Elizabeth Warren Granted POWER!
I have awaited President Obama’s choice to head the Consumer Financial Protection Agency for months now, and am overjoyed that Elizabeth Warren will now head it. After all, she has been involved in the creation and continuous work of this agency from the start, yet to now have a proverbial `gun in her holster’ is surely what we need to really begin to unwind the errantness of Wall Street’s greedy ways.
As I blogged last October, a Harvard Law School professor, Elizabeth has a clear command of the history of financial regulations and now is poised to actually speak out and design “fixes”.
Yes, she’s a consumer advocate, yes she’s articulate, and yes, she’s serious about results. Hope has been restored to many of us seasoned financial advisers and to many American women and men, principally those retired women and men with little time to make up their lost financial ground.
My hat’s off to Elizabeth Warren, and the President for appointing her–against the wishes of many of his supporters and certainly status quo seeking financiers.
It’s a new day…and a bright one indeed!
Make it a great weekend,
Ms. Morrison
Elizabeth Warren-common Sense Yet No Power!
I’ve found the last couple of days’ Yahoo video interviews of Elizabeth Warren, both informative and infuriating.
Here’s a no-nonsense Harvard Law School Professor who is willing to truth tell; willing to answer tough questions with candor, and unpopular answers. Hers is the voice of common sense, the outlier in this conspiracy of silence of Too-Big-To-Fail financial institutions having their way with “the rest of us”.
I’m astonished that she and the TARP Monitor Congressional Oversight Panel aren’t given any real power. No authority to pass laws, no authority to police activity, just as she says, appealing for business to “do the right thing”…not a theme that big business has adhered to lately, for certain. To her credit, she was able to virtually shame Goldman Sachs and Morgan Stanley into paying closer to 94 cents on the dollar vs. 66 cents on the first 1% of warrant sales!
Would that she could have been in charge at the outset of the Troubled Asset Relief Program–TARP last fall! Perhaps the big banks would have needed to supply answers to the very questions they ask us “mortal” borrowers, when we go hat-in-hand for a loan. No, instead they were handed/forced money, hand over Paulson’s fist, with no accounting mechanism whatsoever!
Well, now we must contact our congresspeople and representatives to fight the huge bank lobbys and urge the passage of a Consumer Financial Protection Agency with sharp teeth! Enough of big banks gouging the taxpayers for bail out monies only to turn around and raise credit card fees and interest rates on these same consumers, all the while doling out massive, groups-of-zero bonuses to themselves!
We can’t stop applying pressure now! Turn your outrage into action, and write and call today! We Can Do It Women! Remember what our foremother Margaret Mead said, “Never underestimate the power of a small group of committed people to change the world. In fact, it is the only thing that ever has.”
Good day!
MsMorrison
Tax Day Reliefs!
Well the only good thing about a stock market decline is that we owe LESS taxes on the earnings…ahem, I mean on the lack-of-earnings. In fact, it gets better. We can (and should) take up to $3,000 of losses over and above those which offset our capital gains, as a tax loss.
For example, that means that if you had $1,000 in capital gains in 2008, and you also happened to have $1,000 in capital losses last year, that loss counterbalanced that gain, resulting in no taxes owed. If you had that same $1,000 in capital gains and $5,000, for example, in capital losses (you needed to have sold out your loss positions which in investment speak is “realized losses”, versus just seeing the value go down on paper) you could have offset the $1,000 in capital gains and then taken an additional $3,000 in capital losses against both your Federal and State income tax returns, thereby offsetting even ordinary income.
Currently the annual limit that one can take over and above offsetting equal dollar gains, is $3,000., yet if you had more than that, like $1,000 more in our example above, you can carry those unused losses forward on your Federal Income Tax return for use in future years. (I don’t know of any states that allow unlimited capital loss carryforward though, so any 2008 unused losses do expire, relative to your state income tax return.) So, that’s a bit of tax trivia; i.e., salve perhaps on the wounds of recent portfolio losses.
While some of you will as a matter of principle, wait till tonight, and then begrudgingly deliver your income tax returns to the post office that stays open the latest, others of us will file at least one extension, if not two. Yet, April 15th typically evokes some emotion, not much of it pleasant.
Well, all the more reason to treat yourself to something for nothin’. Yes, here are some links to a couple sites’ advertisements for today’s freebies:
http://finance.yahoo.com/taxes/article/106920/18-Deals-That-Offer-Some-Tax-Day-Relief
http://www.usatoday.com/money/industries/food/2009-04-13-restaurants-tax-day-discounts_N.htm
What mature woman doesn’t love a deal. Now we can feel good again, even for a day, right? No, as you all know, I say we can feel good every day, despite the chaos that swirls around us. It’s up to us what we focus on. I’ll leave you today with this Winston Churchhill quote, which I really find fitting:
“We are still masters of our fate. We are still captains of our souls.”
With so much piracy present today–literally off the coasts of Africa, and metaphorically with our news media preying on our minds–it is indeed incumbent upon us to captain our minds to focus on our well-being, and on the well-being of our family and friends–both those we’ve met and those we have yet to meet.
Let’s all practice random acts of kindness, starting with ourselves. We Can Do It Women!
The Rest Of The Story
Warren Buffet was quoted over the weekend saying the economy is in shambles and that it will last for the rest of this year. Not sure that’s news, yet it’s surely captured headlines. In fact, Buffett may have needed (he surely wanted) to refocus some of the VERY negative spot light on him, given that his investments, including Berkshire Hathaway suffered the worst year in it’s history, by a VERY large margin. Don’t get me wrong, I like Warren Buffet, yet I’m NOT sure this is a time for him to be spouting off; perhaps he should stick to his knitting.
Anyway, the Asian and European markets sold off this morning, and then today the US stock markets sold off big time: the DOW closed today at 6763, down 299.64, which is lowest level since May 1, 1997 and the S & P 500 is down 16% in 11 days and 22% in 2009.
Specifically, the S & P 500 ended at 700, which is the lowest close since Nov 1996. (While some traders have pegged 700 as a critical point level, which if reached would indicate a new low of 600. While it happens to interest me, I don’t believe anyone knows whether this is the bottom, or, if not, where it is. They haven’t in previous months, nor have they called the myriad 10-20% gains that various asset classes—including those of DFA—have posted over several weeks during the past months.
There is GREAT NEWS TODAY. Oddly enough, while neither of these numbers was forecast, consumer spending was up in January as was consumer income. How long that will last is questionable, given the rapidity of over-projection unemployment claims, granted. Yet I suspect you may be receptive tonight to GOOD NEWS! Oil also dropped 10%, so hopefully we’ll continue to see lower gas prices at the pump.
It’s also interesting that we do see emerging markets and tech both up over these past days and weeks, in general, and these don’t typically happen in “normal” bear markets.
We are clearly in a trader’s market, and in a derivatives and shorting market—none of which I participate in as a Certified Financial Planner at Capital Financial Advisors incidentally.
Hey, the new flood of derivative products each time new credit is created makes copulating rabbits look lazy. Yes, all this betting on gloom and doom, and especially all this continued packaging of non-transparent product is CRAZY!
Yes, we are in what some refer to as a “great” recession; different surely from the Great Depression of 1929. Yet a great recession will not show immediate promise. Whether the economy recovers in 2009 is still negotiable, yet the stock market could very well recover before the broader economy does.
I’m praying for the day to come soon where the market’s blood-letting produces transparency. Once that is restored, and only when that is restored can we expect some positive traction, and consumer confidence and recovering markets.
I am not a trader, let alone a short-term trader. I have either harvested, or am in the process of harvesting tax losses in my clients’ portfolios in order to “bank” these capital losses that will be used to offset future capital gains. As you may know, President Obama’s budget plans call for increased capital gains rates from 15-20% beginning in 2011. So, there is clear value in shielding future capital gains from tax.
I did NOT recommend hedge funds, nor did I receive their fat fees and commission paychecks. Yes, most hedge funds exacted exhorbitant fees, WITHOUT performance.
I don’t recommend or promote esoteric financial vehicles that I don’t understand. My advice particularly to mature women investors is to not invest in anything you can’t understand, or be taught to understand.
While the asset classes in which I invest are down, they ARE able to be defined. Index-like investing with a Value and Small cap bent principally in Dimensional Fund Advisors, an institutional money management firm. Real companies, in no-load, razor thin expensed institutional mutual funds. No Madoff, no Ponzi scheme shenanigans.
Tomorrow Bernanke testifies and Treasury Secretary Timothy Geithner makes his first appearance speaking to the House Ways and Means Committee. I will be watching and listening, of course, as I have been, low these past months.
The market’s news however didn’t compare to the recent sad news of Paul Harvey’s death at age 90. What a WONDERFUL man whose rich baritone voice extoled the “the rest of the story” week after week. May he rest in sweet peace!
As investors, we await the “rest of the story” in the markets. Yet, my caution is that any short-term myopia about medium and long-term investments is surely misfocused.
Don’t Get Duped By High-Yield Bonds
As much of the nation’s focus is on the soon-to-be-passed Stimulus Bill, and the tragic Buffalo plane crash, there’s other news that bears notice.
This week, corporations have rushed to take advantage of the opportunity to raise capital, in order to pay down their spiraling debts. They’ve done so by creating a raft of new high yield, low-rated bonds.
While yield-starved investors—including mature women, whom I seek to inform and empower financially–are likely to attack these as would a shark sensing blood in the water, allow me to issue a warning that there will be blood in the proverbial streets if/when these bonds default.
Remember what our mothers taught us. If it sounds too good to be true, it probably is.
Let’s start with some definitions first. There are two major bond ranking agencies; Standard & Poor’s and Moody’s. “Junk bond” is the slang term for Lower Rated/High Yield Bonds. Technically a bond that is rated a letter rating lower than BBB- by Standard & Poor’s and rated below Baa3 by Moody’s is called High Yield, or Junk. US Treasury Bonds are rated triple AAA by comparison.
So while the excess “spread” between the yield of US Treasuries and Junk Bonds has narrowed to a whopping 16%, having been almost 22% in mid December, investors need to exercise extreme caution, IF they purchase junk bonds at all.
The rating systems were designed to act as an indicator of credit worthiness, and bond ratings would generally be thought of as welcome information, providing education to bond purchasers. That is, people who actually research this information before they buy.
However, many commission starved bond dealers and brokerage house registered reps tend to SELL investments to their clients; with nowhere near as much regard for suitability as that of their percentage commission unfortunately. Yes, it’s true.
Granted, many of us in the fee-only financial advisory business have been sorely disappointed (if not a far stronger word) in the failure of Moody’s and Standard & Poor’s to issue adequate or accurate warnings for many of the world’s companies that have since gone quite South. However, Moody’s has just revamped their predictions of global bond defaults as soon as this November to over 3 times that of the current rate, an already high 15.1%.
So, don’t be duped by this week’s flood of high yield bonds. While I hate to be redundant, pigs get fatter, hogs get slaughtered! You will have long forgotten where you spent that extra short-term yield, once your junk bond defaults and not only is the income lost, but the principal right along with it.
Please invest responsibly!
