retirement interruptus: That Was The Week That Was-3rd Week December

This is a story about unforeseen consequences with joint investment & savings accounts when relationships sour. Before the markets went boom in 2008, and while I was doing my radio program, a married couple came to see me. They had a lot of money sitting in a bank account doing very little and after a few discussions a joint investment account, funded with mutual funds, was decided by both and opened. On this account both the husband or the wife could make deposits or withdrawals without the signature of the other. Things went well for a few years until one day the husband called and asked, in not so polite terms, what I did with fifty thousand dollars of his money? After a few questions and phone calls it was determined that a month earlier his loving spouse had called the mutual fund company direct (circumventing her representative) and had them send her a check for fifty thousand dollars and was able to deposit it in her separate individually registered bank account, even though the check was made payable to both her and the husband. The husband finally admitted that he and his lady love were in ‘sorta’ conflict and trying to work things out. She, believing in a bird in the hand a lot more than one promised, decided to split marital property before a judge did. This story had a happy ending but for many people this could have been a disaster- for either spouse. Agreeing to have both party’s signatures on any withdrawals is something that a couple with a joint account should discuss before things get ugly. Aged parent with an adult child jointly on their saving or investment account should also be aware that kids sometime steal and prevention is worth…tens of thousands of dollars. Instructions to the broker or bank can pay dividends. If you cannot trust, or even suspect a possible problem with the other ‘joint’ party, or if conflicts arise, than separate accounts with named beneficiaries on each will do the job of protecting, keeping harmony and affording liquidity. Got Qs Call or E-Mail Paul…586 783 7080…

Bank of America Merrill Lynch suggests a moderate investor allocation for 2013…

65% stocks
33% bonds
2% cash

This for the next 12-18 months. Also, Fifth Third chief investment officer Jeff Korzenik said that he thinks we have another year or two of low rates. He said not to chase yesterday’s winners. High quality bonds especially. And, he also suggested and concurred with BofA BFF’s increasing allocation in international and emerging markets bonds and equities.

My Predictions For 2013… I’m one of these guys who now wears a belt with suspenders, looks behind my truck before I back out of the garage and checks the cholesterol content on everything I eat. It wasn’t always this way. Back in the day I thought if folks owned one mutual fund company they could do all they had to do and get great allocation and returns. The crash of 2008 taught me different. Fund companies did predict a Democrat for President in 2007 but they couldn’t foresee the coming global calamity in products their kinsman created, packaged and sold. I sometimes wonder about that because if you’re in the business of buying and selling individual stocks and fixed securities and rubbing shoulders and knees with other folks who are also buying and selling individual stocks and fixed securities at other companies who in turn know of and are rubbing knees and elbows with…well, you get the picture- why was it that most everyone didn’t know what was going on in their own industry? Certainly Joe and Jane knew, or had an inkling, that something was amiss when radio ads were announcing all the free mortgage money that was theirs for the asking. That off my chest here’s a few thoughts for the coming year.

The Federal Reserve is at the end of it’s tether.
Let Ben Bernanke trade the Federal Reserve into eliminating our national debt. He borrows at 1.65% and buys long-term mortgages paying a tad less than 4%. You do the math.
Multi-national companies – yes. European or China Only- nyet. Not for awhile.
Long-term fixed for another 12 months.
Inflation a coming.
Home builders. Real estate. Yup.
Refinance anything and everything.
Dividends are still important. (Make that a Very)
Large Caps Have The Cash- What’s Not to Like About Google, Apple, McDonalds, Coca Cola, Starbucks and Disney
Defense is a game we should all play with our investments-You May Leave Money On The Table But You’ll Sleep Better
Bottom line: Markets will muddle through and up in 2013 no thanks to the politicians and the lack of leadership in Washington. Win both with fixed and equities in 2013.

Did You Check Your Portfolio Stock Overlap? If you have all your money in one fund family with different mutual funds chances are you own the same stock in different funds even though the funds have different investment objectives. This would explain why your accounts go up and down all at the same time. There is a computer program that you can use and find out how bad your stock overlap is. If you don’t have the resources to do this call or E- me.

Apple Downgraded by Citi to Neutral. The slide of the stock price from a high of $700+ was just too much to ignore. Morningstar evaluated the shares on December 6th and maintained their fair value price of $750. CNBC Heads on Friday talked up the stock saying they’d be all over it after the first of the year.

Monday- All Indices Up. Dow 100 points as noise from Washington on a deal circulated to investors. The talks between the President and the Speaker came as the nation is fed up and the pain of Newtown, Conn is just the worst.

Working for a Family Trust the Trustee Asked if I was an Investment Technician…? Technically the answer is no. But the following chart from Michael Gayed is very interesting and you may want to use it going forward. It’s the relationship between Gold and Copper. Gold is the ‘safe’ haven investment while Copper is the ‘risk’ on investment. Gayed’s conclusion is that when Copper outperforms the risk is on and he suggests that now the risk is on for investors. You can create this chart on StockCharts.com Gold was up $14 an ounce Friday as markets fell.

The laughing you hear is from the halls of Morgan Stanley. The firm was fined $5 million by regulators for its handling of the Facebook IPO. Let us not forget that the firm had a $2.4 billion short on the stock. Plus all the fees acquired along the way. ‘Five million? Let’s have lunch!’ Those meanie regulators!

Yelp is a public company. What it does is allow anyone, including the crazy lady with the twenty cats, to go on their web site and give an opinion on places they’ve done business with including restaurants, pet stores and hair removal shops. Loads of folk visit the site- some 33 million a month. Andrew Zimmerman, the chubby host of his Travel channel show about eating anything, took umbrage with an amateur review and essentially said in a podcast that our opinions are those of ill-informed morons. Getting back to the story. Yelp stock took a hit Monday last because Facebook will be encroaching on its territory. Still other analysts think the stock is worth more and Scott Devine of MS gave Yelp a neutral rating but a $22 price. There are lots more places to grow since the company has only a fraction of the country under its website. I visited the site out of curiosity and saw little banner or pop-up advertising. Perhaps it is that that is holding the share price down?

February 16th- Date of My Inflation Breakfast Meeting. It will be at Sycamore Hills Golf Course- Saturday Morning at 9 AM. ‘Call me now for reservations.’

Here’s a chart above that illustrates even the most conservative investors have to ‘bail’ on bonds eventually and embrace dividend paying stocks, ETFs or mutual funds. If not now- soon…

Tuesday Markets Up Across The Board. Very nice day as hope for a deal sprang from the bosoms of traders…Gold closed $1677. Dow broke 100 points and Naz was huge as Apple found traction. Wednesday Markets took back almost all what went up. Thursday up 1/2 of what was up Tuesday but down Wednesday.

Kirk Spano at Dow Jones reminds us that the markets are either forward or backward looking and rarely does the performance indicate ‘what’s happening now.’ He also pens reasons why we’ll see more inflation in the near future: Central banks globally have printed trillions of dollars, there are more mouths on the planet every new day and the food and energy supply is flat.

U.S. Treasury Sells GM Stake. GM agreed to buy-back 40% of the US shares and pay $400 million more than it would have had it bought those shares in the open market. GM shares spiked 6% on the news. Ford was up Friday as all auto manufacturers publically traded was slightly down.

Libor is the London interbank offered benchmark. This is the long winded way of saying the Libor is what interest rates bank charge when borrowing from each other. The Libor is also used as a ‘global’ benchmark to calculate everything from Government bonds to mortgages and credit card rates. And because of the amount of money involved (trillions and jillions) a small move in the Libor means big profits for banks. The calculation is done by using the average interest rate charged by and from a consortium of banks. UBS instigated a rigging of the Libor that was a global confidence game. Fannie Mae and Freddie Mac are thought to have lost $3 billion because of the rigging of rates. Regulators say this game continued from 2005-2010. The UBS was investigated, admitted guilt and fined $1.5 billion by regulators with No Criminal Charges. Don’t we just love banks?

Thinking of Investing in China? Growth @ 8 1/2%, huge population, increasing personal income, etc. etc.? Zacks sez buy multi-nationals that do biz in China and not the Chinese companies. Loads of companies that do including KFC and GM.

Gold closed $1652 Thursday.

Not a Big Fan of Groupon = not an investor or user be. But JP Morgan announced that they are buying a smaller version of Groupon called Bloomspot. The cost a measly $3 million. Why, you ask? Because JP has a credit card base and this is a good place to gain extra income. The company will structure discounts on client’s credit card bill. Mastercard is already in the biz with its own acquisition called Truaxis. And you thought there was only one way banks could skin you?

Cody Willard is 40 something, an investor, writer and talking head. Cody sez ignore the fiscal cliff. If it happens make sure you have your shopping list ready to snap up bargains.

No Deal- Republicans and Republicans Disagree. Boehner has little clout with his own party. ( No confidence seals The Speaker’s fate. But to give the man his due I doubt if a Rayburn or Gingrich could corral this bunch.) The difference between what Dems want and what Republicans demand is a drop in the ocean. CNBC discussed a U.S. downgrade; not because of fiscally irresponsible but because we’re politically irresponsible. At the same time the Euro is trading higher and the U.S. dollar is still a safe haven. Joining the EU was also discussed as the primary political agenda of the President. Reasons given: Global trade, health care, and social benefits all point to the end- game favored by the Democrats and the President.

Republicans kicked the House Speaker aside and investors showed their displeasure Friday with a modest pullback.