Year End!

This will be the last post of 2008 - a turbulent year for sure.  One wonders aloud what would be remembered from this year, especially in the world financial markets.  It would appear the number one story would have to be the real estate bubble and the financial market crisis.  We could argue over how, when, who, and why but the reality is we are neck deep in it and it will take a global effort to get us all out of it.

Consumer confidence it at some of the lowest levels ever.  Retailers are finding out real quick "that no Christmas is coming", as the final holiday sales are coming in - way down!  We should see a number of retailing bankruptcies in early 2009.  Malls are suffering along with individual retailers as shoppers are being more careful with the money they do have and are willing to spend.  Restaurants are also getting hit as more people can't afford (or chose not to) going out to eat, preferring to stay at home for meals.  This can help the grocery stores, but not the restaurants.

Commodity prices continue to be in the news as oil continues to hover just under $40 a barrel as global demand (or those who can afford it) declines.  Gold is around $870 an ounce while Silver maintains itself just under $11.

If you were not quite sure whether this was just the United States, looking at foreign financial news would set you straight.  This crisis is worldwide!  Unemployment is up in France.  The Nikkei 225 (Japan's version of a stock market index) was down 42% for the year.  Germany is suffering as well as others in Europe who would sell parts to China who would use it to produce products sold to the United States.  The United States is not buying - so China is not buying from Germany!  In Russia, they devalued the rubble!  This is a vicious cycle where everyone is waiting for the new administration to arrive on January 20th, in Washington, D.C.  Don't hold your breath!   There is a lot of work to do and I fear it is only going to get worse before it gets better!

Let's hope for a more prosperous 2009!

A week later and no auto bailout . . . yet!

Well we are still waiting for the White House to agree to forward money to the big three (since the Senate said no way!). President Bush returns from a surprise visit to Iraq to make an announcement which sounds like it could be more than the $14-15 billion from recent discussions.

The FED meets today and is expected to lower interest rates to 0.5% - can't really go much lower! The most recent industrial production numbers are down, as are the latest numbers on manufacturing output which show the recession not only is definitely here, but not showing any signs of getting better.

What type of stocks can one look at, for the long-term, that would be a safe bet right now??? Well, safe . . . is relative, but assuming a long-term time horizon, there is value is companies with a good balance sheet and a secure dividend in the 4.5 - 6.0% range (be careful of some in the 7-9% range in common stock as I am not sure those dividends will not get cut a bit). Also, look for companies with a good balance sheet and good cash flow (Johnson & Johnson, Nestle, Zurich Life, Proctor & Gamble, and Accor). These are long-term plays but I feel will have less volatility in the near term.

Markets waiting on Big3 bailout news

President-elect Obama has been busy putting his team together. This includes not only his cabinet but other various advisors as well. One interesting choice was former Fed Chairman Paul Volcker to head a new advisory panel whose purpose it is to offer advice, information, and strategy for the finacial markets and how to jump start and maintain a healthy U.S. economy.

The world continues to watch and wait on the U.S. govenrment finalizing a package in the form of a bridge loan to the Big 3 automakers. What started with the Big 3 asking for $25 billion, then told to go back and come up with a plan (do you remember seeing AIGs plan? surely the other financial institutions who received part of the $700 billion had to show a plan . . .?). They did and came back and asked for $34 billion! It appears the House and Senate are prepared to offer the Big 3 $15 billion, payable on December 15th, to give them the ability to hang in there until Barack Obama takes over and then his team can decide where to go from there.

Ideas for investments???? Well, this is really looking for a jewel in the trash - what are the best companies in defensive or cyclical industries that have been beat down unfairly and when do you take a chance? I am not convinced we are at the bottom but I do believe we are very close. The markets still move up for a few days and then have a big down (people take short-term profits after a nice move upwards) as the markets settle in. It doesn't take much news, positive or negative, to get movement - though the movement seems to be overblown in either direction. I still like infrastructure plays, but others such as cyclical/defensive stocks are a good way to go as well. There is still a lot of quality companies out there than you can buy on sale! Companies I like are Dean Foods, Kellogg's and General Mills in the food producer category. As always, you need to do your research and determine whether these or any investment alternatives are right for you!

My most recent trade was buying Citicorp in the upper $3 range; it is currently at mid-$8 range. Sure wish I would have bought a truckload of it!!!

What Happens Now?

As someone who does small business consulting, financial planning and teaches finance courses I have been a little busy lately (it has been about 3 weeks since I have posted to this blog!).  So . . .  where do we stand on everything.

1. President-elect Obama has been busy working on choosing members of his cabinet in hopes of hitting the ground running on January 20th.  As an early sign of "keeping my promise to the American people", I do see his choices running the gamut of  liberal/conservative and both parties, many with experience in the Clinton administration.  Now, what shape the economy will be in by then is still up in the air; hopefully there will be something left for this team to manage!

2. Financial crisis continues.  The big three, GM, Ford and Chrysler, are still hoping for a $25 billion bailout (this on top of the $25 billion they want to upgrade the facilities to produce fuel efficient cars).  Yesterday was not a good day for the CEOs of the big three, flying in on private jets, refusing to work for a $1 salary (except for Nardelli, apparently he is "still good" with the $300 million package he got from Home Depot!), nor do they have a concrete plan they can share about turning things around (saying they have made a lot of cuts already), as they hold out the proverbial "tincup" asking for a handout.  Talk about not getting it!  Look, I have no issue with the private jet for important CEOs who need to be able to get to important meetings/conferences where traveling coach would just not work.  I do think this would have been one of those times to buy 3 first class tickets and fly commercial like the rest of the public as you try to show "you understand and care about the common man".  Who is their PR people - please, give me a break!!!  It is all about perception - and the perception of the big three CEOs are they are rich, arrogant, and don't get it!  There are a number in Congress who feel these companies should just reorganize in bankruptcy.   I am not in favor of the bailout without specifics and restriction (especially built around performance measures for pay for the executives), but I find it a little ironic that members of Congress (who don't have to pay social security taxes, have a pretty good "lifetime benefits package", etc.) are talking about cutting costs until it hurts and protecting the people's money.

3. The markets: the international markets are not that different from the U.S. markets, as governments are stepping in along with various money center banks and large world fund banks in an attempt to instill confidence in the system, but things still seen to rise and fall on the fortunes of the U.S. markets.  Yesterday (November 19th) the S&P500 hit 819.  This is significant for me, as in previous market highs which move to lows and then back to highs, etc., the difference between the market high and market low as measured by the S&P  is 50% (this means a drop of 50% from the high before the bottom is found).  In this last market cycle, 819 is that 50% down number.  For me, if this number can hang in her for a while (say a week or so), I think we could have a temporary bottom call to look at.  However, if it continues to fall, it is going to go way down (under 800 on the S&P and about 6500 on the Dow), in my opinion.

4. Ideas for investing (other than the mattress, that is) is very little is out there that I would venture into right now.  If you play options, tomorrow is options expiration so you can look at puts of certain stocks as well as some index plays (as I don't think anything is going to happen on the upside for a while), out a ways (maybe January at the earliest).  What to look at in individual stocks (this is only if you have a LONG TERM view) is very little as well.  I do believe there are still good quality companies that have been beat down too far, but they will come back only when some level of confidence is restored.  There are a bunch (latest count is over 100) "blue chip" stocks that are under $10.  While you can bottom feed it is important to understand the risk and what the story is behind the company.  I always say, if you can't talk about a company you are interested in, for two minutes, you don't know enough to own it!

Here are some stocks that are intriguing to me:

Citicorp (though I think this one is going to break up and pieces sold to other banks)

JP Morgan

Wells Fargo

Johnson & Johnson

Intel

Cisco

Wal-Mart (I think, if this market stays like this for a while, this could be the next Google, as far as price goes)

Merck

ExxonMobil

Blackboard

Apple

You need to have a strong stomach for this market and a long-term time horizon, or just find safe CDs, government money markets, and government paper.

Turbulence . . . Exuberance . . . . . Performance???

The last month or so in the financial markets has been one of the most turbulent in recent memory.  If anyone wanting to see what a roller coaster looked like, check out any average chart which looks like a silhouette of a really neat roller coaster; lots of ups and downs.  

However, if this chart represents your investments, this can make your head hurt and your heart sink!  In investment planning we always talk about diversification (don't put all your eggs in one basket).  This didn't really help much this time!  Just about everything has been hammered lower during this period, and like yesterday, we have had some rallies, nothing that has sustained long term.  Personally, I think we are at the bottom and although we will struggle to move much in either direction until next year (2009), I feel we generally move down 50%  on the S&P between the end of one bull/bear to another (that would be around 819 on the current S&P), and we are right about there (or have been close).  No category has been totally spared: large-cap, large-value, mid-cap, small-cap, micro-cap, international, sectors (can you believe with the gas prices that Energy is down over 30%!), foreign markets, bonds (ST and LT), and even some money funds took a hit (though now the government is going to guarantee those funds).

If you have the stomach for it, this is a great time to buy!  Wall Street is having a sale!!!  Many stocks are 30-50% off.  So, if you liked a company 90 days ago, you should love it now assuming the fundamentals are still reasonably strong.   The safe havens have been government paper, corporate paper, CDs, and money funds ---- none of which are paying a great return (however compared to stocks, they are pretty nice!).  There are some interesting investment choices out there when you consider the low price of the stock and the dividends it pays (you need to check to see that the dividend is secure!).  Companies like Pfizer (PFE) is trading near $17 and is yielding over 7%; General Electric (GE) is trading under $20 and is yielding over 6%; AT&T is trading around $27 and yielding a little less than 6%, and Merck (MRK) is trading around $29 and is yielding over 5%.  Now, this is saying anything specific as you still have to do your due diligence and determine for your self whether these companies will continue to exist in the 21st century.  However, if you determine there are some good quality companies out there, if you can get 5-7% dividends, you can afford to wait for a year or two before the stock comes back.  Where else are you going to make that type of return???

Where we are now - October 8, 2008

Well . . . . . is it safe to come out from under the covers? Maybe not yet. It depends on what type of investor are you, if you are a contrarian (i.e. bottom feeder) this could be the time for you to shine. While most people are wringing their hands and watching increased worry lines appear on their faces, those who are savvy and willing to stomach some risk, now is a time to be getting cash ready to go back in. The bottom is near! Actually, at the current daily meltdown, the Dow will be at zero in only 19 more trading days! Is that something great to think about! Seriously, I would looking at things important to our standard of living. Industries like infrastructure, natural resources, energy and food. Areas to stay away from are the autos, like you needed me to tell you this! GM hit a low today that it had not seen since 1952 when it traded at $6.42. Ford hit a low not seen since 1985 at $2.77.

With all this turmoil in the markets, you wonder who is buying. Well, Bank of America has just sold a bunch of its stock in the markets to raise $10 billion in a effort to help with the Merrill Lynch takeover.

The FED cut the federal funds as well as the discount rate by a half a point to 1.50%. Central banks in Canada, Seden, UK, Switzerland and the European Union have also lowers rates, even though some were worried about inflationary pressures.

Finally, what would a day be like if we didn't talk about oil prices. Today, oil hit $86.05 a barrel. Some members of OPEC (Nigeria, Iraq, Iran & Libya) have been making statements to the press that OPEC may have to adjust the supply in order to help the current markets. Their statement effectively said they feel $90 a barrel is fair value and any sustained level below that will cause them to cut supply. Saudi Arabia has not said anything on the matter. Saudi Arabia is the biggest U.S. ally in the region.

Bailout passed by Senate

The $700, now $805 billion bailout passed the U.S. Senate last night. Now we have to wait and see what will happen with the House. Over the last few days there has been many articles written about what $700 or $805 billion would buy if it was spent on the people of the U.S. rather than the financial institutions that caused the mess. I agree something has to be done, as the credit freeze is affecting those with good credit, who would and are qualifiying for a loan (the types of loans the financial institutions should have made over the last few years), and the is no money to loan.

What this economy needs right now is no different than what a business needs, CASH FLOW. Consumers have nothing to spend and can't even borrow if they wanted to spend.

The markets are in their usually roller coaster ride they can do when uncertainty reigns supreme!

Some interesting items in the financial press, from yesterday (Wednesday, October 1st), is that General Electric is offering to offer shares of stock to sell in an effort to raise $12 billion to give it a chance for acquisitions - clearly it thinks there could be some valuable companies "on sale" when this all shakes out. GE stock is off more than 34%, more than the market (off about 21%). Interesting report has Warren Buffett interesting in buying into GE!

The markets still in turmoil . . .

Do we have a deal or don't we?!?!?! It appeared the financial bailout deal ($700 billion) was hammered out in extended sessions over the weekend, and it was now going before Congress for a vote. Unfortunately we are in a big election year (November 4th), and I believe we are seeing the political wranglings at this time. Whenever it looks like something is going to happen (markets rise a bit), we then have someone wanted to stall or change some detail of the plan.

Look, none of this is any good - we shouldn't be in this mess in the first place, but we are! We you spill a glass of milk in the kitchen, you don't spend time moaning about the glass slipped, your hand was wet, how to protect the kitchen floor from future spills, getting guarantees that the milk if it falls, we go sideways rather than landing on the floor! ------ NO, you clean up the milk first!

We are in a world of financial hurt both in the U.S. and the foreign markets (as they seem to watch us for what we are doing and then react the same). We need to do something! There will be more regulation coming out of this just like the 1930s, after the Great Depression and in the 1980s for the Saving & Loan crisis. We seem to put ourselves in this position every now and again (greed gets the best of us; or at least some of us who work in this industry) and some get hurt, but we always survive.

The markets need some stability, markets to not like uncertainty and financial institutions need to do something with the money (sitting on it makes no revenue), but those customers are either unsure of the future or if wanted to borrow are finding things really tight and they don't have access. We could end up in a depression if this doesn't get resolved soon. If no one is buying, then nothing is made, no one is working, etc. --- it is a vicious cycle.

-------------------
Annuities

Personally, I don't like them, but I know there are planners and others in the financial world who like them. I would never put a client in them if they asked me (s0me do it and then ask what I think???). Overall the concept is a good idea, but I am a firm believer people have no clue what they are buying.

They are signing a contract. A contract in which they have few rights and the insurance company has most of them. One of the reasons a person considers an annuity is that is sounds good, easy, and on the surface makes sense. They are looking for something "safe" and "guaranteed", with little to do after setting it up. Annuities are insurance contracts. There are two types "fixed" with a steady rate of return established at the front end, which accumulates or pays out periodically (depending on how it is set up). A "variable" annuity will have a rate of return that fluctuates, possible of making more than the "fixed" but also possibility of making less. Consumers looking for that "guarantee" will opt for the fixed annuity - bad choice! If I had to force someone into an annuity it would always be variable. Why? Simple, again these are insurance products. With a fixed annuity the annuity contract moneys are co-mingled with the Insurance company funds - in a sense they are in the same boat together. Okay, if the boat doesn't sink ----- every hear of AIG!!!!

Now, a variable annuity does not co-mingle the funds from the annuity with the insurance company, so in my opinion, can be a little safer.

Another reason that I do not care for them is the high fees (as much as 8.5% of your invested amount. Yes, the brokers will tell you "it is a declining fee", which means that if you invest and keep your money in for 5-7 years or so you may not have to pay anything on the way out, as each year the 8.5% you lose gets lower. My issue is if I invest $10,000, I want $10,000 working for me, not $9,150 like it would be with an annuity (after the sales charge).

Anyway, enough ranting for today . . . . . . someone just sit down and decide something!!!

Treasury to the rescue!

Well a couple of good days in the markets, both domestic and foreign.  Oil inches slightly higher, just under $100 a barrel.  Gold, silver and other precious metals are on the rise as people chase something tangible.  This based on some potential losses in money market mutual funds.  Long thought to be safe havens, most individual investors and many institutions own money market mutual funds.  These funds have a NAV (net asset value) of $1.00 per share, normally, and this NAV doesn't go up or down, as the majority of the interest paid to the fund from the securities held is distributed to the shareholders as a dividend.

Just like any other mutual fund however, you are at the mercy of the securities held by the fund.  If one holds government paper (t-bills, t-notes, etc.) there is not really an issue, but if one holds short-term commercial paper in other companies (particularly financials; and financials with weak balance sheets) and those companies have financial difficulties or file bankruptcy, then the mutual fund holding those securities will suffer a loss.  Today the U.S. Treasury Department said it will support money market mutual funds whose NAV has fallen below the $1.00 mark.  This announced by Treasury Secretary Henry Paulson (check you recently printed cash, he is the guy whose signature is on the bottom right front side of your currency!  He also announced an ASSET RELIEF PLAN, by taking bad mortgage loans off the books and getting some funds in the hands of those banks that will still be around after all this mess shakes out. "I am convinced that this bold approach will cost American families far less than the alternative--a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," said Paulson on Friday (September 19, 2008). (from Rueters)

Whew! Is it over . . . . . . .

I feel like the snowman narrator in the Rudolph the Red Nosed Reindeer television special - "tell me when it is over".

The financial markets worldwide are in flux and no markets like indecision, turmoil, uncertainty, and/or confusion.  And we all know how stock and bond markets deal with bad news!  On September 15th, we hear about Lehman Brothers bankruptcy filing (chapter 11); Merrill Lynch is bought by Bank of America and AIG (largest insurance carrier) is seeking to borrow $4o billion!  Also Washington Mutual (WaMu) is being courted by J.P. Morgan!   The Dow Jones Industrials has a large sell off (over 500 points), S&P and NASDAQ follow suit.  Overseas markets suffer similar losses.

Fed Chairman Bernanke today (September 16th), decides to keep the federal funds rate at 2%.  Economic growth appears to have slowed (inflation less of a worry at this time, or is it there are too many other things to worry about!?!?!?) and the labor and housing markets continue to be weak.  A bright spot, unless you are a U.S. oil company hoping to continue to gouge (I mean profit) from increased oil prices, is watching the barrel dip below $91 a barrel.  So, less than $91 a barrel, hurricane over, . . .  . when are we going to see some relief at the pump!?!?!?!  I paid $4.15 a gallon yesterday!

In a market like this the only thing I can say is focus on preserving your capital and don't take any long-term position that would be tough to liquidate!  There will be "fire sales" which are great opportunities for those with the means to get in at a low level and ride the quality companies back up.  Remember your asset allocation strategies, time horizon, risk tolerance and you make decisions.  Never pay attention to someone who gives you a "hot tip" or rumors from a cocktail party.  They rarely pay off.  Part of winning in the investment game is being in first when the price is low and getting out at some point on the way up (as the exact top is too hard to predict).

So keep your head low and your wits about you - this market is very bumpy!

Market news

Well, oil is still hovering around $103 a barrel, which is significantly lower that where is was this summer.  You would think my pump price would not still be $3.96/gallon (up $0.25 in one day!).  Well, the speculation is with Ike heading toward Texas, there could be some supply interruptions from that area.  OPEC announced it will have a "modest cut" in production, but experts still think the crude prices will be lower in coming months.  Apparently just not in my neighborhood - we will see!

RIM (maker of the Blackberry) has a new product - flip phone version (Pearl 8220).  Apple has come out with two new products (or should we say to updates to existing products), with its new iTouch and new 4th generation iPod nano.  A little more storage capacity, some colors choices, and enhanced capabilities are what are in store for anyone entering the fray for the first time, or to get that "other" device.  RIM is going to move away from the flat, touch screen type of product, where Apple intends to focus its development in that area.  I think I can see Apple's product focus, the Shuffle for small, portable tunes - the Nano for more storage, photo, video possibilities in a portable, small package, the iTouch for those that want all the bells and whistles but already have a cell phone, the iPhone - does a bunch of stuff (though some may say it is limited in storage), the the classic iPod which will only be available in 120 GB models is the multimedia storage portable device.  Which company makes the better long term investment?  I don't know.  I do think the record of Apple speaks for itself, though it is hard to make up that type of growth year in an year out with new products, software, extras (iTunes, App Store, etc.).  I think the big worry there is what happens when Steve Jobs decides to step down.  Is there a secession plan???

The U.S. Markets rebound a little today, though European and Asian markets continue to fall.  Recession woes seem to have turned to inflation worries.  If this is the case you want to be in short bonds (as rates would be projected to rise) and away from "trendy" type stocks unless they have a great story and look at "staples" (defensive stocks) until the election on November 4th.  That is one conservative strategy (though there are some sitting on the sidelines in cash - waiting for the right time!  Coca-Cola has made a $2.5 billion offer for the China Huiyuan Juice Group.  This Chinese company was said to have a 44 percent market share, so Coke is getting a great foot into this market in a big way!

Politics and the markets

Well, we now know who will be facing off in November.  Obama/Biden vs. McCain/Palin.

Regardless of what happens, there will be a "First" on November 4th.  Either the U.S. will elect the first minority as the President of there will be the first elected female Vice President in history.  There has been a lot of rhetoric already and more to come.  For me, I am looking forward to the debates.  We usually get about 3 for the Presidential candidates, though there can be more; and at least one from the Vice Presidential candidates.  What I always find interesting in this buildup is how many "friends" and "supporters" everyone has now!  Once the election is over, the losing side kind of packs up and goes home!  We don't usually hear from those two on the short end, for about 4 years if then (think Walter Mondale, Geraldine Ferraro, Robert Dole, John Kerry, etc.).

From a financial perspective how will the markets fare?  It is too early to tell, and I don't know if typical "republican or democrat rules" will prevail this time, and the markets, the economy and the world is a lot different now.  Will this "first" in the election cause things to progress differently than in the past. 

In the meantime you need to look for value.  You will find this by locating the best "player" in an industry that you think will be around and determining whether this individual stock was "beaten down too far".   If you "dollar-cost average" or "value-cost average" this can be a good time to add to a position.  If you invest in mutual funds, the same holds true for you.  In all cases you needed to monitor your diversification (which sometimes can be difficult with mutual funds - just make sure they are not all in the same business --- all large cap growth, etc.), your time horizon and be comfortable with your risk tolerance.  It is never too early to look for "sales" (deals on value plays) or starting to save and/or invest for your retirement!

It has been a while . . .

I am back from vacation and getting caught up on things and it has been a while since I posted.  I was hoping someone out there would have straightened out the markets while I was away!  What were you people doing out there!  Oh well, I guess I didn't really expect oil prices to come down below $100 a barrel.  Nor, did I really expect the Dow to rise back up toward 12,000, NASDAQ above 2,500 and the S&P above 1,350!  Hey we can dream can't we!  At this writing we have begun the Democratic National Convention in Denver, CO.  The Republicans will get their shot in Minnesota after this.  As this concerns the markets, we should be seeing statistics, as we begin winding up the year, as to which party would be better for the markets.  I don't know what kind of faith you can put in this, but here are some of the numbers:

The Dow is the first year of a President's term:

Republican   +3.9%

Democrat  +6.0%

Who knows what will happen this time around!

There are certain industries that seem to be doing well in this slowing economy and 3rd quarter overall will be tough.  Some of the best hanging in there (with upward revisions in earnings) are Healthcare, Aerospace, Telecoms, Financials (yes they have no where to go but up).  Energy and Utilities are showing downward revisions to earnings!  So, still plenty of time until the end of the year, but as the 3rd quarter is winding down, many people look to reallocate their investment portfolio.  This is a tough year for much and most people would not have been on the sidelines with cash, so some strong analysis not only among which sectors should one be in, but in what company within that sector!

Well, I am back from vacation!

Well it has been a while since I have posted as I have just returned from a nice long vacation!  Lots of stuff has been happening in the world, both financially and otherwise.

First, Michael Phelps has achieved his goal of the 8 gold medals - I saw most of them during vacation - an amazing feat.  I also was able to really test out the iPhone as I didn't get great WiFi connectivity in the hotel room (too far from an antenna I guess).  The 3G really worked well for checking emails and posting small messages, I highly recommend it for those who have been waiting.  I have had no trouble with the AT&T service (I was with Verizon) in my local area, and had better coverage area on vacation than I would have had with Verizon.

Well, the financial markets were in another roller coaster pattern, with fears/signs of inflation, credit worries in the financial sector, oil dips to $113 and I still can't get my local pumps below $3.89 a gallon!!!  Russia and the Republic of Georgia are in a mini war - this adds instability to overseas investments, specifically in emerging markets funds.  Some analyst feel we are only halfway through the credit crisis and financial institution failure, one even going so far as to say that Merrill Lynch could fail.   The dollar, which had been on an incredible run, is seeing some profit taking early this week, but I project it will continue to make moves against foreign currencies.  Retailers are suffering weaknesses this weak as you are juggling back-to-school purchases with a worry about what consumers are going to be willing to spend for the upcoming holiday season.  Many analysts feel that retailers will have to offer huge discounts (read little markup/profit margin) to get people to start spending early.  Will it be enough???  We will have to see!

The markets had some success for a few days as some reported 2nd quarter earnings numbers were okay in some tech stocks, however, now there seems to be worry about the third quarter numbers, so things are still shaky.  I still think you can bottom feed on individual financial company stocks, but this is risky business.  If you guess right, you will be highly rewarded!  Fannie Mae and Freddie Mac appear ready to be recapitalized by the U.S. Treasury, so we will have to stay tuned for that.

For those of you thinking about buying a small car in the year end clearance times,  for good gas mileage, here is a list of the most affordable --- the "Top Ten Rides for the 2008 Model Year", all under $15,000 MSRP:

Honda Fit

Hyundai Elantra GLS

Suzuki Reno

Nissan Versa S

Kia Spectra LX

Smart fortwo

Toyota Yaris

Kia Rio

Hyundai Accent GS

Chevrolet Aveo 5 SVM

Olympics coming this week.

With the 2008 Summer Olympic Games starting later this week, bringing together people from many countries around the globe for competition and social interaction. It is a good time to reiterate the consideration of global investing as part of a diversified portfolio. Diversification can be your best protection against risk. It allows you to balance cash, fixed income and equity investments. Not only should one do this with domestic company investments, but it is important to do this with investments of foreign companies (bonds, stocks, or mutual funds allow you to participate in these markets).

Currently, 21 of the worldwide GDP is generated by the Unites States. It is estimated that by 2030, this will fall to 10%. So, currently 79% of the worldwide GDP is generated by countries OTHER than the United States. If you only invest in domestic securities and currencies you are limiting yourself tremendously.

Watching the Olympics you will see athletes from many countries, some you may not know much about. Use this opportunity to learn about other countries, cultures, and business environments and have this knowledge help your investment portfolio. You can invest in individual securities, but it is usually much easier to invest through a mutual fund. There are a number of choices out there and some big mutual fund companies like Vanguard and Fidelity are good places to start the investigation into what is out there. There is good free information about investing, asset allocation, diversification, and risk for you to review.

International financial market news

The U.S. markets are having a little rebound early today. Oil has dipped below $121 a barrel. OPEC ministers feel that they will not cut production preferring to have a healthy supply/demand balance to help stabilize prices, even admitting that prices need to come down a little more. Americans remain with a gloomy outlook on the economy though there are industries and areas of the country were things are better than other places.

Overseas there are still signs of eceonomic difficulties. Though Germany's inflation rates hovers around 3.3% there is a 5 year low in morale/confidence in the economy in Germany. The jobless rate in Japan is on the rise. In Australia, Starbucks is shutting 2/3 of its stores in a cost-savings measure.

For investors, careful review of emerging markets are still showing value for the investment dollar, so consider those. The larger country stocks need to be followed and look for buying opportunities as we hit bottom of this bear market, there will be great buying opportunities all over the world.

A rough week in the markets . . . .

Last week was a rough one in most major markets across the globe.  Oil prices continued to fall, dipping below $125 a barrel, though I am still paying $3.89 a gallon at the pump!  The new worry coming into back-to-school and then the holiday shopping season is related to retailers and raising prices.  The big retail outlets have tried to be supportive of the consumers in these tough economic times, though suppliers are now raising prices to them so it may be hard for the Costcos and Wal-Marts to not pass these prices on to the consumers, tightening the wallets and purses of consumers even more.  Other worries for the remains of summer is the heat wave moving through the country now.  Yes, it is the end of July and it can get hot (August is the hottest month), but overall it has been a pretty normal summer with very few heatwaves (though other weather issues - rain, floods, etc. - have been in the news) have occurred.  Last week the heat wave had gripped most of the country with more expected this week.  This should cause an increase in utility usage which in turn (supply/demand) will cause an increase in consumer spending to cool themselves off.  I think by now the government's economic stimulus checks have all been cashed so it will be interesting to see if discretionary spending comes to a halt or is it just temporary (dog days of summer) before the holiday shopping season!

Oil prices continue to decline . . . .

The stock markets are picking up a little steam this week as the barrel price of oil continues to drop.  Have we seen the top of the mountain???  It may be too early to tell, however, the slight relief makes you wonder whether all of the big three that is closing plants and getting rid of shifts that are making the big gas guzzlers (trucks, large SUVs, etc.) is not a little hasty!

However, with the kind of loses that GM and Ford (Ford announces today, down $8.7 B in losses), it is hard to argue against them.  This Ford announcement explaining the write down of the value of SUV and truck operations, with its view of a turnaround cloudy until 2010, has caused the stock market to be down a couple hundred points today after a nice couple of days of rebounds.  It appears good news is handled cautiously by the markets while bad news hits like a lead balloon.  GM is getting killed domestically but doing pretty nicely overseas.

So, what is a person to do; depends on a number of things!  What is the risk tolerance, what is the time horizon for the funds at risk, what markets are have room for profits???  At this point, I think you need to be careful and picky.  If you can be a value investor in large cap growth companies that have been beaten down (anything blue chip really) there is upside room for growth with little downside risk.  Also, consider the same in Europe, large companies from large countries have some value plays there as well.  Finally, pay attention to Emerging Markets as I think this is the area of growth!

Consider global investing

It is not a stretch to say that if you are going to diversify your investment portfolio, you need to look outside the United States for investment alternatives. Now, the easiest way to do this is through mutual funds (global, international, specific regions, etc.). However, that being said, many of the funds which invest in international firms, specifically Europe and large cap companies are not fairing much better than the U.S. mutual funds (those holding U.S. companies shares). Places like China, India, Brazil, Argentina, Romania, Poland, Russia are booming. The GDP of these countries is expected to grow on average 3 times faster than the U.S. GDP. Emerging Market mutual funds invest in companies in some of these countries and may be a category to look at if you have a long-term time horizon 7-10 years and a moderate risk tolerance.

Markets - what is happening!

Apple is expected to announce good results for the third quarter!  I was finally able to get into a store that had the new Apple iPhone 3G!  So, I have added to the revenue stream in my own small way!  

Drug companies are being looked at for possible mergers and takeovers as Roche offers $44+ billion for Genentech!  Merck and Schering to report 2nd  quarter earnings today!  Drug companies may be the hot ticket right now.

Crude Oil remains under $130 a barrel, so why is gas still $4.25 a gallon at the pump????  It is amazing how quickly it can go up and how slowly it can drop down!

S&P ETFs are getting a lot of interest right now as investors worry about individual stocks and would rather gamble on a pice of 500 large companies to show when the turn around happens!

Money safety

With some recent issues in banking and the mortgage lending business (IndyMac - taken over by the FDIC) some may wonder whether their financial institution is okay?  Well it depends!  I know, kind of a weak answer to the question, but just like many other things, you need to understand the situation.  Banks, savings & loans, and credit unions all fall under and regulatory body.  Each of these institutions has insurance coverage required by law in that industry.  For the most part you are looking at protection of $100,000 per account (checking, savings, etc.) for that individual.  Beyond that things are potentially at risk.  Now this amount does not apply to an investment-type of account which bears risk and has no guarantees on just about anything!  SO the moral of the story boys & girls is to understand the rules.  This is always a good idea, but when you are talking about your money, it is critically important.

Retirement planning --- focus on your time horizon

Each day the financial markets ride the roller coaster ride which would lead you to believe everything from the sky is falling to we are out of the woods.  Are we in a recession?  Or, yes we are, so when will it end?

Today, oil prices dip below $130 a barrel after spending time above $143 recently.  The stock market, measured by various indexes are up almost 2.5% in the last couple of days.  So, are we out of the woods or are these gains short-lived?  I haven't a clue.  What I can tell you is it pays to diversify, carefully, within your time horizon and risk tolerance.

It is never too early to think about retirement and this requires a savings and investment plan.  You can check with Kiplinger's to determine if you savings in on course.  This will allow you to check your age, the amount currently have in a nest egg and how much you need to save from now until 65 to get to your goal.

When you are working through this process there are a lot of "formulas" for savings and investing that you will run across, however, these are guides and you are the only one who can determine what level of risk you are comfortable with and how close to retirement you are.  Some "formulas" relate to how much of your portfolio should be subject to the fluctuations of the stock markets (so stocks versus bonds/cash balance).  The common rule of thumb is to take 100 and subtract your age to get the percentage of your portfolio which should be invested in stocks (equity) and the remainder in cash/bonds (fixed income).  This is a start, and again just a guide.  You also need to determine if you want to put that stock and/or bond percentage in domestic or international or both, how risky (small cap versus large cap for stock; short-term versus long-term debt instruments for bonds).

Some % model portfolios using mutual funds could be like this:

10 years + before retirement (moderately aggressive)

20% International Large Cap stocks

15%  Large Cap Growth - domestic

15% Mid Cap Growth - domestic

15% Small Cap Growth - domestic

10% Emerging markets

20% Domestic bonds

5%  International bonds or commodities

10 years + before retirement ( moderately conservative)

20% Treasury Bond fund

40% Balanced Fund

10% Large Cap Growth Fund

10% Large Cap Value Fund

10% International Large Cap Fund

10% Cash Equivalents

Again, these are ideas and you need to determine your risk tolerance, time horizon, and total funding goal to determine if you are on track or need to invest more!

Apple iPhone it is about the software!

As Apple continues to reinvent itself with the PCs, the entertainment, and the iPhone it is not hurting the stock price or future revenue growth. I think the talk about the iPhone (spend some time on the discussion boards - Macworld, etc.) revolves around the polar opposites, either people love the phone or they hate it as they feel it is missing this feature. Many of these features are part of the hardware of the unit (camera, etc.), others are part of the software. I do think the important innovation from Apple related to this phone is not the hardware but the software. The App store will have about 800 third party applications for use with the iPhone (a large portion of these at no additional cost!). I think this is the area of growth for the future related to this product.

On a related note, there seems to be a shortage of phones (I was supposed to go to a store to get one on Friday (July 18th) but I am not sure the store by me will have one. Especially since I can't get there until about 11:00 a.m. and there is sure to be a huge line (though I expect it to be less than last week).

Finally, I find a lot of the chat rooms humerous at this point since the longest anyone could have owned and used an iPhone is 6 days (counting today), and many of these posts are from a day or two after purchase and the writer is extolling the virtues or complaining that this is the biggest ripoff in all of retail! I just find it amusing that someone can be so sure and confident about something with only 24-48 hours of use! Now, if someone can help me decide whether I should spend the extra $100 for the 16 GB instead of settling for the $8 GB, that would help!!!

Apple iPhone 3G

Well, the Apple iPhone 3G made its worldwide debut on Friday, July 11th.  There were over 1 million units sold in that first weekend, and sales are still going strong.  I attempted to get mine on Friday, but the lines were real long!  I got to the store around noon, the line was long so I went to lunch and did some shopping.  Came back to the line around 1:30 and talked to someone still outside who had been waiting for 3.5 hours!  I decided to try again another day!  Yes, the phone still is locked to ATT, though different from a year ago, ATT coverage has greatly improved in my neighborhood, so I am ready to take the plunge.  The 3G will allow surfing the net at faster speeds than the EDGE network of the first iPhone, though WiFi is still faster if you are close to a hotspot.  This is important if you have 3G access where you are at (I do at work, but the home area doesn't have it yet, though the talk is soon!).  There is also an Apps Store which will allow iPhone users an ability to customize their phone to their liking with additional application software (games, productivity, etc.).  The phone comes in white 16GB, and black 8GB & 16GB.  I haven't decided yet.  I do like the black, but I have the iTouch which is black so I may decide on the white!

Asian Markerts

Part of investing philosophy is diversification.  Diversification can happen in a lot of ways, and frankly should happen in many ways (time horizon, industry, credit worthiness, etc.).  Often it has been reported that you can reduce your risk by adding a little international exposure to your portfolio.  Of all the companies trading in the world markets about 90% of them are not in the U.S. so this means you would need to get some international exposure or eliminate a large percentage of investment possibilities!  The financial crisis in the U.S. is having a negative impact on foreign stock markets and Asia is no different.  These markets are down from 15% (Tokyo) to 45% (Shanghai) to date.  Analysts are no longer asking if  we are in a bear market, but asking how long the bear market will last?

Crude Oil Prices

Commodities can be tough to get a handle on, and oil prices are not exempt from this difficulty.  The correlation between the price of the barrel and the price at the pump is something that many speculate about.  It can be difficult to understand how oil that was just traded today, can have a price which affects the gasoline already in the ground that you will pump today, when that gas was already contracted for and contracted prices determined.  Future prices would seem to be going up for the gas I will be buying next week.  Others feel with the influx of India & China in the market for oil, this is really a supply and demand issue.  Should be great fodder for election debates and we will have to see how it shakes out.

New material

Well it has been a while since my last post.  Part has been personal and part has been time and direction.  I think I have figured out the time and the direction - personal issue is mostly resolved so here we go!

I have decided to focus on money, finance, personal finance and things related to retirement and investing.  

Now, as usual you need a disclaimer her, as though I have a financial background, I am offering only opinion and/or data I have gathered from others and am not offering advice for a fee nor offering investment products or services through this blog site.  

I will periodically make comment about the world around me and I how I see things in the world of money.  I hope others are fascinated by some of the things I reveal and will share as well.

I have recently discovered Yoga . . .

My wife had tried some yoga a couple of weeks ago, and like many guys, I was like "whatever". I finally spent some time, over the last month, reading one of her magazines, Yoga Journal. We began about 2 weeks ago just trying some of the poses (about 5-10 minutes a night). This past Saturday, I went to my first official Yoga class (vinyasana), which was 60 minutes of moving from pose to pose, holding each one for between 3 and 7 breaths. This was a very tiring workount and I was really perspiring at the end. I do have to say I was stiff the rest of that day and the next day, but I can tell you on Wednesday, that my back hasn't felt this good in years! We are now doing 15-20 minutes every day, usually before going to sleep. I have had good restful sleeps in the last few nights since doing this!

One of Bob's passions . . .

I have been involved with greyhound rescue for a number of years. I have owned three of these wonderful animals, including currently a 6 year old female named Charm (here she is next to one of our 3 cats!). She is a 40 mph couch potato!

The organization I have worked with rescues retired racing greyhounds when their owners no longer need them to race and plan to euthanize them. This, like other rescue organizations get involved to make sure this doesn't happen to as many dogs as possible. The organization I work with is called Greyheart. 

Share some of my favorite websites for things . . .

Here are some good websites for learning about financial matters. This could be for personal finance or items having to do with investments. Both are different but good places to start.

Yahoo! Finance

CNBC cable channel

A good starting point for someone who doesn't know a lot about finance, but is willing to put forth the effort to learn about it, is Kiplinger's Personal Finance magazine. This magazine is a monthly publication that is very easy to read and understand and addressed different issues every month from emergency savings, to buying vs. leasing a car, to buying the first house, to insurance, estate and retirement planning and many other items important to putting together a personal financial plan.

Welcome to my blog!

This is kind of strange since I started a blog about 2 years ago, got busy, never kept up with it and eventually just dropped it.  Well, time to fix that!  I will be making a concerted effort to post regularly so for those who happen upon this site, find some things of value.

Some subjects I will be talking about in this blog:

1. Finance, business, etc.  (my educational background is in finance, management, and international business)

2. Apple (I am a recent convert to the MacBook Pro, with the Intel processors - awesome)

3. Exercise and staying healthy (I work out a lot; I am a certified Spinning instructor, I run and bike, and just recently started doing yoga)

4. Traveling (my favorite thing to do when I have free time and extra money)

5. Other items (recently, December 22, 2007, I became a vegetarian)