That Was The Week That Was-2nd Week May

• Jobs are what it’s all about. According to the WSJ Sunday before last companies cranked up hiring April to the fastest pace in five years. Don’t get excited there are 13.7 million Americans still out of work and another 8.6 million who wanted to work full time but could only find part-time jobs. Get the jobs picture rolling brighter housing will follow.  Speaking of which…
• Housing suffered another drop as median U.S. home values fell another 3% from the previous quarter. This the largest decline since 2008.
• Dow 16,000?! According to technical analyst Gene Peroni Jr. at 16,000 the Dow would represent a 27% gain from last week’s close. ‘There is still a reluctance,’ he said, ‘on the part of sideline investors.’ Peroni’s current outlook calls for continued strength from what he calls THEM stocks, an acronym for technology, health care, energy and manufacturing.’ I like the way this guy rolls. I also like tech, energy and manufacturing.
• AIG, the insurance monster, that was propped up by the government in order to pay all the claims for Goldman, Bank of America, JP Morgan and others for the ill managed mortgage mess is about to sell the U.S. shares. The government owns 92% of the company and needs $28.73 a share to break-even on their investment. The problem is gauging price. Morningstar like fair value at $38. a share  but others place share price closer to $23.00 a share. However experts contend that even if the government walks away with $22 a share they’ll be okay since there was profit on the residential mortgage-backed paper it acquired on AIG’s behalf at the beginning of the crisis. (AIG tickled $50 a share earlier this year before falling to current levels.)
• Citi completed reverse stock split and shares opened over $40.00 a share on Monday last and closed down. Jimmy Cramer wrote shares need to get rid of investors who bought for the split before gaining any altitude.
• Split Cisco into Threes – according to the smart folk at Morgan Stanley. Ehud Gelblum believes by dividing the company into threes hidden value may be uncovered up to 40% more than current share price. Cisco disagrees and states it cannot manage three separate ‘disparate’ businesses.  Lots of shorts on the stock.
• Buy Treasuries? The end of QE2 (coming this June) may actually boost bonds and not kill them.  Bond prices move inversely to rates. While fine folk at PIMCO sold their Treasuries the other folk at BlackRock bought more Treasuries anticipating exactly such a scenario. In other words BlackRock believes bond rates will fall while Pimco’s bet was that they would rise. More from the fine folk at Pimco later…
• Commodity price collapse last week attributed to computer sell programs. Oil rarely falls $10.00 a barrel in a single trading day and momentum built until everyone sold to get out of the way. Hope this explains…but it still hurt…
• World financial markets got a wake up call to the strength of the U.S. and its financial institutions. The dollar grew stronger immediately after the death of bin Laden. It was a reminder that the U.S. is still the strongest country militarily and financially. No other country comes close. The U.S is the world’s largest holder of gold in the world with Germany number two and China number three. In addition the U.S. has eleven aircraft carriers that are able to sail and strike anywhere in the world. China will float her first and only sometime this year. Hope this makes you feel better…
• Bounce on  Monday as commodities came back, oil closed over $100; gold and silver tacked on gains.
• David Weidner got testy with the Oracle of Omaha, Warren Buffett, writing that Buffett doesn’t get overly worked up over Berkshire quarterly earnings unless they’re good. (Meow) With claws extended Davey went for the jugular reported that Buffett keeps explaining his losses away by stating, ‘ …each security will grow to their intrinsic value…’; which Weidner writes is the value of a security that is only in Buffett’s brain and nowhere else…( tuna anyone?).
• You can almost imagine Homer spinning in his grave as ratings company Standard and Poor’s cut Greek ratings from BB- to B. The European debt crisis has returned like musical chairs at a kid’s party. Political pressure in Germany and other frugal northern European countries putting the kibosh on any additional aid. This is getting serious with little wiggle room. Greece may not be able to work any deals and  default unless EU raises more cash.  Add in the arrest this past weekend of the head of the IMF for allegedly accosting a hotel maid and this coming week can see more turmoil and uncertainty.
• PIMCO has more than $1 trillion in assets. In April Bill Gross increased short bets on U.S. debt. So far the markets have moved against him. Treasuries have increased .3% on the strength of the economy and the elimination of bin Laden.
• Despite a commodity correction 10 days earlier the charts show no relief for oil and especially gasoline. According to Getting Technical writer Michael Kahn investors can expect more upside. Technically Kahn explains, ‘…crude remains above its trend line. It also remains well above its November breakout level of 87…the excess were wrung out, but the bull market was left intact.’
• Alan K. Simpson, ex-senator from Wyoming and former Cranbrook graduate (Bloomfield Hills, Michigan), lawyer and all around Speaks- Before- He- Thinks kinda guy said Social Security was a Ponzi scheme and not meant to be a retirement plan. (AARP execs immediately got their shorts in a bunch even though ‘technically’  Simpson was right.)
• Tuesday markets closed up. Green all the way except for oil down a bit to close $103.50. If you’re counting four straight days of positives.
• Michelle Girard & Omair Sharif, economists at RBS Securities believe that while the Fed is in no hurry to raise rates in a few months they better start thinking seriously about the inflation picture. Girard and Sharif were winners of the MarketWatch Forecaster of the Month in April, beating out 42 other forecasting teams.
• Ouch. Gasoline lead  markets lower as  margin increases roiled investors into liquidity last Wednesday. The selloff wasn’t wide spread. Retail, especially Macy’s, did exceptionally well. Up 10% for the day. Apple also hung in plus positive news for J&J. Oil closed under $100. Gold and silver also found themselves lower.
• Dead Cat Bounce? This is where a stock jumps up, sucks in investors, and then continues its death spiral. Was it a bounce on Tuesday? It may have been for metals but not the economy according to David Callaway in MarketWatch.com. Professional investors still expect a continued economic recovery. The other side of the coin belongs to those that believe the second leg of the recession is going to be lead by more bank failures and derivative losses.
• Thursday markets started off lower but ended the session substantially up as oil settles around $100 even as Congress grilled oil executives in a bid to rid the industry of tax benefits. 
• Removing the Punch Bowl? According to Randall W. Forsyth last week’s turmoil could be a precursor to the Fed ending the QE2. Commodities may have temporarily ended their run. Mr. Copper has given up fifty cents a pound in April. Traders move to more defensive stocks, retail and pharma.
• Oil Company Tax Hike? Puleeze….either Congress thinks we’re dumber than we are or they’re dumber than we know they are. Watch commodity roller-coaster which identically matches last 2010 template.
• What did I tell you about silver last week?
• The 10-Year Treasury found itself attractive to investors (again!)  as yields fell almost 35 basis points to 3.15%, about where it was a year earlier. This was the lowest yields have been in 2011.  This flight to safety was acerbated by the Greece crisis, the U.S. debt ceiling, strengthening dollar, commodity price reversal and the upcoming end of QE2.
• GM’s stock price lags analyst’s expectations.
• Kirk Ludtke of CRT Capital Group has a $42 =12 month target. Ludtke said GM is the No. 1 player in the two regions that will account for half the world’s unit growth over the next five years: North America and China. 
• Friday the 13th usually bodes well both for stocks and Treasuries. Looking back at the past 10-years the 13th was up 65% of the time. It didn’t this last week.
• German growth accelerated.
•  Japanese banks lose ground as fear grows they may have to take a ‘haircut’ on billions of dollars in loans made to Tokyo Electric Power Company which disclosed three damaged cores at their reactors damaged by the earthquake and tsunami.
• Hedge fund conference in Las Vegas brought some interesting ideas last week.  Cooperman at Omega likes General Motors, which is sitting on a pile of cash and could return significant amounts to shareholders. Daniel Loeb of Third Point, LLC, is excited (?) about Delphi and suggested it could reach the high 20s.  Steven Tananbaum who runs GoldenTree Asset Management said in the past he has bet against Treasuries but currently he is ‘flat’ but may put the trade on soon.
• Finally- Jeff Reeves at MarketWatch names the three worst stocks in the Dow here to date. Here they are with no silly comments: Microsoft, Bank of America and Cisco.

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

When A Good Mutual Fund Goes Bad

    At one time or another, a  buy and hold forever investor will find themselves in a situation when a great fund they own, for one reason or another, drifts to the bottom  of the investment  universe. 

I have seen one-time hot funds from Idex, Munder  and Janus sizzle and then peter out. 

When that happens investors either can sit back and wait as fund managers try to work their magic to make the funds  relevant or simply shed them for better performing options. Investors do not benefit for being loyal. Fund families are the only beneficiary of investor loyalty. Investors end up holding essentially dead money or money that is not producing the returns that other similar funds are providing their clients while the fund tries to get its Mojo back.

The most recent fund that is has lost its way is Fidelity Magellan. Magellan, when it was considered the greatest fund in the world, was managed by Peter Lynch who provided annualized returns of 29% from 1977 to 1999. Today, after a series of managers who tried and failed, Magellan has faltered from a behemoth of some $90 billion in assets to a paltry $23 billion. It sports a Morningstar rating of one star out of five and an annualized rate of return from 2005 to the present of 2.5%. Still there are investors who will stick with the fund even if it means losing every penny they have invested.

How do you determine your good fund has soured and you better be looking for a new investment?

• The Mutual Fund switches manager(s).
• Performance lags peers & indices for two-three years.
• Fund management changes investment philosophy
• Fund assets bloat or decrease dramatically
• Investor’s investment philosophy or needs changes

Once you make the big psychological step to start anew you have to ask what do you want? Is it income, growth a combination of the two or preservation of principal. Here’s a chance to start fresh and get best of breed.

How complex? Do you want a combination of stocks, exchange traded  and mutual funds or just stocks or just funds? Do you plan on trading? Are you going to manage or should someone else do it for you? Research is another thing that you need to do and by that I mean not just picking up an old copy of Money Magazine at your dentist’s office and seeing what funds the Money Mag staff likes or doesn’t.

You don’t have to wholesale dump everything and jump into new funds and investments if you don’t want to. You can start with the worst performers in your portfolio and peel them off and add new funds to replace them in the same sector or category. As time goes on you’ll rebuild and create a plan you can be proud of.

If you have a portfolio of $25000 or less one or two holdings should do just fine. Over allocating just muddies the water and is the number one mistake amateur investors make. Keep it simple. Understand what you sell and buy and keep the risk within your comfort level.

Last, don’t allow tax benefits to be the only thing you hang your hat on to sell or buy an investment but at the same time don’t forget it. Right now many people holding investments can sell them in 2011 and gain substantial losses for the current year and possibly going forward. Those benefits may indeed be gone by 2012.

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 May

 

•   The Dollar edged up against the Euro took commodities and stocks lower for the week. And, as long as the dollar continues to climb higher you can expect lower metals and oils along with other commodities. Stocks will also suffer. But fear not, experts such as Jon Najarian of CNBC and options trading fame, expects, at some point, the dollar to continue its slide. The chart above shows the dollar versus the Euro for the past 30 days. The last week, shown as a straight line to the far right above, indicates how quickly the dollar moved up while all other indices lost ground. Remember oil is traded in dollars and a weak dollar always makes crude more expensive. It does the same with other commodities. In other news….
• The week started with a unflattering picture of Donald Trump on the cover of  BusinessWeek and ditto editorial about the Donald in the New Yorker. Businesses and the self-proclaimed intelligentsia are making him a punch line. As Marketwatch noted, alls okay as the Donald got what he wanted which was the publicity.
• A few thousands miles west the Berkshire-Hathaway annual stock meeting was underway that weekend and both Charley Munger and the Oracle put the coup de grace on the reputation of David Sokol, the resigned and disgraced former heir apparent to Buffett. Buffett added some other insights: (1) The U.S. is not going to have a debt crisis of any kind if as long as we keep issuing our notes in own currency. (2) Any institution that requires society to come in and bail it out for society’s sake should have a system in place that leaves its CEO and his spouse dead broke. It’s board of directors should also be held responsible.  I like this guy. Who knew he had this medieval streak?
• On the Ben Bernanke speech a week ago Wednesday, Randall W. Forsyth in Barrons.com wrote ‘Up and Down Wall Street’, according to longtime Fed watcher Lacy Hunt at Hoisington Investment Management in Austin, Texas, ‘If the objectives of QE2 were to raise rates, slow economic growth, encourage speculation and eviscerate the standard of living of the average American family, then it has been enormously successful.’ (ouch!)
• Any truth to Sell in May and come back in November? Seems at one time there was. However, dear reader, if you remember this last Bull market started in September of 2010 and has kept on rolling. This year you may want be careful of June when the Fed stop their easing.
• Swiss watchmakers allow 49% of their components to be made elsewhere and still be called Swiss. New law would make it 40% manufactured elsewhere.
• In Technology this past BusinessWeek section raves to Alcatel-Lucent and a most impressive turnaround with the stock up 117%. Morningstar writes that the debt is too much for what the stock has done. Stock being pummeled this week. -like a rented SUV.
•   Russia has attracted less private equity money than other emerging markets- $1.4 billion over the past 3 years, compared with $28.6 billion for China, $15 billion for India and $5 billion for Brazil. Killing, kidnapping and extortion all in the Russian business handbook. Ah, those Moscow nights, huh, Boris?
• Bank stocks continue to disappoint. Six of the big U.S. lenders see a combined 13% drop in revenue. Investors are ignoring banks, for the moment.
• Pssssst, want to buy a Bear Market mutual fund? Save your dough. Morningstar reports that Bear funds have been losing on average 10% a year for the last decade. These funds benefited from two crashes and then…nothing.
• Found a few lira in the ye old sofa cushions? Valle Piola, a deserted medieval village in the Appennine Mountains is for sale. The asking price for this fixer-upper, according to the folks at Bid & Ask BusinessWeek a mere $782,000.
• How You Doing? Monthly numbers for April were happy-happy and back in the day we’d settle the year- but not yet at the half-way point and lots more to go through. Great numbers YTD.
• 
• Last week met with a client and discussed what I thought were the 2 best bond trades for the coming Years. We know The Ben Bernanke is eventually going to start raising rates and when he does investors would benefit by buying TBF the ETF that shorts Treasuries. When rates reach what can be assumed the peak investors simply sell the TBF and buy the long 20-Treasury ETF -TLT. It doesn’t get any simpler than that. Seriously, it doesn’t.
• Monday’s market was off, as if it had a bad clam in its chowder, oil and gold down slightly, as well as Dow and Nasdaq, but no reason to call EMS. But, someone may know something.
• Starbucks is close to its stock price all time high.   With rising coffee prices customers have been ‘sensitive’ to total check size when visiting  cafes. This with the majority of customers earning more than $75,000 a year may be causing an unhealthy backlash to any attempt to raise prices in the near future.
• Markets took a hit on Monday. India raised rates. Gold, silver and oil all down.
• Inflationary signs: Jeff Reeves of InvestorPlace.com writes that inflation is far from under control and offers these specifics: Beef expected in increase 6-7% 2o11; Pork should also increase over 2010 by 7.5%; Corn has doubled; Paper towels and T-paper up 5%; Diapers up 7% over 2010. Wages and salaries are not keeping pace. There you have it.
• Facebook- probably the most anticipated IPO. One group of investors is looking to sell $1 billion on the secondary market.
• Silver crushed as CME Group Inc raised its margin requirements and speculators plain ran out of money to play. This caused the price of silver to fall. The higher margin (the ability to borrow) is higher for silver than gold. The high margin is great for the average investor reducing the speculation and rapid rise of price. Down 20% the experts (a-hrumph) are not giving up on the shiny stuff. Sean Broderick, writing from Jupiter, Florida not the planet, reports he’d be a buyer as soon as the silver correction runs its course. The metal, along with gold, he believes is a strong bullish trade.  (Read what billionaire Soros and Rogers are doing further down the page.)
• The world’s largest single commodity empire soon will be a public company. Glencore prepares its IPO. The company trades in commodities and also owns energy, agricultural, mining and metals. For example the company controls 45% of the world’s lead market.
• Wednesday was strike three as the markets fell. Oil still over $100 and the Dow off 83 points. Mitch Rubin, CIO at RiverPark Advisors, said, ‘There’s a general malaise around what the next order of economic activity will be.’ (Someone needs a vacation). Traders seemed to be in a mood to either punish or reward. Las Vegas Sands missed numbers and was hit for 7%. Varian Semiconductor soared after it agreed to be bought by Applied Materials.
• ConAgra, the food giant, wants to get into the generic food biz and bid for Ralcorp who makes private label food for grocery chains and others.  Either this will be a great bet or if the economy improves a bad one as consumers buy private label when the economy is bad. I love Kroger private label chocolate chip with nuts cookies.
• Flash crashes caused by computerized high speed trading have curtailed activities as volume in 2011 is down 15%. Regulators stepped in to propose trading halts for individual stocks that make outsized moves. The proposal known as a limit-up limit down mechanism, would prevent trades from happening outside of specific price bands. The there was Pan Alpha’s Mechem who said, ‘Returning retail investors would help…’, meaning curb volatility.  In 2010 a Flash Crash brought the Dow down 600 points in a nano-second.

• George Soros, Hungarian born hedge fund investor billionaire, and Far Left crackpot, reportedly had been selling off gold and especially silver. This heard on Thursday a day after Jim Rogers, a one time associate and fellow hedge fund billionaire who made his money in commodities, said that silver’s rise was not sustainable and not good for the markets. Investors agree that with a weak dollar and dovish stance at the Fed metals will continue to retreat. 
• Are you sitting down? Brace yourself. UBS gave Citi a Buy rating!! Trading under $5 and with a reverse stock split on the horizon UBS likes Citi although it did offer a caveat that Citi had challenges and investors would require greater patience and a longer term view to reap the benefits of the franchise.
• Huge plunge on Thursday as silver crashed. Don’t expect to be buying anytime soon. Oil also broke $100 and got the gadflies yakking, explaining the root cause of it all. Dan Dicker, independent oil trader, said, crude’s reaction to the …drop was ‘great proof of just how much speculative money there was in the oil market.’ With the large volume of margin selling, he added, ‘just how much stupid money there is in the oil game.’ Plus, with I think the whole world has been short dollars for a few years…then once silver started to crash it was time to get out of everything else.’
• Sanity (explained) extended to the Thomson Reuters/Jefferies CRB Index, which tracks global commodities prices, is ‘actually marginally below levels of five years ago, so it’s hard to argue that commodity prices are headed for a massive decline given that global (GDP) is above the level of five years ago.’ According to researchers quoted Thursday in MarketWatch.com. As markets shake out remember global economies now compete for same commodities –
• GM hit numbers but nitpickers said numbers misleading and stock punished. Or, maybe investors were just in the mood to kick more tires because of an overall bad day. There does seem to be some difficulties with core N.A, operations and…oh, shucks, who’s kidding who, folks over in the towers got some issues globally.
• WSJ report help is needed on the factory floor. Expert workers are now in demand and U.S. manufacturing companies are now scrambling to find talent here at home. File this under real good news, dear reader.
• Friday the jobs report came out better than expected and the markets roared and then came to their senses and finished up 54 points on the Dow. Silver isn’t coming back soon. Andy Smith, senior metals strategist at Bache Commodities said, ‘If gold is the Monte Carol casino , silver is a slot machine in Las Vegas.’ 
• Another ‘expert’ Donna Baldach, a 55 year old retiree. said, ‘Silver will hit $100 before the end of the year.’ Ms. Baldach who lives in Hillsboro, Florida, concluded, ‘I’ve never felt so sure in my life about something.’  I am soo biting my tongue.
• Finally, oil down but….Goldman Sachs analysts had this to say, Consequently, it is important to emphasize that even as oil prices are pulling back from their recent highs, we expect them to return to or surpass the recent highs by next year.

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

Speak English!

  The  WSJ had an editorial a few days back that suggested more than strongly that brokers and financial advisors speak plain English rather than using technical words and phrases such as debentures, beta, alpha, quantitative analysis, PE ratio and non-correlated investments.  These three dollar words and phrases only make the broker seem more like a snake oil salesman than a professional. It seems that even the rich are overwhelmed with their broker’s terms and phrases and sick and tired of pretending to know what their selling or buying for them. They want to know what they need to know in plain seventh grade English.

I agree and I promise to do my bit only if the rest of the working world does the same.

What do you mean what do I mean? I mean everyone I do business with has their own special language and phraseology and speaks to me as if I know, or should know, exactly what they mean.

I take the Mustang into the shop for a tune-up and the mechanic takes a peek under the hood and comments, ‘I see you have  dual overhead cams and you know there’s been some problems with the port fuel injection.’ Whereupon my eyeballs slowly roll into the back of my head.

Try something simple? A few years back I had the outside of my home sided. I did this for two reasons – I hate painting and I hate painting. When I started getting bids for how much the job would cost words like soffit, overlap, single coursing and scarfed joint were bandied about like M&Ms at Halloween. The only words I really latched onto were siding and no discounts.

What could be simpler than having the local grass cutter fertilize and weed your lawn. Only last year I came back from vacation to see strange things growing throughout my lawn. I called ‘My Guy’ who told me, ‘Oh, yeah, you’ve  got Rhizoctonia Blight and we can clear that up with a dose of Chlorothalonil.’ And when I asked him to put in a few trees he asked if I’d like a stand of Picea glaucas to fill in the backyard.

Don’t think turning on the TV and watching a football game will sooth the communication jangles. Terms like dead ball foul, cut block, red zone and dime back may as well be describing the construction of the Hubble telescope.

It doesn’t stop. Call your lawyer, your accountant or the guy that does home closings or sells real estate and you enter the twilight zone of language. From Living Wills, Revocable Living Trusts, Power of Attorney, cost basis on stock sales, foreign exchange tax, loan to value, lien and warranty; someone sign me up for night school because English isn’t being spoken here.

And its everywhere. Work in a restaurant, diner or coffee shop and they got their own lingo going: Curtain rally, back of the house, deuce, cover, on a rail, hillbilly and nuke.

And I haven’t started with medical professional, teachers, factory workers, dentists,  police, fire fighters or people who gamble for a living.  Big Slick, Blinds, Ante, The Flop, A Set; are all descriptive words associated with Texas Holdem. Just one game.

There you have it. We’re all to blame. You, me and the candle stick maker. The problem is that we’ve created these words to describe to each other in the same business what we mean that we’ve forgotten other people just don’t know what the hell we’re talking about.

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 – 4th Week April

• 
• Gold, silver and oil down on May 2nd Monday news of bin Laden’s death. The dollar also gained on the news of the terrorist’s death but for the previous week….

• The dollar continues its slide and Alessio de  Longis, who oversees  the Oppenheimer Currency Opportunities Fund said, ‘…(it) just doesn’t have anything positive going for it. While other countries pay higher rate of interest the U.S. of A. has maintained a low interest philosophy. Partly to avoid paying higher rates to those that loan us money and partly to stimulate American business the dollar has been in a hole and some countries are planning on taking advantage – namely China. The Beijing government has been hinting that it may diversify their $3 trillion of currency reserves away from the dollar. This would, of course, reduce a substantial source of recent dollar buying.
• According to Miller Tabak since The Ben Bernanke took office on February 1, 2006 the dollar’s purchasing power has fallen 11% and its down 21% in the past decade and 82% since the U.S. got off the gold standard in 1971. I’m betting the average person didn’t get 11% increase in pay the past 5 years.
• Funny he didn’t look dead. Insurer John Hancock has been accused by California authorities of withholding benefits from widows and other beneficiaries by allegedly failing to determine if their customer was dead. Seems when a person either stops communicating with the company by either ceasing premium payments or responding to inquiries Hancock simply used existing cash in the policy to keep it in force until they had siphoned all the money out and then lapsed the policy. Hancock is based in Boston and is owned by ManuLife out of Canada. Other companies may have been doing the same and this is going to be a huge black eye for the industry….nah, it’s the insurance business! And you only thought banks acted this way. Wait…more…next-
• Dummying it Down. Primerica, Inc.,had a banner year recruiting life insurance agents in 2010 some 230,000 folks signed up to sell Primerica products. Problem was that 80% of those recruited couldn’t pass the state licensing exam so Primerica is solving the problem by lobbying to dummy down the exam. In five years about 900,000 were lead to water through the company licensing program; about 43 times more than the entire sales force of NY Life. Usually insurance companies have some sort of criteria before hiring but Primerica will hire anyone as long as they don’t have a criminal record. The company sells primarily term life using part-time agents.  And if that isn’t enough bad news in the insurance sector….there’s more!
• States are investigating whether these same life insurers are not just running cash through deceased policies and then cancelling them when they should be turning those assets to the state(s) as abandon property. Without identifying if an insured is indeed dead the company practice stinks to high heaven and tens of millions of dollars are at stake. Insurance companies want to hold onto the cash value policies until they become valueless while the states want to hold the policy as property and then claim it for their own. There is greed written all over this cat fight.
• The natural way of things may take the place of harsher methods of culling government down to manageable size. Seems state workers are retiring early to get current retirement benefits rather than hang around  and get reduced pensions. The states with the highest retirement rates in 2011 over 2010 are: New Jersey-60%, Wisconsin-79%, Texas-54%, New York-65%.
• Home ownership is on the wane, according to anyone who picks up a newspaper. The biggest reason given is that people do not see ownership as a good investment. (Investment is the last thing people consider when buying a home!)
• Bloomberg BusinessWeek April 25-May 1 reported on the Goldman Rules, actual rules written by the investment bank Goldman Sachs that employees must follow or suffer the wrath of…whomever. Here are a few: Don’t call it a recommendation; We are always watching you; Honest, we are always watching you; We only Trust you with things we don’t care about, and finally; Talk slowly to stupid people.
• Monday markets mixed, oil down a smidge and gold up. Mark Hulbert wondered if a weak dollar contributed to the rise in gold and vicey versay and the conclusion: Other factors impact gold’s rise and fall and only about one-third of the time does gold’s rise follow a weak dollar.
• Do you know what your mutual fund is buying? The Commodities Futures Trading Commission is attempting to increase oversight of the growing number of mutual funds that invest in commodities and currencies through offshore subsidiaries.
• Funds are fighting oversight stating that as long as fund companies make their subsidiaries’ books and records available they should not fall under the jurisdiction of CFTC. They also argue that no evidence or allegation of harm to investors.
• Hedge Fund managers were big supporters of the Dems in 2008. Now those same managers are supporting the GOP. Whispers are that they are reacting to the President’s populist attacks on Wall Street. O.k., it’s not a whisper. Investment folks just plain poed at being a target and then shelling out good money for the Dems to be reelected and the abuse to continue.
• Tuesday saw markets soar triple digits and both gold and oil saw modest increases. Excitement was subdued. The Dow hit a 3 year high and the Nasdaq was 12 points off a 10-year high. Still the explanations for the triple digit day were described as an increase in positive consumer sentiment and that the economy seems to be ‘chugging’ away without fear of inflation, a real nice place to be.’ Eric Thorne, senior v.p. at Bryn Mawr Trust said, ‘equities are coming back to be the asset class of choice.’
• Ford helped boost markets with a huge day, outperforming analysts expectations. What did I tell you last week? Still the stock didn’t pop as some hoped. Cold water was splashed on the automaker’s results stating that the stellar performance was unsustainable. Barclay Capital estimates that Ford’s auto biz may have at the end of 2o12 $10 billion of cash. The next logical step may be a dividend payment (watch the stock pop!) to investors in the next 12 months.
• Commodities may be heading for a freefall. Word from Brett Arends in his commentary wrote that with all the speculative bullishness the commodity market may be due for a huge pullback. Everything from cotton, copper to coffee and oil may see a serious price slump. The reason is prices raced higher too fast and many are at historic highs. Reason number 2 is that price gains rarely occur without plenty of volatility along the way. Still, long term, commodities may provide an inflation cushion for investors. Expect sugar to get more expensive by Christmas.
• Wednesday The Ben Bernanke spoke and said the Fed will stop its buying of Treasuries in June, 2011. Interest rates will not change for the foreseeable  future and he said he was confident that the recovery was sustainable. He said a lot of other things like job creation was abysmal, inflation expectations were ‘well anchored’, whatever the hell that means; and the Fed won’t make any moves for at least two more meetings. The markets loved the pep talk and rallied 96 points on the Dow with gold and oil adding numbers. Traders give a 30% chance of a rate hike in 2011. And, naturally, the dollar fell.
• Japan crisis may cause an increase in the price of coal.
• Inflation expectations may be well anchored but when consumer product giants Proctor & Gamble, Unilever and Colgate-Palmolive report earnings they’ll also be discussing price hikes on their premium products. So-long price wars and now shareholders want the companies to start making serious money. With commodity prices escalating the only answer is to hike prices.
• Oh, yeah, in a previous blog, in a not so innocent time did we ever believe that David Sokol,  the former heir apparent to lead Berkshire Hathaway once Warren Buffett was gone, ever make a simple mistake when he bought stock in Lubrizol ahead of Berkshire’s purchase. A committee at Berkshire Hathaway pinned the controversy on Sokol, tossing him under the bus. You can bet that Sokol will be talking to investment regulators real soon, if not already.  Can  David say, ‘bye-bye Lubrizol gains?’
• Silver speculation? I bought it at $17 and it went backwards while gold went on a tear. I sold and came back at $28 and it did the same thing. At $40 I was tempted but backed away and now at $50, at a price where the Hunt Brother’s tried to corner the market, the price of silver seems to be in Mania City. While the metal is soaring the mining stocks are starting to go down, according to MarketWatch’s Howard Gold. He reports that silver contracts this past week are more that 50% higher than in November. One veteran trader think that something is going to derail the silver express and when that happens some investors will be buying the ultra short ETF in silver ZSL.
• Both the Fed and Treasury say they want a strong dollar but their actions are louder as the mighty buck has fallen. A weak dollar makes commodities more expensive and no one at the Fed or Treasury seems to be indicating a change. One thing that could change their minds if foreign investors shun the dollar. But, that doesn’t seem to be a problem as investors are buying on the seeming knowledge that a bundle will eventually be made when the dollar strengthens.
• Friday last was the Royal Wedding and a wrap of the month as all indices were in the green. Oil and Gold were also up and silver flat. For the month the Dow was up 4%, its highest close since May, 2008. The Dow is less than 10% from its record close set in October, 2007. Bob Doll, chief equity strategist for fundamental equities at BlackRock, Inc., said, in spite of numerous headwinds the economic recovery in the U.S. is over. ‘We’re in expansion mode.’ From your lips, Bobby, to God’s ear…
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• Here’s a Jeopardy Question: What major U.S. company trades at 7.1 times expected 2012 earnings, excluding cash, and investors have only gotten a total return over the past 10-years, including dividends, of negative 0.2%.  (Hint, one of the founder’s name is Bill)
• Facebook growing faster than projected several months back and may be ready for IPO spring 2012 according to the wise people reporting at WSJ Monday.
• Finally: FDIC closed 4 more banks Friday bringing the total year to date of 34. Community Central Bank in Mount Clemens, a few miles from where I live, was closed, bringing the total in Michigan to two for 2011.

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