Annual Cocoa Beach Aunts & Cousins Reunion
Well I was informed this Christmas that last year’s Cocoa Beach reunion of my aunts and my cousin would definitely be an annual affair! No problem, we had a blast together, so why not create and cherish great memories while we can? We slept in the 3 beds in my small condo, & also on blow-up beds, yet no one complained about there only being 2 bathrooms. Yes, some of you will remember my 88-year old aunt Janet riding the waves last year, and at 89 she did go swimming in the ocean with me this year, yet for the most part, we just relaxed on the beach and took in some discount store shopping, as well as enjoyed local seafood. Here’s our gang at a waterfront restaurant called Jack Baker’s Lobster Shanty in Cocoa Beach, FL, which I highly recommend!
Why is this so special? My aunts were formative influences in my early years, and each provided me with wise guidance and counsel. We are a God-fearing and a musical family, so we delighted in singing hymns in 4 part harmony together once again.
Two of my aunts are widowed, and another one is taking care of her incapacitated husband, plus my cousin is widowed. Each of these women have learned to manage their money in a way that allows them a comfortable retirement. My cousin’s husband died suddenly so she is a perfect example of a woman who when she needed, pulled herself together, and provided comfort to her 2 children. None of these women started out knowing much about money–let’s remember the horrible socialization women who are now in their 70s and 80s received in their youth and early adulthood–yet they have put one foot in front of the other to forge ahead in uncharted waters, investing for their future. They pray for God’s guidance and they act. I’m happy to be related to them, and to hold them out as “everyday folks” who could serve as examples of empowered women to any woman who needs a role model. We Can Do It Women!
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.
Mind-Bending Rebar Iron
Yes, you read right. I partnered with my Internet marketing guru, Michael Tasner, at a business development conference in San Francisco. We stood 6 feet apart, rested each end of a 6 foot long Rebar Iron bar in the soft spot located in the front of our throats, just under our adam’s apple. We looked into each other’s eyes, and concentrated on both our current power, as well as having drawn up former powerful images of ourselves by the instructor.
We each uttered the words, “I’m ready”, and then on the count of three, we began to walk towards each other, and UNBELIEVABLY, yes, right in front of our eyes and throats, that 6 foot long once-stiff iron bar bent into a U shape between us, the belly of the U-ed iron bar touching the ground.
What a glorious, and exciting illustration that our minds have incredible power, if only we can channel it.
So, my message today to my mature women who may fear that they can’t understand their money. We Can Do It Women. We can use the power of our minds, and sprinkle in some of my assistance through education and empathy to master our money.
Both Michael and I are even more committed believers in the magnificent and almost unbelievable powers of the mind. Let’s use our minds women. Let’s overcome whatever may have stopped us before to get in the financial game women, and make our dough rise!
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!
