Cartoon Tuesday

(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

• 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?

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

Micheal Ramirez, Investors Business Daily

The week in review

• 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

John Sherffius, St. Louis, MO

Retire on $14.5 trillion? (Reprise)

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

• 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?

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

John Trever, The Albuquerque Journal

Retire on $14.5 trillion?

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?

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

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

Vic Harville, Little Rock, Arkansas

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

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?

The week in review

• DJIA dropped 59.55 this past week, .53% to finish at 11,090.67. A lousy jobs report on Friday spoiled an otherwise decent week.
  

• Nasdaq Composite fell 42.o3 points, 1.94% this past week to finish at 2130.06.
  

• S & P 500 dropped 4.72 points, .37% and finished up at 1265.48.
  

• 10-year Treasury yield fell again this week and ended the week down 0.007 percentage points to 5.138%.
  

• Crude oil increased in price by another .22%, just $0.16 to $74.09/bbl. Oh yeah, Jim Rogers told Reuters that oil will soar to well over $100, although he didn't give a timetable.
  

Happy Independence Day!

Cartoon Tuesday

Bob Englehart, The Hartford Courant

Capitalist of the week: Warren Buffett

With his announcement last week that he would donate $31 billion (give or take) to the Bill and Melinda Gates Foundation, Warren Buffett wins the coveted honor of Capitalist of the Week.

Born August 30th, 1930 and known as the Oracle of Omaha, Buffet is ranked as the second wealthiest person in the world behind Bill Gates. He is known for his unpretentiousness and frugality. Despite his immense wealth he still lives in the same Omaha house that he purchased in 1958 for $31,500 and draws a scant $100,000 salary from Berkshire Hathaway.

Atta boy, Warren!

The week in review

• DJIA gained 161.13 this past week, 1.47% to finish at 11,15022, thanks to some encouraging Fed comments on Thursday.
  

• Nasdaq Composite picked up a healthy 50.62 points, 2.39% this past week to finish at 2172.09.
  

• S & P 500 gained 25.70, 2.07% and finished the week at 11270.20.
  

• 10-year Treasury yield fell 0.083 percentage points to end the week at 5.145%.
  

• Crude oil had a big week, increasing in price by 4.32%, that's $3.06 and is now around $73.93/bbl.
  

My favorite news story of the week comes from just down the hill at Berkeley Ctiy Council's Wednesday evening meeting:

With overwhelming support from Berkeley residents, the Berkeley City Council unanimously passed a resolution Tuesday night to be the first jurisdiction in the United States to let the public vote for the president's impeachment. The measure will appear on the Nov. 7 ballot, at a cost of about $10,000.