The Happy Capitalist

Doggone it, people like me!

2011-04-19T17:33:00.000-07:00

I really thought Al Franken was a funny guy as a comedian and actor. As a U.S. Senator, I've been less amused. But today, after learning about Al's tax woes, I'm amused once again.

It seems that Senator Franken accidentally forgot to pay some taxes. Not just a little bit, it was $70,000. And it seems he had stiffed 17 states.

From Politico:

The comedian-turned-Democratic politician announced on Tuesday that he will be paying $70,000 in back taxes and penalties in 17 states after several weeks in which the campaign downplayed the amount of money that his company owed and changed the reasons for why the taxes (and workers' compensation insurance) had not been paid. During this period of time, Franken has also been avoiding publicly commenting about the controversy, instead relying on his surrogates to offer explanations.

Franken says it's his accountant's fault. Of course it was.

The Biden Response

2011-04-14T07:30:00.001-07:00

Starving orphans and grandma in a snowbank

2011-04-13T10:06:00.000-07:00

The prospect of true health care reform evaporated a year ago in the political drive to put 30 million more Americans on the government heathcare dole. And, Obamacare does practically nothing to address the most contentious entitlement crisis we face--Medicare.

The core flaw in our current health care system is that consumers rarely have any incentive to seek out the best value for the money. The 2012 budget proposal put forth by Paul Ryan re-introduces the consumer to evaluating medical services on a cost-benefit basis and deserves serious consideration.

Ryan's 2012 budget proposal modifies Medicare by providing a premium support subsidy giving millions of seniors more control over their heathcare costs allowing them to create their own plan rather than Medicare's one-size-fits-all. Even Bill Clinton endorsed a form of premium support in 1999.

A piece in today's WSJ goes further:

But the key point is that premium support would reduce health costs over time by changing the incentives of the health market. MIT economist Amy Finkelstein's research suggests that Medicare's 1965 creation led to market-wide changes that explain about half of the increase in real per capita health spending between 1950 and 1990. Mr. Ryan's plan would be as consequential in reverse.

And...

Medicare "as we know it" will change because it must. The only issue is how. Mr. Ryan is offering Americans a reform rooted in consumer choice and private competition, rather than political control and bureaucratic rationing. This is why he is under such ferocious liberal assault.

It's going to be very interesting to see how Obama addresses this in today's speech. But if it's more drivel like what we heard last week about Republicans starving orphans and throwing grandma out into the cold, I think I'll pass.

Yippee!

2011-04-09T07:46:00.000-07:00

Budget deal reached! Crisis averted!

Really?

How about some perspective? What Boehner, Reid and Obama agreed to last night is to spend $39 billion less in 2011 than the federal government spent in 2010. Sounds like a lot of money until you look at the big picture. In 2010 the federal government spent $3.552 trillion. Do the math--that's only 1.1% less. Not to mention that our national debt is nearly $14.3 trillion and growing.

Such a big fuss over practically nothing. I can't wait until the fighting starts on a 2012 budget and raising the debt ceiling. Yippee!

Time to knock some heads?

2011-04-08T11:14:00.000-07:00

Okay, so it's been over a year since I posted anything here. What can I say? I'm retired and traveling the country with my wife and two cats in our motorhome, having a blast touring our wonderful country and I've just been too darn busy!

But that doesn't mean that I'm not up to date on politics, world news and other events that impact capitalism. Quite the contrary. I still manage to read the top stories in the online versions of publications like The Wall Street Journal, The New York Times and Fox News. I just haven't been motivated or inspired to write about them. That may be changing.

The state of American politics is turning my stomach and raising my blood pressure. The vitriol is absurd and the lies and extremism abound. If I hear any more about "starving six million seniors" or "throwing women under the bus" I'm driving my Winnebago straight to Washington to knock some heads! Our elected representatives need to get their collective act together and do what's right for America. Too much is at stake.

In the meantime, check back here from time to time, I just might be inspired to post something now and then.

Obama is a lousey moderator (among other things)

2010-02-26T10:36:00.000-08:00

The only real result from yesterday's health insurance summit in Washington seems to be more finger pointing. Dems are pointing critical fingers at Republicans for refusing to go along with this massive bill and Republicans point to Democrats' refusal to abandon legislation that most Americans find distasteful or, at least, suspect.

So why wasn't this day-long summit more fruitful?

For one thing, any experienced business leader can tell you that the success of any meeting depends on the moderator's ability to follow an agenda that is built upon stated and agreed upon desired outcomes. Obama didn't do that. If there was a written agenda, the viewing public wasn't aware of it. It there were stated objectives, they must have been secret. Instead, Obama, seemingly at random, picked on attendees to speak. And what's a politician going to do whenever given the opportunity to speak in from of a camera? You bet, grandstand. By the time everyone in the room was done bloviating the day was shot.

If the President wanted to produce any substantive results in yesterday's summit, he did a poor job going about it. But then, maybe he got exactly what he wanted.

It's not about health care!

2010-02-25T11:05:00.001-08:00

Let's be clear about the reform being debated in Washington. It's not health care , it's health insurance. It has nothing to do with the delivery of health care, it is about who pays for it. The President and many members of Congress, for whatever reason, are intent on calling it the wrong thing. Is there some kind of hidden agenda or are they all just too stupid to know the difference?

The Week in Review

2009-03-22T17:20:00.000-07:00

The DJIA rose 54.40 points, .75% to close Friday at 77278.38
The Nasdaq Composite gained 25.77 points, 1.80% to finish the week at 1457.27
The S & P 500 rose 11.99, 1.58% to 768.54
The 10-Year Treasury yield fell 0.263 percentage points to 2.626%
Crude oil rose $4.81, 10.4% to $51.06

The markets had a second consecutive week of gains and are showing signs that we may have the first monthly gain in stocks since August. The last two days of the trading week had investors trying to interpret the Fed's plan to buy treasuries.

The Week in Review

2009-03-14T08:36:00.000-07:00

The DJIA rose 597.04 points, 9.01%% to close Friday at 7223.98

The Nasdaq Composite gained 137.65 points, 10.64% to finish the week at 1431.50

The S & P 500 rose 73.17, 10.71% to 756.55

The 10-Year Treasury yield rose 0.059 percentage points to 2.888%

Crude oil rose $0.73, 1.60% to $46.25

The absence of profit taking on Friday should be taken as a good sign as investors continued to buy on four consecutive days after setting 12-year lows on Monday. Oil prices have firmed and are up 43% in the last four weeks indicating that the economic shock of the last several months might be wearing off. But there's still lots of bad economic news ahead.

Let 'em fail

2009-03-09T06:53:00.000-07:00

From The New York Times:

John McCain and Richard C. Shelby, two high-profile Republican senators, said on Sunday that the government should allow a number of the biggest American banks to fail, The New York Times’s J. David Goodman and Brian Knowlton report.

“Close them down, get them out of business,” Mr. Shelby, the senior Republican on the Banking Committee, told ABC’s “This Week With George Stephanopoulos.” “If they’re dead, they ought to be buried.”

While the Alabama senator did not say which banks to shutter, he suggested that Citigroup might be on that list, saying the bank has “always been a problem child.”

Mr. McCain, appearing on “Fox News Sunday,” echoed that sentiment without identifying any banks. Mr. McCain, who lost the presidential election last November, also accused the Treasury Department of avoiding the “hard decision” to let “these banks fail.”

Capitalism without bankruptcy is like Christianity without Hell.

The Week in Review

2009-03-07T09:32:00.000-08:00

The DJIA dropped 435.99 points, 6.17%% to close Friday at 6626.94

The Nasdaq Composite fell 83.99 points, 6.10% to finish the week at 1293.85

The S & P 500 fell 51.71, 7.03% to 683.38

The 10-Year Treasury yield fell 0.213 percentage points to 2.83%

Crude oil rose $0.76, 1.70% to $45.52

Just for grins, check out the last post before the hiatus, The Week in Review on August 26th, 2007, about six weeks before the market peaked in mid-October. Puts things in perspective, don't it?

Obama--already setting records

2009-03-06T19:55:00.000-08:00

From Fox News:

The Dow Jones Industrial Average has fallen faster under President Obama than under any new president in at least 90 years, according to a review conducted by Bloomberg.

Bloomberg reports that since Inauguration Day, the Dow has fallen 20 percent, leading at least one investor to dub this the "Obama bear market." The Dow has also dropped 31 percent since Election Day.

Despite a string of government bailout offers and Obama's advice earlier this week that Americans should be buying stock while shares are low, the Dow has continued to freefall.

At what point does Obama actually start to take some responsibility for this?

Who's big mess?

2009-03-06T17:57:00.000-08:00

President Obama keeps reminding us that it's not his fault. Again today at a police acadamy graduation in Ohio, he said, "We inherited a big mess." It seems to be his favorite line.

It is, after all, George Bush's recession, right? Sure, some of the pieces were put into motion long before W took office, but he didn't do anything to correct the developing sub-prime mess or the impending housing market collapse that triggered this recession. So, most of the blame should rightfully be placed squarely on Bush's shoulders.

Most of it.

But shouldn't others share some of the blame? What about Congress? What about the Clinton administration where it all started?

President Obama was a U.S. Senator for four years before being elected President. (Even if he did spend most of that time campaigning for his new job). And Joe Biden served in the Senate for 36 years.

Rahm Emanuel, Obama's Chief of Staff, was a senior advisor to Bill Clinton and then worked as an investment banker. Hmmm.

Obama's Secretary of the Treasury, Timothy Geithner, besides being a tax cheat, worked in the Treasury Department under Lawrence Summers and Robert Rubin during the Clinton administration.

Eric Holder, Obama's Attorney General, served as Deputy Attorney General under Bill Clinton and was deeply involved in Clinton's controversial pardon of Marc Rich.

Hillary Clinton, Secretary of State, a U.S. Senator for eight years and First Lady during the Clinton administration.

So when President Obama says "we" inherited a big mess, just exactly who is he referring to?

Barney Frank and The Young Liberal

2009-03-02T06:00:00.000-08:00

The Young Liberal in our office approached me the other day and started a conversation about the pitiful mess our economy and stock market are in and asked some pretty good questions about sub-prime mortgages and and the collapse of housing markets. I was so encouraged when he seemed to come to the realization that government meddling had a significant role in our present lot. There's hope for The Young Liberal, I thought.

Then he ruined it all. He said, "I've been seeing a lot of Barney Frank on the news. He's a pretty sharp Congressman."

Crap!

The hiatus is over

2009-03-01T07:35:00.000-08:00

So, The Happy Capitalist has been on a little hiatus. Okay, not so little. It's been a year and a half. Everyone needs a little time off, right?

Anyway, this seems to be a good time to bring back The Happy Capitalist as American capitalism and it's future are in question. We are caught in the midst of a painful recession, the likes of which have not been seen since the early 1980s. Our new President believes that the way out is through massive government spending in the form of bailouts, social programs and the nationalization of American businesses. His administration is rapidly moving away from the basic tenets of capitalism and individual productivity and responsibility.

In posts that follow we'll take a good hard look at Obama's programs and the other goings-on in his administration with a critical eye. We'll explore how the U.S. and global economies got to this point and who's responsible, anyway. We'll follow economic news, the stock market and changes in taxes, Social Security, Medicare and housing. It should be fun.

The week in review

2007-08-26T10:56:00.000-07:00

The DJIA shot up 299.79 points, 2.29% to close Friday at 13,378.87

The Nasdaq Composite rose 71.66 points, 2.86% to finish the week at 2576.69

The S & P 500 gained 33.43, 2.31% to 1479.37

The 10-Year Treasury yield fell 0.040 percentage points to 4.633%

Crude oil fell $0.73, 1.02% to $71.09

Financial Planning Question of the Week

2007-08-22T17:51:00.000-07:00

Feel like testing your financial planning expertise? Here's a real-life question I had recently...give it a shot.

A client is buying a new vacation home and selling an existing second home. She will need about $200k for the down payment next month and should be able to pay it back in 3-4 months when her existing second home sells. She is in the 35% federal tax bracket, 9.3% state and not subject to AMT. What's the best way to raise the money?

a) A home equity line of credit on her primary residence at 8.25%
b) Liquidate investments and pay capital gain taxes of $8k-10k
c) Take a $200k margin loan at 9.125%
d) Take a swing loan at 7% on the present second home

Take your best shot!

Cartoon Tuesday

2007-08-21T18:42:00.001-07:00

By Bob Englehart, The Hartford Courant

Baby I'm amazed

2007-08-16T20:40:00.000-07:00

I've been an investment professional for almost thirteen years and I am still amazed at the extent to which the market will overreact to information that shouldn't even be news. This morning's non-news is a great example.

WASHINGTON (AP) -- Construction of new homes fell in July to the lowest level in 10 1/2 years, and analysts said there is no end in sight to the deepening housing slump.

The Commerce Department reported Thursday that construction of new homes and apartments dropped by 6.1 percent in July from the June pace to an annual rate of 1.38 million units.

For years mortgage pimps have been lending gazillions of dollars to people with credit scores of 425. Now that it's come back to bite them in the ass in the form of defaults and foreclosures, these Einsteins have quit lending the un-creditworthy any more money. And we're supposed to be surprised that new home starts are falling?

It's even more amazinging that it actually did suprise a lot of folks as the Dow slid 340 points (intraday) on the news. What will tomorrow bring?

Sell! Sell now!

2007-08-11T07:38:00.000-07:00

It's definitely time to sell. No, not your stocks. Invest for the long haul.

It's time for Matt Murphy, the young New Yorker who caught Barry Bonds record-setting home run ball, to unload the thing.

While most sports memorabilia appreciates with age, we don't see any upside to hanging onto this used Spalding, only downside. Barry's image will likely become even more tarnished as the steroids scandal continues to unfold. Then there could be surprises that come out of left field. Perhaps it's revealed that Bonds has been spending the off season at Michael Vicks's little dog park. Or maybe he's been betting on basketball games with Tim Donaghy. Any revelations like those would devastate the value of the ball and Murphy's tax liability has already been sealed.

The ball is considered by the IRS as a "treasure trove" and will be taxed as ordinary income based on its value when acquired. Most estimates put the ball's value around $500,000 which throws Mr. Murphy into the top tax bracket. Tack on another 7% or so for the state of New York and the total tax bill is around $210,000. That leaves about $290,000; not a bad day's work, but I certainly wouldn't risk the ball's value falling below that tax liability by holding it too long. That's worse than striking out in the bottom of the ninth, bases loaded.

Cartoon Tuesday--One-sheet Sheryl

2007-05-08T20:52:00.000-07:00

By Gary McCoy, The Suburban Journals

Cartoon Tuesday

2007-04-17T06:40:00.000-07:00

By Mike Lester, Rome News-Tribune, Rome, GA

Cartoon Tuesday

2007-04-10T06:40:00.000-07:00

By Larry Wright, The Detroit News

The week in review

2007-04-07T15:41:00.000-07:00

DJIA shot up 205.85 points, 1.67% and closed the week at 12,560.20.

Nasdaq Composite added 49.70 points, 2.05% and closed at 2471.34.

S & P 500 also rose, adding 22.90 points, 1.61% to 1443.76.

10-year Treasury yield rose 0.101 to 4.752%.

Crude oil dropped $1.49, 2.4% to $64.28.

Cartoon Tuesday

2007-03-27T06:33:00.000-07:00

By M.e. Cohen, New Jersey, Freelance

Great season, Jayhawks!

2007-03-24T17:42:00.000-07:00

The week in review

2007-03-24T07:36:00.000-07:00

DJIA had its best week in years gaining 370.60, 3.06% to finish out the week at 12,481.01.

Nasdaq Composite shot up 76.27 points, 3.21% to 2448.93.

S & P 500 rose 49.16, 3.54% to 1436.11.

10-year Treasury yield rose 0.067 percentage points to 4.613%.

Crude spent much of the week back above $60 rising $2.70 since last Friday, 4.53% to $62.28/bbl.

Stocks had their best showing in years this week after the Fed announced (to no one's surprise) that it was leaving rates untouched. In addition they indicated that their next move would likely be to ease rates, reversing the direction of the last couple of years.

Cartoon Tuesday

2007-03-20T19:46:00.000-07:00

By Henry Payne, The Detroit News

The week in review

2007-03-18T08:19:00.000-07:00

DJIA had another rocky week, falling 165.91, 1.35% to 12,110.41.

Nasdaq Composite also dipped, dropping 14.89 points, 0.62% to 2372.66.

S & P 500 lost 15.90 points, 1.13% to 1386.95.

10-year Treasury yield fell 0.045 percentage points to 4.546%.

Crude oil fell back below $60, losing $2.94/bbl last week, 4.90% to $57.11.

Cartoon Tuesday

2007-03-13T07:08:00.000-07:00

By R.J. Matson, The New York Observer and Roll Call

Capitalist of the week: Ernest Gallo

2007-03-11T08:45:00.000-07:00

"I simply judge a wine by pouring a glass and drinking it. If I feel like another glass and have a desire for it, to me it's a good wine.

Ernest Gallo, who founded the Gallo wine empire with his brother Julio, died Tuesday at the age of 97. Julio died in an auto accident in 1993.

Ernest Gallo was born on March 18, 1909, to Giuseppe Gallo, known as Joseph, and Assunta Bianco Gallo, who was called Susie, in Jackson, California. In the 1920s the couple bought a farm near Modesto and began to grow grapes. But with Prohibition and then the Great Depression the couple became saddled with an unproductive farm and heavy debt. On the morning of June 21, 1933, in the kitchen of the farmhouse, Joseph Gallo shot and killed his wife and then himself, leaving three sons, Ernest, Julio, and their younger brother, Joseph, then 12.

With a little money left by their dead parents and a loan from Ernest's mother-in-law they rented a shed in Modesto. They knew nothing about making wine and, as legend tells it, had nothing more than a pamphlet from the Modesto Public Library to explain the trade. The Gallo Winery began with just $5,900 in capital.

Business was good for the brothers but it really took off in 1957 with the introduction of Thunderbird. Gallo has been criticized for exploiting the ethnic "misery market" with this citrus-flavored, fortified wine but it's reported that the brothers sold 32 million gallons of Thunderbird in it's first year.

The Gallos, realizing they could not sustain their winery on cheap products, moved up-market and began to produce better wines. Business flourished.

From the New York Times:

And the company, entirely family controlled, was indeed large. Industry analysts estimate that Gallo produces some 80 million cases of wine a year, which is about 220,000 cases or 2.64 million bottles every day. The company reportedly owns 10,000 acres of vineyards in California and buys grapes from hundreds of independent growers.
According to Forbes magazine, Gallo had sales of about $980 million in 2005 with a net profit of $44 million. In 2006, according to Forbes, Ernest Gallo was No. 283 on its list of the 400 richest Americans, with an estimated net worth of $1.2 billion.

The week in review

2007-03-11T08:22:00.000-07:00

DJIA regained 162.22 points this week, up 1.34% to 12,276.32.

Nasdaq Composite also made up some of the previous week's losses, up 19.55 points, 0.83% to 2387.55.

S & P 500 gained 15.68 points, 1.13% to 1402.85.

10-year Treasury yield rose 0.076 percentage points to 4.591%

Crude oil slipped back$1.59, 2.58% to $60.05.

Stop saving for retirement!

2007-03-07T19:27:00.000-08:00

In a completely irresponsible MarketWatch column yesterday, Paul B. Farrell makes the assertion that Americans are being duped by Wall Street into saving too much for retirement.

Warning, you're being hypnotized: Wall Street insiders, bankers, brokers, advisers and their buddies want you to pile up assets. Why? Not for your own good, but because the more securities you own, the more money they make in fees! Get it?

Farrell seems to think that your pension, Social Security and perhaps a part-time job are all you'll need in retirement.

Focus on income: Pensions, Social Security, IRAs, and a new career, business or some part-time work. And remember, savvy families also quietly build wealth in home equity. Pay off the mortgage, live debt-free. Downsize. Maybe cut costs moving to a cheaper region. Go for a reverse mortgage. Be creative. Add up these pieces of income and you'll see how to reach whatever you need to live comfortably in retirement.

That's all just fine Paul, as long as you neglect the fact that the defined benefit plan has gone the way of the ten-cent cup of coffee and anyone who has read a newspaper in the last decade has serious questions about Social Security's sustainability. Besides, being a greeter at Wal-Mart is not part of my retirement plan.

Who wants to take their chances on Farrell's advice? Anyone?

Note: Mr. Farrell (Dr. Farrell, actually) has a law degree and a PhD in psychology--proof that a good education doesn't necessarily make you smart.

The week in review

2007-03-03T08:28:00.000-08:00

DJIA shed 533.38 points, 4.22% and finished Friday at 12,114.10. Just a little painful.

Nasdaq Composite lost 147.10, or 5.85% to close the week at 2368.00

S & P 500 dropped 64.12, 4.41% and stands at 1387.17.

10-year Treasury yield fell 0.163 percentage points to 4.515%

Crude oil was up half a buck, .82% to $61.64.

Normal markets correct from time to time. A correction is usually defined as a decline of over 10%. This market is down less than ten percent so it has a long way to go for this little downturn to even be considered a correction. Yes, it was the worst week in over four years but ignore the media who want you to believe the sky is falling and stick to your investment plan.

Too little too late, Alan

2007-03-01T19:45:00.000-08:00

Two days after sending the U.S. stock market into a spiraling nosedive, today Alan Greenspan softened his remarks about a pending recession.

By the end of the year, there is the possibility, but not the probability of the U.S. moving into recession.

Gee thanks, Al. Why didn't you say that on Monday?

Cartoon Tuesday

2007-02-27T19:24:00.000-08:00

By Bob Englehart, The Hartfor Courant

The week in review

2007-02-24T08:17:00.000-08:00

DJIA fell 120.09 this week, 0.94% to close Friday at 12,647.48. Not a very good week for blue chips.

Nasdaq Composite gained 18.79, 0.75% to 2515.10.

S & P 500 dropped 4.35 points, 0.30% to close at 1451.19.

10-year Treasury yield fell 0.012 percentage points to 4.678%.

Crude oil rose $1.75/bbl, 2.95% to $61.14.

Cartoon Tuesday

2007-02-20T18:35:00.000-08:00

By Bob Englehart, The Hartford Courant

Estate planning lessons from Anna Nicole Smith

2007-02-18T08:16:00.000-08:00

The financial and legal wranglings of Anna Nicole Smith are lengthy and legendary and will likely continue for years after her death.

In the mid-nineties she battled it out in courts for a claim to her late octogenarian husband's estate as well as filing for bankruptcy to avoid paying an $850,000 judgment against her for sexually assaulting her son's nanny.

Now, courts will have to decide who will receive Anna Nicole's estate. In 2001 her attorney, Howard K. Stern, drafted a will leaving her entire estate to her son Daniel. No provisions were made for future offspring and she didn't update her will after Daniel died and Danielynn was born five months ago. Since the only heir named in her will is deceased, the document is invalid and a probate court will likely award the estate to the infant Danielynn and appoint a guardian and conservator. Whoever that is will have access to millions. The legal maneuvering will be as bizarre after death as they were during her life.

There are a couple of important lessons here from an estate planning angle.

First, have a competent attorney help you draft your documents. Yes, Stern is a law school graduate and a member of the California bar but he had no experience with probate. No competent law professional would draft a will without provisions for children or grandchildren yet to be born. It should have had contingencies in the event that Daniel predeceased Anna Nicole.

Secondly, update your estate documents regularly and after significant changes, i.e., births and deaths. Not that Anna Nicole should have gone directly from the cemetery to an attorney's office, but this could have been greatly simplified if she had updated her will soon after Daniel died and Danielynn was born.

This is going to be interesting to watch.

Cartoon Tuesday

2007-02-13T19:21:00.000-08:00

By Jeff Stahler, The Columbus Dispatch

The week in review

2007-02-11T08:27:00.000-08:00

DJIA lost 72.66 points this week, 0.57%% to 12,58083.

Nasdaq Composite dropped 16.06, 0.65%% to 2459.82 pulled down by the semiconductor slump.

S and P 500 dropped 10.33 points, 0.71% and closed Friday at 1438.06.

10-year Treasury yield fell 0.044 percentage points to 4.784%.

Crude oil was just barely under $60 on Friday after gaining $.87 for the week, 1.47% and stood at $59.89.

Cartoon Tuesday

2007-01-29T19:30:00.000-08:00

By R.J. Matson, The New York Observer and Roll Call

The week in review

2007-01-28T08:03:00.000-08:00

DJIA lost 78.51 points this week, 0.62%% to 12,487.02.

Nasdaq Composite dropped 15.82, 0.65%% to 2435.49.

S and P 500 was also in the red, it shed 8.32 points, 0.58% and closed Friday at 1422.18.

10-year Treasury yield rose another 0.106 to 4.879%.

Crude oil regained a little of the ground it has lost in the last several weeks and was up $2.02, 3.78% to $55.42.

Every year market soothsayers fill January headlines with prognostications of every sort. Fortunately for them, no one keeps score since they are so rarely right.

But a common theme in many of this year's forecasts is more volatility for 2007 than last year and, while its still very early, those predictions so far ring true.

This week the Dow surged to its 26th record close in four months on Wednesday and abruptly turned around to dump 119 points the next day. It lost another 15.54 points Friday leaving the index little changed for the year.

What's the cause of this temperamental behavior? Simply, profits and interest rates, same as always. And while interest rates are still historically low and profits historically high, there is not as much confidence they will stay that way as there was last year. There's no clear indication which direction the Fed will move next and the momentum of corporate earnings has slowed. Throw in the housing market wild card and you have the perfect mix for a completely unpredictable market. Be prepared for more turbulence.

Cartoon Tuesday

2007-01-16T00:04:00.000-08:00

Mike Lester, Rome News-Tribune, Rome, GA

The week in review

2007-01-14T19:13:00.000-08:00

DJIA gained 158.07 points this week, 1.27% to 12,556.08.

Nasdaq Composite had a great week as well, up 68.57, 2.82% to 2502.82.

S and P 500 rose 1.49%, 21.02 points and closed Friday at 1430.73.

10-year Treasury yield rose another 0.123 to 4.771%.

Crude oil got slammed another $3.32/bbl, 5.90% to $52.99. (Gas stations are a little slower to change their prices on the way down, aren't they?)

The big gainers this week included Apple (AAPL) amid all the buzz over its new products, Exxon Mobil (XOM) and Google (GOOG) which surpassed the $500 mark.

The week in review

2007-01-06T07:01:00.001-08:00

DJIA sank 65.14 points this week (-82.68 on Friday), 0.52% to 12,398.01.

Nasdaq Composite was a different story, up 18.96, 0.78% and closed Friday at 2434.25.

S and P 500 fell 8.59, 0.61% to 1409.71.

10-year Treasury yield rose 15/32 to 4.648%.

Crude oil dropped a whopping $4.74, 7.76% to $56.31.

The first week of the new year got off to a pretty rocky start as the broad market lost ground after a robust jobs report on Friday.

This is the part of economics that really has casual stock market observers scratching their heads--167,000 new jobs were created in December and that caused the Dow to drop 83 points? Huh? Why is such great news bad for stocks?

Remember the old rhyme, when rates are low, stocks will grow? Well, job creation that is too rapid is indicative of an economy that is growing too fast and that inflationary risks are present. To curb those risks the Fed raises interest rates. When rates are high, stocks will die.

At least the market has found something to obsess about besides oil.

Cartoon Tuesday

2007-01-02T07:44:00.000-08:00

By Gary Varvel, The Indianapolis Star-News

Cartoon Tuesday

2006-12-26T19:30:00.000-08:00

By Michael Ramirez, Investors Business Daily

Happy Christmas Eve Eve Day!

2006-12-23T11:55:00.000-08:00

Dictionary.com defines "Eve" as:

"the evening or the day before a holiday, church festival, or any date or event: Christmas Eve; the eve of an execution."

So tomorrow could properly be referred to as "Christmas Eve" all day long. Or you could call it "the day before Christmas" or "December 24th". Just don't call it "Christmas Eve Day"! Okay?

And if I hear anyone over the age of nine refer to today as "Christmas Eve Eve" I'm just gonna smack 'em!

The week in review

2006-12-23T07:52:00.000-08:00

DJIA pulled back a bit this past week--down 102.30 points, 0.82% and closed Friday at 12, 343.22.

Nasdaq Composite also lost a little ground, down 56.02 points, 2.28% and closed at 2401.18. Ouch!

S and P 500 fell 16.33, 1.14% to close at 1410.76.

10-year Treasury yield rose 0.028 percentage points to 4.624%.

Crude oil dropped $1.68/bbl 2.62% to $62.41.

Cartoon Tuesday

2006-12-18T21:44:00.000-08:00

By Paul Combs

The week in review

2006-12-17T17:09:00.000-08:00

DJIA gained a respectable 138.03, 1.12% and closed Friday at 12,445.52.

Nasdaq Composite also gained 19.84 points, 0.81%and stands at 2457.20.

S and P 500 gained 17.25, 1.22%% to 1427.09.

10-year Treasury yield rose 0.037 percentage points to 4.597%.

Crude oil rose $1.40, 2.26% to $63.43.

Irony

2006-12-15T22:35:00.000-08:00

A company that built a fence to keep illegal aliens out has pleaded guilty to hiring illegal aliens. Huh?

A Southern California fence-building company and two executives have agreed to plead guilty to knowingly hiring illegal immigrants and pay a combined penalty of $5 million, two people close to the case said Thursday, marking a rare victory for the federal government in prosecuting employers for immigration crimes.

Golden State Fence Company built 6,100 feet of the 15-foot-high fence near the Otay Mesa border crossing in San Diego.

It's not clear whether illegal aliens were involved in building the fence to keep out illegal aliens but we're guessing they were. What irony.

Cartoon Tuesday

2006-12-12T07:56:00.000-08:00

By John Trever, The Albuquerque Journal

Career futures

2006-12-10T10:58:00.000-08:00

A 19 year-old Anaheim Hills, CA student has offered up an interest in his career earnings for $100,000 rather than borrow the money to fund his college education.

In August, Steen put himself on eBay (Charts) to pay for his college education, offering 2 percent of all future earnings to the highest bidder, with a minimum $100,000 bid.

He hasn't had any takers and it's no wonder. Figuring a 43 year career and a 6% discount rate, Mr. Steen would need to average better than $325,000 a year to get my interest. Good luck Ron, but that's just a little more risk than I want in my portfolio.

The week in review

2006-12-10T07:41:00.000-08:00

DJIA picked up 113.36 points this week, 0.93% and closed Friday at 12,307.49.

Nasdaq Composite also gained a very healthy 24.15 points, an even 1.00% and stands at 2437.36.

S & P 500 gained 13.13, 0.94% to 1409.84.

10-year Treasury yield rose 0.123 percentage points to 4.559%.

Crude oil fell $1.40/barrel, 2.21% to $62.03.

OPEC's October production cut has pushed oil prices back above the sixty dollar mark and caused stocks to stall. After setting a series of record highs in October and November, the Dow flattened out as reserves were depleted and oil prices climbed. OPEC is set to meet next week and might announce another output cut on Thursday, so it might be a rocky week for stocks.

The Happy Capitalist has been a sad and neglected blog of late as travel and professional demands have kept me away. With Christmas just a scant two weeks off, things might get worse before they get better. But these postings, as sparse as they are, help me to keep a more balanced perspective on things so they're not going to go away completely. At least not for awhile.

Carryon dos and don'ts for the holidays

2006-11-22T19:42:00.000-08:00

Well, the Thanksgiving holiday begins and about a 20 million Americans will be traveling by air this long weekend. Yes, the rules about carryon luggage have been challenging to keep up with as pesky terrorists get more creative with ways to blow up airplanes. So to help ease the confusion, the Tranportation Safety Administration has posted a list of items that passengers can carry onto airplanes and those items that need to be checked or left at home.

A quick look at the list reveals a few not-so-obvious items that you cannot carry onto a plane:

Ice axes/ice picks
Meat cleavers
Sabers
Swords
Bows and arrows
Spear guns
Cattle prods
Billy clubs
Brass Knuckles
Stun guns
Throwing stars

OK, so I guess it makes sense that these items can't be carried onboard, I just never thought about taking my cattle prod to Thanksgiving dinner.

If you're traveling by air this holiday season, you might want to check out TSA's list!

Cartoon Tuesday

2006-11-21T19:47:00.000-08:00

Nick Anderson, The Houston Chronicle

The week in review

2006-11-18T07:34:00.000-08:00

DJIA shot up 234.13 this week, 1.93% and closed Friday at 12,342.56.

Nasdaq Composite also gained a very healthy 56.14 points, 2.35% and stands at 2445.86.

S & P 500 gained 20.30, 1.47% to 1401.20.

10-year Treasury yield rose slightly, 0.020 percentage points to 4.609%.

Crude oil fell $3.78/barrel to $55.81.

New home construction plummeted 14.6% in October to a six-year low and has many economists revising downward their estimates of U.S. economic growth. This is further evidence that the Federal Reserve, as it so often does, has overshot neutral by raising interest rates too much and too quickly.

Nymex became a publicly traded company on Friday and debuted with the best first-day IPO performance in over a year. The stock priced at $59 and finished Friday at $132.99 after trading as high as $152 during the day.

Rumors continue to swirl around Charles Schwab and the future of the company as its 69 year-old founder and CEO has stated that he will retire in 2007 or 2008. Some speculate that Bank of America might be involved with Schwab in talks of some sort of merger or acquisition.

O.J., Pensions, ERISA and Golf

2006-11-15T18:02:00.000-08:00

The following little essay was originally published on this blog on August 14th, 2005 and attempts to explain why O.J. Simpson continues to live a rather lavish lifestyle and appears not to work while the families of Nicole Brown Simpson and Ron Goldman have never received any of the judgement against Simpson. With the announcement today of his new book, If I did it, and accompanying television appearance, it seems like a good time to re-run this post.

Eight years after the families of Nicole Brown Simpson and Ron Goldman won $33.5 million judgments against O. J. Simpson, many are still scratching their heads that Simpson is living lavishly while much of the award remains unpaid. How can this be?

The answer is that O. J. had some pretty smart financial advisors. During his years as an NFL star and advertising pitchman, Simpson built up hefty sums in his NFL pension and personal pensions set up through various companies he established. Then he left the money inside the defined benefit plans rather than rolling it into an IRA where he may have had more flexibility with investments. Today he draws $25,000 per month from the NFL pension alone.

The Employee Retirement Income Security Act of 1974 (ERISA) states that employer retirement plans including all types of defined benefit plans "may not be assigned or alienated." The Browns and the Goldmans can't touch O. J.'s pensions.

Despite the Simpson case, it is in society's best interest to protect retirement assets from judgments and other creditors. With an already dismal national savings rate, further discouraging participation in retirement plans wouldn't be in the country's best interest. But ERISA and the subsequent 1992 Supreme Court case, Patterson v. Shumate, extended protection only to ERISA plans. IRAs, Roth IRAs, SIMPLE IRAs, SEPs, etc. were not protected.

Finally, the courts and congress have moved to extend protection to nearly all forms of retirement accounts. On April 4th of this year the U.S. Supreme Court ruled in Rousey v. Jacoway that IRAs are "similar plans" and deserved the same sort of protection afforded to ERISA plans.

Additionally, The Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA), signed into law on April 20, 2005, and effective on October 17, 2005, has substantially increased and simplified bankruptcy creditor protection for retirement accounts. Virtually all retirement accounts will now be exempt assets in bankruptcy proceedings.

One last word about O.J.--Simpson chooses not to work since any earned income would only be seized by the court. So he is forced to play golf every day...something's just not right.

Cartoon Tuesday

2006-11-14T23:40:00.000-08:00

John Trever, The Albuquerque Journal

The week in review

2006-11-11T08:06:00.001-08:00

DJIA gained 122.39 points this week, 1.02% to 12,108.43. The rally continues.

Nasdaq Composite picked up a healthy 58.93, 2.53, and wrapped up at 2389.72.

S & P 500 gained 16.60, 1.22% to close the week at 1,380.90.

10-year Treasury yield dropped 0.127 percentage points to 4.590%.

Crude oil rose 45 cents this week, 0.76% and stood at $59.59 yesterday afternoon.

Results of this week's election had an entirely benign, if not negative, effect on the financial markets this week as stocks finished Friday lower than where they stood mid-day election day. While American liberals are giddy and gleeful about the new influence Nancy Pelosi and Harry Reid will likely possess for the next two years, investors' reactions were a bit more realistic. The burden is now on Democrats, who have spent the last six years complaining, to actually present ideas and solutions.

Number one on democrats' to-do list appears to be a hike in the national minimum wage. Gee, what a compete waste of time. More than half of U.S. states already have minimum wages above the federal level and those states are discovering that employers are quick to automate, outsource, go underground and hire illegal workers or just quit business altogether rather than pay unskilled workers more than they are worth. Higher minimum wage policy creates more problems than it solves.

Democrats need to really step up to the pump and present some concrete solutions rather than a just a bunch of fluff designed to excite uninformed, unsophisticated voters. I'll be waiting.

Cartoon Tuesday

2006-10-30T21:57:00.000-08:00

By Bob Englehart, The Hartford Courant

The week in review

2006-10-28T08:20:00.000-07:00

DJIA gained another 87.89 this week, 0.73% to 12,090.26. Nice little rally we've got goin'.

Nasdaq Composite picked up 8.32, 0.36% to finish at 2,350.62.

S & P 500 gained 8.74, 0.64% to close the week at 1,377.34.

10-year Treasury yield dropped 0.106 percentage points to 4.681%.

Crude oil was up $1.42 this week, 2.39% and was up above $60 Friday at $60.75.

The U.S. economy grew at a 1.6% annual rate last quarter, its weakest since 2003. Core inflation rose at only a 2.3% rate, down from 2.7% in the previous period. Our economy is cooling too quickly, inflation is not an issue. With housing prices falling, the wealth effect created as they were soaring will quickly disappear and erode consumer confidence. By spring of 2007 the Fed will be contemplating lowering interest rates once again.

Cartoon Tuesday

2006-10-24T12:47:00.000-07:00

Republicans in Berkeley?

2006-10-22T08:31:00.000-07:00

Friday's Wall Street Journal (paid subscription) included a front-page story about the rise in conservatism on one of the nation's most liberal college campuses.

The growth of the Berkeley College Republicans at one of the nation's most liberal campuses echoes some broader political trends. At Berkeley, while leftist students still dominate and outnumber conservatives, the liberal groups have splintered and are now spread across factions from the Cal Democrats to the International Socialist Organization to groups formed to oppose the war in Iraq. At the same time, several faculty members say, there are more conservative-leaning students than in the past, propelled by swells of patriotic feeling after events like Sept. 11 and an increase in the number of religious student groups.

While this is all very encouraging, should it really be front-page news that astute, rational thinking is taking place on a college campus?

Week in review

2006-10-21T07:33:00.000-07:00

DJIA rose a respectable 41.86 points, 0.35% and closed Friday at above 12,000 at 12,00237.

Nasdaq Composite lost 14.99 or 0.64% to finish the week at 2342.30, down 0.64%.

S & P 500 gained a mere 2.98 points, 0.22% and closed yesterday at 1368.60

10-year Treasury yield fell 0.018 percentage points to finish at 4.788%.

Crude oil dropped $1.75 to $56.82/barrel. I paid $2.44/gallon for regular yesterday, the lowest in quite a while and pretty darn good for California.

For the first time in its history the Dow Jones Industrial Average closed above 12,000 this week. So, is there something magical about 12,000. Probably not. But what makes it significant is that it took so darn long to do it.

When I started my career as a stock broker with Morgan Stanley in January of 1995, the DJIA stood around 4,000. Over the course of the next few years the "thousands" fell pretty quickly. Five thousand came just before my first anniversary, 6,000, 7,000, 8000 and the rest all came pretty regularly. When the Dow reached 11,000 in the fall of 1999, there was no reason to think that 12,000 wouldn't be right around the corner. No one suspected that it would take seven years.

What's next? Well, that's anybody's guess and I doubt we'll ever experience anything like the late 90's again. But as we celebrate 12,000, I'm reminded of those days. They sure were fun.

The week in review

2006-10-15T07:53:00.000-07:00

DJIA rose a respectable 110.30 points, 0.93% and closed Friday at 11,960.51. Flirtin' with 12,000.

Nasdaq Composite 57.30 points, a really healthy 2.49% and finished off the week at 2357.29..

S & P 500 was up 16.04 for the week, a 1.19% gain, and closed at 1365.62 Friday.

10-year Treasury yield increased 0.106 percentage points to 4.806%. It was a pretty lousy week for treasuries but if you're looking to refinance that ARM, 10-year Treasury yields will be under 4.50% by spring.

Crude oil fell another $1.19 in spite of a rally Friday. Down 1.99% to $58.57.

European stocks hit 5-year highs on Friday and Japanese stocks rallied as well. Markets in India and Singapore also rose to records. Gee, a bit of a global bull, isn't it?

Cartoon Tuesday

2006-10-09T21:57:00.000-07:00

Cameron Cardow, The Ottawa Citizen

The week in review

2006-10-07T09:00:00.000-07:00

DJIA rose a health 171.14 points, 1.47% and closed Friday at 11,850.21. New records.

Nasdaq Composite gained 41.56 points, 1.84% and finished off the week at 2299.99.

S & P 500 was up 13.73 for the week, a 1.03% gain, and closed at 1349.58 Friday.

10-year Treasury yield increased 0.063 percentage points to 4.700%.

Crude oil fell $3.15, 5.01% to $59.76.

The rise in oil prices a week ago was no more pause as oil prices continue to fall. Where are the guys now who were calling for $100/bbl just a couple of months ago? OPEC's economies are weak making the threat of reduced output unlikely and prices should continue to decline. Two bucks for gas again?

The September jobs report was weak on the surface as new job creation was half the forecast. But the report also contained healthy upward revisions for the previous two months. The bond market paid more attention to the revisions and prices fell on Friday. It took the steam out of a nice rally in stocks as well.

No graffiti?

2006-10-04T21:01:00.000-07:00

I've lived in the Bay Area for over six years now and I ride on BART regularly but I never noticed this sign in BART stations until today. It just strikes me as a bit odd. Are there places where graffiti is okay?

Cartoon Tuesday

2006-10-03T18:57:00.000-07:00

By Dana Summers, The Orlando Sentinel

The week in review

2006-09-30T08:06:00.000-07:00

DJIA shot up 170.97 points, 1.49% and closed Friday at 11,679.07. Smokin'!

Nasdaq Composite gained 39.50 points, 1.78% and finished off the week at 2258.43.

S & P 500 was up 21.07 for the week, a 1.60% gain, and closed at 1335.85 Friday.

10-year Treasury yield increased 0.037 percentage points to 4.637%.

Crude oil rose $2.36, 3.90% to $62.91. A dead cat bounce?

While the Dow Jones Industrial Average is bumping up against an all time high, many portfolios are still nowhere near records posted in early 2000. The DJIA is a scant 44 points below its peak of 11722.98 that it reached in January of 2000 but it's interesting to note that the S&P 500 is 12% below its record and the Nasdaq is a whopping 55% short of the peak it reached in March of 2000.

Cartoon Tuesday

2006-09-26T00:05:00.000-07:00

By Steve Nease, Oakville, Ontario

The week in review

2006-09-23T07:40:00.000-07:00

DJIA dropped 0.46% or 52.67 points to close out the week at 11,508.10.

Nasdaq Composite shed 16.66 points, 0.75% and finished at 2218.93.

S & P 500 lost just 5.09 points, 0.39% and closed Friday at 1314.78.

10-year Treasury yield dropped 0.198 percentage points and stands at 4.601

Crude oil fell another $3.47, 5.42% and was trading yesterday afternoon at just $60.55/bbl.

The Fed's Board of Governors met this week and, for the second consecutive meeting, left the discount rate alone. And while the multitude of economic measures are almost always a mixed bag, there seems to be mounting evidence that the U.S. economy is slowing too quickly. So, if you're worried about that adjustable-rate mortgage that you got a few years ago, there's still hope. Mortgage rates have dropped significantly in the last couple of months and if, six months from now the Fed reverses course, it could be an ideal opportunity to lock in a long-term fixed rate.

Cartoon Tuesday

2006-09-19T22:18:00.000-07:00

Daryl Cagle, MSNBC

Cartoon Tuesday

2006-09-12T06:51:00.000-07:00

By Larry Wright, The Detroit News

The week in review

2006-09-09T07:49:00.000-07:00

DJIA lost 72.04 this week, 0.63% and closed Friday at 11,392.11. A mild pullback.

Nasdaq Composite shed 27.37 points, 1.25% to finish at 2165.79.

S and P 500 was down 12.09, 0.92% and wrapped up the week at 1298.92.

10-year Treasury yield increased just a tad, 0.051 percentage points to 4.781%. 4.50% is till in our future. Don't refinance that ARM just yet.

Crude oil fell another $2.94, 4.25% and stood Friday at $66.25/barrel. Wasn't it only a few weeks ago that pundits were projecting $100?

The week in review

2006-09-02T07:13:00.000-07:00

DJIA gained 180.10 this week, 1.60% and closed Friday at 11,464.15. Not bad.

Nasdaq Composite added 52.87 points, 2.47% to finish at 2133.16. Tasty.

S and P 500 was up 15.92, 1.23% and wrapped up the week at 1311.01.

10-year Treasury yield dropped 0.062 percentage points to 4.728%. Is 4.50% in our future?

Crude oil fell another $3.32, 4.58% and stood Friday at $69.19/barrel. Gee, gas will be back under 2 bucks before you know it.

Lots of good news all around!

Cartoon Tuesday

2006-08-22T12:25:00.000-07:00

Clay Jones, The Freelance-Star, Fredericksburg, VA

The Security Booth

2006-08-20T18:52:00.000-07:00

The week in review

2006-08-19T07:27:00.000-07:00

DJIA added 293.44 this week, 2.65% and closed Friday at 11,381.47.

Nasdaq Composite gained 106.24 points, 5.16% to finish at 2163.95.

S and P 500 was up 35.56, 2.81% and wrapped up the week at 1302.30

10-year Treasury yield dropped 0.132 percentage points to 4.843%.

Crude oil fell $3.21, 4.32% and stood Friday at $71.14/barrel.

Wow! Stocks and bonds all up nicely this week and oil dropping to a level we have not seen for awhile. Does it get any better?

Thursday President Bush signed into law a long-awaited pension reform bill that impacts mostly defined-benefit plans, but also adds some interesting twists for IRAs and 401(k) plans. It's great blogging material if I only had the time...

Of course the really big news this week was the (bogus) confession made by John Mark Karr to the murder of JonBenet Ramsey. The news media was sure quick to give him his 15 minutes.

Cartoon Tuesday

2006-08-15T19:02:00.000-07:00

The week in review

2006-08-13T07:27:00.000-07:00

DJIA dropped 152.32 for the week, 1.36% and finished up at 11,088.03.

Nasdaq Composite fell 27.34 points, 1.31% to 2057.71.

S and P 500, down 12.62, 0.99% to 1266.74.

10-year Treasury reversed direction with the yield up 0.072 percentage points to 4.975, still hanging below 5.00!

Crude oil fell $0.41, 0.55% to $74.35.

Stocks and bonds showed very little response to the discovery of a major terror plot, though I'm certain that there would have been a huge reaction had it not been discovered.

Word of the day

2006-08-11T07:50:00.000-07:00

fas·cism n.

1. often Fascism

a. A system of government marked by centralization of authority under a dictator, stringent socioeconomic controls, suppression of the opposition through terror and censorship, and typically a policy of belligerent nationalism and racism.

b. A political philosophy or movement based on or advocating such a system of government.

2. Oppressive, dictatorial control.

Cartoon Tuesday

2006-08-08T18:47:00.000-07:00

(A friend sent me a bunch of insults featuring Hallmark's Maxine and I just have to post a few! Thanks, Jaye.)

The week in review

2006-08-06T07:21:00.000-07:00

DJIA gained 20.65 points, 0.18% to finish the week at 11,240.35. Well, it's better than a poke in the eye with a sharp stick.

Nasdaq Composite dropped 9.09 points, 0.43% and closed Friday at 2085.05.

S and P 500 gained 0.81 points, 0.06% and finished at1279.36.

10-year Treasury yield dropped again this week, 0.093 percentage points and closed at 4.903%.

Crude oil gained $1.52 but stayed below $75 at $74.76.

The treasury market shows again this week that traders think the end of rate hikes is at hand, or at least close. Stocks are still moving day by day on response to whatever news is coming from the Middle East.

Liability Insurance: How much is enough?

2006-08-02T08:20:00.000-07:00

Everyone would like to save money on auto insurance, right? Yesterday David Bach, The Automatic Millionaire, had a column on Yahoo! Finance titled "Five Ways to Slash Car Insurance Costs".

Bach's suggestions were all run-of-the-mill variety, you know, shop around, keep your driving record clean, blah, blah, blah. But one item really caught my eye.

Don't over-insure. Many experts suggest that liability limits of $50,000 for one person injured in an accident, $100,000 for all people injured in an accident, and $25,000 for property damage liability (called 50/100/25) is sufficient. And before you buy other add-ons such as medical coverage, check to make sure you're not just duplicating coverage you already have.

Excuse me? In 21st century, lawsuit-crazy America, $100,000 in auto liability coverage is enough? I don't think so and Bach's recommendation is irresponsible. I would like to meet the "experts" he's talking to.

Last year, one of our clients was at fault in an accident in which several were injured and a boy was killed. Our client, a good driver, hadn't been drinking, speeding or driving carelessly. A second of inattention, a brief error in judgement and the result was catastrophic. The victims' were awarded nearly $2 million. And this could happen to anyone. Fortunately our client carried a multi-million dollar umbrella policy, otherwise he would have been financially ruined.

So folks, just stop and think for a minute and use common sense before you take the advice of some columnist or, for that matter, some blogger. It could make a real difference.

David Bach and I both worked for Morgan Stanley in the Bay Area though we never met. Bach now lives in New York City and is making his fortune writing books and magazine articles about personal finance. I'm a CFP and now I do financial planning for high-net-worth folks in Northern California and write The Happy Capitalist. Tell me, whose got the better gig?

Cartoon Tuesday

2006-08-01T00:01:00.000-07:00

Micheal Ramirez, Investors Business Daily

The week in review

2006-07-29T07:05:00.000-07:00

Stocks had their best week in months as the DJIA gained 353.32 points, 3.23% to close out the week at 11,219.70.

Nasdaq Composite gained 73.75, 3.65 and finished at 2094.14.

S and P 500 gained 38.26, 3.08% and closed Friday at 1278.55.

10-year Treasury yield dropped again this week, 0.051 percentage points and closed at 4.996%, the first time below 5% in months.

Crude oil dropped another $1.19/bbl to $73.24.

Fueling stock prices on Friday was the news that the U.S. economy's growth rate slowed dramatically in the second quarter, building hopes for an end to Fed rate hikes. Have we seen the end of the tightening cycle?

Cartoon Tuesday

2006-07-24T20:21:00.000-07:00

John Sherffius, St. Louis, MO

Retire on $14.5 trillion? (Reprise)

2006-07-23T08:40:00.000-07:00

Monday's post about the $14.5 trillion Americans have stashed in retirement accounts, although not intended to be provocative, caused a bit of stir.

Rich Slick from Get Rich Slick had this to say:

Let's do the math. $3.4 trillion divided by 80 million retiring baby boomers = $42,500/american. Average retirement 65 and lifespan 15 years (80 at death)= $2,833.33/year or $236/month.

Hmm... I don't know of anyone that can live on $236/month unless you are in some fourth world country.

Oh wait, I forgot to add all those free medicaid, medicare, prescription drug benefits everyone is going to get. Hmmm.. I wonder who's going to pay for that.

Well, Rich was using the wrong number for his calculation and Barry Ritholtz from The Big Picture called him on it.

Hey Slick Rich--

Where did you get the $3.4T number? The starting point was 14.5T -- not 3.4T -- so I get $181,250 spread out over 15 years or 180 months -- Thats ~$1007.

Not much, but better than $236.

Of course, that's assuming an even distribution, which we know isn't remotely the case.

Barry was so enamored by the arithmetic that he published a post on his blog titled, "Do the Math"which, at last count had generated 59 comments.

Now, for a couple of fellows who seem to enjoy their calculators, might I suggest that they stop and think for a moment before punching away on the old HP12c. Both boys made three incorrect assumptions. First they assumed that the average American is never going to save another cent and will retire tomorrow. Secondly they assumed that this retirement savings won't earn anything for the next fifteen years, we're apparently just going to keep it under our mattresses. Thirdly they assumed that Americans have no other retirement savings even though the original article stated that retirement assets only account for a little over a third of household financial assets.

If Rich and Barry intended to demonstrate that Americans are woefully prepared for retirement, there's no argument. That's been documented time and time again. But I'm not worried that either of them could ever take my financial planning job. They're just not that good at the math.

The week in review

2006-07-22T07:23:00.000-07:00

DJIA finally showed a little upward movement and gained 129.03 this week, 1.2% and finished at 10,868.38.

Nasdaq Composite dropped another 16.96 or 0.83% to wrap up the week at 2020.39.

S and P 500 eked out a 4.09 point gain, 0.33% to finish at 1240.29.

10-year Treasury yield dropped again this week, 0.024 percentage points and stands at 5.047%.

Crude oil dropped a whopping $4.28/bbl (Sept), 5.44% to $74.43. Maybe you can hang onto that big SUV a while longer.

The web's best business blogs?

2006-07-20T08:33:00.000-07:00

Every morning, James Altucher at The Street.com (free trial memberships available) lists some "timely, topical posts from the Web's best business blogs. " This morning, James included this post from The Happy Capitalist. Wow, I'm honored to be in such fine company!

Cartoon Tuesday

2006-07-18T00:01:00.000-07:00

John Trever, The Albuquerque Journal

Retire on $14.5 trillion?

2006-07-17T19:08:00.000-07:00

Can we retire on $14.5 trillion? That's the amount of money Americans have stashed away in retirement accounts according to research published today by the Investment Company Institute.

"Clearly, Americans are focused on saving for retirement as a top priority," said ICI senior economist Sarah Holden, who co-authored the study with ICI senior economist Peter Brady, in a statement.

"Our research continues to indicate that individuals are building retirement nest eggs by using employer-sponsored plans and IRAs."

The research also showed that mutual funds' share of the retirement market continues to increase and represents about $3.4 trillion of the total.

Goldman Sex?

2006-07-16T11:03:00.000-07:00

Goldman Sachs, Goldman Sex, I suppose it could be a little confusing.

At least the folks at Goldman Sachs think so. They've filed a complaint against a Netherlands man who operates Goldmansex.com, an "adult entertainment guide for business travelers".

Goldman Sachs submitted the paperwork to the National Arbitration Forum this week, saying that the domain name goldmansex.com may cause confusing associations with the firm.

Rob Muller, the site's founder and proprietor, chose the title because Goldman is his nickname, according to published reports.

All of the publicity generated by the legal wranglings have been the best thing that could happen to the adult entertainment site. Perhaps Goldman Sachs should offer to take the little company public.

Week in review

2006-07-15T09:10:00.000-07:00

Stocks don't move up in a straight line. They never have and they never will. It's always two steps forward, one step back. Sometimes that one step backward is a little hard to take, especially if it's been awhile since the last significant pullback, as is the case now. And as long as global unrest and high oil prices dominate the headlines, this market will continue to struggle.

DJIA dropped 351.32 this past week, 3.17% to finish at 10,739.35. Pretty ugly.

Nasdaq Composite fell 92.71 points, 4.35% this past week to finish at 2037.35.

S & P 500 dropped 29.28 points, 2.31% and finished up at 11236.20.

10-year Treasury yield fell again this week and ended down 0.067 percentage points to 5.071%. It's really struggling to get very far beyond 5%.

Oil again was the big story for the week as things are really heating up between Israel and Lebanon. Crude finished yesterday at $77.03 after having traded above $78 for awhile.

Cartoon Tuesday

2006-07-11T11:37:00.000-07:00

Vic Harville, Little Rock, Arkansas

Hurricane Katrina--Wind or water, does it really matter?

2006-07-10T18:47:00.000-07:00

A federal judge in Mississippi today began hearing testimony in the case of a couple whose home was damaged by Hurricane Katrina but their insurance company has paid only $1,600 for $130,000 in damage.

Now, before anyone gets worked into a lather about the big, bad insurance company stickin' it to the poor policyholder, consider this fact: Flood damage is excluded from virtually every homeowners policy. That's right, unless you buy separate flood insurance, usually through the National Flood Insurance Program, your home is not covered for flood damage.

This court case is interesting because its outcome could affect thousands of other homeowners whose homes suffered wind and water damage from Katrina. A ruling that wind caused the damage changes everything.

The trial, being heard without a jury by U.S. District Judge L. T. Senter Jr., is the first among hundreds of lawsuits that have been filed by Gulf Coast homeowners challenging insurance companies over the wind-verses-water issue. Plaintiffs' attorneys hope a ruling in the homeowners' favor would pressure insurance companies to pay out hundreds of millions of dollars in settlements for homeowners whose claims have been rejected.

The homeowners also charge that their agent told them in 1999 that they didn't need flood insurance. I hope they're not really expecting the judge to believe that. Who ever heard of an insurance agent telling clients that they don't need more coverage?