Investing Trick or Treat: What Works What Doesn’t

  Every time you turn around there is another investing rule. You cannot turn on the car radio without some self-styled expert pontificating about why managed accounts are better than buying no-loads or Roth IRA conversions make sense or buying mutual fund 529 plans is smart college planning. A body just wants to tear their hair out whenever every Tom, Dick & Suzie is tossing in their two bits on what you should do with your money. Okay so here are a few of mine. You can embrace or reject and you won’t hurt my feelings.

• There are worse things than paying taxes. Don’t sweat the possible increase on dividend taxes- you probably won’t even notice the difference. Chasing tax efficient investments is usually a waste of time for most of us.
• Rebalancing is simply selling high and buying low. It’s dumb. Warren Buffett holds winners and sells losers and so should you. (Don’t believe me? Check the S&P 500 index for the past decade versus the long-term bond index. Bonds posted an average annual return of 8.70% while the S&P 500 index lost o.54% per year.) How would rebalancing work with stocks and a bond allocation? Rather than compounding your winners you’d be minimizing your upside while feeding the loser. Like I said – dumb.
• Dollar cost averaging is a great way to get costs down as long as you do it with mutual funds and not stocks. It’s the one rule every investor should tape to the mirror or computer and read every day.
• Forget 529 plans for college education savings and buy the state of Michigan guaranteed plan. It’s called Michigan Education Trust. Don’t live in Michigan, lots of states have similar plans. No matter what happens you’ll guarantee the kid’s education. College costs escalate at double digit rates and no investment can keep up. Buying a 529 and investing in guaranteed dollars is just tossing money away.
• Not everyone needs a Trust to complete their estate plan. Simply designate beneficiaries on any account. It saves money and is just as efficient. What you should have is a Will along with Power of Attorney. There are lots of exceptions and you should talk to your advisor.
• Buying stocks and think you missed the boat on that one special company? Check the stock chart and see if and where it gapped in price. The stock usually comes back to fill that gap – sooner and sometimes later.
• Buy long-term care insurance. Cannot afford the full coverage than buy partial because something is always better then nothing.
• Don’t buy or invest in anything you don’t understand or cannot explain to someone else and have them understand what you said.
• Don’t invest with someone you don’t know or simply calls you on the phone from out of town.
• Ask what the ‘advisor’ is buying and if not what he or she is recommending find out why. 
• Naturally, my favorite is just keep things simple. The less moving parts the less chance of something going awry. (I dislike things going awry!)

Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was-3rd Week October

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• I misplace car keys, pens and cell phones. President Clinton, according to a new book, misplaced the nuclear strike key for retaliation if we were under attack. Now we are told Fiji seems to have lost their document of independence presented by Prince Charles in 1970. The U.K. has agreed to send over a photocopy. (Has anyone checked our Declaration of Independence lately?)
• Back from a few days out of town and the investment forecast suddenly signaled squalls.  When I left it looked like clear equity sailing with QE2 on the horizon but last Tuesday China tosses in a rate hike and Bank of America losses billions and suddenly it’s a new ballgame. Gold falls as rate hike signals new direction. The worst day for the markets since August 11th.
• Dividends, glorious dividends. According to Bloomberg BusinessWeek ‘investors are driving up phone stocks not for their growth but their dividends’. Phone stock dividends are higher than their bond yields.
• Whisper from Wall Street 24/7.com is if Microsoft get their iPhone right their stock is cheap. HP out with their new tablet last Friday but smaller screen than iPad.
• Entitlements will be under scrutiny if lessons from across the Atlantic are any indication, according to Randall W. Forsyth of Barrons.com.  Means testing is coming, dear reader. You very well may pay into them but getting benefits may depend on need. Reductions of social security, Medicare and government assistance are on the menu of things-to-do for the coming decade.
• Goldman Sachs reinventing itself as it has reported its second consecutive quarterly profit decline- off 40%. Losses extended from 37% decline in fixed income net revenue and 43% loss in net revenue from stock trading.
• Last Wednesday’s action was in direct contrast to Tuesday’s. All indices up triple digits and China was forgotten like an uncle who doesn’t  send Christmas cards. CNBC reported that Bernanke’s buying binge will benefit global stocks like Coke and McDonalds.
• According to Barrons.com Technical writer the Tuesday selloff was just the ticket for a much needed dose of reality in a rising short-term trend. Markets, according to Michael Kahn, are expected to rise for the short term.
• Want to get into the metals mania but don’t know where to invest? Gold, silver, platinum or palladium? (Didn’t kids from Grosse Pointe chant that while jumping rope? ). A new ETF will have all four and it is called the ETFS Physical Precious Metals Basket Shares. The metals will be stored in vaults managed by J.P. Morgan Chase & Company. Later in the day a JP announced a new copper ETF.
• Suzie Orman shilling for Ameritrade. Suzie doesn’t trade but buys insured muni’s for her own account. I don’t get it. Maybe someone at Ameritrade hopes other don’t either.
• Kellogg, Snap, Crackle, Plop (Not me, Barrons.com reporting poor performance for the cereal giant).
• Best performing hedge fund bet against the U.S. economy. Up 38% year to date.
• Smart money is betting against Bank of America. The poster boy for the foreclosure mess is in the crosshairs as investor short the stock. According to Barrons.com investor pessimism remains robust. Robust is the operative word here.
• On that…CNBC talking heads wondered if an equity rally could be sustained without the financials…the consensus on Friday last, the mortgage foreclosure problem may be overblown and there are no problems with GS and a few others.
• Pity the poor French who now have to work to age 62 before receiving full state retirement benefits. The horror! The new law is effective November 1st and 69% of the citizenry oppose its passing. (Don’t the French have wines and cheeses older than that?) I have a bunion at least that old.
• A mere bagatelle as gold fell 3% for the week.
• Good news as cheap money is causing companies to pump up their pension plans. Honeywell, Lockheed Martin, Boeing and Parker Hannifin Corp are investing more into their pension plans to bolster them against future troubles.
• G-20 decided to give merging countries a bigger say in the IMF. This was an acknowledgement of sorts specifically for Brazil, Turkey and China.
• No currency wars, says T. Franz Geithner. (Unless it’s us.)
• Finally, FDIC shuttered more banks with a year to date tally of 137 closed and 800+ on their watch list.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Required Minimum Distributions -2010

As we’re wrapping up 2010 and you are 70 1/2 please do not forget your Required Minimum Distribution withdrawal from your Individual Retirement Account. If you have not set this up as an automatic or not sure please call me.

Also, if you have an inherited Individual Retirement Account from a relative (not a spouse) make sure you take a RMD from the account for 2010. 

The law allowed us to skip 2009 but we do have to take the RMD in 2010.

Call me @ 877 783 7080 to check status, order forms or just make sure that everything is set for 2010.

pstanley@westminsterfinancial.com

Mutual Fund Fees

  A client and I were talking and the conversation turned to mutual fund service fees and commissions. She wanted to know how they worked.

A while later I thought I’ve never written a blog about this subject and I figure this is as good time as any. The SEC is currently holding hearings on mutual fund fee and expenses and these changes will impact all investors.

Here are the basics. There are load, no-load and load waived mutual funds. No-load funds are purchased direct from the no-load fund company or from a planner or representative in a fee for service account. There are also fund supermarkets where you can purchase no-load and load funds but there are fees associated with the purchase that are not added on if bought direct from the mutual fund company. You can also purchase load funds in a fee account and the commission is waived. There is no commission discount if an investor buys direct from a load mutual fund company.

Confusing?

When I started in the business it was all pretty basic. There was one commission schedule for load funds that started at 8 1/2% plus there were the no-load mutual funds such as Vanguard and most of the offerings from Fidelity. (Yes, dear reader, Fidelity, had load mutual funds including their flag ship Magellan Fund.) Today there are a variety of fund classes to denote how the broker/dealer is compensated. The basic share classes are labeled A, B and C.

A-shares have a front end commission. The maximum commission today is 5 3/4% ( for equity funds and less up-front for bond funds) and this amount reduces based on the amount of money invested. At one-million dollars invested with one family of funds there is no front-end sales charge. The important thing to remember is the assets have to be with One Family (one mutual fund company) and not with several mutual fund firms. Investors may also receive commission reductions if they agree to an additional purchase that hit certain dollar breakpoints over the coming thirteen months. Those breakpoints for commission reductions are generally at: $10,000; $25,000'; $100,000; $250,000 and $500,000.

B-shares are almost extinct as regulators have curtailed their use believing representatives were misusing the product. The B-share was popular with investors with no up-front sales charge and a higher service fee. B-shares usually converted to A shares after the account had been open for 7-years. The higher expense charge that compensated the broker/dealer then reduced to what the A shares were charging. C-shares have no up-front fee and after 13 months no redemption fee. There is a higher 12b1 fee that compensates the broker/dealer and registered representative.

All funds, load, no-load and load waived funds have expense fees. Simply because a mutual fund is a no load or load waived fund does not mean it does not charge what is called an expense ratio. Mutual fund firms exist to make money and they charge a fee to compensate the fund managers, service desk, technology department, mailing, printing, advertising, research, brokerage fees, shareholders and the like. This fee is call an expense ratio.

In addition to the expense ratio and illustrated separately many fund firms also charge a 12b1 fee which pays the broker/dealer and ultimately the registered representative for servicing the client account.

Not all mutual funds charge a 12b1 fee and in a few years this too will be modified if the SEC has anything to say about it. The Securities and Exchange Commission is working hard at having the fee disappear over the next few years. No one knows for sure but something will replace the 12b1 or the fund company will add a fee commensurate with the cost of the current 12b1. There is discussion that `12b2’ will replace 12b1. The fee will remain but vanish after a number of years.

The handwriting is clear that the regulators want to (1) reduce compensation to servicing broker/dealers and representatives; (2) have given little thought to the future cost of servicing customer accounts; (3) no one has discussed the actuality of higher fees arising out of regulatory reducing costs to the investors. (4) Regulations will force the small investor from finding and working with a professional advisor.

All the above commissions and breakpoints along with expenses can be found and read in any mutual fund prospectus. Hopefully this helps and if anyone has questions please call or write: pstanley@westminsterfinancial.com or call 877 783 7080. Share this with someone who cares about their money.

 

That Was The Week That Was – 2nd Week October

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• Opps! Seems all those banks that suspended mortgage foreclosures were not doing it out of the goodness of their hearts. Robo-signers mass exited thousands of home owners with nary a human glance at the documents. Now the slow and methodical legal system clashes with the quick as a flash banking industry to create a mess that, according to Bloomberg BusinessWeek, may take years and years before its settled.
• This week several banks restarted the foreclosure process by replacing robo-signed documents with actual paperwork creating a howl from mortgage bondholders.
• This latest mess may hold home prices down until the next decade. Having lunch up north with some real estate friends who shared that the only business they were doing was foreclosures and short sales. Home prices lower today than they were 2 years ago.
• Cotton hits all time high. Prices not seen since the Reconstruction. Forget cheap tidy-whities. While labor cheap King Cotton may be back.
• No Social Security hike for second year in a row. Blame the fact that food and energy not used in the COLA calculation. (Just wait my senior friends, just wait and double digit increases are on the horizon).’
• Last week gold stumbled. Metals fall as confidence shaken with banking problems.
• Investors the world over wait for ‘QE2’ or Quantitative Easing Two by the Federal Reserve. According to CNBC the Fed is attempting to spur financial speculation which, they hope, will lead to real investment and growth. With QE the Fed doesn’t print money or destroy the dollar. In fact the dollar and inflation may strengthen and create a ‘Goldilocks’ economy where there are low rates and a politically safe environment to invest.
• Finally, the consumer is still alive. September retail sales increased 0.6% on cars, appliances and electronics.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was- 1st Week October

 

• The day after a super-stupendous September  caution was in the air although there was action in the bank stocks. Citi was a prime mover as the government began to reduce its position. The financials did not participate in the September rally. Very interesting.
• Manufacturing slowed in August but the consumer seemed to open wallets and purses a bit more. Could have been back to school purchases but we’ll wait and see what comes of the holidays.
• Car sales were double digit up for all the majors for the month of September. This in the face of whispers that predicted bad news for the industry.
• It was an algorithm that set off the ‘flash-crash’ last May. Seems algorithms like bedbugs are difficult to manage. 
• It’s a dollar driven market. Oil pops to over $80 due to the dollar lower. As dollar falls, driven many say by the Fed, stocks go up and Treasury yields down. For continued clues watch the dollar index DX-Y.
• The Ye- Old- Melt-Up Theory arrives at Barrons.com. Fund managers have to chase performance and as they do ye old customers come along for the ride till the end of the year or S&P 1300. Or, you can call it what it is- a market chase.
• Ford CEO was misunderstood in Italy, as most Americans are. ( I said ‘no anchovies!’) What the Italians reported Mulally as saying was the Ford company would be debt free by 2011. What he really said was that the company would have more cash than debt. He also expects to get back the investment grade rating by next year. Ford also expects to reduce its stake in Mazda.
• Question: Who had/has the most sound banking system and economy during the economic depression crisis? Answer: Canada. Now they want to export their expertise as a global hub of risk management. Eh? (I thought their best export was the old television program, ‘Corner Gas’.)
• How has the market gone up while jobs are scarce and housing is in the tank? Traders have been betting on a cheap dollar and especially on ‘Quantitative Easing’ by the Fed. Translation – buying US debt and keeping rates low, which in turn is good for stocks. 
• Monday last markets off as nervous traders await Fed decision to buy Treasuries.
• Congress investigated, again, opportunity to tax life insurance proceeds. The argument is that life insurance has morphed into a benefit for the rich.
• Bank of Japan cut rate range…now 0 to 0.1%, Honest!
• Dollar has gotten strength later in the week but, according to Barrons.com technical analyst Michael Kahn, this but a brief moment. He reports that the immediate term dollar strengthens, intermediate it falls and long-term remains flat, or moves sideways for an extended period of time. (Bodes well for stocks).
• JP Morgan upgraded Ford saying investors are missing the message.
• Bond yields fall as the Fed game is well afoot.
• Who’s to blame-game for the ‘flash-crash’? Waddell and Reed the mutual fund powerhouse who are keeping mum.
• AMEX fighting DOJ over fees that Visa & MA both rolled over and agreed to go along with. This agreement allows merchants to steer customers to less expensive credit arrangements. Merchants have complained they lose money on transactions and were forced by contract to use either V or MA no matter the amount or loss. AMEX fights DOJ and some predict opportunities with AMEX.
• Apple keeps rolling and new iPhone being prepped for Verizon in January 2011. ATT no longer has monopoly.
• From ‘Are You Kidding Me?’, 30-year mortgage rate at the end of the week of October 7th at 4.27%.
• Former Bush economic advisor Sumerlin told CNBC last Thursday that the Fed has to pump an additional $6-$7 trillion dollars into the economy to get it moving. Also, he said if the Bush tax cuts were allowed to expire it would throw the country back into the recession.
• Thursday dollar strengthened, gold off highs.
• Friday jobs report came out worse than expected so expect Fed to begin aggressive quantitative easing, or buying of Treasuries, reducing yields, crushing the dollar against other currencies and making stocks and commodities (oil!!!) more expensive. The good news in the Friday jobs report was that hourly income increased %0.01 and the average workweek remained unchanged.
• Let’s not forget that factories still cranking out product and corporations have huge cash on hand. M&A is alive and well and that doesn’t spell bad news just caution going forward. Companies are still unsure of Administration policy and tax increases. Uncertainty the key.
• 131 Banks shuttered year to date.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Taking A Break From The Blog

Back October 19th with new stuff to share!

 

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com.

Reading The Trades

Curiosity has gotten a lot of people in trouble. It also has created opportunities and satisfied our nature. There have been adventurers who have risked their lives to find out what was just across the mountain or pond. I get that same kick  not so much kayaking the Missouri but reading other professional’s trade magazine.

There are all kinds of trade magazines targeting brain surgeons to car lube franchisers. Sometimes business owners and professionals like to leave these specialty magazines out in their waiting rooms and I like to read them. The ‘trades’ not only inform but tattle to their constituents. (Has anyone read Variety?)

On that vein, and because I have very little creative juices going on today with my teeny gray cells, I thought I’d share notes and comments from my most current issue of Investment News.

• Ken Fisher, king of the investment mass marketing of managed accounts, said ‘Pimco’s new normal is idiotic and the next decade will be as good as the 1990s.’  Or so Kenny hopes and fingers crossed. Pimco, of course, paints a bleaker future but Pimco are basically bond folk and all bond folk are desperately depressing.
• Broker/Dealer fraud cases rose in 09, SEC says. Biggest scam? Mainly involved in Ponzi-like schemes. See what Madoff started?
• Investment News readers were really hacked at insurance companies who closed funds in existing variable annuity plans and replaced them with new funds that were not consistent with the old ones. Planners believe that insurance companies were doing this to ‘dummy down’ risk by offering less risky fund choices. Why this is a surprise to anyone over the age of 21 is beyond me.
• Big double-truck article on why not now buying gold makes sense. Reasons given: Too expensive, Fundamentals don’t jive, Not a good hedge, Watch it fizzle quickly & some clients may already own enough of the metal. The real reason is waay too expensive. Just say it and move on. This is what you get when you pay an author by the word.
• State Regulators are now concerned about (1) Small blind real estate investment pools (2) Structured products and (3) Gold scams. Whew! And I feel so silly spending the whole day wondering if I could use cold water with my Oxi Clean tablets.
• Jeffery A. Hirsch, editor in chief of the Stock Trader’s Almanac, predicts DJIA over 38,000 in an eight year super boom. To the best of my knowledge Jeff hasn’t been off any meds.
• Finally –1950 deja vu- blacklisted Russian spy stripped of CFP credentials. The Certified Financial Planner Board of Standards, Inc. revoked Russian spy Cynthia A. Murphy of her planning credentials. The reason is she failed to answer a CFP board’s complaint. Ms. Murphy had 20 days to answer.  Talk about a no-brainer. Supposedly Cynthia was a great financial planner and a lousy spy. It’s a timing thing- you can’t give client seminars and skulk around stealing secret plans without neglecting one job or the other. 

And that concludes, dear reader, another issue of Investment News. Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

Bonds & What To Do When They Go Boom!

  For the last year or so we’ve heard the horrors of what is going to happen when interest rates start to increase. Bond principal falls as rates increase. It does just the opposite when rates fall. Before you panic, because rates are due to increase remember our economy is still fragile and you should not expect higher rates anytime soon. Experts think the third or fourth quarter of 2011 may be when we see rates moving up.

There are both dangers and opportunities when the Fed starts moving interest rates. You do have to do certain things when rates move higher otherwise you will, if you own domestic bonds, lose money. How much money you lose is dependent on the type of bond you own, the maturity and how high rates go up. A Morningstar interview with a bond portfolio manager suggested that once the process of higher interest rates starts the it may continue for years before rates hit their peak.

How much can you lose? A recent WSJ article illustrated that a one-point jump in Treasury yields would translate to a 5% loss for a 10-year Treasury note and a 12% drop for a 30-year Treasury bond.

These so-called experts blame you, me and the candle stick maker for buying bonds and avoiding stocks over the last few years. They blame us for chasing yields, ignoring stock dividends and trying to make as much money in the safety of bonds as we can. They also look down at us from their Ivory Towers as not having enough sense to get out of the way when bonds turn and interest rates go up. We are told that the American investor has loaded up to excess on fixed income when the truth is that both foreign investors and the U.S. government own the vast majority of bonds.

The Federal Reserve owns $1.2 trillion of mortgage securities and foreign investors have bought $373 billion of Treasuries or 60% more than the average Joe and Josephine has put into ‘all’ bond funds combined.

It does not matter if you own corporate or government bonds they both react to rates the same way. If you are owners of short-term, intermediate, municipal, high-yield or foreign bonds the volatility is somewhat different. Some bond issues will be affected and others, such as foreign, may not.

If you ignore increasing interest rates it is possible to lose a significant amount of money. Assume you bought a $10,000 bond with a 4% coupon. The bond matures in 10-years. You can sell it at any time between now and then for whatever value the market is willing to pay for it.

If interest rates suddenly jump 50% and new bonds are offered at a 6% interest rate a 4% bond needs to have principal reduced in order to equal a 6% yield. On a ten thousand dollar bond the value would be reduced by $3,300.

When rates start to climb an investor has choices. If you own an individual bond you may decide to simply hold the bond to maturity rather then take a loss. If you own bond mutual funds you may not have that luxury. While bond managers will be scrambling to sell old holdings and buy new they will be losing principal on their original bond portfolio.

The good news is that nothing is as extreme as rates moving up 50% overnight. Rates will move up eventually but usually at a fraction of a percent. But having a plan in place as to what to do when rates do go up is necessary.

• Don’t panic. A lot of smart money is waiting to take advantage of rising interest rates. You can too.
• Check maturity of individual bonds. 1-2 years out you may want to hold and get income and wait for them to mature.  You won’t lose anything by doing that except what new bonds are paying.
• Domestic bond mutual funds and closed-end funds need to be sold. Have your broker place sold assets in a money market. Sales can be made tout de suite with minimal loss of principal. You will lose money as rates move up so you do have to act swiftly.
• Research ETFs that short the 10-year or 20-year Treasury. The ETF will act positively as rates move up.
• Research TIPS.  These are Treasury Inflation-Protection Securities. Higher rates usually mean inflation and TIPS can add a protective layer to a conservative portfolio.
• Start today to buy dividend paying stocks and mutual funds. Today you can get 3%-6% on a slew of different investments. Waiting  until a later date and you may find the prices bid up and the yield not so attractive.
• Cash is also good- temporarily. Some folks think they’ll see the 18% fixed money market days of Carter but remember we worked our way to those returns and they didn’t happen overnight. Then there is always the probability we may not see those days. An investor can always sell a 6% dividend asset to buy a double digit asset when the time and opportunity arrives.
• Finally, don’t forget that going forward new issue bonds will be pegged to competitive rates. Investors may be able to buy brand new bonds at the new rates which could be in double digits as they were back in 1980.  After bond yields peek they usually fall providing investors with increased returns.

Questions for Paul call 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

That Was The Week That Was – Last Week September

•   Last Monday markets opened to good news from Asia and Europe but domestic indices meandered as traders took profits from a fairly outstanding September.
• Graham Summers, in his ‘Seeking Alpha’ Weekly Forecast,  reported that the previous week the Fed injected more than $10 billion into the markets via three Permanent open Market Operations and another $10 billion into the system via ‘behind the scenes’. This ‘trashing of the dollar’ in order to bolster stocks could mean a major weakness in the Dollar, which would cause stocks to retest the April highs of 122o (on the S&P) and Gold exploding to $1350, or higher. (Weak dollar good for stocks!).
• Very interesting, Canadian and US stocks in lockstep both retreating last Monday as investors on both sides sold off financials.
• IPO woes. Ze hottest IPO in years gets lukewarm reception- Liberty Mutual.
• Hey, I told you first! Emerging markets are not just a satellite but investment planners believe a Core Holding.
• Some of the hottest markets are South Korea, Taiwan, the Philippines, Singapore, Malaysia, Indonesia and Thailand. These are called the Asian Tigers . Hot they will stay and grow for some time. You can buy them in an emerging markets fund or individual exchange traded fund.
• Home prices in the Detroit Metro area increased 1.6%.
• Markets up on the bet of Fed intervention and tons of cash in corporate coffers.
• Currency wars, it is called by WSJ. Global economies survive on their cheap money as exports are life blood. China rules with bogus cheap currency and U.S. is getting the message and making the dollar less expensive than their friends and neighbors.
• Weird or just me? The CBS’  Hawaii 5-0 attracted 12.5 million viewers and Sarah Palin and Dancing with the Stars garnered 21.5.
• Before the bell Thursday- Irish banks need more money, Spain downgraded by Moody’s. U.S. taking China to the woodshed because of it’s currency policy.
• Last Wednesday the U.S. House passed legislation to penalize China’s foreign-exchange practices. Currently the Yuan is undervalued to the U.S. dollar by 20%. (Now you know why you can buy tidy-whities so cheap – one reason is the exchange rate – second the average income in China is 25% of the U.S. average income-)
• On Thursday China gave a ‘muted’ response to the U.S., a politically correct word to express their concerns and willingness to ‘work things out’. They are buyers of our debt and our consumer supports their economy. We each have something to lose and gain.
• Question: If dollar continues to fall and stocks to rise the end result is? Answer: It’s a tie ballgame.
• Liberty Mutual (see above) pulls plug on IPO. Investor resistance to premium stock valuation and lackadaisical institutional interest almost certainly would cause insurance giant to nosedive. Good call. 
• Thursday markets were in for a bit of profit taking on the end of the month with indices down slightly.
• The world famous investment bear Peter Eliandes of Stockmarket Cycles may just change his mind on the direction of the market ‘after’ October 1st.
• The best September since 1939 breaking the rule that with a bad August comes a bad September. Markets gained 7.8% for the month.
• AIG plans on starting to pay back the $120 billion loaned by the government by first converting common to preferred and increasing ownership to 92% from 80% and allowing the Treasury to sell shares over time.
• More problems for Irish banks as the weakest in the union. Expect more grief coming from that sector.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.