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.