Friday, December 27, 2013

Stocks up--convert to tax-FREE

Dow index up over 80% since 2008--Do you know where your dollars are?
Stock market is on track to end the year with its biggest percentage gain since 1996 and is almost certain to have its best year in a decade. Is this the end of the boom? Can you convert some of your 401k or IRA gains into tax-FREE income in retirement? Do you know where your dollars are?

Health Insurance Cancelled? Don’t worry—No mandate
Americans whose health plans are being canceled because their coverage doesn’t meet Obamacare rules will be exempt from the mandate that they carry insurance for one year, under a change announced by the Obama administration.

GOP raises car insurance coverage minimum in OH !???!!
Ohio drivers who carry the minimum amount of insurance will have to boost their coverage the next time they renew their policies. A state law that went into effect this week doubles the state minimum levels of coverage that drivers must carry — to $25,000 per person, $50,000 for a multiperson accident and $25,000 for property damage. It is the first increase since 1969. The state’s program of randomly checking drivers for coverage has found that about 11 percent typically lack insurance. GOP sponsored this law to mandate higher cost insurance. WOW Get all your discounts:

Senators ask why investors can’t see broker complaints before buy
Brokers have been able to hide their complaints in 97% of all cases. Why? Senators Chuck Grassley and Jack Reed cited a study that found that regulators consented to brokers' expungement requests in 96.9% of cases they reviewed from May 2009 to December 2011. The sky-high expungement rate in cases that make it to FINRA arbitrators suggests that the BrokerCheck database "may not enable investors to easily obtain all the information necessary to determine whether to hire a particular broker," Grassley and Reed wrote. "We share FINRA's view that 'expungement is an extraordinary remedy that should be granted only under appropriate circumstances,' and that it should be permitted 'only when it has no meaningful investor protection or regulatory value,'" they continued. "However, we believe that meaningful investor protection includes the disclosure of whether a customer dispute was settled. Not just for transparency sake, but also to help prospective investors make informed decisions about which individuals or firms with whom to do business."
Self-regulator FINRA is owned by brokerage firms and pays arbitrators (industry) to hear complaints.

Long-term care claims ignored by Bankers Life
Oregon state insurance regulators have again slapped Bankers Life and Casualty Co. with a large fine, this time for mishandling long-term care insurance claims from elderly and disabled customers. Consider alternatives:

SCAMS           “Deficits don’t matter” Republican Godfather, Dick Cheney, 2002
Bush wars increased the debt by $4-6 trillion to $16 trillion. 1985 debt $3 T, same as 1945.

Govt buys access to our phones, computers, etc—allows hackers to steal data!
NSA paid $10 million to RSA Security to weaken the encryption technology and keep backdoors in system for easier access to encrypted information. RSA is regarded as an important and influential firm in computer security. RSA was paid by NSA to includeNSA-friendly code in encryption programs in popular security tools.
Millions of smartphone users worldwide use SecurID tokens for sharing information with security. As per reports, RSA generated pseudo-random number generator called Dual_EC_DRBG in its BSAFE encryption software toolkit. Two unnamed sources informed Reuters reporter Joseph Menn that Dual_EC_DRBG was set as default to gain a contract worth $10 million from NSA in 2006.

We let hackers hack bec/ strip on cards is 70s tech
American businesses haven’t adopted widely available technology that would make it far more difficult to commit credit-card fraud. The issue is the continued use of magnetic stripes on the back of credit cards. Most other countries abandoned this technology long ago. They’ve switched to cards with embedded chips that generate a new code for every transaction, making cards very difficult to counterfeit. On the other hand, it’s easy to make fake magnetic stripes.

Credit card firm misled on ID and insurance “protection”—stock up!??
American Express will pay $75.7 million to resolve charges that it overbilled consumers and misled customers on services provided. AmEx charged consumers for identity protection services without the written authorization necessary to provide services, the CFPB said. In other cases, consumers were misled about the benefits of an "account protector" program intended to offer relief after a major life event, such as unemployment or temporary disability. Shares in AmEx closed at $88.69, up 0.4 percent.

41 Watchung Plaza, B242
MontclairNJ 07042

Friday, December 20, 2013

Winners and losers

Today’s winning mutual funds are tomorrow’s has-beens—don’t time market
Only 7% of the 692 domestic mutual funds that ranked in the top quartile of returns in September 2011 managed to continue to rank in the top quartile through September 2013, according to the S&P report. Only 21.24% managed to stay in the top quartile over two straight years. Over five years, the odds drop considerably, even if the standards are lowered to just staying in the top half of all funds in a respective category. Only 6.47% of the 1,421 domestic mutual funds that ranked in the top half of performers in September 2009 stayed in the top half for the next five years without slipping. Smart investors use index funds since they beat 86% of all funds over time.

Congress cuts military pensions—but not their own pensions
Saying thank you to our military? Military retirees are outraged that Congress voted a budget deal that trims military pensions, calling the move "an egregious breach of faith." The  deal cuts pension cost of living raises by 1% for military retirees who aren't disabled and not yet 62 years old. Cost of living hikes are automatic raises intended to keep up with inflation.
What is left after cuts to food stamps and unemployment comp? Congress’s pay?

Wealthy cut holiday spending—economy falters
Survey predicts a sharp, 9.4 percent drop in holiday spending this year. Behind this drop is a sharp falloff in spending by the wealthy. Those with incomes above $100,000 plan to lay out $300 less than they did last year, undoing two years of strong gains. Already have everything they want.

Corporations are not spending on new plants/equipment—CEOs clean up
Corporate share-buyback authorizations this year through March totaled an estimated $208 billion, according to research firm Birinyi Associates. That marked the strongest first quarter since Birinyi began recording buyback data in 1985.
The first quarter was the fourth-largest in dollar terms, trailing the second-, third- and fourth quarters of 2007. At the current pace, 2013 would see $833 billion of authorizations versus $477 billion in 2012 and second only to 2007’s $863 billion of buyback activity.

Prius is best value car
Best overall value among all models out there, Consumer Reports magazine says look no farther than the Toyota Prius, the popular hybrid car. And at the other end of the spectrum, if you want to squander all your dollars, you can't do a better job of flushing them away than by buying the Nissan Armada, a giant SUV, says CR as part of its annual Best New-Car Value analysis. For Prius, it's a second straight win on the CR best-value list, having unseated the Honda Fit from the title it held for four straight years. The magazine lauds it as having the right combination of performance, reliability and low estimated five-year ownership costs at 47 cents per mile. Armada costs $1.20/mi.
Toyota Avalon Hybrid Limited scored highest among large cars and Lexus ES 300h was top luxury car. Save more with a top pick USED vehicle:
Hyundai is most fuel efficient. 
Honda is top safety pick

To claim or NOT to claim insurance—that is the question
Drivers pay an average of 38% more for car insurance after making a single claim, according to a new report. The hike is steepest in Massachusetts, where just one claim leads to an average premium increase of 67%. California (+62%) and New Jersey (+59%) are not far behind. Maryland has the lowest post-claim increase (+20%), followed by Alabama (+22%) and Michigan (+23%). A second claim puts an even deeper dent in Americans' wallets: a driver with two claims pays nearly twice as much for car insurance as a claim-free driver (+86%). Time to ask for discounts with a new company:

Voter fraud issue is GOP fraud—study says no fraud
Out of the 197 million votes cast for federal candidates between 2002 and 2005, only 40 voters were indicted for voter fraud, according to a Department of Justice study outlined during a 2006 Congressional hearing. Only 26 of those cases, or about .00000013 percent of the votes cast, resulted in convictions or guilty pleas. But the push for voter ID laws is not all about preventing fraud, said Pennsylvania state Rep. Daryl Metcalfe, who sponsored his state's voter ID law. Cost of routing out 26 from 200 million is estimated at over $200 million in all states. This includes buying a birth certificate, going to MV, paying fee and state bureaus making and enforcing new laws/regs about voter ID.
Paying military retirees full benefits would be cheaper (see above).

ObamaCare charges smokers more, but …
Except in CA, NY NJ and MA, you will be charged more for your policy. This surcharge may make premiums greater than your subsidy. There is little that can be done to verify non-smoker status on the applications. Once you have coverage, you can’t lose it. I am guessing poor smokers won’t worry about collections after they get sick. 
Health plans are voluntarily extending the deadline for consumers to pay their first month's premium. Consumers who select their plans by Dec. 23 and pay their premiums by Jan.10 will be able to have coverage effective Jan. 1.

ObamaCare will reduce costs eventually
Executives in the health care delivery system said: “overall, the expected average operating cost reduction was 11.7 percent. Fifty-four percent said the savings could be achieved by reducing the number of hospitalizations, 49 percent said savings could be achieved reducing the number of readmissions, and 39 percent said savings would be achieved by reducing the number of emergency room visits.”  It is easy to be pessimistic “yet hospital leaders appear to be very optimistic about the future of the system."

Junk insurance plans being uncovered—mixed blessing
Some states allow companies to sell plans that don’t cover serious costly illness. Consumers buy plans because they are cheap. They don’t realize the ‘junk’ until they have to use the plans. By then it is too late. Bankruptcy often follows losing all savings.

ObamaCare forces Congresspeople to pay more for insurance—taste own medicine
Rep. Jim Matheson, D-Utah, saw his monthly premiums rise from $434 to $795. Like all members of Congress, Matheson had previously selected his insurance from plans offered through the Federal Employees Health Benefits Program, which still covers everyone from park rangers in Zion National Park to the chef in the White House. With such a large federal workforce, the program has a huge risk pool and that meant lower-than-average costs for top-quality insurance. But when Congress passed the Affordable Care Act in 2010, Republicans fought for and won a provision requiring lawmakers and most of their staffers to get their insurance through an exchange, set up to help the uninsured and those who buy insurance on the private marketplace. Now they have to pay more. Young staffers may pay less.

Small business owners save using the web
The Insureon Small Business Institute study shows that the market for the nation's smallest businesses saw overall price increases of 2%, slightly lower than the increases reported for the overall small business insurance market. "The online market for small business insurance is strong and healthy," said Ted Devine, CEO of insureon. "More business owners are comfortable purchasing coverage online, and these [SCIOP Index] numbers show that going online to make that purchase is a smart decision from a financial standpoint for owners of the nation's smallest businesses."

SCAMS           “Deficits don’t matter” Republican Godfather, Dick Cheney, 2002
Bush wars increased the debt by $4-6 trillion to $16 trillion. 1985 debt $3 T, same as 1945.

Why regulation is necessary!
Merrill Lynch settles SEC charges to the tune of $132 million over misleading investors about three structured debt products. The hedge fund, Magnetar Capital, hedged its stock positions by shorting against the collateralized debt obligations known as Octans I CDO Ltd. and Norma CDO I Ltd., that Merrill Lynch was selling to its clients, according to the SEC. When your broker offers the next Octans I, ask the SEC if OK.

States sold our highways to investors—investors have no risk and all cash? We lose!
States have agreed to pay investors fixed amounts instead of the tolls. If no traffic, states must still pay. FL taxpayers pay extra $13 m according to some. IN, IL, NY, NJ giving private investors the road projects since taxes can’t be raised. Traffic falls—bankruptcy.

41 Watchung Plaza, B242
MontclairNJ 07042

Friday, December 13, 2013

10 worst money mistakes

Are your …
Investments earning less than the market average of 10%? 
Advisors taking fees without meeting your goals? 
(There are NO refunds if they fail.)
Trading costs and taxes eating up your profits?
Emotions freezing you out of the stock market?
         You can correct these mistakes by using the time-tested strategy proven successful by Warren Buffett. 

Know your score before you buy
Recently, a reader tried to buy a $2500 bed using a retail stores’ credit facility—GE. They were only allowed $1000 to buy a bed. This reader had never applied for credit before which accounts for the lower amount. Know your score before you shop for a big ticket item and avoid the waste of time trying out what they won’t finance. Payment history is the single most important factor, making up 35% of the FICO formula. There are websites that provide a credit score or an estimate. The sites— Inc., Credit Karma Inc.'s and—also offer products for sale. You can check your credit reports for errors FREE once every 12 months from each of the three bureaus. Audits have found about 20% have errors.

You knew all along—insurers gauge poor credit holders
New research shows that, holding all other factors constant, the two largest auto insurers, State Farm and Allstate, charge moderate-income drivers with poor credit scores much higher prices than drivers with excellent scores. Insurers fear poor payers are poor driving risks: reckless behavior is reckless behavior. Insurers only want drivers who don’t make mistakes. Shop the insurers who want more insureds.

Saving money online made easy
You can save a bunch by buying almost all your needs online. Use the tips here to save on regular stuff: You can even save when your friends use Amazon. For financial products like insurance and mutual funds, you can save $3,000 or more every year by avoiding the middleperson and shopping online. Most products are standardized commodities. The Internet helps you learn exactly what you need and how to avoid fees and commissions that can take up to 63% of your nest egg over time. You can even use an IRS-approved account that let’s you avoid all income tax. Yes, it is tax-FREE:

Do you regret taking SS benefits early?
You have 12 months from the date of your initial claim to change your mind. If you do, you must repay all the benefits you have received, plus those of anyone else who has received benefits on your earnings record, such as a spouse or dependent child. In return, you get to increase your benefits by about 8% per year until you reach age 70 when benefits can’t be increased. However, benefits are taxable depending on your income so it might be wise to consider building a tax-FREE account instead.

End of work unions—back to middle ages when agreements were broken at will
U.S. bankruptcy judge’s ruling that pensions can be cut to reduce the city of Detroit’s $18 billion long-term liabilities is a “watershed” event in the history of municipal bankruptcies, according to a credit analyst. U.S. law allows for contract cuts in bankruptcy, and supersedes Michigan law protecting pensions. “Some places like Chicago and Philly with low pension levels and high unfunded levels will have to be addressed,” she said. How is your state-funded pension?

More talk of changing our SS benefits—benefits we paid for already!
Sen. Rob Portman, R-Ohio, said he also wants to find ways to encourage people to save more. "We have to make sure people have a backstop," he said. "Social Security was never meant to be a backstop."
But that is exactly what it was intended to be. The act was an attempt to “limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children.”
Portman spoke to financial advisors and encouraged the SEC to allow them to give “common sense” advice instead of following the fiduciary rule (use the best product for the client not yourself).        
So we can’t count on our SS benefits or our pensions anymore. They can be cut by our “representatives” and the judges they appoint. 

Lower fees boost retirement earnings
A new survey released by Aon Hewitt finds that employers are boosting returns on retirement savings at very little extra cost through lower fees, and by offering non-mutual fund alternatives and adding passive management strategies to the investment mix. Switch to tax-FREE retirement funds and gain 30% more:

New 401k fee disclosure documents fail to disclose fees
Nearly 40% of working consumers currently contributing to a retirement plan believe they don't pay any expenses in their 401(k). Limra found that only one in three participants spends more than five minutes reading the disclosures, and only 12% were able to estimate just how much they pay in fees. Fees can take up to 63% of our nest egg over time. Yet the industry continues to hide the fees with legal language to confuse inside 20-page documents. See your fees! Use low-cost funds, earn more:

Vanguard founder pleads for standard: “best interest of client” for all
A longtime financial markets leader called on federal regulators Tuesday to stiffen their spines and propose rules that would require everyone providing investment advice to act in the best interests of their clients. There is widespread opposition to fiduciary duty rules being considered by the Labor Department and the Securities and Exchange Commission, John Bogle, founder of The Vanguard Group, said. Bogle has long said that regulators must “Apply fiduciary duty to anyone 'touching other people's money'.”  Meanwhile major brokerage firms are increasing their brokers pay to incentivize them to court wealthy clients only. You are the best judge of your needs:

Long-term care insurance rates to rise--guaranteed
“It is impossible to be in this business long-term, if you have to set all of your assumptions based on the date the policy is issued and you can never change or re-rate the policies,” Genworth CEO McInerney said. The insurer is requesting premium increases of 6 percent to 13 percent on some contracts sold from 2003 through last year. Some of the rate increases requested on the older policies were greater than 50 percent, Genworth said last year. Consider the alternatives to constant rate increases:

Regulators rule to try to protect taxpayers from banks’ gambling
U.S. regulators Tuesday voted to adopt the so-called Volcker rule meant to limit the ability of banks to use their own money to make risky investment bets. The core intention of the Volcker rule is to prevent banks from making market bets with federally insured money, such as depositor money that is insured by the FDIC. Banks would have until mid-2015 to comply with the new rule but many large banks may have already made adjustments. Bank examiners will learn how to test the banks about the rule. Insurer and bank gambling losses were covered by taxpayers in 2008. Most have been paid back. All GM stock was finally sold December 2013. America socializes the risks of bankers and privatizes the benefits for bankers. 

American’s health better—smoking down but diabetes up
An annual measure of the nation's health status finds evidence that Americans made "a notable shift" toward better health in 2013. The prevalence of diabetes ranges from 7% of adults in Alaska to 13% in West VirginiaHawaii scored well on most measures.Mississippi is ranked last this year.  It looks at 27 measures of health, including tobacco and alcohol abuse, exercise, infectious diseases, crime rates, public health funding, access to immunizations, premature birth rates and cancer and heart disease rates. Last year, Vermont was No. 1.

SCAMS           “Deficits don’t matter” Republican Godfather, Dick Cheney, 2002
Bush wars increased the debt by $4-6 trillion to $16 trillion. 1985 debt $3 T, same as 1945.

Bernie Madoff Says Prison Is Like Camp—having a great time on the taxpayer dime this time.

What the ????
Newlyweds just three weeks removed from their wedding day lured a Pennsylvania man to his death with a Craigslist ad because they wanted to kill someone together, police said. Elytte Barbour told officers before his arrest Friday night that he and his wife, Miranda, had planned to kill before but their plans never worked out until last month when Troy LaFerrara responded to an online posting that promised companionship in return for money.

41 Watchung Plaza, B242
MontclairNJ 07042

Friday, December 6, 2013

Use Buffett's winning strategy

Warren Buffett’s strategy has outperformed all others
New study finds Oracle of Omaha has outperformed every long-lived U.S. stock and mutual fund. Looking at all U.S. stocks from 1926 to 2011 that have been traded for more than 30 years, a paper published this week by the National Bureau of Economic Research calculated that Mr. Buffett's so-called Sharpe ratio is 0.76 since 1976. That was about twice the stock market's 0.39. Invest like Buffett:

Tax credits this year
Energy credits for improvements such as insulated hot water heaters, insulation, double-paned windows. Install them before year end. The items that qualify for this special tax treatment will be marked by the manufacturer. Keep this documentation in your tax file in the event of an audit.
Tax-free charitable distributions directly from an IRA to a qualified nonprofit organization by persons age 70 ½ or older. Without itemizing, you can have your charity give you a deduction for part of your IRA distribution.
Filing joint rather than as two single individuals now legal for LGBTs.
Education credits continue but the tuition deduction expires after 2013.
Student loan interest deduction and employer-provided education assistance benefits.
Dependent care and Earned Income Tax credit remain.
Child Tax and Saver’s credits.
Estate tax exemption is $5,250,000 with a top tax rate of 40%. Couples $10,500,000. 
Free tax prep by IRS-trained volunteers at AARP:

Pensions for state workers underfunded
Illinois is the state with the worst funded public employee pension system in the nation. Estimates are that they are underfunded by a hundred billion dollars. The situation’s so serious that, according to one recent report, about twenty cents of every taxpayer dollar inIllinois is now used to pay for pensions.  These public workers and these retirees spent their careers paying into retirement systems, holding up their end of the bargain while the state did not, and that it’s unfair for them to cut their benefits to the degree that they’re being cut. Many other states have already dealt with these problems and are fighting them out in the courts right now. Illinois’s constitutional protection is a particularly rock-solid one, compared to how the language is written into some other states. Don’t rely on your employer for future income. They may go bankrupt. Make your own:

CA goes ahead with employer ObamaCare
California has opened an online insurance exchange for small business. The program that's part of the national health overhaul was launched formally Monday, two months behind the state-run exchange for individuals and families, known as Covered California.
It's voluntary — companies with up to 50 full-time workers are not required to provide insurance for workers. Officials say the site will offer affordable choices to small businesses that want to offer attractive compensation packages, including health care. Some owners could qualify for tax credits.

Investors BEWARE! Sales people can still sell bad-for-you products
The Investor Advisory Committee, a SEC advisory panel, has called on the SEC to move forward with a rule that "would require brokers to act in the best interests of their clients when providing retail investment advice"...the same standard that investment advisers meet.  While the SEC has included investment-advise standards for brokers on its 2014 regulatory agenda, it is slated for "long-term action" without a specific timetable. Trust but verify your broker/advisor’s advice:

Internet advisors growing
Cerulli Associates say Internet-based financial advisers are winning over investors and are serious competition for conventional advisers.  More than 100 startups for personal finance and investment are aggressively pursuing younger investors. The number of retail investors using direct-to-investors online platforms run by discount brokerages has nearly doubled since 2008.  Shop and save on insurance/investments:

401k statements to include monthly income projections
Labor Dept will require your plan provider to include income projections on your statement so that you have a more realistic expectation of your future retirement situation. Studies show that those who receive quarterly projections increased their saving by 29%. The information worked best for those already motivated to save. It also helps those that are considering retirement versus those that are less informed. Workers were most successful when their employer installed automatic enrollment and increases in small amounts. Workers still prefer a fixed pension managed by the employer’s plan provider. However, most employers are phasing out such plans. Tune up your 401k and have more for retirement:

GOP leader calls Pope a Marxist
“This is just pure Marxism coming out of the mouth of the pope.”

Are you ready for a Second Job “Retirement”?
Working retirees’ trend: the proportion of partially retired workers has risen from virtually zero to 15 percent for 60 to 62 year olds, and is over 20 percent for 65 to 67 year olds, up from 5 to 10 percent in 1960, according to the University of Michigan study. Multitudes of workers in their 50s and early 60s have been laid off or forced into early retirement. Workers now have the flexibility to take retirement benefits anywhere between 62 and 70 from SS and old employers. Higher-paid workers work more years. Many workers keep their part-time jobs until age 70 or beyond to make up for lost wages earlier in their career instead of taking full retirement at 65 or 66. A study found that a high inflation rate results in a slightly higher retirement rate, because wages lag inflation and therefore lower the rewards of working. Make Tax-FREE income:

Your scripts can cost half what you pay
Shopping for your drugs can be shocking. I checked the price of my scripts on 10 different sites. They were all different. The most useful sites were and Savings over years can be significant. Some buy from Canadian pharmacies and save even with shipping. Check the pharmacy reviews first. Buy only what you need:

SCAMS           “Deficits don’t matter” Republican Godfather, Dick Cheney, 2002
Bush wars increased the debt by $4-6 trillion to $16 trillion. 1985 debt $3 T, same as 1945.

Madoff 30-year scam never questioned by SEC or regulators
Bernard L. Madoff’s former finance chief, who pleaded guilty to aiding the con man’s $17 billion Ponzi scheme, said the company was using fake trades to trick investors in the 1970s when he started working there after graduating high school.
The fraudulent trading went on “for as long as I could remember,” Frank DiPascali, 57, told a jury in Manhattan federal court today at the trial of five ex-colleagues. “It was virtually impossible not to know what was happening.”

MetroNorth train kills 4 – No “Dead Man’s Brake”
"I zoned out"
Last year’s near accident on MetroNorth—engineer ignores “alerts” and reads paper.
All trains are supposed to have this safety device:
The “Alerter” is an alarm designed to stop the train if the engineer doesn’t respond within a few seconds—a “dead man’s brake.” As we spoke, Tony, the engineer today, smacked a large red button to silence the racket. After a few moments of blissful quiet, the blasted honking started again. Tony would whack the big button once more. Honk, HONK, HONK, WHACK. Honk, HONK, HONK, WHACK.

On April 27, 2010, a motorman on a NY subway ‘G’ train apparently suffered a fatal heart attack at the controls, activating the so-called dead-man feature, which stops the train when the motorman takes his hand off the controller.
Unfortunately, MetroNorth did not have either feature on its lead-car train.

John Thomas scams customers
The SEC charged the former CEO of John Thomas Financial with negligent activity, alleging the firm steered customers into proprietary hedge funds and influenced a fund adviser and manager to breach fiduciary duty.

41 Watchung Plaza, B242
MontclairNJ 07042