimulus checks given to taxpayers to spur spending, more money for infrastructure improvements and state and local governments, loans for domestic automakers and extended unemployment benefits.

She warned that if steps aren't taken to spur the economy the recession would be worse.

Motor vehicles will continue to slide, from 16.1 million last year to 13.3 million this year and 12.2 million in 2009, the lowest number since 1983, she forecast. She expects sales to pick up to 13.6 million in 2010.

The Michigan economists expect to see a reduction in market share for the domestic automakers but said the forecast isn't built on the demise of any of them.

The forecast said inflation will drop from 4.2 percent this year to 1.3 percent next year before rising again to 2.6 percent in 2010. Falling oil prices will be responsible for some of that drop, with the forecast calling for prices to stabilize at under $60 a barrel in 2009.
It expects housing prices will fall 14 percent this year and 6 percent next year, with new housing starts dropping to a low of 836,000 next year and to improve slightly in 2010, but not to this year's level of 965,000 units.

Eddie Lampert

2008-11-19T11:08:00.001-05:00

I don't like hearing this stuff about my man Eddie Lampert. I am, and have been ever since I first read about him, a big fan of Eddie Lampert. From reading of his start at Goldman, and then when he left to open his own hedge fund, to when he was kidnapped, up to current day Eddie. So to hear something like this about how poor his company is doing and how people do not like the stock makes me hope, or think that he has an underlying plan, I just have no idea what it could possibly be. He has not been known for being overly people freindly as he rarely gives out much information on his funds or it holdings.

This article was pulled from Fortune.com, and like I said I am hoping he has a master plan and it is not just that his company is slowly falling to its demise.

Whatever you do, don't buy Sears
Investor Daily: Betting on the retail sector these days isn't for the faint of heart. But here's one stock to avoid at all costs.

By Suzanne Kapner, writer
November 18, 2008: 11:50 AM ET

NEW YORK (Fortune) -- Investors who think shares of Sears Holdings are a bargain after plummeting 80% from their peak should think again.

That might sound like a no-brainer after retailers across the board - from Macy's to Best Buy - have been reporting dismal third quarter results amid one of the worst consumer spending downturns in decades. But there are reasons why Sears is likely to disappoint more than most when it reports earnings Dec. 2.

A big chunk of the Hoffman Estates, Ill.-based retailer's sales comes from appliances, tools and electronics - categories that have been decimated by the housing collapse. Sears and its sister retailer Kmart have long been getting clobbered by competitors like J.C. Penney and Wal-Mart. That drubbing is likely to get worse in an economic downturn.

What's more, Sears provides few clues between earnings reports, such as monthly sales figures or earnings guidance, to help analysts make accurate profit predictions. Analysts expect Sears to lose 50 cents a share in the third quarter ended Nov. 1 and earn $2.51 for the year. That compares with break-even for the year-ago quarter and $5.70 in earnings per share for fiscal 2007.

Credit Suisse analyst Gary Balter cut his 2008 earnings estimates last week, to $1.19 a share, but concedes that his revision may be too high.

Meanwhile, Richard Hastings, a consumer strategist at the investment bank Global Hunter Securities, says he's concerned that Sears' sales of big-ticket items were impacted in the third quarter "greater than is generally understood."

Another bearish sign: Hedge fund Pershing Square Capital, run by activist investor William Ackman, recently sold all but 500,000 shares of what had previously been a 6.7 million share stake in Sears.
Sears' stock, which traded above $190 back in April 2007, is now changing hands around $34. Some analysts say the shares have further to fall. Balter thinks the stock could trade as low as $20. At is current level, Sears' trailing price to earnings ratio, at 9.7, is more expensive than most of its major competitors, including J.C. Penney, Macy's and Kohl's.

"It's the most expensive stock we
cover," Balter said.

A years-long decline

Much of that premium is predicated on the expectation that Eddie Lampert, the billionaire hedge fund manager who controls Sears, will live up to his boy wonder status and magically turn Sears' lemons to lemonade.

The company owns valuable brands, including Kenmore appliances, Craftsmen tools and Lands End apparel, as well as a pile of real estate. But those assets are worth less than they were in November 2004, when Lampert, after rescuing Kmart from bankruptcy, used its shares to buy Sears, Roebuck & Co. and create what is now called Sears Holdings.

So what does the future hold for Sears, one of the oldest names in American retailing? Despite a brief revival in the 1990s, Sears long ago lost its way. The company's problems, including a lack of focus and eroding customer service, predate Lampert's involvement. But Sears' slow decline doesn't mean it can limp along indefinitely.

While Sears is sitting on a $1.3 billion cushion - the difference between the cash it brings in from operations and what it owes in rent and interest payments - that safety net is expected to shrink in coming years as sales continue to decline.
"Sears is about as badly positioned as anyone we cover," said Morgan Stanley analyst Gregory Melich.
Also key to its survival is maintaining the confidence of suppliers.

Electronics retailer Circuit City, which filed last week for Chapter 11 bankruptcy protection, was pushed to the edge when vendors stopped shipping goods. One important difference in Sears' case: collateral - essentially its inventory - is more than double its credit line, which should reassure vendors.
Sears spokesman Chris Brathwaite denies that the retailer is in dire straits. "Sears Holdings has consistently maintained a strong capital structure with more than adequate liquidity," he said. At the end of the second quarter, Sears had $1.5 billion in cash and a $4 billion revolving credit facility in place, which doesn't expire until 2010.

Still, it's not clear that Lampert wants Sears to survive. He has not made the usual store upgrades necessary to keep Sears competitive with peers, which suggests he is running the company for the cash it generates. Lampert has used some of the cash for buybacks, which typically boost a company's share price.

But you can only milk a cow for so long before it runs dry - one reason why investors should steer clear of this stock.

From WSJ

2008-11-18T07:39:00.001-05:00

Maybe There Is an Upside to This Mess

The market has tumbled, the financial system is wobbling, and global economies likely are in a deep
downturn.
But one big positive has emerged: The plunge in prices of all kinds of commodities, from oil and natural gas to steel and copper. These moves will ease some pressure on strapped consumers and will give a boost to a range of companies by reducing their costs and increasing demand for
some of their products.

Searching for stocks likely to be helped by tumbling commodity prices can be tricky, however, because the benefits can be offset by growing problems elsewhere. Companies in the gambling business, for instance, will be aided by falling oil prices as travel to casinos becomes cheaper. But rising unemployment, housing troubles and other issues plague their customers, even as some casinos deal with heavy debts, making these shares look risky.

Look for an Energy Lift

Analysts say the best move is to focus on companies that are helped by falling energy prices and are in relatively stable businesses -- ones that aren't dependent on consumer spending or other areas of weakness.
"Energy costs represent only one dimension to the business," notes Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Without evaluating their overall business environment, you could get caught with the right idea but the wrong company."

Last week, the Dow Jones Industrial Average was down 5%, leaving it down 36% so far this year.

The Nasdaq Composite index was down nearly 8%, bringing its 2008 drop to 43%.

Energy prices continued to plunge, as did other commodity prices. Oil, which closed at $57.04 on Friday, now is off more than 60% from its record close of $145.29 on July 3.
Falling energy prices hurt companies in the oil patch, of course. But many others rely on energy as a key input to make their products. These companies are seeing their own costs drop sharply.

One company likely to benefit: Pactiv, the maker of Hefty trash bags, plastic containers and other products such as plastic plates, cups and cutlery. Pactiv relies on polypropylene and polyethylene, both oil-based resins. Cash flow is impressive. The shares were selling Friday for a price-earnings multiple of about 16.
Pactiv's products are relatively stable, even in a global slowdown. During the 2000-2002 downturn, the stock climbed, a sign of its defensive nature; shares are basically flat from a year ago. Pactiv has raised prices on its products in recent months, a healthy sign.

The company's third-quarter results fell compared with a year ago, in part because energy prices soared earlier this year and its products became more costly to produce. But Chairman and Chief Executive Richard L. Wambold late last month said, "As we move into the fourth quarter, this situation will change as a result of our pricing actions in the third quarter, and [because of] resin-cost decreases, which are expected in the fourth quarter."

It's in the Bag

Pactiv is a "perfect example of a company that has benefited from lower crude prices," says Harris Private Bank's Mr. Ablin.

The falling costs of commodities such as resin, diesel and other raw materials also will help consumer-products maker Clorox. Meanwhile, about one-third of Goodyear Tire & Rubber's costs of goods sold are products derived from oil. While the company could be hurt by the continuing troubles of the U.S. auto makers, sales of replacement tires -- 80% of Goodyear's business -- are tied to miles driven, which should rebound if gasoline prices fall further.
Airlines benefit from lower oil prices, and many investors rush into these shares when crude drops. These companies added fees over the summer to compensate for the higher energy costs they were dealing with at the time. Now that fuel has fallen, many carriers have simply incorporated their former fuel surcharges into ticket prices, which could lead to profits. Shares of AMR, parent of American Airlines, have almost doubled since mid-July. But airlines have deep difficulties, such as fierce competition and heavy employee-pension costs, making the area highly risky.

By contrast, companies that cater to the aerospace industry, which includes both commercial and military business, appear more attractive, according to some investors. Precision Castparts, which makes rivets and metal parts for aircraft, as well as fasteners for automobiles, could be a beneficiary of any improved airline health.

Precision shares have fallen 60% so far this year, but as the outlook for its customers improves, so will Precision's. It also will be helped by falling metal prices. The stock trades at about 12 times its expected profits for the next year, a relatively attractive multiple. An industrial-gas-turbine business is growing, even as sales of fasteners to auto makers slow. Most analysts have a "buy" rating on the stock.

Flying Higher?

Aircraft-component manufacturer TransDigm Group, down about 40% in the year to date, is trading at a P/E ratio of about 11. The company, which makes ignition systems, gear pumps, cockpit security devices and other components for commercial and military airplanes, recently authorized a stock-buyback plan, a healthy sign.
Defense spending could fall in the Obama administration, but some analysts say those concerns are overstated (see Barron's Insight).
Dean Machado, managing partner of New York hedge fund Akita Capital, says he is a fan of BE Aerospace, a maker of aircraft interiors. Its shares are down about 84% in the year to date, and it recently cut its earnings expectations for next year. But the stock now trades for just four times these estimates, getting Mr. Machado excited.

"While energy isn't a major input, the company is a major supplier to airlines and aerospace, and to the extent that airlines now are healthier ... BE shares should benefit," he says.

Article from another great blog

2008-11-17T14:09:00.001-05:00

Stockmanmarc wrote...

The Dhando Investor: Mohnish Pabrai
For those of you that are not familiar with Mohnish Pabrai, he is a devout disciple on the teachings by Warren Buffett and Ben Graham. Mohnish runs a fund identical to Warren Buffett's original Buffett Partnership which was the predecessor of Berkshire Hathaway(BRKA,BRKB). Pabrai wrote a book about a year ago titled the Dhando Investor. The word Dhando which is pronounced dhun-doe is a Gujarati(a state in India) word. Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhan-dho, literally translated, means "endeavors to create wealth".

Pabrai is a focus investor usually holding about 12-18 stocks in his portfolio. Pabrai likes to put no more than about 10% in each stock. Currently Pabrai holds about 16 stocks in his portfolio with about 320 million under management. Fairfax Financial(FFH), Harvest Natural(HNR), and Sears Holdings(SHLD) represent his 3 top holdings. The current 13F filings show that Pabrai increased his holdings by 52% in Wellcare(WCG) while selling most of his position in Jackson Hewitt(JTX).

For those of you that have not read the Dhando Investor, you should, it is simple to understand and makes a lot of sense.

Values in the market?

2008-11-13T11:52:00.000-05:00

Its tough to decide what stocks are values or what stocks you'll keep dollar cost averging down to zero. Check out this Forbes slide show and see some that they think are selling for some low prices...

http://www.forbes.com/2008/11/11/brcd-sfn-hma-pf_jl_1111money_inl_slide_2.html?thisspeed=25000

Investing for tough times

2008-11-11T21:40:00.000-05:00

7 investing themes for tough times
Investor Daily: Here's where to find the few stocks that could beat the bear market.

NEW YORK (Fortune) -- As the bear market becomes situation normal, successful investing has become more a matter of "my stocks are down less than your stocks." But should it be? The old adage is that any fool can make money in a bull market and we saw that writ large over the past couple of years. Making money in today's market takes real skill. The question really then is what kind of stocks could possibly go up in this market?

Well, first of all not many. Or at least not many over the past couple of months. Only about 2% of U.S. stocks are trading above their 200-day moving average, which in plain English means that some 98% of all stocks sell for below their average trading price year-to-date. (Next to none are trading at their 52-week highs, by the way.) So stocks are beaten down, which means they could be a bargain, but they could also fall lower. The frustrating point is that SOME stocks will go up over the next year; we just don't know which ones.

To help narrow down the search, I've come up with some investing brain food. Themes that might help you find that select group of stocks that go up.

BE OBAMA-FRIENDLY: A recent Bloomberg article tapped into bullishness about the president-elect's position on compressed natural gas as a source of automobile fuel. That moved stocks like Chesapeake Energy (CHK, Fortune 500), Devon Energy (DVN, Fortune 500) and XTO Energy (XTO, Fortune 500).

TAKEOVER BAIT: There will still be mergers. In fact bear markets can spur this activity. In tech, giants like Oracle (ORCL, Fortune 500) and Cisco (CSCO, Fortune 500) are known to be acquisitive during such times - i.e. take a look at smaller software and networking companies. (And don't forget Yahoo (YHOO, Fortune 500)!) Banks will also be bought out, but that is a most dangerous game. Energy too: Chesapeake (see above) has been mentioned as a takeover candidate. You didn't want to own these stocks on the way down, but now the time may be ripe.

THEORY OF RELATIVITY: This is all about not having to run faster than the bear, just running faster than your fellow hiker. (Ouch!) Time Warner (TWX, Fortune 500) - yes my parent company - recently announced third-quarter earnings that were decidedly blah, but here's how the AP saw it: "Time Warner 3Q profits beat expectations." And so TWX stock is up a smidge over the past ten days (I'm using that period because it includes trading days before the announcement whereby investors may have anticipated the news) while the S&P 500 and competitor Disney (DIS, Fortune 500) is down. Of course that is a small victory for long-suffering TWX shareholders, but you get my point about beating expectations.

BUYBACKS: Yes we know this can be a false promise, but with lower stock prices this strategy might actually make sense. An example here would be US Cellular parent Telephone and Data Systems (TDS, Fortune 500) announcing a $250 million buyback. Not huge but enough perhaps. That stock has been up recently.

DIVIDENDS ARE YOUR FRIEND: Cash is king in this environment as Fortune's Shawn Tully recently wrote. (Why do I always confuse Shawn with Cary Grant?) I don't think that it's too late to buy stocks after companies announce dividend increases, by the way, because in this environment you can see investors moving more and more to dividend payers. Check out Questar (STR), Emerson Electric (EMR, Fortune 500) and even Vornado (VNO) if you can imagine.

FRUGALITY: As in look for companies that are cutting costs, or even scaling down. But be careful here. Look at this story: "Investors send Genco Shipping shares higher after it drops orders for six ships, freeing up cash." Only problem is the market changed its mind about the move and soon sent Genco southbound. (Oh. Never mind.)

EARNINGS: Remember some universal truths still apply. John Eade, who is the CEO and director of research at Argus Research, says this: "What makes stocks go up, consistently across the board, in any kind of market, are growing earnings. We've been in a market environment for five quarters where overall, corporate earnings have been falling and [we're] looking ahead toward lower earnings in 2009."

Is there any hope John? "The areas where our analysts are actually seeing some strength would be healthcare. They have been increasing their estimates for pharmaceuticals, biotech and medical devices." What names? Eade says companies like Baxter International (BAX, Fortune 500), Abbott Labs (ABT, Fortune 500), Schering-Plough (SGP, Fortune 500), and Johnson & Johnson (JNJ, Fortune 500). The other area is in for-profit education. "I guess people are losing their jobs and thinking it's going to be a while before they get a job. They're going back to school and taking courses at traditional colleges and schools but also these for-profit universities." Here Eade points to ITT Educational Services (ESI) and Corinthian Colleges (COCO). Makes sense, right?

Again, some stocks will be winners. Finding them is the trick. Let's hope by this time next year things are looking up.

Obama is having an economic strategy meeting today

2008-11-07T11:10:00.001-05:00

Apparently Barack Obama is having a meeting today to figure out the strategic plans to fix our economy. According to CNBC the group is called Transition Economic Advisory Board, TEAB. The guys who are on this board all have pretty good track records of success and it seems likely they could help our economy. Members of the group are former Fed Reserve Chairman Paul Volcker, former Treasury secretary Robert Rubin, Google Chairman Eric Schmidt and of course, the infamous Warren Buffett.

I don't know a ton about all of them, but I do know that Robert Rubin and Warren Buffett are probably two of the best guys to have on a board like that, so I wish them the best of luck in fixing our nations problems.
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Flash Back - Article from 2005

2008-11-07T09:45:00.001-05:00

Greed on Wall Street
The Rise and Fall of Tyco's Dennis Kozlowski

By BRIAN ROSS
Nov. 11, 2005

This fall's art season brought a gathering of multimillionaires to New York's famed auction houses, where connoisseurs competed for the latest
must-have works of art.

"It's a big night for money," the actor Steve Martin said as he mixed into the crowd heading into Christie's at Rockefeller Center for the evening's auction of postwar and contemporary art.

The bidding was fast and furious, with works by Warhol, DeKooning and Lichtenstein changing hands for tens of millions of dollars.

"It's amazing. It's like grand opera. You have egos fighting other egos," said Brett Gorvy, international co-head of the Post-War and Contemporary Art Collection for Christie's in New York.

The night's star was Homage to Matisse by Mark Rothko, which set a new record when it sold for $22.4 million.

One Multimillionaire Missing from the Crowd

Yet, while the auction houses filled with collectors, the face of one multimillionaire art aficionado was missing from the scene. His name is Dennis Kozlowski, and his attempts to become part of the world of wealth and prestige led to his downfall.

Today Kozlowski, the former chief of Tyco, is known as New York State inmate #05A4820.

"Greed is one of the seven deadly sins," reminds author Tom Wolfe, whose novel "Bonfire of the Vanities" profiled the men who considered themselves "Masters of the Universe."
"If you feel you are a master of the universe, then a lot of rules just don't apply," he says.

That appears to have been the mindset of Kozlowski. Earlier this year, he was convicted of stealing hundreds of millions of dollars from the company he ran to finance a worldwide spending spree.
"The airplanes, the cars, the courtiers, the chefs, it really was something that you would have expected to see at Louis XIV's court at Versailles," described author James Stewart, a contributor to the New Yorker, who chronicled Kozlowski's rise and fall in the world of the rich and the greedy.

Kozlowski wanted to be a part of that exclusive world. Indeed, he "felt he needed to be a part of it in order to take his place among the ranks of the corporate chieftains that he thought he deserved to be compared to," Stewart explained.

As the head of Tyco International, Kozlowski became known as the country's most aggressive CEO as he made millions for himself and the company.

"He was entitled to draw a very large salary legitimately, and yet he still decided well, that was not enough," Stewart continued. "He first began cutting corners and then cutting more than corners, and then just going full tilt into pretty much whatever he could get his hands on to the tune of millions and millions and millions of dollars."

Kozlowski's downfall began with art, in particular his failure to pay the New York State sales tax on several multimillion-dollar paintings.

"If we had not asked the question, what about the taxes, that would have ended the investigation," John Moscow, the assistant district attorney who discovered Kozlowski's failure to pay the sales tax, recounted.

"If you can afford the paintings, you should be able to afford the tax," he said of the taxes, which totaled more than $1 million.

Investigation Shows Life of Extravagance

Moscow's investigation slowly began to reveal how Kozlowski, the son of a New Jersey policeman, came to afford his grand lifestyle.

He kept homes in Nantucket and Boca Raton, Fla., in addition to his lavishly decorated Fifth Avenue apartment in Manhattan containing a $6,000 shower curtain, a $15,000 umbrella stand and almost half a million dollars in draperies and 17th-century antiques, all of which were bought with company money.

He also bought the famed sailing yacht Endeavor with his own money and hired a full-time crew of nine to help maintain it.

"Baby, if you've got it, flaunt it," said Wolfe.

"I think people in many cases are dying to flaunt it. If you're 59 and you've made a fortune, and you're still not attractive to women because you can't explain to them what you do, and you can't go around the beach with a sign hanging around your neck saying 'Financial Giant,' you have to call attention to yourself," Wolfe said.

And Kozlowski did. To celebrate his second wife's 40th birthday, Kozlowski rented a five-star resort on the Italian island of Sardinia. On a videotape of the party, later played at his criminal trial, waiters in togas greeted guests while Jimmy Buffett and a band flown in from Nantucket serenaded them. A life-size cake in the image of his wife had breasts made of icing that later exploded. Vodka was served out of an ice sculpture of Michelangelo's David.
"He was nouveau riche. No question about it. Old money would not be throwing that kind of party in Sardinia," New Yorker contributor Stewart said.

"That was a dreadful waste of money," assistant district attorney Moscow agreed. "He certainly was willing to spend other people's money at an incredible rate for himself -- we call that stealing."
The affair of Kozlowski capped an era of unchecked greed in corporate America that began in the 1980s and was celebrated in the famed movie "Wall Street." Since then, the country has watched several multimillionaires, from Bernard Ebbers and Scott Sullivan of MCI WorldCom to Kenneth Lay of Enron, be asked to explain their avaricious behavior.

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Took this from Kiplinger.com - wanted to give everyone some more information on the President Elect

2008-11-06T20:27:00.001-05:00

Obama’s 10 Big Challenges

The president-elect faces a recession, a revamping of the world’s financial system and two wars -- just for starters.

President-elect Barack Obama won’t have much time to savor his historic victory as the 44th president of the United States. It may be an exaggeration to say that becoming the first African-American president of the United States was easy compared with what comes next, but there’s much truth in it.

That’s why Obama and his aides have been quietly planning the transition and the first 100 days, hoping to use the superb organizational skills that helped win the election to get a new administration up and running in record time.

Expect the president-elect to move quickly on several fronts. In the next several days, he’ll reach out to reassure Republicans, independents and those Democrats who didn’t vote for him. He’ll move to restore public confidence and signal his intentions in Iraq and Afghanistan. The freshness of his election will probably boost optimism among the huge number of Americans eager for change, and Obama will try to channel that into a mandate for many of the things he wants to do.

Mandates are easier claimed than realized, however, even with the large majorities that Democrats will have in the House and Senate. Obama will find that out when he tries to tackle the 10 big challenges he’ll face first.

1. Naming his economic, foreign policy and defense and security teams. He’ll move on this very soon, perhaps within days. The aim is to send a message to the markets and to foreign leaders that a smooth transition -- even if it brings a host of policy changes -- is coming.

2. The economy. The economy will dominate Obama’s first year, and maybe his entire term. He’ll start to put his imprint on the issue within days by urging Congress to pass a stimulus bill in a lame-duck session in November. Obama has called for another round of rebates, aid to states, an extension of unemployment benefits, new spending for roads and other infrastructure needs and a new tax credit for domestic hiring. The president-elect will have to decide how far to go in pushing for what he wants, even before taking office, and how much to compromise with Republicans, who favor a smaller package.

3. Financial market fix. Obama’s economic team will get involved quickly with the implementation of the $700-billion debt rescue plan. Treasury Secretary Henry Paulson has said he wants to involve officials of the new administration in the debt rescue effort as soon as possible. Obama supports giving the Treasury Department and the Federal Deposit Insurance Corp. wide latitude to move rapidly where needed to save teetering institutions and promote credit lending. The unprecedented government intervention will be a major headache for months, if not years.

4. Economic summits. President Bush will consult with Obama on plans for the world economic summit on Nov. 15. The aim of the meeting is to set goals for a new worldwide financial regulatory framework, and foreign leaders will want to be sure that Obama and Bush are on the same track. The meeting will bring to Washington two dozen world leaders, many of whom may get a chance to meet privately with the president-elect.

5. Naming remaining Cabinet. Immediately after naming his economic and national security teams, Obama will get to work on the rest of the Cabinet. His transition team has already narrowed the list of potential picks, and relatively early decisions are likely. He’ll name some Republicans to show he’s serious about wanting to end the partisan divides that infect Washington. All in all, Obama has about 5000 political appointees to name, as well as ambassadors. About one in five requires Senate confirmation, a process that takes time.

6. Iraq and Afghanistan. Obama will meet soon with military commanders and the joint chiefs of staff to plan an orderly reduction of troops from Iraq and an increase of troops in Afghanistan. General timelines will be mentioned, but no firm deadlines will be set. The U.S. will have a significant presence in Iraq for a few years yet.

7. Regulatory environment. Obama will try to reverse many late Bush initiatives and then set to work on several changes aimed at tightening regulations at the Securities and Exchange Commission for investment banks, hedge funds and credit rating firms.

8. Setting a legislative agenda. Obama’s first challenge will be to unify Democrats behind his agenda, rather than be pulled along by congressional leaders, who have a long list of pent-up priorities. Obama will have to decide whether to move quickly on major issues such as health care, climate change, energy and tax plans or aim lower initially and get some legislative wins under his belt on less controversial matters such as children’s health care, stem cell research and a new federal aviation law. Best bet is that Obama will try to set a bold agenda, but move cautiously to rack up some early wins. Republicans will want to cooperate to some extent rather than risk getting tagged as obstructionists, but they will stick together and block some moves, lest they appear irrelevant to their supporters.

9. Dealing with the deficit. It will haunt his domestic plans, requiring him to scale back on investments in green technology research, student loan assistance and possibly a middle class tax cut. He won’t scrap his ideas, but some will be pared back and delayed. It’s possible a staggering $1-trillion deficit will be on the books next year, due to the financial and housing market rescue.

10. Foreign relations. Obama is unlikely to start with a flurry of foreign trips, but he will need to establish good initial communications and relations as president-elect with allies the world over. He’ll turn early to the Palestinian issue, as well as with the threat of a nuclear Iran.

billshrink.com

2008-11-06T20:16:00.003-05:00

I read about this the other day and it is a pretty cool program, its worth checking out, it only takes a few minutes and can save you some money. I used it to check my cell phone plan and it was pretty impressive how it worked. It checked all the other companies around as well as checked all their plans and took into consideration the service you can get in the particular area that you use your phone most. Look into it, it could be worthwhile for you...

How will the election effect investments, from Fortune

2008-11-05T07:04:00.001-05:00

Red stocks, blue stocks
Investor Daily: Here's how to choose a presidential portfolio.

NEW YORK (Fortune) -- Does your faith in your candidate extend to your investment portfolio? If so, this column is for you.

While Barack Obama, John McCain and their respective supporters may argue over who would be a better president for the stock market, there are specific investments for which no debate is necessary.

The candidates' policy proposals so favor or so disfavor particular companies and industries that the outcome of the election (assuming we have a clear winner) is almost certain to have an impact when markets open Wednesday - though given the country's fiscal and economic condition, how long any victory glow lasts is another question entirely.

Let's start with the blue stocks - investments most likely to benefit from an Obama win and from Democratic gains in the House and Senate.

PowerShares WilderHill Clean Energy Portfolio. The case for buying this exchange traded fund, which owns shares in alternative energy companies, is simple. Obama has said that his top priority as president will be ending U.S. dependence on Middle Eastern oil, and that the path to freedom lies in investing $150 billion over the next 10 years in renewable energy. He also wants to require utilities to generate 10% of their electricity from renewable sources.

All of this adds up to a potential bonanza for the solar, wind, biofuel and other companies included in the PowerShares WilderHill (PBW) ETF. Best of all you'd be buying low: the ETF's price has sunk from $29 to $10 a share since last December.
Jacobs Engineering. Jacobs is another buy-low, blue-stock opportunity. Obama's economic stimulus plan calls for the creation of a "National Infrastructure Reinvestment Bank" that would spend $60 billion over 10 years on roads, bridges, ports, airports and rail lines.

This would a boon to Jacobs (JEC)a contract engineering firm that specializes in municipal infrastructure. The stock is down 63% this year due to concerns about whether in a weakening economy states and cities can afford new infrastructure projects.
Municipal Bonds. This isn't a stock pick, but munis are a no-brainer for anyone in a high tax bracket. Obama has made no bones about the fact that he intends to raise income taxes on anyone earning more than $250,000 a year, and with Democrats controlling both houses of Congress, he's likely to get his way. That would make munis' tax-exempt income more valuable.

Plus, munis are great value even at today's tax rates. Munis normally yield less than U.S. Treasury bonds, but today the yield on a triple-A-rated 10-year municipal bonds is 4.48% versus 4.0% for comparable Treasuries, according to Bloomberg.
Our red stocks won't so much benefit from a McCain administration as much as they will gain in the absence of an Obama administration.
Take utility stocks, for instance. One reason utilities are popular is their high dividend yields. Chuck Gabriel, a veteran Washington analyst now with Capital Alpha Partners, thinks the utility sector has been depressed by the likelihood of Obama rolling back President Bush's 2002 dividend tax cut. (Dividends used to be taxed as regular income; now they're taxed at 15%.) Thus a McCain upset should lead to a big rally in utility stocks.
Our favorite way to play this: Utilities Select Sector SPDR (XLU),an ETF with 4.1% dividend yield.

Transocean. The conventional wisdom in Washington is that Obama would revive at least a partial ban on offshore drilling in the Outer Continental Shelf were he elected, whereas McCain "would push very hard for more drilling," says Dan Clifton, Washington analyst for Strategas Group. That's good news for the offshore drillers. Transocean (RIG)in particular is incredibly cheap, trading at only five times projected 2009 earnings.

Stressed about the Economy?

2008-11-02T11:40:00.002-05:00

An article I read, though it is from about a month ago, is probably still true or maybe the percentages have gotten higher. 80% of people in the US are stressed about their personal finances and the economy, says the American Psychological Association. Apparently most people are drawn to counseling because of relationship problems with marriage and children, depression and anxiety, but now, 8 out 10 people that go see doctors for counseling are there for reasons related to personal finance.

Thats sick that so many people lay sleepless at night (says the article) about money. I was talking with my Grandfather last Thanksgiving and he was going on a rant about how when he was a kid they would work and earn a few cents and they would go to the bank and deposit it into their accounts and mark it up in their ledger, and everyone of his friends had an account like that, that they took care of and followed closely with their money. I don't know what he was getting at really, if he was saying that the internet might have something to do with the change or what, but I started thinking about it, and I think he may have meant that at such a young age he and all of his friends were caring after their own money and not having the parents watch after it, therefore instilling a strong sense of what a dollar is worth at a young age.

I can see that...I know people who up through college did not manage their personal finances, and even myself, I don't think that I manage my personal finances well enough. I had a checking account opened as soon as I got my first job, and I had learned to keep the ledger and knew how to write checks, go to the ATM and make deposits. I still think though, even as of right now, I don't budget well, or stick to budgets well, and I don't watch money as closely as I should and maybe if I had grown up in my Grandfathers time it would be different...who knows.

Think about it now though, if everyone paid a bit closer attention to everything thats been going on, maybe they wouldnt have to be stressed. A lot of baby boomers are most likely stressed out about this financial crisis right now as they are closing in on retirement and they have just lost 30 or more percent of their retirement nest egg. Though, Bogle, the Vanguard founder, says that if they had listened to his investment philosophies and used target retirement accounts that automatically adjust for you based on your retirement year, they would not have gotten hit hard at all because as you get closer to retirement he would have had your investments switch to more conservative investments, such as cash, bonds, etc...

Who knows the right way to invest, it all depends on what you are personally comfortable with, but what is money worth if you can even sleep well at night, and you are constantly stressed out? Though I am younger than these baby boomer's my advice to anyone is to pay yourself first, put money aside to an emergency fund that is in a high yield savings account, then consistently put money away into investment accounts (IRA's, 401k's, and brokerage accounts) to invest for your future. I feel that if you follow those simple instructions always put some money away for yourself, and choose investments that are right for you as well as right for your retirement time line, that should alleviate a lot of stress. Start as early as you can, and put as much money as you feel comfortable doing, it'll start to add up quickly and it will feel great and make you want to do it more.

Also, the best thing you can do is to educate yourself on personal finances, investments and the economy. There are plenty of magazines out there, books, and websites that can help you learn so that you can take control of your money as opposed to have someone else constantly take some of your earnings every money in investment management fees. And hey, be real with yourself, if you don't have the time to master your investments, leave it to someone else then, you dont want to risk losing that nest egg of yours.

CNBC.com says US has cut spending for the first time in 2 years

2008-10-31T09:44:00.001-04:00

Personally I think that is great news. The reasoning as to why the US has cut spending is not good news by any means (stock market, job loss, financial uncertainty, etc...) but the fact people have decided to cut spending can hopefully help them curve their long term spending habits. As a while the US spends more than we make, so we are never actually getting ahead at all, we(individually) are constantly falling behind.
We should always pay ourselves first before we even consider spending money. A good idea may be to automatically have 10% of your paycheck go into a savings account you rarely if ever look at, that way you are putting some money away for a rainy day.
This time of economic uncertainty can bring it to peoples attentions that that paycheck that gets deposited every week may sometime disappear, and you will have to find a way to pay bills and survive without for a period of time. I do not want anyone to lose their jobs, I just want the idea to be in their head that's its possible, that way we will as a whole stop spending like crazy and we can turn the savings rate from a negative to a positive.
Nobody will be there to bail you out as individuals when you lose your job, or you get a pay cut, or as an entrepreneur your customers cut their spending, therefore resulting in less profit each week. Living below our means, though boring and not fun is proven as the best way to get to personal financial solvency.

As soon as you cut your spending and put that extra cash into a savings account, you not only are saving that dollar value, but that money you saved is now working for you and gaining interest, so your then making extra money for yourself, passive income, making money for doing nothing.

Wall Street Jobless Try B-School, Mix Purple Hooters

2008-10-30T14:27:00.001-04:00

By Matt Jarzemsky

Oct. 30 (Bloomberg) -- Bryan Gunderson tried to master the intricacies of structured-equity investments until he lost his job at JPMorgan Chase & Co. Now he's learning the subtleties of Purple Hooters.

After collecting his last severance check in August and getting no offers from more than 100 resumes he sent to friends, companies and employment agencies, the 25-year-old graduate of Loyola College in Baltimore decided to go to B-school -- for bartending.
``It's come to the point where, yes, I need another job,'' said Gunderson, who has a bachelor's degree in finance and is looking for bartending work. ``I always frequent bars, so why not be on the other side?'' he said in an interview at New York Bartending School in Manhattan.

Gunderson lost his job amid a credit crisis that threatens to leave 165,000 people unemployed in New York City in the next 24 months, including 35,000 in the financial industry, according to the city's comptroller.

A growing number of out-of-work New Yorkers are turning to bartending, according to school directors. Enrollment in the American Bartending School in Manhattan climbed 53 percent from last October to 84 pupils, the most for the month in five years, director Joe Bruno said in an interview.
``This will be a huge year for us,'' Bruno said. ``Generally, when the economy is bad we do well because people need supplementary or primary income.''

Enrollment Gains

Gunderson recently graduated from the New York Bartending School, which has had an 18 percent jump in enrollment, said Tom Sisson, school director. The credit crisis and layoffs are driving the growth, said Sisson, who declined to say how many students he has.

``The increase I'm talking about, it's definitely that corporate, Wall Street, finance kind of thing,'' Sisson said.
The number of people working in food and beverage services in the largest U.S. city climbed 3.6 percent in September from last year to 201,800, according to state Labor Department data. Employment in securities, commodities and other financial businesses fell 7 percent to 174,700.
``A lot of people that are looking for careers in other industries seek employment in our industry,'' said Chuck Hunt, executive vice president of the New York State Restaurant Association
The 40-hour course offered at New York Bartending School costs $695 and typically draws ``physicians, attorneys, people in the corporate world, people who've suffered a job loss, people who are burned out and are having the so-called mid-life crisis,'' Sisson said.

Purple Hooters

At the final exam, students must pass a written test and mix 20 drinks in six minutes. An instructor picks the speed-test cocktails from a list of 200 that includes the Purple Hooter, made with vodka and raspberry liqueur, and the Red Devil, which contains Southern Comfort, sloe gin, amaretto, orange juice, vodka, triple sec and lime juice.
Billy Achitsaikhan, 27, says he didn't worry about finding work again when he left New York to trek through Central America in 2006. The graduate of Skidmore College in Saratoga Springs, New York, said he had joined Morgan Stanley after internships at Bear Stearns Cos. and Smith Barney Holdings Inc.

``Two years ago, there were days when I would go to Wall Street and meet up with two different headhunters and they would literally offer me more than 10 jobs apiece,'' Achitsaikhan said in an interview.

Since he returned to Wall Street last month and posted his resume, ``no one has called me,'' he said. Achitsaikhan graduated from the American Bartending School on Oct. 17 and said he plans to look for bartending work.

Not Recession-Proof

The median annual income, including reported tips, for a full-time bartender in New York City was $30,540 as of May, while the median for all jobs was $42,600, the state Labor Department said. Securities, commodities and financial services sales agents' median income was $111,160. Gunderson and Achitsaikhan declined to say how much they earned in their previous positions.

Tending bar isn't recession-proof, said James Brown, a state Labor Department analyst.

Restaurants are facing the toughest environment since the 2001 terrorist attacks because of the slumping economy, record rents and an increase in food prices, Hunt said. Eateries may be more likely to hire an experienced bartender who is out of work because a restaurant closed than someone fresh out of training, he said.
``Eating establishments and drinking places tend to lose employment during downturns,'' Brown said. ``People spend less, tourism drops, expense accounts get cut.''

At least gas prices are down...

2008-10-30T11:04:00.001-04:00

During this turbulent market where it is difficult to know what the news everyday is going to do to the market and how investors are going to react, we can all enjoy one thing and that's a lower cost to fill our gas tanks. I believe as of last night 6 states in the US registered gas prices under $2 a gallon.

Oil has come down dramatically in prices, and has risen a bit in the past couple days, but still oil sitting around $60 or $70 a barrel is much better then where it was. I read a report where an analyst thought that oil prices could get to $20 a barrel---a few months ago that was unthinkable. (I don't even know if it is currently "think able", but that's neither here nor there). It makes driving by a gas station, either to pump or just to look at the prices, to see the costs going down as opposed to going dramatically up each day. It got as high for one gallon of gas as a lunch in your work cafeteria in some places.

I am not sure what you as a consumer can do to help keep the prices where they are but I believe from what I did hear is you can help. Numerous sources have said to just don't get greedy with the gas, remember where it was before and don't have a short term memory. Know how quickly and dramatically gas prices can sky rocket. Use gas as you would have before when the prices were higher, sometimes you can control it of course, but if you we're car pooling to work, keep doing it, it'll only keep more money in your pocket.

Buy n' Hold for everyone?

2008-10-29T13:03:00.000-04:00

Its a tough question to ask to certain people, there are certain people (most notably, Warren Buffett) who will live and die by the buy and hold philosophy of stock investing. They say historically the stocks perform better and when you trade frequently you water down your profits (or increase your losses) by trading expenses. As I've been reading, it seems as if the buy and hold philosophy would have returned you nothing over the last ten years, actually, you would have lost 11%. Ouch.

If you ever watch Jim Cramer and listen to him rant and rave about every stock under the sun, first you might think to yourself, "jesus, he talks to fast and churns through so many stocks in such a short period of time, how could I ever follow his advice?" and you also may think, "how can anyone with a full time job and a life (other than investing) keep up with him. So, for those reasons alone, you may think buy and hold is easier than trading frequently, but Jim Cramer will tell you different and he has had a very successful career as an investor, sans a few big hiccups he has had recently with his stock picks.

You may get a rush out of actively trading, and making a few bucks real quick, which is always a good feeling (hurts worse losing money real quick though). But you really need to access your goals, your time frame, your ability to handle risks (ups and downs, news, etc...) and the amount of free time you have to pick stocks and follow the active traders to see what they'll do before you can figure out what strategy is right for you.

Ill leave you with the thought that continues to occupy my mind as I think about these two strategies, and that is the number under Warren Buffetts name every year in Forbes or when you see him in the WSJ, the richest man, or very close to it.

This can mean great things for investors-from businessweek

2008-10-27T11:33:00.000-04:00

'Perma-Bear' Backs Other Value Investors: Buy Now

Jeremy Grantham, chairman of Boston-based asset manager GMO, is feeling vindicated. In 1998, Grantham recalls, he forecast that in 10 years the total inflation-adjusted return of the Standard & Poor's 500-stock index would be -1.1%. In October, "it slashed through that, and marked the end of the Great Bubble," he says.

Now, Grantham, whose firm manages more than $120 billion in assets, is almost gleeful. The value manager, who earned the sobriquet "perma-bear" for his long-standing bearish outlook, is buying. Like Warren Buffett and a growing number of savvy value investors -- among them, Third Avenue Management's Marty Whitman and Longleaf Partners' Mason Hawkins -- Grantham is seeing opportunities in the cheap prices created by this autumn's rapid stock market unraveling. Stocks, Grantham says, are now cheaper than they've been since 1987. "You are looking at the best prices in 20 years, and you should be making 7% to 8% to 9% real (inflation-adjusted) returns. The last time I was this optimistic was in the summer of 1982."

Not that Grantham's blindly upbeat. "It's optimism with great trepidation," he says. That trepidation reflects the fact that Grantham doesn't know if the market will fall further. But he's not the type to try to time the bottom. In fact, he says, bubbles historically overcorrect, and usually quite dramatically. That's what happened after the stock market crash of 1929, the 1965 collapse of the Nifty Fifty, and the contraction in Japan in 1989. "We are reconciled to buying too soon," says the money manager. "A value manager buys too soon and sells too soon. That's the nature of the beast."
Values at Home and Abroad
Grantham, who is repositioning both his personal portfolio and his clients' funds, has "equal enthusiasm" for emerging markets stocks and high-quality U.S. blue chips.

Among U.S. stocks, Grantham's betting on big-cap blue chips -- the most solid of companies with strong franchises, little debt, and stable history. "I'm not personally recommending Coca-Cola, or J&J, or P&G but these are the essence of what I am talking about," says Grantham. "These super-high-quality franchise companies got left behind in what I call the 'greatest suckers' rally. They are cheap and have been cheaper than the market for a long time."
Overseas, Grantham is looking at emerging markets, which are trading at around 25% off from what he considers their fair value, making them the cheapest prospects. Within emerging markets, he particularly likes Brazil. However, he's pessimistic on commodities, which he believes could be pushed to new two-year lows on slowing growth prospects in China and elsewhere.

What about financials, that most battered of battered sectors? Grantham's not as pessimistic on them as he's been previously, but he still prefers to invest elsewhere. "I don't think financials would make the list," he says, "but I think they are cheap relative to long-term expectations."
With a stomach of steel and a keen sense of history, Grantham feels no qualms about buying now: "I don't have any anxiety. I feel so much better with history on my side. Truly. I've been looking forward to this for years."

Vanguard founder finds value on the far horizon

2008-10-27T10:18:00.000-04:00

The search for wisdom in personal finance will take you sooner or later to John Bogle, who founded Vanguard, created the first index mutual fund and still preaches the gospel of long-term, low-cost, diversified investing.
Bogle, 79, has been warning for years about the excesses of Wall Street, where, he says, the triumph of "salesmanship" over financial "stewardship" produced colossal losses for millions of people. He is armed with statistics showing that a vast majority of investors - including most professional investment managers - should not even bother trying to pick individual stocks.

They are just not very good at it, he says. Better to invest in the broad market through index funds with low costs, allowing the shareholders, and not the investment managers, to profit when times are good.

As for trying to time the ups and downs of the market, Bogle contends that the chances of being right over any extended period are so negligible that it's a fool's errand to try.

Yet for simple, straightforward reasons, he says that this is a very good time to put money into stocks - not for short-term trades, mind you, but as part of a diversified portfolio that you hold for many years.

"The probabilities for stock market investing right now are very compelling," Bogle said by telephone from his office at the Bogle Financial Markets Research Center, on the Vanguard campus in Malvern, Pennsylvania. The cataclysm in world financial markets has brought down valuations to fairly attractive levels, he said, improving the prospects that the broad stock market, over the next decade, can earn an annualized return of perhaps 9 percent.

So this isn't the time to sell, he said, but he allows one big exception: "If you cannot afford to lose another penny, then you simply have no recourse but to get out of the stock market."
Stocks could easily fall further, and if you aren't in a position to absorb more losses, you must protect yourself. And retirees should hold a big dollop of bonds, which generate income and provide ballast in a shaky market. "Investing isn't just about probabilities," he said. "It's about consequences, and you've got to be prepared for them."
But for long-term investors who can afford to wait a decade or more before cashing out, the probabilities are much better right now than a year ago, precisely because of the terrible beating the market has taken.
Of course, that doesn't mean you should put all of your holdings into stocks - "unless you're just starting out in investing and you're very young, and you have very little to lose, and an awful lot to gain," he said. Everyone needs to examine their particular situations and tailor an individual strategy. Nonetheless, he offered some rules of thumb that, he said, "will keep you out of trouble."

First, hold bonds - preferably in a truly diversified, low-cost index fund, and in an allocation roughly equal, in percentage terms, to your age. If you're 50, for example, consider holding 50 percent bonds and 50 percent stocks. "This is simplistic, and of course you need to look at your own situation," he said, and adjust the bond proportion up or down depending on your needs and level of risk-aversion.

If half of your portfolio was in the Vanguard Total Bond Market Index fund this year, that fixed-income portion would have held its own - on Thursday, it was down 0.2 percent for the year - and mitigated sharp losses in the equity part of your portfolio.

If the equity half was in the Vanguard Total Stock Market Index fund, your equity allocation would have lost 37.4 percent through Thursday. The net loss in your portfolio would have been just a bit more than half of that, or 18.8 percent. If you held more of the bond fund, your losses would have been lower.

Once you've set up a conservative, balanced, broadly diversified portfolio, as well as a way to add to it regularly, try to let it be. Don't check your returns daily.

Unless you're a market pro, and maybe even if you are, daily market averages are mainly noise, distractions without much meaning or use, he said.
Bogle has lived with a transplanted heart since 1996, and while he has retired from management of Vanguard, he still works energetically, giving speeches and writing books about Wall Street's mistakes and the benefits of investing with a low-cost index fund approach.
He says that despite "an orgy of speculation" that has hurt the global economy, he remains convinced that if long-term investors stick to the basics, "put blinders on" and try to have "strong stomachs," they can ride out the rough patches and ultimately prosper.

"If you were to put your money away and not look at it for many years, until you were ready for retirement," he said, "when you finally looked at it, you'd probably faint with amazement at how much money is in there."

Yahoo! - We heard a lot of talk about it months ago, but all that has calmed down, what's up with it?

2008-10-24T11:14:00.000-04:00

Five reasons to buy Yahoo stock
The struggling Internet company may look like a basket case but now's the time to jump in.

SAN FRANCISCO (Fortune) -- Here's why you should buy, not bail, on Yahoo.

1. Eventually, management will get tossed.
Starting with the least scientific or analytical reason for owning Yahoo, there's every reason to believe the days are numbered for CEO Jerry Yang and President Susan Decker. By all accounts fine people, they simply haven't led Yahoo well.

The former excelled as Chief Yahoo, dabbling in deals and motivating the troops. But Yang hasn't been a decision leader and is "lurching from crisis to crisis," as The New York Times aptly phrased his tenure. Decker, in turn, is widely derided in Silicon Valley as too much the finance chief, not enough the operations guru.

Yahoo's doormat board tolerated Yang's ascension to CEO as a way of appearing to not have fired his predecessor, Terry Semel. Now that raider Carl Icahn - who has been quiet of late regarding Yahoo - is on the board, though, action is far more likely. Were the board to dump Yang and Decker it's an easy bet the stock would pop, even if they didn't immediately name a successor.

2. Microsoft will return.
Microsoft continues to deny that it's interested in bidding again for Yahoo. It is forced to make these protestations because Steve Ballmer can't seem to stop talking about why such a deal would make sense.

The math is pretty straightforward here. Microsoft offered to buy Yahoo for $31 per share. Yang thought his company shouldn't fetch a dime less than $37. Microsoft said it was willing to pay $33. Today, Yahoo has been nosing below $12. Microsoft, instead, has been talking about buying back more stock.
Just wait. Microsoft likely is waiting to see what the Justice Department has to say about Yahoo's search-advertising deal with Google. When that's all done, a Microsoft-Yahoo tie-up makes as much sense as ever, especially considering that Microsoft, amazingly, still can't make money in its online business. It needs Yahoo's scale to get profitable.
There is another Microsoft option that could benefit Yahoo and its stock price. "We believe Microsoft is waiting in the wings to replace Google as a search outsourcing partner," writes Marianne Wolk of Susquehanna Financial Group, "which could afford Yahoo some upside lift to [its] earnings forecasts, assuming there is a minimum guarantee from Microsoft to exceed Yahoo's internal figures as incentive to get the deal done."
That's a good thought: If Google can't help Yahoo make money, Microsoft will.

3. Investors are looking for reasons to buy this stock.
In the initial hours after Yahoo reported a generally atrocious third quarter and a bleak outlook Tuesday, its stock popped. The various reasons postulated by observers were amusing when taken as a whole. The San Francisco Chronicle guessed this was due to "relief that Yahoo's fourth-quarter financial guidance wasn't as bad as feared."
Others chalked it up to the cost reductions associated with announced layoffs of 10% of Yahoo's workforce - even though the layoffs were widely expected and therefore shouldn't have affected the stock price. One analyst, Mark Mahaney of Citigroup, praised Yahoo for having had the foresight to avoid stock buybacks until now - and then prognosticated the positive impact of future buybacks. "We note that the company ended [the third quarter] with about $3.3 billion in cash and no debt," he wrote, adding that buybacks were likely.

4. Long-term trends favor Yahoo.
Yes, Yahoo is losing share to Google. Yes, Yahoo is barely growing. Yes, it's a tired argument that Yahoo is one of the strongest brands in the media world. Yes, this argument for owning its stock hasn't worked in a long time. Yet the argument still holds water. The company global page views grew 17% in the third quarter. It's part of an industry, online advertising, that will continue to grow (or at least take share) no matter the economy. Compared with The New York Times, a sterling brand in a declining industry, Yahoo is a powerful brand in a growing industry.

5. It's cheap.
There's always that. Morgan Stanley's Mary Meeker figures that given the value of Yahoo's cash and its publicly traded Asian assets (even taking into account the difficulty in selling stakes in other companies), investors value Yahoo's core business at just $6 per share, or eight times Wall Street's estimates of 2009 profits. That's an extraordinarily low multiple for any company with the opportunities in front of it that Yahoo has. Yahoo's management thought Yahoo was cheap at $30, of course. Today, investors would do quite nicely for a fraction of that amount...

Amazon.com, Inc.

2008-10-23T17:33:00.003-04:00

I am no stock picker and I do not claim to be. But it seems as if Amazon.com, Inc (AMZN) has gotten banged up pretty good over the past year or so. As of right now it is selling closer to its 52 week low than its 52 week high, and they are not forecasting great results forthcoming. That makes no sense to me. I would think that as we approach, or are already in a recession people would become much more aware of where their dollars are going. Me personally, if I want a book, I am going to order it from Amazon.com (and I would have even before this recession), because I can get it much cheaper all I have to do is wait a few days for it to ship. Not that Barnes and Noble or Borders are rip offs, but if you have just a little patience you can save yourself like 50% of your order cost. This is just books that I am talking about too, how about all of the other items you can buy online that you can get at huge discounts from the brick and mortar stores.

Also, we have this new population of people, people that have grown up from their very young childhoods using computers, so they may be more comfortable placing an order online then some of the older folk, who just started using computers and are not yet as comfortable. As this generation of computer savvy people starts taking up more and more of the population, I feel as if more and more things will be purchased at quite a discount online. I have not actually read the Amazon.com business model, but I am going to assume they take a piece of every sale on the site, otherwise it wouldn't make sense for them to sell items on the site. All of this information is pointing to more money in Amazon;s pockets and more traffic to the website, therefore more people talking about their experiences on Amazon, then leading to NEW customers to Amazon.com. In summation, I feel that Amazon.com, Inc (AMZN) is worthy of people taking a look at it and maybe picking up a few shares somewhere down the line. Not only did I just discuss how more people are going to be shopping on there, but come on, again - we are in a recession, everyone is going to be looking for a cheaper deal on things, and that's online.

Think about it. Like I said, I'm not expert, but I think it might be something if you were to buy and hold for a very long time, you would be a happy investor.

From the Wall Street Journal

2008-10-23T11:51:00.000-04:00

Weill Seeks to Gain From Pain --- Considers Fund to Invest in Battered Financials

Sanford Weill, the architect of Citigroup Inc., is considering a plan to profit from the same turmoil that has clobbered the banking giant.

Mr. Weill, who pulled off the deal that created Citigroup a decade ago and became its chairman and chief executive, is in talks about launching a private-equity fund that would invest in beaten-down financial companies and assets, according to people familiar with the matter.

Mr. Weill's potential partners are Michael Klein, who was co-head of Citigroup's investment bank until he left in July, and Michael Masin, former chief operating officer at the New York company.
Such ventures often fizzle before getting off the ground, so it isn't clear if Mr. Weill will go through with the plan. In recent weeks, though, Mr. Weill's team has reached out to potential investors, including sovereign-wealth funds, outlining their strategy and gauging interest in putting money into such a fund, people familiar with the discussions said. The tentative goal is to raise about $5 billion.

Launching the fund would mark a new chapter in Mr. Weill's storied financial career. In 1986, he bought a troubled Baltimore-based lender that became a vehicle for building a global financial juggernaut that culminated in Citigroup. Now 75 years old, Mr. Weill stepped down as CEO in 2003 and as chairman in 2006.

In recent years, Mr. Weill has devoted much of his time to two philanthropic ventures, Carnegie Hall and the Weill Cornell Medical College.

Meanwhile, Citigroup has suffered, piling up four straight quarterly losses that have caused its shares to plunge 55% since the beginning of the year.
In 2005, Mr. Weill was preparing to launch a private-equity fund but shelved the idea following an outcry from Citigroup's board, which worried that the venture might compete against the company.

Mr. Weill has remained obsessed with Citigroup, frequently offering his advice to bank executives. Last year, after handpicked successor Charles Prince resigned under pressure, Mr. Weill volunteered to return to the company. Citigroup directors declined his offer.
Earlier this year, he joined sovereign-wealth funds, public pension funds and other investors who pumped $12.5 billion into Citigroup in exchange for preferred stock. At the time, Citigroup's stock was trading at about $28 a share.
The shares fell 6.1%, or 86 cents, to $13.32 apiece in New York Stock Exchange composite trading Wednesday at 4 p.m.

Mr. Klein is a charismatic investment banker with a bulging Rolodex. Since leaving Citigroup, he has advised the U.K. government on handling the financial crisis and recently landed a fellowship at Princeton University's Woodrow Wilson School of Public & International Affairs.

Mr. Masin got to know Mr. Weill during their time together as trustees at Carnegie Hall. Mr. Weill recruited him to join Citigroup's board and later hired him as chief operating officer. Mr. Masin left Citigroup in 2004 and is now a senior partner at law firm O'Melveny & Myers LLP.

Messrs. Weill, Klein and Masin either declined to comment or didn't respond to requests.

I've posted his stuff before-from yahoo!-Ben Stein

2008-10-22T14:31:00.000-04:00

Why I'm Still Buying

This is my most serious column yet. So let's get to it.

I get a fair amount of mail about the economy. Lately, much of it asks the same questions:
* What the heck happened to our economy so suddenly and powerfully that it caused the immense uproar and fear and stock market crashes we have had lately?
* Why didn't I, Ben Stein, famous so-called braino, get what was happening and why did I remain optimistic so long?
* What is the future going to bring?

First of all, obviously, I don't know what the future will bring. If I knew the future, I would be the richest man on the planet very soon and I assure you I am very far from that.

But I now see what has happened and I can explain that, and it might give a tiny bit of insight into what will happen in the future.

Start around 1995. Groups involved with civil rights issues and activities for poor people began to complain that poor people and especially non-white poor people got mortgages much less often than white well to do people. Many economists, including me, explained that it was not at all surprising that poorer, less credit worthy people were often turned down for credit. That's how credit is supposed to work: you lend to people who will pay you back.

But the advocates for poor and black people had immense political clout. Under President Bill Clinton, they passed legislation that called on banks to be required to lend to non credit worthy borrowers. The laws, including the Community Reinvestment Act, the CRA, required two large government sponsored enterprises, Fannie Mae and Freddie Mac, to buy those lower quality mortgages from the banks, guarantee them, and sell them to the public. These were bundled into immense pools of subprime mortgages as they were called, and sold all over the world.

Soon, the private sector got into the act in a vast way. They also went to banks and bought their subprime loans, packaged them, and sold them as Collateralized Mortgage Obligations all over the world.

Supposedly, the subprime collateralized mortgage obligations (CMOs) were sliced up in such a way that buyers could have a very high likelihood that they would be repaid even if many of the mortgages in the portfolio defaulted. This assumption was based on a misunderstanding of poor quality credit that had been popularized during the era of the junk bond investment powerhouse, Drexel Burnham Lambert.

As it happened, these low quality mortgage bonds were recognized as highly likely to have real problems very soon after they started to be issued by private banks in the billions. The people who recognized the high likelihood of defaults were able to profit from that likelihood:

First, they could sell the mortgage securities short, a straightforward wager that has long been available.

Second, they could buy credit default swaps (CDS) from financial entities. These were essentially a side bet that anyone could make about a certain mortgage bond (or any other kind of security). It paid off fantastically if the bond went into default or was close to default. The people who sold these CDS were banks and insurers, especially Merrill Lynch and A.I.G., that believed the mortgage bonds would not default and therefore charged very little to the other side, the counterparty, to make the bet.

Things went along well for everyone on the long side for several years as the housing market boomed. Even if borrowers could not repay their mortgages, they could refinance the mortgages for more money than was owed on the original mortgage, pay off the first mortgage and live happily in their new home. The mortgage in question in the bond would - again-- be paid off and the bond would continue happily in its owners hands.
Then, the housing market started to stabilize and soon fall, as housing prices do. They move in cycles, although around a rising mean, as we economists say.

Now, when the subprime mortgage holder could not pay off his mortgage, he could not refinance. Instead, he had to default. When a lot of these mortgages defaulted, the bonds into which they had been lumped declined in value.

So far, I, your humble servant, followed the deal just fine. It was extremely similar to the collapse of the Drexel Burnham Lambert junk bond empire. This had caused barely a ripple in the national economy when it fell apart in the early 1990's. I assumed that the same would happen with junk mortgages. There would be some failed banks and insurers, but the Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury could make all of those losses good. The total amount of subprime mortgage bonds was large but not compared with bank capital or the regenerative powers of the Fed.

So, I assumed, and wrote, things would be fine.

Where I missed the boat was not realizing how large were the CDS based on the junk mortgage bonds. They were not only large, but absolutely staggeringly large. Where the junk mortgage bonds were in the hundreds of billions, the CDS were in the tens of TRILLIONS. If the sellers of the CDS had to pay off in large part, the liability greatly exceeded the total bank capital in the United States and maybe in the world. That is, the derivatives based upon the junk mortgage bonds could be - and were - not in any way limited to the size of the mortgage bonds themselves, and this I did not know until a few months ago.

It is this liability that swamped the banks, investment banks, and insurers. It is the CDS liability that broke AIG and Lehman.

When I realized the extent of this problem, I wrongly thought the federal government would step in and in some way rescue everyone who had sold CDS. They did, except they 'forgot' to rescue Lehman. Lehman was so large that when it failed, it was like a torpedo striking an ocean liner below the water line. A gaping hole was left in the whole world finance system.

Bankers panicked. If Lehman could fail, then anyone could fail. In that case, the banks that were still solvent figured they had better hoard their assets and stop making loans. This led to the ongoing credit freeze. This led to a rapidly gathering economic downturn and a drastic fall in prices of all kinds of securities, real estate and commodities. It also led to a severe credit squeeze on hedge funds, which saw credit dry up and their asset prices fall suddenly, and were forced to sell stocks and other assets on a dramatic scale, leading to still greater falls in securities prices, and the worldwide panic that it still unfolding.

In turn, this led to huge infusions of liquidity into the banks of the world, the semi-nationalization of the banks of the United States and of many other nations to shore them up, thaw credit, and bolster world markets and economies. These were drastic steps for drastic times, all generated by derivatives. Warren Buffett had warned us against them, and he was dead right, as always.

Now, these acts should help. But it might not do the job all by itself. Major lender solvency issues remain. If housing prices keep falling, more mortgage bonds will default and the liability attached to the credit default swaps based upon them will still be in the trillions or even tens of trillions.
I might well be too alarmist here, but I think the only rational possibility is for the federal government or the New York State government (because most of the CDS were entered into in New York) to simply annul the credit default swaps as void as being against public policy. After all, there was no insurable interest in most cases, which tends to void insurance contracts, which is what a CDS is.

Once that happens, the banks can breathe freely again, take risks, and the economy can revive. Or, perhaps the housing market will stabilize, mortgage based bonds will rally, and the CDS will be out of the money and will not be a threat to the lenders. But something has got to happen to defuse these deadly derivatives.

In any event, we now know a lot we did not know before. Credit default swaps are way too dangerous. Derivatives generally are dangerous. There is much that Ben Stein does not know. I hope this explains some of how we got to this precarious place, I apologize for not seeing it sooner. But I am still optimistic that the government will save us from the CDS, and we will go on to renewed prosperity. In other words, I am still buying.

A few ways to save a few bucks

2008-10-21T09:27:00.000-04:00

Next time you get some time on your hands and your sitting around watching TV or you're bored out of your mind doing nothing, you can take a few minutes and save yourself a few bucks. You'll also have a great feeling of satisfaction after because you did something to help yourself!

1) Cell Phone - Call up your current cell phone service provider and let them know that you have been shopping around for better deals and you have found one. Let them know that you have run a break even analysis and even with the large fee that you may be charged for cancelling your contract with them, over the next few years you will be saving a lot more money. Now, don't get pissed off and start yelling because you really should have no intention on cancelling with them. Tell them, you've liked the service you have received from them for however long you have been with them, and if they could help you out somewhere along the way (more minutes of you need them, free texting, shave a few bucks off each months bill) you would be more than happy to stay with them. This should be good for a small break in the monthly service fees or some free minutes and texting.

2) Car Insurance - I did this just the other day, it only took a few minutes and the person with Geico was actually pretty helpful. I called and told them I was looking to shave some costs off my car insurance monthly bill but I also wanted to make sure I was well insured still. We went through my entire policy and we were able to make sure I was still very well insured and I took a few dollars off each months bill. ALSO, with car insurances, you can save money based on how you pay you bill. If you pay lump sum every 6 months you won't be hit with any fees, but sometimes if you pay monthly they charge a convenience fee, which can add up to be like $50 a year, so see if you can work something out with the insurance company. You could also pay the insurance for a year or 6 months on a 0% apr credit card, that way as long as you pay it on time monthly you wouldn't be hit with any fees.

3) Credit Cards - This can be helpful if you have a card with a balance on it or if you just have a credit card for emergencies. Call up your credit card company and let them know that you have been shipping around for credit cards with better rates and you have found one. You can make up a card company (chase, citi, amex, whatever) and say they are offering a rate lower than what you are currently getting with your current card. Again, like the cell phone, you don't need to yell at them because its very possible you have no ambition to switch credit cards. Just let them know there are better rates out there, reiterate you haven't had problems with the current card, or if you did they weren't huge ones and you are just looking out for your best interest. If you do carry a balance that can safe you a ton of money a year, and if you don't, when you have an emergency and have to use your card it won't be quite as painful.

4) Reconciliation - Go through all of bank statements and credit card statements and look at all of the charges. Make sure you know what every charge is and you need every charge. Make sure you don't have a small fee getting charged every month from your credit report, or if you don't listen to satellite radio, call and cancel it, this can save you $30 or more each month (if you cancelled your credit report and satellite radio). There are other ways out there to get a credit report for free, you don't need to pay $15 a month.

Follow these steps and be that much closer to positive cash flows at the end of every month.

Better to listen to them, than me

2008-10-20T11:21:00.004-04:00

So as Ive said before, I think there could be some good opportunities out there in the stock market to buy at some historically low prices. But who am I to say, a twenty-something year old investor and stock researcher, but I haven't LIVED through the ups and downs like some of the following guys have.

Buffett says hes is buying US stocks based on his simple philosophy: be fearful when others are greedy and greedy when others are fearful.

John Nuff, who was in charge of the Windsor Fund at Vangaurd for a few decades says that it is time to start buying again.

Buffett talking to Reuters:

(Reuters) - Billionaire investor Warren Buffett is buying U.S. stocks, he wrote in an opinion column in the New York Times.

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett wrote in the paper.

Buffett acknowledged the economic news was bad, with the financial world in a mess, unemployment rising and business activity faltering.

"What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he said. "So if you wait for the robins, spring will be over."

Buffett, who made his money by building his company Berkshire Hathaway Inc, into a $199 billion conglomerate, wrote that investors were right to be wary of highly leveraged entities or businesses in weak competitive positions.

"But fears regarding the long-term prosperity of the nation's many sound companies make no sense," he said.

Buffett said major companies would suffer earnings hiccups, but added they "will be setting new profit records five, 10 and 20 years from now."

Neff talking about his outlook:

In a small office in West Conshohocken, a legendary stock market bottom feeder has been having a feast.

John B. Neff, who racked up record gains as manager of Vanguard's Windsor Fund over three decades, is buying stocks again.

And while the actions of one person may mean little in a multitrillion-dollar market, Neff's renewed romance with stocks signals that, to him, the worst is over.
As of Friday, he has put cash that he had held on the sidelines for the last year back into the stock market. He retired from Windsor in 1995, after 31 years, so the world no longer watches him. He manages a portfolio for himself and for some small charities.

But at age 77, he has not tired of what he calls "the ultimate ball game," the stock market.
About 18 months ago, Neff started to keep more of the stock portion of his portfolio in cash. (He noted that since he left Windsor, he has kept about 30 percent of his portfolio in tax-free municipal funds to preserve wealth.)

Neff likes bargains, stocks that sell for prices of five or six times their earnings. It is like shopping only when prices are marked down 60 percent or more.

Few stocks were that cheap last year, so he sold some of his investments to take gains and did not reinvest. For much of the last year, he has had about 15 percent to 20 percent of his stock portfolio in cash.

It is not that he saw the downturn coming.

"I wasn't greatly concerned about the level of the market, or I would have had more than 15 percent in cash," he said. "I was just having a tough time finding the kind of stuff I like, with a low P/E [price-to-earnings] ratio and a high dividend yield."

Like a P/E, a dividend yield, calculated by dividing dividends paid yearly by the stock price, may indicate whether a stock is a bargain.

So does it mean anything that he has put his cash back in the game?

"It does," he said. "It says in fact that an awful lot of things are available at a friendly price. It's the kind of market I'd take advantage of."

He is not completely bullish.

"There's some real tough sledding out there," he said. He said he believed that the economy might experience a recession but that he thought it would be mild because retailers were marking down prices and consumers would buy.

And before anyone even considers following his investing lead, he cautions that he "really got killed the last couple of weeks."

Last year, his portfolio lost about 11 percent, although the overall market was up slightly. But since he left Windsor, he said, he has earned about 19 percent yearly, far better than the overall market. In the 31 years he oversaw Windsor, he beat the Standard & Poor's 500 index 22 times - by about 3.5 percentage points a year.

As Windsor manager, he was a maverick. (Neff, a lifelong Republican, is supporting John McCain for president.) Conventional investing wisdom says people should diversify, buying many stocks to reduce the risk of losing a lot on one. Neff liked to make big bets - and still does.

His current portfolio contains about seven stocks. His on-again, off-again love affair with banking giant Citigroup Inc. is on again. He famously bought a big stake in that company for Windsor in the early 1990s when bad loans in real estate and in developing countries pummeled its shares.
He has been buying Citigroup again, believing that its stellar network of offices around the world will help it thrive when the global economy recovers. Citigroup now accounts for about 13 percent of his portfolio.

He also likes Seagate Technology Inc., which makes hard-disk drives. Neff said he thought that business would continue to grow as corporations sought computer storage.

He also likes energy companies ConocoPhillips and Swift Energy Co. and computer-maker Hewlett-Packard Co.

Several of his positions remain underwater, but he has regained some of that ground in the last two days.

"Citigroup is up 18 percent today," he said after yesterday's market close. He still has a long way to go. Citigroup shares closed at $18.62 yesterday. He paid about $45 a share for previous Citigroup purchases.

So he continues to toil, almost as hard as he did when he was managing billions of other people's money. He works about 60 hours a week in the West Conshohocken office offered to him by his friend Paul Miller, a founder of the money management firm Miller, Anderson & Sherrerd that later became part of Morgan Stanley.

Neff said he remained a product of his youth in the Midwest and in Texas.

"I'm a combination of Michigan substance and Texas bull," he said. By bull, he said, he means that he has strong opinions and few fears about expressing them.

His opinions remain strong, but his body has faltered a bit. He has retired from various boards of directors. He tires more easily than he used to and dislikes the harried nature of today's business travel. He says he is occasionally forgetful and confesses to requiring a short midafternoon nap.
"It's just a little hard to keep up. I still keep up with the marketplace, I think."

From Fortune.com

2008-10-17T06:37:00.000-04:00

Are stocks cheap yet? It's been a brutal selloff, and blue chips have been burned. By some measures, it's a good time to buy.

NEW YORK (Fortune) -- Has the brutal market selloff left stocks in the bargain bin? After three painful weeks on Wall Street - and another 9% plunge in the S&P 500 Wednesday, the steepest one-day selloff since 1987 - the stock market is hovering around five-year lows. Including Wednesday's drop, the S&P 500 is off 38% since the start of this year, while the Dow Jones Industrial Average has plummeted 35%.

So are stocks downright cheap yet? By many measures, they certainly appear that way. Analysts at research firm Morningstar calculate a "fair value" for each of the approximately 2000 stocks they track. On average, those stocks now trade at about 72% of that fair value estimate, after hitting a low of 64% on October 10. That's as low as the figure has gone since Morningstar began tracking it in 2001. The research firm has more five-star-rated stocks now than ever before, says Robert Johnson, Morningstar's associate director of economic analysis.

Financial stocks have made most of the headlines, but other blue chips have been burned too. Exxon Mobil,for example, now trades at $62, down from a 52-week high above $96. General Electric has seen its share value halved, from more than $41 to $19 and change. Microsoft closed at $22.66 Wednesday, off a 52-week peak of $37.50.

The broad stock market now trades at 11 times the past 12 months' operating earnings, says Sam Stovall, chief investment strategist at Standard & Poor's Equity Research. That's a 44% discount to the average multiple since 1988, Stovall notes. "If you expect no earnings growth at all, we're still trading at a very hefty earnings discount," he says.

Another measure of valuations also suggests that stocks are extraordinarily cheap right now. By using a ratio of price-to-peak earnings (essentially, the highest earnings posted during the current economic cycle), money manager John Hussman and others seek to more accurately forecast market conditions by filtering out some of the noise and volatility inherent to quarterly earnings.

As Hussman pointed out in a recent note to investors, the S&P 500 is trading for about 10.7 times its peak earnings levels, a multiple as low as we've seen in nearly two decades. (The bear markets of the early 1970s and 1980s saw price-to-peak earnings multiples around seven, but the price to peak earnings multiple historically averages around 14.) "Stocks are now at the same valuations that existed at the 1990 bear market low," Hussman wrote. "Relative to 30-year Treasury yields, the S&P 500 is priced to deliver the highest excess return since the early 1980's."

That hasn't been enough to lure hordes of bargain hunters back just yet, and investor psychology may be largely to blame. The market tumble may have been the result of the frightening uncertainty over the full scope of the credit crisis and the federal bailout plan. But a related concern is now also preoccupying many investors: Just how long and deep will the recession be, and how much will corporate earnings suffer? "Everybody's now suddenly waking up," says Morningstar's Johnson - and dealing with the notion that, "Oh shoot, we've got a recession to go through yet." That's why Wednesday's troubling retail-spending report prompted such a sharp decline.

The lingering economic uncertainty and the cloudy picture for earnings make it extremely difficult for investors large and small to gauge just how cheap stocks have become. The worry now is that, if the economic crisis drags on and earnings expectations for the fourth quarter and the year ahead prove too optimistic, today's screaming bargains may not be such great deals after all.

Stock Market

2008-10-16T17:29:00.003-04:00

The stock market can be very risky as we have seen over the past few months. There were tons of people who lots tons of money due to the market collapse, I mean I'm talking 40-50% of their retirement nest egg. A good amount of our US population is baby boomers, and they are all getting ready to retire within the next few years. Those people are some of the people who have been hit the hardest, they may have to put retirement off for years and continue to work (if they can keep their jobs). I only say that regarding keeping their jobs because of the fact we are in a "recession", and during recessions there tends to be lay offs, so hopefully none of those people will get laid off...well hopefully there wont be any lay offs, hopefully as a whole the economy turns around quickly.

So as I just stated, this is a tough time for anybody in the market, but it can be good for us young people. Think about it, the stock market is selling at levels that it was at 7 years ago...if you can get some money into the market now (mutual funds, index funds, or individual stocks - if you know what you are doing) its kind of like having started years earlier. I heard a person say the other day "we are all going to be kicking ourselves in 24 months because we did not take mortgages out on our homes and put it into the market" - that's if we could even get loans now because there has been a loan freeze recently and its been very difficult to get loans. What he was saying was that he was optimistic about the market over the next few years. Now that was not Warren Buffett who told me that, but it makes sense that the stocks will rebound. Buy low sell high, that's the first rule of investing in stocks and now could be a great opportunity to buy low.

Below are a few links to articles about legendary investors discussing how there are some GREAT values out there in the market right now.

Going against the theme above, there are other ways that you can look at this economic catastrophe. The US savings rate is somewhere in the area of -2%...yes that's a negative, the US as a whole spends more than they make. You can have this current turmoil be a reality check for you, for years the economy was good, the market was great and we did not even think of anything like this happening, so we may not have thought about building up a nice emergency fund in cash sitting in a high yield savings account building for us. That is something everyone needs to have, you need to be prepared for the worst, you need to be prepared for job loss or your extra income being cut. So you can either be optimistic on the market and put some money into the stocks and hoping that is turns around and you get a nice amount of money WORKING FOR YOU in the stock market, or you can build up a nice cash hoard for any hardship you may come across.

If you want to open a brokerage account and start investing, I'd recommend Scottrate, Charles Schwab or even Sharebuilder. These companies all have low commissions on your trade so you can make more of your money work for you as opposed to going to expenses of making a trade.

If you want to build up a CASH HOARD (I like the sound of that, it sounds cool, the word HOARD) I would recommend setting up an ING Direct savings account or E*Trade. ING Direct does not have the highest rate out there right now but they do offer $25 bonuses for opening an account (which I can hook you up with, just send me an e-mail) and honestly, they could not be easier, I have used ING for the past 4 years and I have never had an issue and the site is so easy. E*Trade pays a bit more in interest, and I don't have much experience with them, but I do have an account with them and they are pretty good too.

Let me know if you want a bonus link, or want information on opening a brokerage account.

Check out these articles.

http://www.forbes.com/finance/2008/10/14/whitman-value-toyota-pf-ii-in_ms_1014adviserqa_inl.html

http://www.morningstar.co.uk/UK/funds/article.aspx?lang=en-GB&articleID=58428&categoryID=14

http://www.stockhouse.com/Columnists/2008/October/2/Bargain-basement-stocks-worth-buying

Rags to Riches

2008-10-16T11:50:00.000-04:00

I'm going to try to do a series of short bio's on successful people we see and hear of daily, and whom we probably idoloize. Not everyone comes from money and I am sure we can get good insight from a few rags to riches stories...let me know if you know of anyone that came from little and turned their lives into a success story.

From Fortune.com - How to rebuild AmericaThe era of small government is dead. We need a strong, skillful Washington again to start rebuilding America from the ground up.

2008-10-15T06:22:00.001-04:00

(Fortune Magazine) -- It's certainly not morning in America.

Yet it doesn't have to be twilight either. America can pull through the current economic crisis with a dose of political maturity and a bit of luck. Success will mean the end of the Reagan era, of an ideology that has brought the country to its knees.

Ronald Reagan told us that government was the problem, and that low taxes and deregulation were the solutions. The result, even more than Americans recognize, is a government so shrunken in skill and mandate that our gravest problems - financial collapse, natural hazards like Hurricane Katrina, broken health care and education, unsustainable energy systems, and growing global instability - are left without a serious response.

Either we once again invest in our future, notably through an expanded public sector, or we will lose our future.

I presume that John McCain and Sarah Palin will lose the election. Never has a national ticket been less equipped intellectually, temperamentally, and practically to confront America's problems than this one. I also presume that Palin's winks to America will prove to be the equivalent of the Cheshire Cat's grin: the last expressions of an ideology disappearing from the scene.

Yet Barack Obama will soon find himself and our country in a labyrinth of difficulties requiring a new approach to public policy. The Reagan-era small-government ideology is defunct, and so too is the modest corrective that characterized Bill Clinton's "triangulation" with the right.

In the immediate future the greatest challenge is to stop what George Soros has called the "wrecking ball" of unregulated finance, the consequence of turning the economy's keys over to Wall Street.

Vast sums of money, untethered from the traditional capital-adequacy standards of commercial banks, inflated a gargantuan housing bubble that has now burst. The outflow has been violent in the other direction, as short-term funds from pensions, money markets, and foreign lenders have suddenly fled to safe havens. The housing market and consumer credit are in collapse. Wall Street's shadow banks have closed down. Money market funds are so spooked after Lehman's bankruptcy that they won't buy AAA commercial paper.

When AAA isn't good enough, we know that panic and fear have taken over.

The immediate need is to save the financial system through ample liquidity from the Federal Reserve, government backing of the commercial-paper market, and banking sector recapitalization, mainly by private money but also from public funds as needed.

Giving homeowners relief from foreclosures will be an important social policy and a way to return mortgage-backed securities to a partial-repayment basis. Unfortunately, the Paulson-Bernanke $700 billion bailout, aimed at buying mortgage-backed securities from the banks, addresses none of these issues, as the world's financial markets realized the moment the legislation was passed. The new President will have to modify the plan starting on Jan. 20 so that the vast sums voted by Congress will contribute more directly to banking recapitalization and the timely restructuring of existing mortgages.

Stopping the wrecking ball with these measures will take a while, probably at least through 2010 or 2011. These steps will prevent an economic collapse similar to the Great Depression or even to that of Asia in 1997, when several economies shrank by 10% or more.

By keeping credit markets open for business, the government can prevent an outright collapse, a depression, but that will not stop a recession in the U.S., centered on a steep fall in housing construction and consumer spending. The U.S. economy is likely to shrink by a few percent of GDP in 2009, and unemployment is likely to rise by a few percentage points. All of this will hurt badly.

Yet the greater challenge is not simply to stop a collapse, and certainly not to resurrect the housing bubble, an impossible and misguided goal that is still widely espoused through one scheme or another to get mortgages flowing again.

The deeper problems come back to Reaganomics. By next year we will find not only a shuttered housing market and weakened banking system but also a budget deficit exceeding $500 billion and perhaps as high as $750 billion or more, including charges for the financial bailout. The larger figure would amount to 5% of GDP, the highest proportion since the Reagan years. America will have gone through a decade of minimal household saving (made possible, of course, by the defunct easy access to mortgage financing and consumer credit) and will have borrowed, cumulatively, around $4 trillion from abroad since 1998, mainly from Asia. And we haven't even begun to address the challenges of climate change, broken infrastructure, health care, and schools.

For these reasons, we need to begin the transition back to national saving, both by government and by households. Now that easy financing has dried up, consumer spending will weaken dramatically, aggravating the pain in the short run.

For households, this can and should be the transition to positive saving and rebuilding net financial assets. Housing construction will remain low for several years, as will purchases of consumer durables like automobiles and home furnishings. The dollar should weaken, which will direct some of the resulting excess productive capacity toward exports, thereby reducing and eventually eliminating our heavy dependency on foreign saving. As a rich country, the U.S. should be a capital lender to the world, not a net borrower.

Some of the excess capacity, however, should be filled not by exports but by increased public and private investment at home. America needs an upgraded infrastructure to stay safe and secure. Yet we've neglected infrastructure for decades. Federal investment in nonmilitary major physical capital has been running a meager 0.2% to 0.3% of GDP in recent years. The results of chronic underinvestment are degraded roads and bridges (ones that actually go somewhere), lagging broadband access in parts of the country, vulnerability to natural hazards, and a dangerously decrepit power grid that is susceptible to disruptions and unequipped to support a modernized energy system.

In fact, the entire U.S. energy system needs an overhaul, both to ensure energy access and national security and to begin the transition to a low-carbon-emission economy to curb rapidly accelerating climate change. Such a massive multitrillion-dollar overhaul will inherently require partnerships between the public and private sectors, the kind of relationship deliberately shunned by the free-market reveries of Reaganomics. The goals of the partnerships should include:

*The development of mass-market battery-powered autos (hybrid or plug-in) that achieve at least 100 mpg of gasoline on new fleets by the year 2015.
*An efficient power grid that can carry renewable energy - solar from the Mojave Desert and wind from the Great Plains - to the population centers of the U.S.
*A utility industry that can reduce 80% of emissions per kilowatt on newly built power plants by 2016, either by recruiting noncarbon sources (wind, solar, nuclear) or by capturing and disposing of the carbon dioxide.
*
These goals will require hundreds of billions of dollars of public financing for research, development, early demonstration, and the rollout of new technologies, which in turn will leverage trillions of dollars of private capital during the next 20 years.

Now here's the rub, the one that has not even begun to sink in. None of this can be accomplished with the fiscal straitjacket that has been in place since Reagan's first tax cuts in the early 1980s. The mantra of small government and money in the pockets of ordinary Americans has been with us for nearly 30 years now, right through the Clinton era as well. Budgetary revenues have been capped at around 18% of GDP even as the population has aged, health-care costs have soared, and needs from energy to education have been left unattended.

Reaganomics began with wrong diagnosis and a great lie. (In these waning days it depends on even more absurd justifications.) The wrong diagnosis was the belief that the stagflation in the 1970s was caused by too much government, when in fact it was caused by the breakdown of the global fixed-exchange-rate system in the early '70s and by a dramatic tightening of global oil supplies, which led to OPEC's market power. Stagflation was eventually overcome, at high cost, by the combination of Paul Volcker's tight-money policy, investment in energy efficiency, and the development of alternative energy supplies - not by Reagan-era tax cuts. The great lie was to blame the stagflation era's spiraling costs on the infamous "welfare queens" allegedly taking the hard-earned money of America's workers.

This narrative played into the fantasies of a free-market, go-it-alone America, and for some it still does. The absurdities today are that the budget deficit, now at $450 billion and rising, is somehow to be eliminated, according to McCain and Palin, by boldly cutting $18 billion in earmarks and other unidentified waste, fraud, and abuse. That won't get us very far. Such small-government platitudes are especially discordant at a moment when the government is plowing in $700 billion to bail out the financial system.

The true fiscal story is far more dramatic and interesting than the Reaganomics daydreams. Government outlays amount to roughly 21% of GDP, but nearly 17% of GDP is accounted for by a very few areas: the military (4.2% of GDP), health and veterans' affairs (5.4%), retirement and disability, including Social Security (5.4%), and net interest payments (1.7%). Four percent of GDP must now finance all of the following areas: infrastructure, education, housing, nutrition, antipoverty, energy, environment, international affairs, science and technology (including space), agriculture, judiciary, and general administration of government! Of course, this is absurd. It is the end stage of a failed ideology that says that these areas should be left to the private sector. In fact, everyone is awaiting serious government as a partner for business and society.

We can't even fund our current minimalist government out of current taxes, and yet we will have to expand government spending by several percent of GDP to face our cascading problems. Today's budget deficit of 3% of GDP will expand to around 5%, but on top of that will be another 3% or so for all the critical needs we will face. From the perspective of five to ten years, even an additional 3% may be too low in view of the vast unfunded liabilities represented by rising costs of health care for an aging society. The idea that our fiscal mess can be addressed with the current tax system is absurd. The McCain-Palin idea of adding still more tax cuts for the rich on top of everything is surreal.

Some fiscal steps are clear. Around 2% of GDP can be recouped by ending the Iraq occupation (costing roughly $140 billion per year in direct outlays) and by cutting some expensive, unnecessary weapons systems. Another 1% of GDP can be recouped by ending the Bush tax cuts for the wealthy, as Obama has suggested. Yet even those steps will leave us with vast and growing needs. We should probably be aiming realistically for outlays and revenues close to 24% of GDP (up by three percentage points in outlays and six percentage points in revenues), compared with the current federal outlays of 21% of GDP.

Where will this money come from? The income tax is pretty much exhausted as an effective source, except to recoup a bit more at the high end, and corporate income taxes are of limited potential in a global world economy where they can be so easily avoided. One good but partial option will be carbon taxation, which might realistically collect 1% of GDP (roughly $25 per ton on six billion tons of emission). The fiscal gap will remain.

Like every other high-income country, the U.S. will finally need a national value-added tax or sales tax of some sort, perhaps starting at a 5% rate (to collect initially around 3% to 5% of GDP). The VAT has proved to be a smart tax, by focusing taxation on consumption rather than on saving and investment. Admittedly, we are nowhere near a public consensus on such issues. Nobody has even bruited such a possibility. Both candidates are promising tax cuts: Obama moderately for the middle class, and McCain recklessly for the rich and for corporations as well.

Yet reality will begin to dawn. Reaganomics is over - even the moderate, triangulating version of the Clinton years. It's time to embrace government again as part of the solution rather than as the source of the problem. And it's time to start paying for government again. Our future, and surely our children's, will depend on it.

Ever wonder what they mean by the Dow?

2008-10-14T09:59:00.000-04:00

Here's an article from the Buffalo News (buffalonews.com).

What is the Dow average, anyway?

NEW YORK - Amid weeks of stock market turmoil, many worried investors have been tracking the daily trajectory of the Dow Jones industrial average like never before.
But few understand how the index of 30 of the biggest U. S. companies is calculated - or what the closely watched measure of stock market performance really means.
Here are some questions and answers about the world's most famous stock index.

Q: What is the Dow Jones industrial average?

A: The Dow, the oldest continuing U. S. market index, is a way of measuring the combined stock values of 30 big U. S. companies.
It started out with 12 components, including now-defunct companies like U. S. Leather Co. and Tennessee Coal, Iron and Railroad Co. The only original component still around is General Electric Co.
These days, the index has expanded to reflect the U. S. economy's move away from big industrial companies. Staples of the modern Dow include big financial companies like Citigroup Inc., technology bellwether IBM Corp. and drug manufacturer Pfizer Inc.

Q: How is it calculated? A: Charles Dow, who launched the index in 1896, originally just took the price of one share of each company's stock, added the numbers up and divided by the number of companies. The average when the index launched was 40.94 - a quaint little number compared to Monday's close of 9,387.61, or the Dow's record high of 14,165.43 on Oct. 9, 2007.
Today, Dow Jones & Co. has come up with a mathematical formula to adjust for things like stock splits - when a company doubles the number of stocks its shareholders have, splitting the price of each in half - or new companies being added or removed. The idea is to keep the index consistent over time, and to make sure today's value can be compared in a meaningful way to what it was a year ago or 10 years ago.
This can be done various ways mathematically, but at Dow Jones it is handled by changing the "divisor" - a number that is divided into the total of the stock prices. That divisor currently stands at 0.122820114.

Q: How does the index account for the fact some components are bigger than others?

A: The index is what's called a "price-weighted average," meaning expensive stocks have more influence over the number than lower-priced ones do. This is the case because the index is based purely on the dollar value of stocks; if a high-priced share goes up 20 percent, that's a greater dollar increase than a cheaper share's 20 percent jump.
For example, a sharp drop in the price of General Motors last week didn't have a huge effect on the Dow because the automaker's stock was already so low. The stock fell $2.15, or 31 percent, on Thursday but only lowered the Dow by 17.1 points. GM's drag wasn't all that noticeable on day when the Dow plunged 679 points.

Q: Is the Dow considered a good measure of how the nation's companies are generally faring in the stock market?

A: Yes and no. Some on Wall Street downplay the importance of the average because it isn't as broad a measure as counterparts like the Standard & Poor's 500 index, which reflects the performance of 500 companies' stocks.
Still, the Dow is the granddaddy of U. S. market indexes, and it offers a relatively easy-to-understand snapshot of how the market is faring. Analysts generally believe it is a useful tool when combined with other market indicators, including the S&P 500 and the Nasdaq composite, an index of shares on the tech-heavy Nasdaq stock market.

Q: What are the 30 members of the index?

A: The companies are: 3M, Alcoa, American Express, AT&T, Bank of America, Boeing, Caterpillar, Chevron, Citigroup, Coca-Cola, DuPont, ExxonMobil, General Electric, General Motors, Hewlett-Packard, Home Depot, Intel, IBM, Johnson & Johnson, JPMorgan Chase, Kraft Foods, McDonald's, Merck, Microsoft, Pfizer, Procter & Gamble, United Technologies, Verizon Communications, Wal-Mart and Walt Disney.

Hopefully that answered some of your questions. Thanks Buffalo News.

News-makers

2008-10-13T22:20:00.001-04:00

Hey, if you noticed, running down the side of my site are links to articles on specific news makers in different businesses. What the feed does is it pulls the most recent articles off of the web and links you to them, just as if you were to google search for the most recent articles on any of them. So, check out the articles and let me know if you want me to add anyone to the lists for easy access for you. Thanks.

Time to buy?

2008-10-13T21:30:00.000-04:00

Anyone know what's going on in the markets? There has been a global market downturn, a lot of countries stock markets have been plummeting and causing nervous investors to pull their money out due to fear of losing value. In the US a lot of baby boomers have money in the stock market and baby boomers are getting ready to retire so it is likely a lot of them have pulled cash out to preserve they money they still have so they don't hinder the retirement plans too much.

Every time you turn on the TV or you open up a financial news website it seems as if they are discussing how much worse the market can get and how much value each of these companies can continue to lose. Is that the right way to be looking at what is going on? As Warren Buffett would say, you want to be greedy when others are fearful and fearful when others are greedy. The one issue with that is: is it too soon? Has the market not bottomed yet? Will it continue to lose another 20 or 30%?

Its obviously a very tough decision to make, but Warren Buffett has invested, over the past 3 weeks or so, billions of dollars into at least 3 companies (GE, Goldman Sachs and Constellation Energy). He has an awfully good track record of investing so it may be a good idea to follow his lead, but at the same time, can you risk the market going into a further downturn?

This fear can change peoples points of view on money. This could scare them into realizing that they don't have enough money in emergency savings (if they even have an emergency fund). They can begin to realize that they shouldn't be in this position and they do not want to ever let it happen again, and they change there spending habits, so that instead of not saving any money each pay period, they now want to save 10%, well, where is that 10% coming from...they have to cut costs somewhere. My point is that people may stop spending or may cut back on spending their discretionary money, so there may be a lot more businesses that could be effected but it may not show until they release numbers with the lower cash flows taken into consideration.

It may very well be a time to buy, but be cautious because as you've seen with the market it can in any direction very quickly.

Fortune.com

2008-07-17T08:51:00.001-04:00

How safe is your money, and how to protect it

Yes massive bank failures are rare, but not unheard of. Here's what you need to know to shelter your money if it happens to you.

NEW YORK (CNNMoney.com) -- The chances are your bank is not going to shut down overnight.

But if you're at all worried about this in the wake of IndyMac's collapse, there are easy ways to eliminate your exposure today.

"This is the portion of your portfolio that's supposed to help you sleep at night not keep you awake," said Greg McBride, Senior financial analyst at Bankrate.com.

The FDIC, short for the Federal Deposit Insurance Corporation, fully insures individual accounts up to $100,000 per deposit per bank, and $250,000 for most retirement accounts.

The FDIC does not cover money invested in stocks, bonds, mutual funds, life-insurance policies, annuities or municipal securities.

"The bottom line is, if you are putting money into the bank you are purposely settling for a lower return on a no-risk investment," McBride said.

Therefore, "it doesn't make any sense to then expose yourself to the risk of a bank failure."
If your money is is in an account with less than $100,000 at a bank insured by the FDIC, you have nothing to worry about.

If you do have funds that aren't covered by the FDIC, then you have some exposure in the event of a bank failure that can - and should - easily be remedied.

How to protect yourself

Although about 95% of the $19 billion in deposits at IndyMac were insured, uninsured deposits account for 37% of the $7 trillion on deposit in the U.S. as of March 31, according to LaJuan Williams-Dickerson, a spokeswoman for the FDIC.

To calculate your personal exposure, Williams-Dickerson advises consumers to go to http://www.fdic.gov and click on the Electronic Deposit Insurance Estimator, also known as EDIE.

"Regardless of your bank's health you should look to protect all of your deposits," said McBride. You can do this by moving excess funds to another bank, or by opening separately titled accounts at the same bank.

Spread your funds out by opening accounts with different names, like a joint account with your spouse or named as trusts for your children. But beware: Saving one account under John Doe and another under John J. Doe won't cut it, McBride warned.

Another way to protect your money is to hold accounts under $100,000 at a few separate banks - not just different branches of the same bank.

If you're still worried about whether your money is protected, "talk to the bank about strategies to get additional FDIC insurance," advised James Chessen, chief economist of the American Bankers Association. The bank can help you reorganize your funds to get full coverage.

The odds are in your favor

"It's important to note that bank failures are rare and they are going to be rare in the future," Chessen said. "Ninety-nine percent of the banks out there are well capitalized."

The FDIC disclosed last month that it was closely watching 90 financial institutions on its "problem bank list." While that number is higher than it has been in the last few years, it is still relatively low, Williams-Dickerson said. In fact, there were 2,165 on the list in 1987. The FDIC does not publish the names of the trouble banks for fear of spurring a bank run.

To find out how safe your bank is, you can check out the Safe & Sound rating on Bankrate.com, which provides a sense of the relative financial strength and stability of commercial banks, savings institutions and credit unions.An earlier version of this story reported that U.S. bank deposits totaled $13.4 trillion. The actual number of total U.S. deposits is $7.0 trillion.

Student Loans

2008-07-16T10:15:00.002-04:00

Student Loans can be a real hinderance on some people before, during and after college. They are passing new laws to make loans more affordable and hopefully easier for people to live their lives after college with them. Here is some information and articles on them.

From Yahoo Finance
Student Loans: Repayment Doesn't Have to Be Painful
by Anya Kamenetz

On July 1, Generation Debt got some good news: New rules came into effect making college and graduate school loan repayment much more affordable for a wide range of people.
The idea behind the rules, applauded by student advocates, is to make our higher education system more equitable by helping those who graduate, play by the rules, and meet their obligations to repay the cost of their education.Helping more qualified young people afford college is a public investment that should see a real return in terms of higher earnings -- and thus more taxes paid -- by members of this generation. And in the case of new programs that target teachers and other public servants, these young people will be filling vital roles in our economy. At a time when the cost of education, food, gas, and everything else continues to rise, it's important that students, families, and recent grads understand these programs and how to take advantage of them.

An Interest in Low Interest
The College Cost Reduction and Access Act (signed into law on September 27, 2007) lowered the cost of borrowing on all student loans. Starting on July 1, the fixed interest rate for new Stafford federal loans dropped from 6.8 percent to 6.0 percent. As a result, the average four-year college student starting school this fall will save a total of approximately $2,500 in interest. Under current law, rates will step down each year until they reach 3.4 percent.

If you have older Stafford loans with a variable rate (those taken out before July 1, 2006), the rate just dropped three percentage points, to 4.21 percent from 7.22%. That makes now a perfect time to consolidate and lock in that great rate. A consolidation loan means combining your student loans from each year into one sum with one monthly payment. If you graduated in May of this year, you can consolidate now and lock in an even better rate of just 3.6 percent. Do it this summer, because both the 4.2 percent and the 3.6 percent rate could go up in July 2009.
With the current turmoil in the credit markets, there aren't as many private lenders offering consolidation loans these days, much less the special perks and incentives that were popular in years past. The good news is that you can always get a consolidation loan directly from the government, through www.loanconsolidation.ed.gov. Calling All Public Service Graduates
If you work in a qualified public service job for at least 10 years -- and make your debt payments during that time -- the brand-new Public Service Loan Forgiveness program will forgive your remaining debt at the end of those 10 years.

If you are a current student and agree to teach for at least four years, you could be eligible for an additional program, the TEACH grant. This is a grant -- not a loan, so it doesn't have to be repaid -- of up to $4,000 a year.

Who qualifies? There are a lot of fields that qualify as public service under Public Service Loan Forgiveness. You can enroll in this expanded benefit program whether you're now a student or currently employed in an eligible field. This includes any job of 30 hours a week or more with a federal, state, local, or tribal government; the military; public schools and colleges; any post with a 501(c)(3) nonpartisan nonprofit; police officers and other public-safety workers; EMTs; childcare workers; librarians; those who work with the elderly and disabled; public health educators; doctors and nurses in a community clinic; and AmeriCorps workers.

On the other hand, only current college students are eligible for the TEACH grant program. Anyone, student or graduate, who works in public service and has student loans with payments that are scheduled to last longer than October 2017 can sign up for the Public Service Loan

Forgiveness Program.
What's the catch? Of course, these programs are designed for people who already have a strong interest in one of the above fields. The commitment is a long one: 10 years of your career for Public Service Loan Forgiveness and four years for the TEACH grant.

Also, your student loans must be with the federal direct loan program, not with a private lender such as Sallie Mae. In order to take advantage of the program, you can consolidate your loans into the Direct Loan program here.

Finally, there is a risk with any program like this that the laws or rules might change during the time you're paying back the loans. In the short term, the exact qualifications might change between now and November 1, when the Department of Education finalizes its rules. Help for

Those Drowning in Debt
Look out for another improvement to the loan program, coming next July 1. If you have high student loan debt relative to your income, a program called Income Based Repayment can help. It will allow you to repay your loans based on a sliding scale. So for a graduate earning $35,000 with $40,000 in loans, monthly payments would be capped at $242.50, compared to $460.32 under standard repayment. All remaining balances are forgiven after 25 years.

Here are links to some more information:
Go here and here for all the details on these new programs.

Havoc

2008-07-14T15:48:00.002-04:00

There is a lot going on in the market the past few months. A lot of people who have money invested in the market are seeing the value of the accounts dropping dramatically, 10-20%. Thats a real tough pill to swallow and I am sure plenty of people are getting very scared and pulling out of the market. That could be a good idea, so that you will not lose any more money, and if you switch to risk free money market maybe you can continue to make 3%.

If you do though sell out there are a few things you could be missing out on; Dollar Cost Averaging (The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high), in this case you can either keep investing money as the market goes down, or you can stop adding new funds, but have your dividends reinvest in the stock of the company that may be going down or at least not going up!

That can really make a big difference years down the line, if you don't have to live off of your dividends (some older, retired people may bank on those dividends coming quarterly to buy groceries or pay insurance bills) its a great way to keep investing. I mean think about it, say you own 25 shares of BAC, and every quarter you get paid out $16 in dividends, what are you going to do when a $16 check comes to your door? If it were me, I'd throw it in my checking account and spend it as I would any other money in the account, but really...what is $16 going to get you? Well, if you switch your investment to reinvest your dividends, that $16 will buy more shares of BAC every time it is paid. SO, for those of you that would have spent it, you would most likely have nothing to show for it, but those who had the dividends reinvested, you could have many more shares just a few years down the line, practically for free (all depends on how you look at it).

So, you can either bail out of the market and switch to risk free, or you can do as a Warren Buffett, Bruce Berkowitz and many other value investors would do, and buy when its low and sit on it for a long time as it comes back up.

Ben Stein - He's got some good input

2008-07-08T10:22:00.002-04:00

This is an article from Yahoo! Finance, Ben Stein has some good, conservative ideas.

Don't Panic - Buy Index Funds and Real Estate

by Ben Stein

Now for some reassuring words. Of all of the columnists writing in this space, I suspect I am the oldest. This means I have seen the most economic fluctuations. This also means I am less terrified about them than younger heads.

Let me put this differently. I read recently in The Wall Street Journal that the stock market was at the time of that writing almost in " Bear Market Territory," which is to say, down roughly 20% or more from its high. This, said the author of the piece, shows that we are about to have very bad economic times. The author helpfully noted that the market has been down into "Bear Market Territory " some nine times since the mid-1960's. Without doubt, this author was trying to do his best, and to serve his readers.But here's a relevant addendum: yes, the market may have fallen 20% or more nine times since then. But there have only been five recessions since then.That is to say, the stock market predicts 10 out of five recessions. Not such a great record.
The truth is that while the economy is clearly slowing down we are not yet in a recession. There has so far not even been one quarter of negative economic growth, nor even a break-even quarter. We may well have one soon, but two in a row are required for the classic definition of a recession. And as I keep saying, if anyone can call anything a recession, the whole subject loses all intellectual or factual meaning. This too could happen-a real recession-but it has not happened yet.

There are still reasons for hope. Exports are phenomenally strong. Minerals and agriculture are strong. Medical is strong. The government sector is large and robust. Sadly, military must remain strong indefinitely.

The government is running an immense deficit, and this is stimulative. True, finance is in tatters, as is transportation, refining, and home building. These are large sectors. They may fall so much that they bring the economy into recession.

But think about this: somewhere out in the big wide world, there is voracious demand for minerals and commodities. That (along with speculation) explains their major price increases. It would be extremely rare for there to be a spectacular worldwide demand for commodities along with a serious fall in demand for other factors in an economy. That is, it would be rare for demand to be both rising and falling at the same time. It could happen, but it would be rare.
However, let's assume we do have a recession. I hope we don't, but we might. What do we do about it? What can we do about it? Just keep plugging along. Just keep buying broad indexes. Just keep a good chunk of liquid assets. None of us can control the economy. Thus, we just have to keep swimming in the roiled waters.As we cling to our life jackets, please remember this: no recession lasts forever. I can well recall so many times in the past when every single headline in The Wall Street Journal was about some record growth of sales or profits. Then time passes and every single headline is about horrible news. Then time passes and there is mixed news, and then it's all good news again.

Economies go through cycles. But the long-term trend is up, and people who buy broad indexes when the news is bad, if they live long enough, live to be happy about it.Besides, what alternative do you have? If you have money to invest, yes, keep some in cash. But cash loses its value in inflationary times. In fact, holding cash over long periods - beyond what you need for peace of mind - is a surefire way to make yourself unhappy. You will lose money on it over long periods as inflation nibbles at it.

The best bet usually is what has gone down the most, and that, for now, is real estate. I got a letter from a thoughtful reader saying he was going to wait until real estate had reached its all time low before he bought. But how will he know? And how rarely does he find a home he truly loves? Even when homebuyers buy at the top of the cycle, if they love their homes, and if they can hold on, they always end up delighted.Yes, there will be news saying housing will not recover THIS TIME. But in fact, except in really depressed areas, housing recovers EVERY TIME and goes on to pass its prior record. The real story of real estate, as my brilliant money manager friend, Phil DeMuth, says, is of failing to buy, not of staying away successfully.

The plain fact is that you don't know when real estate will be at bottom until it's too late. If you see a home you love, buy it now if you plan to be in it a long time. And know that the headline writers want to whip you up and make you crazy about the economy. They sell fear. Stay calm and stay well to do.

Horrible Quarter

2008-06-30T23:08:00.002-04:00

The quarter has come to an end and as we have watched along the way it had finished horribly. The major benchmarks for the market have been heading south and have not looked back yet. As much as this may be depressing for those of us in the market currently as our investments have likely been shrinking on a daily basis, this is a great time to get into the market (also a good time to add more money in for those of us in the market currently; dollar cost average down).

There are a lot of values out there, its tough and not smart to go out there and start buying stocks without studying and learning a lot about the stock and the industry, but you can get into some index funds, or solid mutual funds at a premium right now. I am not going to tell you that the market is not going to make a turn around tomorrow and we are all going to make a killing, but the market is down, its lower than it has been in a while, and its a good time to get in and maybe be able to get an extra few shares of that index fund for the same about of money you wanted to put in last year.

Again, you need to be very aware of what you are investing in, if not thats just silly, but for those of us who don't have the knowledge or time to study investments, just take a little time out of your day and read up on some index funds and mutual funds. Look for mutual funds that are investing how you want (aggressive, conservative, income...), make sure they have a great track record as a manager and then its up to you to take a little risk.

Sometimes it tough to get money together to invest, take a look at hustlermoneyblog, there are some good ways to save a few bucks to plow it into the market if you want. Ive been a long time reader and have never been disappointed.

Ill continue on with investing education over the next few weeks....

10 Rules from marketwatch

2008-06-13T11:13:00.004-04:00

Ten investing rules that will help you weather this stormy market

Wednesday June 11, 12:24 pm ET By Jonathan Burton

Ten rules to remember about investing in the stock market

SAN FRANCISCO (MarketWatch) -- Rules may be meant to be broken, but with investing ignoring the rules can break you.

Especially now. Investment rules are tailor-made for tough times, allowing you to stick to a plan just when you need it most. Indeed, a rulebook is important in any market climate, but it tends to get tossed when stocks are soaring. That's why sage investors warn people not to confuse a bull market with brains.

So with the economy looking more and more like the oil-shocked, stagflation-strapped 1970s, and stocks recoiling from rising unemployment, record energy prices and falling home values, it makes sense to dust off the old playbook and see how it applies today.

One of the most relevant lists of rules, from a legendary Wall Street veteran, is also among the least known. Beginning in the late 1950s, Bob Farrell pioneered technical analysis, which rates a stock not only on a company's financial strength or business line but also on the strong patterns and line charts reflected in the shares' trading history. Farrell also broke new ground using investor sentiment figures to better understand how markets and individual stocks might move.
Over several decades at brokerage giant Merrill Lynch & Co., Farrell had a front-row seat to the go-go markets of the late 1960s, mid-1980s and late 1990s, the brutal bear market of 1973-74, and October 1987's crash. Out of those and other experiences came Farrell's 10 "Market Rules to Remember."

These days, Farrell lives in Florida, and efforts to contact him were unsuccessful. Still, the following rules he advocated resonate during volatile markets such as this:

1. Markets tend to return to the mean over time

By "return to the mean," Farrell means that when stocks go too far in one direction, they come back. If that sounds elementary, then remember that both euphoric and pessimistic markets can cloud people's heads.
"It's so easy to get caught up in the heat of the moment and not have perspective," says Bob Doll, global chief investment officer for equities at money manager BlackRock Inc. "Those that have a plan and stick to it tend to be more successful."

2. Excesses in one direction will lead to an opposite excess in the other direction

Think of the market as a constant dieter who struggles to stay within a desired weight range but can't always hit the mark.

"In the 1990s when we were advancing by 20% per year, we were heading for disappointment," says Sam Stovall, chief investment strategist at Standard & Poor's Inc. "Sooner or later, you pay it back."

3. There are no new eras -- excesses are never permanent

This harkens to the first two rules. Many investors try to find the latest hot sector, and soon a fever builds that "this time it's different." Of course, it never really is. When that sector cools, individual shareholders are usually among the last to know and are forced to sell at lower prices.

"It's so hard to switch and time the changes from one sector to another," says John Buckingham, editor of The Prudent Speculator newsletter. "Find a strategy that you believe in and stay put."

4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

This is Farrell's way of saying that a popular sector can stay hot for a long while, but will fall hard when a correction comes. Chinese stocks not long ago were market darlings posting parabolic gains, but investors who came late to this party have been sorry.

5. The public buys the most at the top and the least at the bottom

Sure, and if they didn't, contrarian-minded investors would have nothing to crow about. Accordingly, many market technicians use sentiment indicators to gauge investor pessimism or optimism, then recommend that investors head in the opposite direction.

Some closely watched indicators have been mixed lately. At Investors Intelligence, an investment service that measures the mood of more than 100 investment newsletter writers, bullish sentiment rose last week to 44.8% from 37.9% the week before. Bearish sentiment slipped to 31.1% from 32.2%. Meanwhile, the American Association of Individual Investors survey was less positive, with bearish sentiment at 45.8% and bulls at 31.4%

6. Fear and greed are stronger than long-term resolve

Investors can be their own worst enemy, particularly when emotions take hold.

Stock market gains "make us exuberant; they enhance well-being and promote optimism," says Meir Statman, a finance professor at Santa Clara University in California who studies investor behavior. "Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks."

After grim trading days like Friday's nearly 400-point tumble, coming after months of downward pressure on stocks, it's easy to think you're the patsy at this card table. To counter those insecure feelings, practice self-control and keep long-range portfolio goals in perspective. That will help you to be proactive instead of reactive.

"It's critical for investors to understand how they're cut," says the Prudent Speculator's Buckingham. "If you can't handle a 15% or 20% downturn, you need to rethink how you invest."

7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

Markets and individual sectors can move in powerful waves that take all boats up or down in their wake. There's strength in numbers, and such broad momentum is hard to stop, Farrell observes. In these conditions you either lead, follow or get out of the way.

When momentum channels into a small number of stocks, it means that many worthy companies are being overlooked and investors essentially are crowding one side of the boat. That's what happened with the "Nifty 50" stocks of the early 1970s, when much of the U.S. market's gains came from the 50 biggest companies on the New York Stock Exchange. As their price-to-earnings ratios climbed to unsustainable levels, these "one-decision" stocks eventually sunk.

8. Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrendIs this a bear market? That depends on where you draw the starting line. With Friday's close, the S&P 500 Index (CDNX:SPX.V - News) is down 13.1% since its October 9 peak. Not the 20%-plus decline that typically marks a bear, but a vicious encounter

nonetheless.

Where are we now? A chart of the S&P 500 shows a couple of sharp downs and subsequent rebounds in the past six months, with a tighter trading range since April. It remains to be seen if we can avoid a tortured period of the kind seen from 2000 to 2002, when sporadic rallies couldn't snap a slow, protracted decline.

9. When all the experts and forecasts agree -- something else is going to happen

As Stovall, the S&P investment strategist, puts it: "If everybody's optimistic, who is left to buy? If everybody's

pessimistic, who's left to sell?"

Going against the herd as Farrell repeatedly suggests can be very profitable, especially for patient buyers who raise cash from frothy markets and reinvest it when sentiment is darkest.

10. Bull markets are more fun than bear markets

No kidding.

Make Extra Money?

2008-06-10T15:11:00.002-04:00

As we are graduating college, enjoying summer break, awaiting a job, gainfully employed; whichever of those fits you best, money is of the essence. We all have bills, and as we get older the more bills we are accountable for. So obviously any type of free money or easy money is great to help subsidize out income. Whether you are fighting to pay the bills, or you can pay your bills but you are trying to get some money into the stock market to invest for tomorrow or to have that help subsidize your income, free money deals are great. I will begin to post any free money deal I find around the Internet and if you find any, e-mail me, or post to me and let me put it on my site so the other people who read this can get some free cash too. Help out your fellow man who's trying to stay afloat.

Current ones that I know of are:
ING Direct-Open an account with $250 you get a free $25; no fees, no minimums, its a great account and you can get free money to get the ball rolling.

Virtual Bank - Open an account with $100, they give you $20

OptionsXpress- Is giving $100 if you open an account wtih $500 and make one trade.

Let me know if you want info on any of these or if you know of any free money deals we can get.

SABOTAGE?!?!

2008-06-05T10:37:00.002-04:00

Icahn Accuses Yahoo! of Sabotage

Pia Sarkar

06/04/08 - 04:51 PM EDT

SAN FRANCISCO - Financier Carl Icahn is calling for Yahoo!YHOO to remove a provision for generous severance packages to company employees, which he deemed as a major deterrent for a MicrosoftYHOO takeover.

The billionaire investor shot off a letter to Yahoo! on Wednesday, in which he borrowed heavily from a shareholder lawsuit claiming that the tech giant had purposely tried to sabotage a merger deal with Microsoft by introducing the severance packages.

"The board can rescind the 'severance plan' that is the largest impediment to a Microsoft deal," Icahn wrote. "You currently can do this because Microsoft withdrew their bid 30 days ago. It is time for you to stop misleading your shareholders with respect to Microsoft."

Icahn added that by removing the severance plan, Yahoo! could free up about $2.4 billion.
"It is also time to admit to your shareholders that the severance plan was not done for your employees (who you conveniently neglected to inform that Microsoft had earmarked $1.5 billion in retention incentives for), but rather was done simply as an entrenchment device and to impede a Microsoft bid," he wrote.

A Yahoo! spokesperson could not immediately be reached for comment.

On Jan. 31, Microsoft made an unsolicited $44.6 billion offer for Yahoo!, and later bumped the amount to $47.5 billion but still could not reach an agreement.

Since then, Microsoft has said it is no longer interested in a merger but is currently in talks with Yahoo! to come up with an alternative deal.

Icahn, however, wants the merger and has come up with a dissident slate of candidates to oust Yahoo!'s board and bring Microsoft back to the table.

"I and many of your shareholders believe that the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft," he wrote.

Icahn is also pushing to remove Jerry Yang as Yahoo!'s CEO, adding that he and the rest of the board have made it extremely difficult for Microsoft to renew negotiations.

In his typical colorful language, Icahn wrote: "Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies. I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo Board."

Yahoo! has defended its position all along, emphasizing that Yang and the board have been "crystal clear that it would consider any proposal by Microsoft that was in the best interests of its shareholders."

Who shareholders ultimately believe will be determined on Aug 1 at Yahoo!'s annual meeting in San Jose, where they will vote on the company's board members.

Shares of Yahoo! were down by less than 1%, or 3 cents, to $26.82 in after-hours trading.

Five Tips for 20-Somethings to Save for Retirement

2008-06-04T13:51:00.002-04:00

From thestreet.com

Legend has it that Albert Einstein once called compounding interest the most powerful force in the universe. Unfortunately, that concept has escaped many of those who would benefit most from it: the 20-somethings who have entered the work force but aren't saving up for retirement.
While it can be hard to justify saving for something that will occur decades into the future, financial advisors say its importance can't be understated.

One reason is that Social Security is far from guaranteed: Without reform, the program will not be able to pay out benefits at current levels, starting in 2041. People who are 22 years old now would typically still have at least 10 years to go until retirement at that point.

Another reason is that compounding interest makes saving early far more profitable than starting late.

As an example, Vincent Barbera, director of financial planning at TGS Financial Advisors, offers two different scenarios: Person X deposits $2,000 into an IRA each year from the ages of 22 to 31, then stops, while Person Y deposits $2,000 each year from the ages of 31 to 65. Both have the same interest rate and allow interest to accrue. Person X will earn nearly $50,000 more than Person Y by age 65, even though the latter contributed $50,000 more to the account over 25 additional years.

With that in mind, here are five helpful tips for 20-somethings who want to start preparing for the future:

• Put "surprise" cash into an IRA. Instead of spending that $100 birthday present or $600 rebate check, pretend you never received the money and stick it into your retirement savings account.

• If your company offers a 401K plan, enroll -- even if you put the minimum amount that will be matched. If not, start contributing to your own individual account.
Joseph Birkofer, a financial planner at Legacy Asset Management in Houston, suggests putting at least 7% of your gross pay into such an account to match your contribution to Social Security and Medicare.

• Use automatic deposits from your check or bank into your IRA. That way, you don't have to put in the effort of manually depositing funds and won't be tempted to use them toward another purchase.

• Put yourself in their shoes. Find it hard to justify saving money for something so far off in the future? Imagine yourself as a retiree and how it will affect your family and lifestyle. Birkofer suggests thinking about how your grandma, great-uncle or local retirees pay for lunch.
"There's only three places to get money besides stealing it or winning the lottery: the government, whatever you did yourself or from your family and your kids," he says.
If you don't want to rely on Social Security's shaky outlook or the unattractive option of burdening your family, being financially independent through your golden years can only come from the initiatives you take now.

• Don't get burned. When choosing a fund, make sure to balance risk.
Some want to chase higher returns with riskier funds, but starting out slow might make more sense -- especially for those who are hesitant to start saving in the first place.
Birkofer suggests young investors build up a core of $15,000 to $20,000 in a balanced retirement fund, then start exploring funds that are weighted in international or emerging-market investments.
"We lost almost a generation of investors because of the dot-com bomb and it's taken them years to come back to the market," he notes.

Icahn

2008-06-04T09:58:00.000-04:00

Carl Icahn wants Yahoo CEO fired

By Yi-Wyn Yen

Another day, another angry Yahoo shareholder.

Yahoo investor Carl Icahn told the Wall Street Journal that he wants wants to get rid of Jerry Yang as Yahoo’s CEO for botching the Microsoft (MSFT) bid.

Icahn is putting more pressure on Yahoo (YHOO) in an effort to force a union with Microsoft. “It’s no longer a mystery to me why Microsoft’s offer isn’t around,” Icahn told the Journal. “How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone.”

The corporate raider’s scare tactics to bring Microsoft and Yahoo together haven’t worked so far. Microsoft CEO Steve Ballmer withdrew a $33-per-share bid one month ago after Yang indicated he wanted a higher offer. Shortly after, Icahn bought up a minor stake in Yahoo and announced plans to launch a proxy fight to oust Yahoo’s board in hopes of convincing Ballmer to come back. But Ballmer has said he has moved on. So far, has not revealed any plans to make another offer.

Icahn told the Journal that he doesn’t believe Ballmer will return because of Yang. Court documents in a Yahoo shareholder lawsuit that were unsealed Monday accused Yang of trying to sabotage the Microsoft deal.

The complaint made by two Michigan pension funds said that Yang convinced the board to adopt a poison pill that would make a Microsoft takeover extremely difficult. Though Microsoft said it was willing to set aside $1.5 billion to retain Yahoo employees, Yang adopted a plan that would allow all employees to leave Yahoo and receive a generous severance package if the company was bought.

“I’m very cynical about many of the boards and CEO’s in this country, but even I am amazed at the lengths that Jerry Yang and the board went to entrench themselves in this situation,” Mr. Icahn told the Journal.

The Journal also reported that Yahoo’s board is scheduled to meet Tuesday.

Oil

2008-06-04T09:44:00.000-04:00

Oil Falls Amid Indications High Prices Will Cut Fuel Demand

By Mark Shenk

June 4 (Bloomberg) -- Crude oil fell amid indications that U.S. and Asian fuel consumption will drop because of increasing prices.

UAL Corp.'s United Airlines, the world's second-largest carrier, will reduce its fleet by about 100 planes to counter record jet-fuel costs. India, Malaysia, Indonesia, Taiwan, Sri Lanka and Thailand have cut subsidies and raised fuel costs, which is likely to curb fuel demand.

``You are starting to see consumers respond to these high prices,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``We are getting growing evidence that demand is taking a hit. I think we will test $120 before the week is over.''

Crude oil for July delivery fell 68 cents, or 0.6 percent, to $123.63 a barrel at 9:14 a.m. on the New York Mercantile Exchange, after earlier dropping to $123.15, the lowest since May 15. Futures reached a record $135.09 a barrel on May 22. Prices are up 87 percent from a year ago.
Brent crude oil for July settlement declined 80 cents, or 0.6 percent, to $123.78 a barrel on London's ICE Futures Europe exchange. The contract touched $123.03, the lowest since May 16. Prices reached a record $135.14 on May 22.

India's government raised retail prices of gasoline, diesel and cooking gas, Oil Minister Murli Deora told reporters today in New Delhi. The government previously increased fuel prices in February, the first time since June 2006. Cooking-gas prices had been capped since April 2005.
U.S. gasoline use fell 4.7 percent last week from a year earlier as motorists cut consumption, MasterCard Inc. said yesterday.

The Energy Department is expected to report that U.S. supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, rose last week, according to the median of 14 estimates in a Bloomberg News survey.

The department is scheduled to release its weekly report on inventories at 10:35 a.m. in Washington.

Free $25

2008-05-28T09:26:00.004-04:00

E-Trade Bank is offering a $25 bonus when you open up a complete savings account by the end of May, so you only have a few days left. On the site is says that they will credit your account with the $25 within 30 days after you open the account. No fees, $1 minimum.

Its currently paying 3.15%, which is better than your local bank, and competitive if not better than the other online banks.

Here is the link to the $25

Yahoo Finance - Housing

2008-05-27T09:56:00.000-04:00

US home prices drop at sharpest rate in 20 years

By J.W. Elphinstone, AP Business Writer

Widely watched housing index says home prices fell at steepest rate in 20 years in 1st quarter

NEW YORK (AP) -- U.S. home prices dropped at the sharpest rate in two decades during the first quarter, a closely watched index showed Tuesday, a somber indication that the housing slump continues to deepen.

Standard & Poor's/Case-Shiller said its national home price index fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988. The quarterly index covers all nine U.S. Census divisions.

The narrower indices also set record declines. The 20-city index tumbled 14.4 percent during the quarter, the lowest since that index was started in 2001. The 10-city index plunged 15.3 percent, a record in its 20-year history.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.
Nineteen of the 20 metro areas reported annual declines, with 15 of them posting record lows. Six metro areas lost more than 20 percent.

Las Vegas had the worst quarterly performance, falling 25.9 percent, followed by Miami and Phoenix. Only Charlotte, N.C., stayed above water, gaining less than 1 percent over the previous year.

Retirement Planning

2008-05-23T10:14:00.003-04:00

Here's a quick and dirty way to plan for retirement....

At the beginning of the year, figure out how much money you want to put away for retirement, say $9,000 a year. Look into your companies 401k plan, and if they have a match, take advantage of it, and max out your "free money" from them. For example, if you company matches the first 5% you put into the 401k at 100%, then that is 100% risk free gains. So, ideally what you would want to do it max out your free money from your employer, for our example, we'll say your employer matches the first 3% of what you put into your 401k. Now lets assume your salary is $50,000/year, so then you ll put $1500 away into your 401k plan through your employer, as you put that away, they hand you (into the 401k plan) another $1500...you can not beat that risk free return in the open market!

So now (not including the match) you are $7500 away from your goal of putting $9000 away for retirement in the current year. 401k's can be limited to that amount of funds the offer and the investment you can invest in through them, but by putting money into them you get the match and you reduce your tax liability by the amount you put away. 401k's are also taxable when you take the money out down the line, SO, next you would want to max out your Roth IRA.

A Roth IRA is a retirement account that the money can grow tax free, and you can take out your contributions anytime you want without any tax implications. You can invest in any type of security in a Roth IRA (stocks, bonds, mutual funds, etc...) so that is a huge advantage from the limited funds you'd be able to invest in through the 401k. The limit this year if $5000 for those accounts, so you will want to put $5000 into the Roth IRA throughout the year...that leaves you with $2500 to still put away during the year to reach your goal.

Go back to your 401k and up your contribution's there to cover the other $2500 that you need, and that way you have put away your goal of $9000 towards retirement and it is all growing tax free! The way I described takes advantage of the benefits your company offers, and the benefits that the government is giving you with the Roth IRA's.

Any questions on anything, let me know and I can clarify anything.

GREED IS GOOD

2008-05-22T11:21:00.000-04:00

KISS

2008-05-20T21:57:00.005-04:00

Keep It Simple Stupid

This is a phrase that can relate to many aspects of life and business, but for my purposes, and the purposes of reaching out to young adults fresh out of school, in school, or people of any age, I am going to talk about banking.

Its a 5 Step Process....

1)Primary Checking - Everything is deposited into this account, then from this account you determine where it is going to go to...I suggest go to your local bank and get a totally free checking account, no minimums, no fees, no interest earning (the amount of interest earned on this account will be so minimal it wont matter anyways). But this is your first layer of banking, you'll want a brick and mortar bank that you can go to the branches and deposit anything from pay checks, to loose change. Anyways, in summation, any money you earn goes right into this account.

2) ST Savings - This can be at the brick and mortar bank too if you want, this is more for peace of mind, when you do your monthly or weekly budget you should be putting away the money you need into this account. So pretty much, if you know that your cell phone bill will be $80, each week you get paid, transfer $20 into this account so that at the end of the month when its due that money is already there for you. Also, another example...if your car payment is $200 a month, you know every week to put $50 into that savings account so that at the end of the month you have the money put to the side for the payment.

3) LT Savings - Open this account at an online bank because they pay much better interest rates, and the goal would be to get the dollar value in this account high. Once you know your fixed expenses, and you know how much you want to spend, you then will transfer the rest (I prefer to budget for savings, so that its not "whatever is left over", savings should be a fixed expenses! Anyways, this is money that you want to save for big ticket items, or just to put away for a long period of time and you do not plan on spending it(new car, 3-6 month buffer for a worst case scenario, new TV). I recommend using ING Direct, I know that their are other ones out there, but I like ING because you can set up as many sub accounts as you would like and have it all under one log in number. You could have an account for each big ticket item that you want, or each event you are saving for, this way the money is already earmarked for something.

4) Brokerage Account - This is for money that you wont need for any of the circumstances shown above. Again, I prefer to budget for this, so I would want you to work this into your budget of how much money you want to go into this account each month. But all in all this account if for money that you wont be needing. Here you can go ahead and purchase stocks (if your young, you should be purchasing stocks), index funds, ETF's, or mutual funds.

5) IRA - This should be the final stage of your financial situations. A retirement account...this also should be budgeted for, exactly how much money you want to put into here each month. Roth IRA's are probably the most popular to open for a young person, but an Individual IRA may be one you want to open too (posts regarding the IRA types to come later). This account is tax free, whatever dividends you earn from investing in here (its just like a brokerage account) are not taxable at the time. If you sell a stock and make a $5000 gain, it is not taxable in that year. Adversely, if you lose $5000 on an investment, you cant write it off as you normally capital losses. Again, I will post more details regarding the retirement accounts and the options you have soon, that will make more sense of those rules and the tax consequences behind IRAs.

If you keep it simple like above, and make sure all the money moves from 1 to 5, and not in any other direction (except 2 to 1, to pay off the large expenses you were putting money away for) you will be on the road to be financially fit. Too many bank accounts at different banks, can cause you to forget about them, and start accruing bank fees, one bank fee can wipe out a good amount of your interest earned for the year.

Oil races past $129 a barrel to record

2008-05-20T09:37:00.000-04:00

Oil prices surged to a new trading record above $129 a barrel Tuesday amid continuing concern about global supply.

U.S. light crude for June delivery reached $129.31 a barrel in electronic trading, surpassing the previous intraday mark of $127.82 hit Friday as it smashed through the $128 barrier in a matter of minutes. At 9:22 a.m. ET, the contract was up $1.95 at $129.

Nauman Barakat an energy trader at Macquarie Futures, the trading arm of Macquarie investment bank, said the surge was led by distillates, which jumped 10 cents a gallon in early morning trade.

Barakat said he'd seen no news that would have caused the jump, but noted how strong demand for distillates, which are used to make diesel fuel and heating oil, has been pushing up the price for those fuels in recent weeks.

Oil closed above $127 for the first time Monday. The rally came after Algerian Energy Minister Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, was quoted by a government newspaper as saying OPEC would not increase its output during the U.S. summer driving season.

Close to the record

OPEC's next meeting is scheduled for Sept. 9.

Concern about supply has recently become the primary driver of the market, replacing earlier worries about a weakening dollar, and not even Saudi Arabia's promise last week of an additional 300,000 barrels of crude a day could alleviate those new concerns.

Despite that promise from the world's leading oil producer and the U.S. move to temporarily stop filling government stockpiles, prices have shown no indication of stopping their record run.
Through Monday's close, the front-month contract has hit nine trading or closing records in 11 sessions.

In other price-supportive news ahead of the U.S. driving season, independent refiner Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by as much as 756,000 gallons per day. The shutdown occurred while the fluid catalytic cracking unit was being brought back online from a previous shutdown May 7.
The refinery in Artesia, N.M., is Holly's largest.

As oil prices reach new heights, so have gasoline and diesel costs.

"Average gasoline prices in the U.S. rose for an eighth straight week and for the fifteenth time this year, up 1.8% or 6.9 cents to a record $3.791 a gallon (3.8 liters)," noted Stephen Schork in his Schork Report. "Gasoline at the pump is averaging 28 1/2% above last year's pace.
"Meanwhile, average diesel prices are up by 43% or $1.134 a gallon. As of Monday prices rose 3.7% to a $4.497 per gallon average!"

Drivers in some parts of the U.S. are paying considerably more, however. Gas pump prices in parts of California have been stuck above $4 a gallon for weeks now.

Interesting Article from Fool.com

2008-05-04T12:14:00.000-04:00

Are You Leaving Millions on the Table?

http://www.fool.com/investing/value/2008/05/02/are-you-leaving-millions-on-the-table.aspx

Chuck Saletta
May 2, 2008

Investing in stocks is not for the faint of heart. Honestly.

Did you know, for example, that there's a respected tool called the Ulcer Index? It's a technical way of calculating an investor's risk. The very existence of an Ulcer Index should make it clear that investments rarely go in a straight, steady, upward line.

That has been crystal clear these past few months, with stocks vacillating between recession-fueled panic and bailout-supported euphoria. Checking your stocks in this environment may well be a recipe for an ulcer.

Of course, that also makes now the perfect time to refocus your investment strategy on its long-term potential.

Put time on your side
Where can you find significant long-term potential? In dividends. Though quite often maligned, ignored, and otherwise misunderstood, they really do make all the difference over time -- because the big benefit those dividends bring to the table is that they can be reinvested.

In his book The Future for Investors, Wharton Business School Professor Jeremy Siegel studied the entire history of the Standard & Poor's 500 index. Among his most important conclusions was this: "Dividends matter a lot. Reinvesting dividends is the critical factor giving the edge to most winning stocks in the long run."

Why? Because in essence, you take the cash thrown off by your investments and turn around and buy more shares with it. When you're just starting out, the $20 to $40 or so you might expect to receive each year on each $1,000 investment may not seem like much. Over time, though, all those little dribs and drabs add up to quite a tidy sum.

How tidy?
Say you sock away $5,000 every year for the next 40 years, and invest it in a collection of dividend-paying stocks that yield an average of 3%. Let's further suppose that this collection of stalwart companies combines to return 4% per year (on average) for the duration of your investment.

Should you stick those stocks in a tax-sheltered IRA and reinvest the dividends? Or put them in a regular account where you can keep and spend the dividends?

The choice over what to do with $150 may seem nearly meaningless in the first year or so, but as this chart shows, your account will grow quite a bit faster if you let those dividends compound on your behalf:

Year	Take as Cash	Reinvest	Difference
1	$5,200	$5,350	$150
5	$28,165	$30,766	$2,602
10	$62,432	$73,918	$11,486
15	$104,123	$134,440	$30,318
20	$154,846	$219,326	$64,480
25	$216,559	$338,382	$121,824
30	$291,642	$505,365	$213,724
35	$382,992	$739,567	$356,576
40	$494,133	$1,068,048	$573,915

Year-end balances. Assumes each investment is made at the beginning of each year.

Wouldn't you rather forgo spending the $150 up front and instead pocket an extra $574,000 at the end of the line?

Is that realistic?
It's quite an accomplishment for a company to both provide a significant dividend and grow that payment at a decent clip for decades on end. However, it has been done. The following handful of firms, for instance:

Carry at least a 3% yield.
Have paid higher dividends every year in each of the last 10 years.
Have increased their dividends over the past decade by a better-than-8% annualized rate.

Company	Recent Yield	10-Year Annualized Dividend Growth
Allstate (NYSE: ALL)	3.3%	11.7%
CBL & Associates (NYSE: CBL)	9%	8.9%
General Electric (NYSE: GE)	3.8%	12%
General Growth Properties (NYSE: GGP)	4.9%	12.4%
Kinder Morgan Energy Partners (NYSE: KMP)	6.6%	12.6%
Eli Lilly (NYSE: LLY)	3.6%	8.9%
Pfizer (NYSE: PFE)	6.4%	17.6%

Foolish conclusion
Yes, a decade is hardly 40 years, but as you look for new investments in this rocky market, remember that strong dividends and strong growth can combine to create an unbeatable long-term investment.

Our Motley Fool Income Investor service is beating the market by more than six percentage points by owning companies that behave like those described. What's more, the average pick now has a yield of more than 5%.

You can see our entire lineup of dividend stocks for free with a 30-day trial.

At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric and of Kinder Morgan Management, a related company to Kinder Morgan Energy Partners. At the time of publication, Chuck's wife owned shares of General Growth Properties. Eli Lilly and Pfizer are Income Investor recommendations. Pfizer is also an Inside Value selection. The Fool has a disclosure policy.

Rebate Checks

2008-04-28T23:45:00.001-04:00

This is from Kiplinger.com, but I am sure it is information that people want....

When to Expect Your Tax Rebate Check

IRS schedules payout dates for $107 billion in economic stimulus checks.

By Kevin McCormally

March 18, 2008

The last two digits of your Social Security number will determine when you’ll get your tax rebate check -- $600 for most taxpayers, $1,200 for couples who file joint returns, plus an extra $300 for every child under age 17 claimed as a dependent on 2007 returns.

The IRS announced yesterday that it hopes to pay the first 34 million rebates in the three weeks beginning May 2, wrapping up stimulus payments owed to most tax filers by early July. Taxpayers who haven’t filed their '07 returns in time to be queued up for the initial payout schedule will get their money later in the summer and into the fall.

Taxpayers who opt to have their 2007 tax refunds electronically deposited in their bank accounts will move to the front of the rebate line. The first payments will be made electronically May 2 to the accounts of refund taxpayers whose Social Security numbers end in 00 to 20.

The next batch, paid May 9, will go to those with Social Security numbers ending in 21 to 75. Then, on May 16, the final electronic payments will be made and, at the same time, the first paper checks will be issued . . . to taxpayers whose Social Security numbers end in 00 to 09. The rest of the checks will be issued according to the schedule outlined in the box below.

If you file a joint return, the timing of your economic stimulus check will be based on the Social Security number of the first spouse listed on the return.

Procrastinators may have to wait

Although you must file a 2007 tax return to get a rebate check (even if you otherwise don’t need to file), filing by the April 15 deadline does not guarantee that you’ll be get your check on the IRS-announced schedule. The agency said its timetable is for taxpayers whose 2007 returns are "filed and processed" by April 15. Since it takes a few days to process electronic returns and a week or more to handle paper forms -- especially those filed en masse as the deadline approaches -- waiting until the last minute to file is likely to delay your chance to put the rebate to work to stimulate the economy.

For the best odds of getting your money as soon as possible, file electronically at least a week before the April 15 deadline and have any refund direct deposited into your bank account. If you file on paper after April 1 and have a relatively low Social Security number, there’s a good chance your return will still be in the processing phase when the payouts begin. Rebates not paid as part of the initial rollout will be made on a weekly basis as the year progresses and 2007 returns are processed.

The IRS said Monday that no rebates will be issued for returns filed after October 15.

IRS timetable for rebate payments

Here’s the government’s plan for making the economic stimulus payments for taxpayers whose 2007 returns are filed and processed by April 15:

DIRECT DEPOSIT PAYMENTS
If the last two digits of your Social Security number are:	Your rebate should be sent to your bank account by:
00 - 20	May 2
21 - 75	May 9
76 - 99	May 16
PAPER CHECK
If the last two digits of your Social Security number are:	Your check should be in the mail by:
00 - 09	May 16
10 - 18	May 23
19 - 25	May 30
26 - 38	June 6
39 - 51	June 13
52 - 63	June 20
64 - 75	June 27
76 - 87	July 4
88 - 99	July 11

Calculate your tax rebate

IRS announced on March 17 that it has developed a calculator to help taxpayers estimate the size of their rebate. As noted above, most taxpayers who file as single, married filing separately or head of household will get $600, those who file a joint return will get $1,200, plus there’s a $300 bonus for each child under age 17 claimed as a dependent on your 2007 return. Some taxpayers will get less, however. The IRS calculator will estimate your rebate based on your 2007 return.

American Automaker going to make a turnaround?

2008-04-28T11:40:00.002-04:00

Fortune.com reports that billionaire investor Kirk Kerkorian is taking a larger stake in Ford....

Kerkorian to boost Ford stake to 5.6%

Ford (F) jumped after billionaire investor Kirk Kerkorian’s Tracinda Corp. said it would tender for 20 million Ford shares at $8.50 apiece, a 13% premium to Friday’s close. Kerkorian, who already owns 4.7% of Ford, has a long history of auto investments: He bought into Chrysler’s turnaround in the mid-1990s and later backed the automaker’s sale to Daimler (DAI) in a merger that was unwound last year after years of subpar results. His decision to boost his Ford stake to 5.6% reflects his confidence in the efforts of Ford chief Alan Mulally to put the automaker on firmer footing. Ford swung to a surprising $100 million first-quarter profit last week, as Mulally’s cost-cutting efforts began to bear fruit.

“Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Ford’s management was starting to achieve highly meaningful traction in its turnaround efforts,” Tracinda’s press release read. “Last week this was reinforced by Ford’s first quarter 2008 results, achieved despite the difficult U.S. economic environment. Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.”

Ford shares rose 10% in early trading Monday, jumping 75 cents to $8.25.

Buy N' Hold

2008-04-23T09:42:00.002-04:00

A value investor strategy would be to buy a stock with the idea of buying a part of the company and planning on holding on to it for a long time. If the stock market were to shut down for 5 years, you should still be happy holding onto your piece of a business. If you go into an investment with that strategy in mind, you are bound to be better off than trying to buy a stock and flip it for a quick profit, because it can very easily go the opposite way as you had hoped, they you are SOL...

I say this because I tried to make a virtual few bucks by following two stocks. In my head it got the point where I was sick of them going up and going down, and not breaking much more than what I have paid. So it got to the point where I would sell them...and then, two days later for one, and about a week later for the other they jumped in price dramatically....very disappointing. It makes you think, you really need to research your investments and make sure you know how you expect the company to do so that you can handle little bumps in the road when it goes down a few points.

What I would want people to take away from this post is, make sure you research all investments totally so you are confident in what they are going to do. And if you buy a good company, with good management and a good product, you should not have to worry about selling it for a long time, just hold on to it until you have made a satisfactory gain, to the point where if it continues to go up after you sell, you will still be happy with the gain you made.

Blockbuster/Circuit City Deal?

2008-04-16T11:30:00.005-04:00

Is the blockbuster/circuit city deal a good one? Here is some information that may help you determine weather it is or not, or my spark your interest too look further into the deal....

Circuity City is currently trading under 5 dollars, and their stock has tumbled since mid 2006....

Similarly so, Blockbusters (trading under $3) stock has been consistenetly falling since the begining of 2004. They have tried many different technigues to keep thr store competive over the past years, and they just can not seem to get back to where they were...

This is a piece from the Wall Street Journal dot com discussing the deal...check out the companies further...BBI and CC...

Blockbuster and Circuit City: More Explanation, Please
Posted by Heidi N. Moore
Sometimes, unsolicited offers don’t see the light of day for good reason. Should Blockbuster’s bold offer for big-box electronics retailer Circuit City have been that kind of deal?
Blockbuster is pushing an unsolicited $1 billion offer to take over Circuit City. The troubled video-rental chain actually made the offer in February, but Circuit City management prevented Blockbuster from studying its finances or operations. Now Blockbuster has gone public with the offer, and it has the backing of Carl Icahn, who also is backstopping a rights offering attached to the deal to prove that Blockbuster can get financing for the bid.
Circuit City has publicly opposed the deal, in part because it doubts Blockbuster’s ability to get financing (that statement was issued before the Icahn news). But why stop there? Blockbuster seems to have to prove a lot of things to get this deal done, like, ‘Why does it make sense?’
Overlapping products and services? Blockbuster will have to explain a bit more how its rental business is a good fit–rather than direct competition–for Circuit City’s video sales business. Blockbuster’s video- and DVD-rental business has some awkward gaps with Circuit City’s big-box electronics retail strategy. Circuit City’s prices for electronics and DVDs have fallen because it has larger economies of scale. Blockbuster management is betting that consumers will want to buy DVDs at the same place they rent them; that might be the case, but will consumers be as eager to rent for $5 a night what they can simply buy for $15 a few aisles away? This is especially of concern since Blockbuster has been raising rental prices as part of a recent overhaul of its businesses.
Doing a deal to solve operational problems? Not exactly. In fact, this deal would represent a move in an entirely different direction for Blockbuster. An argument could be made that both companies have serious strategic issues that they need to deal with before even considering a combination. In 2007, Circuity City reported a loss of $321.4 million, and Blockbuster a loss of $74.2 million. Blockbuster’s management has been digging itself out of the hole by slashing costs and raising prices. The company is forecasting first-quarter net income of $30 million–swinging from the year-earlier loss of $49 million. Still, the timing of Blockbuster’s strategy raises questions: Will rising prices play well amid a pullback of consumer spending in the recession some say the U.S. has fallen into? If the strategy ends up yoking together two companies with deeper problems, it will bring to mind the old joke among investment bankers about bad deals: “tying together two stones to see if they float.”
Ease of getting a deal done? Blockbuster’s market cap is $630 million, smaller than Circuit City’s $750 million. The size discrepancy was behind Circuit City’s sniffing about the financing. While Icahn’s offer to backstop a rights offering goes some way to answering that concern, it may not go far enough for Circuit City management and shareholders to open the books and take a chance that this deal will go through.
Is this about real estate? Blockbuster CEO Jim Keyes indicated that part of his rationale for the deal would be combining systems, back-office operations like accounting, better deals with vendors and–this should give investors pause — “rationalization of the companies’ real estate.” Hedge-fund maven Eddie Lampert took over Kmart and combined it with Sears partly in what Wall Street called “a real-estate play. But, “although shares of Sears rose tenfold since 2003, the prospects for that line of investing have become dim, and both Kmart and Sears are in need of more direct investment, according to some analysts. Lampert took his hands off the situation this year.
Are activist investors calling the shots, or is management? A deal this counterintuitive has a high bar to jump in terms of justification, and investors will want to know that management has a firm hand on the wheel. In this case, however, activist shareholders seem to be speaking louder than management. Icahn’s support on the Blockbuster side, aligns with the interests of Circuit City investor Mark Wattles, who has been lobbying for a sale of the company and an overhaul of management and the board. Icahn already succeeded in ousting former Blockbuster executive John Antioco.

An interesting article from Market Watch

2008-04-04T12:20:00.002-04:00

Calling brave investors

ANNANDALE, Va. (MarketWatch) -- When it comes to investing in individual stocks, contrarian analysis sounds perfectly reasonable -- in theory.
What could be more sensible than Nathan Rothschild's famous line that, "The time to buy is when the blood is running in the streets"? After all, if you wait to buy a stock until the news is all good, then its price will already have been bid way up and have relatively little further upside potential.
But actually behaving like a true contrarian is another thing entirely.

Just take airline stocks, for example. Please!
How many of you self-proclaimed contrarians stepped up to the plate and bought any of the stocks in this industry in recent days? The blood is surely running in the streets of that industry.
You protest? You argue that contrarian analysis, however reasonable it may be in theory, should not be construed as a license for stupidity?
I grant that you certainly appear to have a good argument. Two airlines have declared bankruptcy this week alone. Safety concerns have grounded large chunks of several other airlines' fleets, leading to countless cancellations and flight delays -- and, perhaps even worse from a longer-term point of view, causing many travelers to rethink whether they even want to get into a jet airplane in the first place.
And wouldn't a recession, which very well may be imminent, if we're not in one already, reduce demand for air travel even more? Finally, fuel prices, which are already sky high, don't appear to be headed much lower any time soon.
But contrarians don't disagree that airlines face profound challenges. The contrarian case for airlines stocks is instead based on the notion that their prospects, while bad, aren't nearly as bad as investors are making them out to be.
This, at least, appears to be the argument made earlier this week by George Putnam, editor of the Turnaround Letter, one of the genuine contrarians among the several investment newsletters I monitor. In the April issue of his newsletter, Putnam writes that "the airline stocks look awfully cheap to us right now."
Putnam uses this "it is bad, but not that bad" argument to respond to those who believe that a recession is a reason to avoid airline stocks, for example. "While it is true that travel expenditures are somewhat related to the overall economy, the major airlines are in much better shape this time around compared to past downturns," he writes.
"In the past economic cycles, airlines expanded rapidly during good times, buying new planes, adding routes and letting expenses creep up. Then when the downturn hit, they found themselves with too much debt and a lot of empty planes. Over the last few years, however, the airlines have behaved very differently. They have been disciplined and did not buy planes or add routes, and they focused on keeping costs down. As a result, they should perform much better than they have in the past if we are indeed in an economic downturn."
Which airline stocks in particular does Putnam especially like?
"While we like all the airlines at current prices, we're particularly attracted to Delta Air Lines Inc. Del. (DAL)and Northwest Airlines Corp. (NWA). As the carriers that most recently restructured in Chapter 11, they have among the best cost structures and balance sheets. Also, they could both benefit if their on-again off-again merger actually comes to pass."
To be sure, Putnam in the same issue of his newsletter concedes that there is a fine line between being early in recommending a stock and being just plain wrong. But he nevertheless believes that for those who are particularly brave, airline stocks right now "hold great promise."

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

Heres a joke to break up your work day...

2008-03-31T13:35:00.000-04:00

Marvin was a 14-handicapper, but one day he walked up to his club pro, a scratch golfer, and challenged him to a match. He proposed they put up $100 each on the outcome.
"But," Marvin said to the pro, "since you're so much better than me, you have to give me two 'gotchas'."
"A 'gotcha'?" the golf pro asked, "what's that?"
"Don't worry," Marvin replied, "I'll use one of my 'gotchas' on the first tee and you'll understand."
The golf pro figured that whatever 'gotchas' were, giving up only two of them was no big deal - especially if one had to be used on the first tee. So he agreed to the bet, and the pro and Marvin headed to the first tee to start their match.
Around four hours later, club members were amazed to see the pro handing Marvin $100.
The pro had lost to Marvin!
The club members waited for the pro to enter the clubhouse, then asked him what happened.
"Well," the pro said, "I took the club back on the first tee, and as I started my downswing, Marvin knelt behind me, reached up between my legs and grabbed my crotch, and yelled 'Gotcha!' "
The club pro just shook his head. "Have you ever tried to play 18 holes waiting for the second 'gotcha'?"

Where to stash your cash...an article from Fortune.com

2008-03-27T13:50:00.002-04:00

(Fortune Magazine) -- Where do I keep my cash? During times of financial crisis (like now), that's the question on many investors' minds. And when the financial crisis involves the credit markets (as it does now), the answer isn't so simple.
Keeping money in "cash" generally means putting it where it is guaranteed not to lose value and can be accessed quickly, with no fees or taxes. As some investors have learned the hard way, not all investments touted as "cash-like" meet those requirements.
The first scare came in August, when it turned out that money-market funds, long thought to be super-safe, had been buying risky mortgage-backed bonds. While no investors have lost money, fund sponsors, including trusted names like Janus (JNS), Wells Fargo (WFG), and Credit Suisse (CS), have had to step in to prevent some funds from registering losses.
Close calls
Just how big a problem is it? In December, Janus took a $16.2 million charge when it bought such securities from its money-market portfolios. "They would rather reach into their own pockets and take earnings losses than incur the wrath of investors by fouling up a liquid investment that is supposed to be fail-safe," says Lipper senior analyst Jeff Tjornehoj.
The second near miss has come in the market for auction-rate securities - essentially long-term bonds that pay interest at a rate determined by periodic auctions. Some individual investors put money into funds that bought auction-rate securities believing they were similar to money-market funds but with slightly higher yields.
However, the credit crunch has put a crimp in the market, and several auction-rate funds, including ones run by Nuveen and Eaton Vance (EV), are frozen. Investors are still earning interest, in some cases at extremely favorable rates, but they can't get their money out.
What to expect
So where does that leave nervous people with money at hand? There are still safe options, but remember that safety means lower yields. "If you are getting more than a market rate on your cash, you are taking some risk, which is not cash investing," says Madelynn Matlock, a director at Huntington Asset Advisors.
Or as Peter Crane, head of money-fund research firm Crane Data, says, "Cash is the money you need on hand, so safety and liquidity are your first concerns. Yield comes after all of that."
If you keep your assets in cash while the storm passes, stick with the classic menu of investment options. That means Treasury bond money-market funds, high-yield savings accounts, and short-term CDs. Those options seem plain, but they offer the safety and liquidity that defines true cash investments. And take heart. You can still find decent yields by shopping around, but you have to shop carefully.
Let's start with the safest investments of all: short-term Treasury bills, or T-bills, which range in maturity from a few days to 26 weeks. You can buy bills directly from the Treasury at treasurydirect.gov; the minimum purchase is $1,000. (On Friday the Treasury Department announced that it would reduce that minimum to $100 as of April 7, in order to open up the market to smaller investors.)
Money-market funds that invest only in short-term Treasury bills were yielding an average of 1.9% recently, according to Crane Data. They carry zero risk of default, and because they are short term, no risk that rising interest rates will reduce their value.
Considering money markets
Bank money-market accounts, insured for up to $100,000 by the FDIC, are another super-safe choice. They recently yielded 3% on average, according to bankrate.com. But some are paying much more: Flagstar Bank in Troy, Mich., is offering 4.18%.
If you don't mind locking up your money for a few months, bank CDs offer similar protection and, sometimes, higher yields. Metropolitan National Bank in New York City is offering 3.46% on a three-month, $2,500 CD, while Corus Bank in Chicago is paying 3.79% on a six-month CD. You can check bankrate.com to look for the best rates.
If you prefer money-market funds, keep in mind that they are not guaranteed to maintain their value. Stick with companies known for low expenses and conservative management, and likely to stand behind their funds, such as Vanguard, Fidelity, and T. Rowe Price. The average money fund yields 3.4%, according to Lipper, and the average tax-exempt money fund yields 2.4% -equivalent to 3.7% for someone in the 35% federal tax bracket.
Finally, remember that inflation - currently running at about a 4% annual rate - erodes the value of cash holdings. So don't keep your money parked forever.
Says Matlock: "Once the market chaos clears, you can take advantage of opportunities you would have to miss if you weren't in a low-yield but secure and liquid investment now."

Possibly try to stay risk free by putting your money in some of the online savings accounts I have highlighted on the page...and some of them have sign up bonuses which you cant complain about. Also, through sharebuilder you could invest in a money market account and get a $50 bonus when you start to invest in it...just a few ideas to help you make more money.

Put your tax refund to work for you

2008-03-20T21:32:00.002-04:00

How many of us are getting tax refunds?

Put that to use, as opposed to buying a PS3, or an XBOX 360, put some of that money to work for you. Either buy some mutual funds, partially fund a Roth IRA, or buy stock you have been looking at. Instead of having your tax refund make you spend hours in front of the TV vegging out, or have a killer time at the bar one night, put that money away and make it work for you. It was probably money you did not expect to be receiving in the first place, so it will not be as painful to kick start your savings.

Or maybe you don't want to start investing just yet, but you want to put it away for a rainy day...then e-mail me and Ill send you an invitation for ING Direct, put $250 in ING, and right away you'll get a 10% gain as you get a $25 bonus for opening an account.

Maybe you aren't getting $250...how about $100, put that in Virtual Bank, you'll get a 20% bonus right away.

If you want, take a look at share builder and use that bonus code to make an easy $50.

If you have any questions on any of the options above, shoot me an e-mail or post a comment.

$50 to help get started with investing

2008-03-07T00:34:00.002-05:00

You shouldnt jump into it unless you feel you are prepared for it, but sharebuilder is offering $50 to open up an account with them. Use the promotional code "share50" when you are signing up. A few weeks after your first transaction they will add $50 to your account balance. Let me know if you have any questions or need any suggestions on how you would want to get started.

share 50

Intro to Investing Part Two

2008-03-02T12:12:00.003-05:00

I started the other day giving readers a solid base of information on where they can put their money to make it work for them. I started with Mutual Funds, DRIPS, and Savings Accounts. Here are a few other ways to make your money work for you as opposed to sitting idle...

Index Funds - Like a mutual fund, but has a portfolio put together to match or track a market index (S&P 500, Financials). A benefit to this is you get good market exposure and because it is not as actively managed as mutual funds the operating expenses are lower and the funds tend to have much lower turnover with the holdings which can be beneficial at tax time. Because of the lower expenses and the broad exposure, index funds are said to beat other forms of investments, and it is passive investing, so you dont have to keep an eye on it from day to day and trade. You can buy these anywhere (Scottrade, Schwab, E*Trade), some like many things, may have minimums. But, as Ive mentioned before, you can usually waive the minimum purchase by setting up for an automatic investing plan where they will pull $50 or $100 out of your account monthly to invest in.

Bonds - With bond you are pretty much just loaning money to the government, or the corporation that you purchase the bond through. They have a set period of time, and they have a set interest rate. They are used by various entities (states, US government, companies) to get cash flow for projects they want to undetake. These are fixed income investments, you know how much money you are going to get when you invest in these. You can purchase them from a 30 day period of time up to years. A major concern with bonds is the credit rating of the issuer, you want to buy bonds from a a company with good credit, but by doing so, you get a lower rate of return. Adversely, if you buy bonds from a company with a lower credit rating, the interest rate will be higher, because of course, the risk is higher. Just like lendning money to a friend...if they are trustworthy, they have a good flow of incomes, your likely to loan them money, and if you charged interest it would be a lower rate then if you were going to lend money to a kid with no job, whos shady and you never know if you are going to get it back (I dont know why you'd ever lend to the second guy, but you get my point).

Stocks - The infamous stocks...when you buy shares of stock in a company, you own part of the company...depending on how large of a position will determine what percentage of the company. Common stock is the type of stock most of us would like to get familiar with, and you can buy and sell these through out the day as the price goes up and down. When you look to buy stocks you want to think that way too...you want to think about it in a sense that, I am going to be part owner of this company, do I feel its a good enough company to buy into? Thats the general idea of stocks, and there will be many more articles going far more into detail about stocks, if you have questions let me know, but stocks will be a major part of my talking on this blog. Also, stocks for the most part, have historically outperformed the investment vehicles that you are fmailar with.

Use my Newsreels

2008-02-29T16:29:00.003-05:00

I always used to go on the Internet and search for articles or stories on investors that I liked or wanted to learn what their moves were...well I found out about these newsreels and I set it up so that articles on all the guys I used to search for are now generated on the side of my site...go check them out...those are only a few of the people that I like to read about, but I figure it will give you a good start to learn more about my strategies and mindsets.

If you have any more people that you like to read about, or companies that you like to read about let me know and I will set up newsreels for them, but it saves you a bit of time then having to go to a search engine and type them in yourself.

Click on the persons name that you like, and it will give you four articles from them.

Happy reading.

The Best Investors

2008-02-29T11:12:00.002-05:00

Warren Buffett, Eddie Lampert, Jim Cramer, Bruce Berkowitz...these are just a few of the best investors...articles on these guys coming soon...

Scary But True

2008-02-29T10:30:00.002-05:00

Its scary to see how people struggle to get by, but this is an eye opening article to see how people get into trouble, and through hard work and support through your significant other you can fight through to financial prosperity.

http://kiplinger.com/columns/starting/archive/2008/st0227.htm

Easy Money

2008-02-28T22:32:00.003-05:00

Here is an easy way to save a few bucks a month...go to your bank and see if they offer any accounts with free online bill pay..if they do, get that account and go online and sign up bills for online bill pay. Its not a lot of money, but with the cost of postage going up all the time, and the amount of time you spend writing the checks and addressing the envelopes, you can probably do something much more productive with your time. Hey, pennies to nickels, nickels to dimes, dimes to quarters, and quarters to dollars, every little bit helps.

Budgets

2008-02-27T15:05:00.004-05:00

As talked about in a prior post, budgeting is the first step and most important step in saving money. Setting up a budget isn't too difficult to do at all, its sticking to it that is difficult. No joke, it is extremely tough to keep everything straight. It ll be fun at first, then slowly you see how horrible your spending habits really are, then it becomes a difficult task to keep track of this spending, it will pain you to put each cash payment, or credit card purchase into excel. As much as it hurts to do, and you get down on yourself because you spend money like an idiot, all these hours you work at jobs you hate...that money you make just gets blown on stupid stuff. That's good though, because now you are starting to realize where your money is going..then you can adjust accordingly...cut a little back here, cut down how much your talking or texting on your cell phone, etc...

Steps:
1. Build a budget (excel works well)
2. Set up a system (in excel as well, use another sheet) of tracking all of your spending...to the penny
3. At the end of the month, or the week, compare your totals of money spent in each category with what you put in excel as the budgeted number
4. Analyze what you see, how much over or under you went in each category and adjust your budget and spending accordingly.

When I would set up a budget, I would sit down, think of everything you spend money on, and think of a reasonable number (based on your past spending habits) of what you would want to spend monthly in that category...you may have guessed wrong, so after the first few weeks/months you can go back and adjust.

You need to be honest with yourself though, you cant forget to add certain expenses in there, or put them in a different category because at the end of the month you don't want to see that you spend $600 at bars!

Remember set up a savings account, and make sure that you have savings in your budget as a fixed expense.

Random Fact of Compound Interest

2008-02-25T21:25:00.002-05:00

This is quite an extreme example but its something to think about...If Christopher Columbus had placed a single penny in a 6 percent interest bearing account and told someone to remove the interest every year, the value of the interest earned by 2005 would be about 31 cents. But if he had placed the same penny into the same interest-bearing account but left the earned interest to compound - earning interest upon the interest - the balance for 513 years would be $95,919,936,112.

Intro to Investing Part One

2008-02-25T20:49:00.007-05:00

Mutual Funds - This is pooled money that professional money managers invest for you. You purchase shares of the mutual fund and these professional money mangers invest it for you as well as everyone else who is invested in the fund. Every fund has a different theory, growth, income, blend...you have to choose which is right for you at a particular stage in your life. (we'll get back to that) Not a bad way to get started investing, you can go to a T. Rowe Price or TIAA CREF and start buying mutual funds for as little as $50 a month...that's $12.50 a week...just stop eating out one day and put that into a mutual fund. Charles Schwab has it so that you can do it with as little as $100 a month, $25 a week.

DRIPS (Dividend Reinvestment Plan) - Again, its not a bad idea, not quite as diversified as a mutual fund, but if you get a good company that pays out a decent dividend and has growth potential, you could be sitting back, watching your money grow over time. You don't hear too much about these anymore because of all of the alternative possibilities and the fear of not being properly diversified. If you have a company you would be interested in doing this with go to the company home page and look for the investor relations section and there should be some information on how to start investing directly with them. If not, go to computershare.com and they have lists of companies DRIP programs they oversee.

Savings Account - Maybe you are not ready for the market, you want to research a bit more before you jump in, that's more than fair and can be a good idea. Open up a savings account (e-mail me about ING) and set up automatic withdrawal's from your checking account. This way you automatically are saving and you get a guaranteed return, not matter what the market does. Setting up automatic transfers is the best way to approach this, get serious, there is a better opportunity for your cash to make it to the savings account if you set it up automatic as opposed to you having to manually transferring it...doesn't seem like much, but you'd be surprised how much it helps setting it on auto pilot.

more to come.....

Start Now

2008-02-21T14:16:00.003-05:00

It is so important to stat investing early and at a young age. Take a few minutes and check out this slide show and it will show you how much easier life will be if you start early.

Vanguard shows the difference between two investors.

Free Money

2008-02-21T00:38:00.003-05:00

One of the first rules of economics is that there is no such thing as a free lunch...that's true, but these are a few free lunches for you and I, the only ones paying the bill are a few larger corporations.

ING Direct: Been using this savings account for years, and I have never had a problem with it. Pays out a very competitive interest rate (currently about 3.4%). I like it because it gets the cash out of my checking account and it makes it a bit more difficult to get at. It takes 2 or 3 days to transfer cash between your ING Direct account and your checking account, that way, it gives you time to think about a big ticket item purchase.
ING offers $25 referral bonus to new accounts (online savings, and another $25 for their electric online checking account) as long as you deposit $250 in each to start. Yeah, $250 might be tough to get together, but its a 10% risk free gain in one day, then you have $275 compounding at 3.4% instead of yur $250 you deposited. The electric orange works the same way, but it pays a bit lower interest rate, and their are alot of perks to it as well...free checks, free postage because they send the checks out for you, and debit card with a ton of locations in your area to withdrawl cash from.

Revolution Money Exchange: The guy who started this company seems to be trying to compete with paypal...there was an article a few weeks ago in USA Today about it. Anyways, if I refer you to open up an account with this bank, as soon as you open it up...you get $25 and I get $10 for a referral. It is that easy. The ING Direct needs you to deposit the money to get the bonus, for this, you do not need to deposit any money, it is credited to your account right away. Then, link it up with your checking account that you already have and you can pull the money out. I have played around with it a bit, and it does seem like it could be a pretty cool thing to use...if you owe your buddy some money from the bar tab the night before you can send the money to him through this bank just by knowing his e-mail address.

Virtual Bank: Again, just like ING Direct, it is an online savings account, pays out a decent rate, and you get a free bonus and so do I for you opening an account. Ill send you a referral e-mail, and you open the account, fund it with $100 and they will give you a $20 bonus for opening the account...I as well will get a bonus for referring people. Again, thats a 20% gain, RISK FREE right off the bat.

None of these are scams at all, I know it seems odd that banks are giving money away like that, but it is their way of advertising. If you see a bank on TV that has a good rate you might open it up, but if your buddy tells you about it, and the good experience they have had with it, PLUS a free bonus, I bet you are more likely yo open the account, and it may be cheaper for the banks then paying millions of dollars to run a commercial prime time.

Send me a message, or post, and Ill send you a referral link and we can both benefit.

New Years Resolutions

2007-12-15T15:08:00.000-05:00

Most people make New Years Resolutions regarding getting in physical shape, or being more organized, well you should make a New Years Resolution, to get your finances more organized and in shape. No more living paycheck to paycheck, and worry about having enough money to pay each bill, or to time your spending so that you don't overdraft the account.

Set up a budget, see if you are going to have any money left over after all of your expenses weekly or monthly, and instead of getting a smile on your face because now you have a few more bucks to blow down on Chippewa Street, or some other local watering hole, set that money aside, and let that money make money for you.

As I posted before, there are investment vehicles for people that don't have high upfront costs to get started with them, Charles Schwab, T. Rowe Price, TIAA Cref...OR if you don't want to start investing in mutual funds, set up one of those online savings accounts I discussed, you can then make over 4% (ING is about 4.2%, and Virtual Bank is 4.6%) RISK FREE. Instead of blowing it on one night of partying, make it last, and make it make money for you.

It might be tough to start saving at first, considering it may not have been something you were that religious about before, but once you start saving, start seeing that bank balance get larger and larger based on your deposits, and then you see the interest payments adding on top of that, it will be a good feeling knowing that you are getting your finances in order, and you are saving for something larger...whatever it is you decided you are putting that cash away for...

Albert Einstein said it best, when he said that he thought that compound interest was the 8th wonder of the world, so at the start of 2008, start that interest compounding for you.

FREE MONEY FOR STARTING TO SAVE

2007-12-15T14:54:00.001-05:00

Many banks offer you bonuses to open savings accounts with them..and I have two of the banks here
ING Direct which I have been using since January of 2005, and have never had a problem with them, offers you a $25 when you open up an online savings account with over $250. Its a great deal, ING's online savings accounts are great, I like how you can track your interest earned daily, and it is so easy to withdrawal or deposit money.
Virtual Bank, also is offering a deal for opening up an account with them; fund the account with $100, and you get a $20 bonus, thats not a bad deal either...like ING, both are completely online, and easy to use...easy to deposit and withdrawal cash from.

For both of the bonuses, you need to be referred by someone, so let me know, and I will e-mail you a referral form, and we can both make some money, because I get a few bucks from each of those bonuses...$10 from ING and $20 from Virtual Bank.

ANYONE CAN INVEST

2007-12-15T14:53:00.001-05:00

A lot of people have the idea that you need a large sum of money ($1,500...$2,000 or more), to invest in mutual funds. Charles Schwab started a MoneyLink program where you can invest in there funds with an automatic transfer from a checking account to an account with them, and all you need is as little as $100 a month. If you can't swing the $100 a month, T. Rowe Price and TIAA CREF also have waived the minimums on mutual fund accounts for automatic investing. Both TIAA CREF and T. Rowe allow you to start investing with automatic investments into their funds of only $50 a month. Thats a bit over a dollar a day, and I dont like talking about that "Latte Effect" or whatever it is called, but almost anyone can come up with that much a month...thats less than a night out on Chippewa.

Free Checking

2007-12-15T14:52:00.000-05:00

In Buffalo M&T Bank started the Totally Free Checking years ago and other banks have followed. People should realize that the checking accounts that they hold that are earning less than .5%, but you are getting hit with $7 fees monthly for having an account labled "Interest Checking", arent worth while. You should open a Totally Free Checking Account at any of the banks, not just local, but now the nationwide banks all have free checking. What you should do after you set up an Totally Free Checking Account is jump on the online bank bandwagon and open up a savings account through one of the online banks to transfer money between the two accounts. I love the online savings accounts because it gets the money out of my hands, and is a few days away if I need it for anything, so it allows you to make the decision on an impulse purchase.

Budgeting

2007-02-16T20:40:00.000-05:00

I feel this is the most important part of keeping your personal finances in order. The best way that I can think of to put together a budget is through Excel. The way I do it is I low ball the income (not by a lot, but by a few bucs), and high ball the expenses, this way if you stick to the budget you'll have some money left over. Also, another way that I find it easier to save money is to actually work it into your budget, don't just put whatever money over you have left into savings, actually figure our how much you want to put away each month or week, and work that into the budget.

Income
-Expenses
-Savings
-Retirement
-Spending
=Left over

You can do whatever you want with this money, put it away for a vacation fund, put it into a high interest bearing savings account until you know what you want to do with it.

I read on another blog recently about how you dont want to kill yourself saving and saving for retirement, you are working, so you want to be able to get out there and enjoy some of the money you are making. If you can put together a solid budget, low balling the income and high balling the expenses, that is the first major part of getting onto the road of financial stability.