Pay The Bill

A look at FDIC coverage

2008-07-16T20:37:00.001-07:00

The IndyMac Bank failure got me thinking about something most of us take for granted: Federal Deposit Insurance Corporation, usually referred to as FDIC, protection of our bank accounts.

The FDIC is an independent U.S. governmental agency created to protect bank customers against loss of deposits held in an FDIC insured bank or savings association that fails.

According to the FDIC Web site, insured deposits usually are available to customers of a failed bank within a few days. Since the inception of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.

The key phase is "insured deposits," which means the amount meets the agency's limits. The amount $100,000 is tossed about, but there are some specifics that need to be noted, primarily in regard to the various account categories.

Single accounts: For accounts owned by one person and titled only in that person's name, the money in all such solo accounts counts toward the $100,000 insurance limit. That means if you have a checking account and a CD at the same FDIC-insured bank, both account amounts are added together and that total is insured up to $100,000.

Remember, it's per person/account and per bank. So if you have $100,000 in ABC Bank and $100,000 in XYZ Bank and both FDIC-insured institutions fail, each account is fully recoverable.

Joint accounts: These accounts are owned by two or more people. If the owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000 for each owner.

For a couple with a joint checking account and a joint savings account at the same insured bank, like the hubby and I have, each co-owner's shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple's joint accounts.

For example, the hubby and I have a hypothetical $200,000 CD at an insured bank with equal access to the account funds. So the hubby has $100,000 and I have the other $100,000 and we're OK if our bank fails, since we each get $100,000 of coverage.

If, however, our CD earnings bumped our account total up to $220,000 -- since we're being hypothetical, we're getting a great interest rate on this CD! -- that would put each of us $10,000 over the insurance limit.

Retirement account added coverage: While the basic insurance amount is $100,000 per depositor
per insured bank, retirement accounts get added coverage. IRAs are insured up to $250,000 per depositor per insured bank.

Additional assets uncovered: But other assets aren't usually protected by the FDIC.

As the fine print on bank literature and Web sites notes, the FDIC does not insure money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an FDIC-insured bank.

Calculate your FDIC coverage: You can calculate your bank insurance coverage at EDIE, the FDIC's online Electronic Deposit Insurance Estimator.

You also can get download a copy of Your Insured Deposits: FDIC's Guide to Deposit Insurance Coverage, which has details on insured account ownership categories, or you can order a copy by calling toll-free 1-877-275-3342.

Bad banks: IndyMac is the fifth bank to fail this year. Between 2005 and 2007, only three banks failed.

However, that escalated failure pace is not a reason for worry, according to the head of the FDIC.

"All bank depositors should understand that their insured deposits are safe," said FDIC Chairman Sheila Bair (reported by Reuters). "The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits."

According to FDIC records, in the past 15 years, the federal bank insurance agency has taken over 127 banks with combined assets of $22 billion.

The Pasadena, Calif.-based IndyMac, which was seized Friday, July 11, by regulators after a bank run in which customers withdrew $1.3 billion of deposits over 11 business days, will reopen Monday. It will have a new charter and a new name, IndyMac Federal Bank.

Still in a movie mode: Keeping with today's earlier post about accountant movies, the best bank failure flick is, obviously, It's a Wonderful Life.

If only real life were as wonderful as the reel life in some of these great old films.

But, alas, there aren't many bankers like George Bailey or towns like Bedford Falls anymore.

Book Review: Save Now or Die Trying

2008-07-14T20:37:00.001-07:00

Mark Bruno’s book, Save Now or Die Trying is a modern, up-to-the-minute book on retirement. It was published in 2007. The author has been covering the retirement industry for Crain’s Pensions and Investments for the last few years. As a newbie who learned everything on the job, he can relate to most of his Generation Y compatriots. His examples are the Jacks and Jills making their way in the world. He delves into their attitudes towards retirement and their fears and aspirations for the future, a lot like Suze Orman does, but his examples aren’t quite as two dimensional. None of us are, but I think the examples he’s picked out are more realistic than you’ll find in other personal finance books.

His title is a strong start and so is the first page. He’s out there to emphasize to today’s 20-somethings that no one is going to pay for their retirement. The only person responsible for it is YOU. I’m right behind him on that concept. Another concept he revisits over and over is that you can borrow a money for nearly everything, except retirement. A better thing to do is to ‘buy your retirement’ now, by saving for the future. I think that’s a great way of putting it.

There weren’t too many new things in this book overall, but a few key things really stuck out at me. 1. Roth IRA’s and Roth 401k’s. I did not know that regular 401k and Roth 401k contributions have a combined limit. I’ll have consider that as I revisit next year’s savings plan. 2. His online resource list has some new websites and resources I’ve never heard of before.

This book is a great gift for a new college grad or anyone under 30.

Yay!

2008-07-09T08:35:00.001-07:00

TIAA-CREF found my thousand dollars. All is well again.

I'm more heavily thinking about sinking most of my salary into the retirement plan.. I am going to pay SO MUCH in taxes this year that I am trying to stick as much of it into tax-sheltered accounts as possible. (Still filling the Roth though, since I can't retroactively fill it five years from now when I am in a lower tax bracket.)

Life is just chugging along. I am really incredibly busy with CashDuck.. and of course I am not making it any easier for myself by advertising so much and getting lots of new users, and working on new site doodads. :)

How Much Money Does Opec Make in 6 Days?

2008-07-07T08:35:00.001-07:00

Enough to buy General Motors.

Morgan Stanley Commodities Head Retires

2008-07-05T20:35:00.001-07:00

Morgan Stanley commodities chief John Shapiro has decided to follow Michael Lewis advice about what "the really shrewd people" do when times get tough on Wall Street. They "abandon the big firms for which they have happily worked for many years, and sneak off," according to Lewis.

Shapiro is stepping down from his positions as the head of Morgan Stanley's huge commodities trading desk. He's been with the firm since 1984, and gets credit for building its energy-trading business. But lately Morgan Stanley has seen a sharp decline in revenues from commodities. Shapiro's surprise retirement will inevitably be read as a signal that things haven't improved.

As the Wall Street Journal tells it:

The firm recently said a decline in commodity revenue from the first to second quarter of this year was due in part to wrong-way bets in the power sector. But a person familiar with the matter said the overall commodities business in the first half of 2008 is running on a par with the first half of the prior year.

Writing on the wall seen.

Morgan Stanley's Shapiro Resigns as Commodities Chief

You can get one thing

2008-07-05T08:35:00.001-07:00

When my son was a little boy, I would regularly bring him to the grocery store with me. And as any parent knows, as soon as kids can point and talk, they want you to buy them things when you're at the store.

This is normal human behavior: see stuff, want it, try to get it. But of course no parent can buy everything; and even if you could, it wouldn't be a good idea. Sometimes getting stuff (even as adults) isn't in our best interests. Stuff may cost too much, it may be unhealthy, we may want to use our money for other things, we may not have the room or the means to care for the things, we may just be feeling a fleeting desire that we'll forget all about in 5 minutes, etc.

So I saw these trips to the grocery store as teaching moments. I wanted to teach my son about money, stuff, and how you really can get the things that you want most. I also wanted to preserve my sanity on the shopping trips. So I decided to tell him yes to everything he said he wanted, with one condition: he had to pick just one thing.

When we got to the grocery store, I'd tell him “You can buy one thing. You can get whatever you want, but just one thing.” He'd ask me if he could get pop tarts and I'd reply with sure. Gatorade? Sure. Ice cream? Gogurt? Gum? Candy? Yes, yes, yes, yes, if that's your one thing. You decide. It's up to you.

When he was really little, his one thing would change with practically every aisle. He was constantly putting stuff back and getting something different instead — sometimes even right up to the checkout line. But as he grew older he became more sure of what he really wanted. It appeared to get easier for him to decide. He could cut through the things that only looked good at the moment for what he wanted most.

Maybe this is an extreme way of thinking about things, because of course we can have more than one thing in our lives. But it's a good way to think about the power of choice. Every choice we make (and even the choice NOT to choose) affects our life. The choices add up. If we focus them on what we want MOST (whether it's retirement savings, to get out of debt, or a trip to Antarctica) we'll be much more likely to get them. We can't have everything, but we can have the things that mean the most.

Stock Screen for Tuesday 6-17-08

2008-07-03T20:35:00.001-07:00

Today's screens give us an interesting mix of stocks that were higher on above average volume. I was specifically looking for stocks that were up at least 1% and had volume of at least 50% larger than the average. Several names, such as AAP, ABFS, ACM, EEP, ERES, FDS, GDI, IPHS, NDSN, OMI, PQ, TEVA, TITN, TOT and VIT, showed up on multiple screens. I will admit that not every one of these stocks look appealing after viewing the charts.

TITN, Titan Machinery (made three screens) was up almost 11% on volume 509% larger than the average closing at a new all-time high. The stock is now up 30% since the original analysis on April 21, 2008 at $23.97 (the ideal trade setup was noted at $21.00 which the stock did drop down to). A buy on a move back above $21 would give you a current gain of 47%.

Vanceinfo Technologies (VIT) is a stock that I noticed for the first time today as it was up 3.37% on volume 122% larger than average. VIT made the IPO screen and interesting stocks within 15% of a new high screen. The Chinese stock interests me as it has more than doubled in price over the past three months and is now flirting with a new all-time high.

This is exactly how I dissect my screens each night – I look for stocks that are up more than 1% with volume at least 50% larger than the average. Stocks making multiple screens are viewed first but every chart is analyzed.

No Holiday For Me

2008-07-03T08:35:00.001-07:00

Here’s to a lackluster 4th of July. I have a 3-day weekend and will NOT be taking advantage of it.

Most likely I will be cleaning the dust out of my condo and sleeping in a lot.

There might be a fireworks show if I can find a decent spot for viewing. A bike ride perhaps. The Smithsonian Folklife Festival for a day. Maybe even a minor league baseball game and blogmeet. (/me waves *Hi Ted!*)

If my friend is around, I’ll run over to her house to continue a quilt I’ve been making since March.

I have neither time nor money this year for a summer holiday. I went to a wedding earlier in May so I shall work like The Ant all summer. I ain’t no Grasshopper.

California--A Nice Place To Visit But I Wouldn't Want To Live There

2008-07-01T20:35:00.001-07:00

Went out to the Bay Area for my niece's wedding. Great trip, had fun, glad to be home given the price of houses and a wee bit of overcrowding. Seems that I am not the only one glad to be out as outlined in this article at MarketMinder.com. Enjoy--if you can.

California Hates the Poor

10/5/2007 |

California hates the poor. At least the Golden State certainly seems to act that way, given the way it treats its lower-income residents.

But wait—isn’t California known as one of the most socially progressive states, spending billions of dollars on social programs and public assistance for low-income residents each year? Indeed! Yet Californian legislators uphold a policy choking off precious dollars that could go to residents needing it most. That wacky policy is the Golden State’s tax structure.

California boasts the most punitive state income tax system in the entire Union. (Not so fast New Jersey, Hawaii, Iowa, and Oregon! Though you’re all nearly as bad.) With so much wealth in the state, you might not feel much immediate sympathy for those paying the lion’s share of the state taxes. After all, California’s got Hollywood movie stars, celebutants, and Dot-Com-mega-billionaires! Make them pay! Folks tend to forget California has millions of souls—the vast majority are Average Joes.

Let’s examine the current tax structure. California income taxes kick in at a modest 1% rate for annual income up to $6,622. Not too bad—$6,622 seems a small amount to hit up for income tax, but 1% isn’t that much. But, California’s highest tax bracket of 9.3% (the highest in the nation) begins at the affluent, wallet-busting, Bentley-driving sum of $43,468.

I’ll repeat that. California imposes the nation’s highest state income tax level of 9.3% on residents earning more than $43,468. Some perspective: In 2004, the US Census reported California’s median income was $51,185—higher than America’s median income of $44,648. Translation: If you’re “middle class,” California wants 9.3% of your income. It’s a shakedown for your lunch money.

Meanwhile, nearby states Washington, Nevada, and Texas charge no state income tax at all. Arizona starts its highest tax bracket at $150,000 where residents pay 4.57%—less than half California’s top rate. It’s hardly surprising these states are some of America’s fastest growing states. In 2006, Arizona’s and Nevada’s populations swelled over 4 times faster than California’s.

If you’re a Californian with a nice retirement savings, where would you retire? California wants a hefty portion of your retirement income every year, whereas nearby Washington and Nevada want none. Add to the equation the far lower cost of living in those states, and relocating seems like a no brainer. So, folks leave and California ends up with none of their income, property, or sales tax revenue.

Those poor souls remaining in California end up with less money to fund public schools, build new roads, pay for social programs and so on. All thanks to politicians ignoring fundamental economic principles and placing too heavy a burden on its working residents and businesses.

When a state places too heavy a tax burden on its citizens or businesses, the government stifles consumer spending, business investment, and actually ends up collecting far less tax revenue. A government can maximize its tax revenue at an optimal point. Tax too much and folks don’t see much of a reason to get out of bed in the morning. Mrs. Entrepreneur fails to see the upside in launching her cutting-edge new business idea. Less business activity means less tax revenue. The Laffer Curve (shown here http://upload.wikimedia.org/wikipedia/commons/4/47/Laffer_Curve.png) demonstrates the concept.

If prohibitive taxation makes a difference between US states, one could also apply the concept to countries. When a nation imposes high hurdles for new business development and wealth creation, the prospect of strong economic growth becomes increasingly remote. Conversely, if a country slashes corporate tax rates to spur economic activity, all other factors remaining constant, that’s bullish for growth.

Take Ireland for example. The Emerald Isle slashed its corporate tax rate to 12.5%—one of the lowest rates in the developed world.

Selected Corporate Tax Rates by Country

Ireland 12.5%
Netherlands 25.5%
United Kingdom 30.0%
China 33.0%
Belgium 33.9%
France 34.4%
Germany 38.6%
USA 39.5%
Japan 39.5%

Much to the chagrin of France and other EU heavyweights, economic growth in Ireland is soaring! After all, entrepreneurs and existing businesses only need two very simple elements to justify a venture: profit and human capital. Ireland has an educated, English-speaking work force and a corporate tax rate low enough to entice entrepreneurs from around the globe. Ireland will likely attract business activity, people, and tax revenue other countries will miss out on. It shouldn’t be much surprise, then, that Irish GDP growth is expected to more than double the EU’s average. Erin go bragh!

Eastern Bloc countries are also joining the low-tax party. Estonia, Latvia, Russia, Ukraine, Slovakia, Romania, Georgia, and Macedonia all successfully introduced low flat tax structures in recent years. These moves now pressure Western European countries to either become more competitive with their business climates or face a hemorrhaging economic growth towards their neighbors with cheap labor and more welcoming tax structures.

With one of the largest gross domestic products in the world, one could only dream of the economic boom resulting from slashed California tax rates (not to mention falling federal tax rates). With the Irelands and Nevadas out there, Uncle Sam and the Golden State better act fast. Their poor depend on it.

China Architectural Engineering (CAEI)

2008-06-30T20:34:00.001-07:00

Stock of the Day

China Architectural Engineering, Inc.

Wednesday’s Closing Price: CAEI - $10.75

Sector: Industrial Goods

Industry: General Contractor

52-week Price: $4.75 - $27.25

June 6, 2008 Business Wire:

“China Architectural Engineering, Inc. (CAE) (AMEX:RCH), a leader in the design, engineering, fabrication and installation of high-end building envelope systems, today announced that the Company will ring the opening bell at the NASDAQ MarketSite in New York City's Times Square on Thursday, June 12, 2008 at 9:30 a.m. EDT. The Company will commence trading on the NASDAQ Global Select Market under the ticker symbol “CAEI” on June 10, 2008.”

Although the company has “China” in its name, 45% of its revenue comes from Australia, Dubai, Qatar, the U.S. and Europe. Business week noted that growth should last well beyond the Olympic games this year because of robust orders in foreign markets.

The company’s order backlog is said to be at $100 million or 1/5th of its current market cap, a nice card to have up its sleeve in today’s world market.

The gap-up on the chart in May on huge volume concerns me when attempting to establish a solid risk/ reward trade strategy. I would like to see the gap fill prior to entering a position but I do see support along the 50-d m.a. or even $8 per share. I am going to set-up the “ideal trade” using the current moving average so we can cover a potential pull-back to the gap-up area noted on the charts.

Potential Trade Set-up:

Entry: $7.00

Risk is set at 1.0% of total portfolio or $1,000 of $100k

Stop Loss is 12% or $6.16 ($6.00 area)

Number of Shares: 1,190

Position Size is $8,334

Risk is $0.84

Target is $13 for a 7-to-1 risk/reward ratio

Key Fundamental Numbers:

Market Cap.: $547M

Outstanding Shares: 51.1M

EPS Growth (MRQ): 178%

EPS Growth (TTM): 135%

Revenue Growth (MRQ): 76%

Revenue Growth (TTM): 50%

Earnings per Share (EPS):

$0.50 Next year, +39%; High estimate $0.64, +77%

$0.36 current year, +71%

$0.21 last year, +50%

$0.14 previous year

2008 NMFA Fellowship Program available

2008-06-29T08:33:00.001-07:00

Hey everyone, I'm writing to let you know that the Military Spouse Fellowship for the Accredited Financial Counselor Program for 2008 is now accepting applications. From now through the end of April, the application will be available online through the National Military Family Association website. It's a great program and at the end of it, the selected applicants will have attained the certification of Accredited Financial Counselor under the guidance of AFCPE and FINRA. Please see the linked website if you're interested in learning more or applying to this program. It is definitely worth the effort.

And on a more personal note, tax season will be over in less than two weeks, and I look forward to blogging again!

See Me On The Tee Vee

2008-06-27T08:32:00.001-07:00

Check this out! They actually didn't use very much of my footage.. but I'm glad they pronounced my name correctly. :) And they didn't use any of the shots of the guinea pigs which I think were definitely way more interesting than me talking.

Simply College Answers Our Student Loan Q's

2008-06-25T20:33:00.001-07:00

While I typically spend my weekends dining, drinking and catching up with friends at social functions, I spent much of this weekend at the Kellogg School of Management's
Women's Leadership Workshop in Evanston, Ill. Kellogg is one of the world's top business schools, and I was honored to be a participant. The session featured valuable classroom workshops on negotiations, interviewing techniques, values-based leadership and relationship dynamics for leaders.

I'm going to reflect on those themes and share learnings from the workshop in coming days, so look for more on that. In the meantime, I noticed that many of the women attending the session were grappling with the issue of funding and student loans. Serendipitously, I had already been working on a story about college loans with the good folks at Simply College, a company that specializes in simplifying financial aid for those applying to college and graduate school.

Since the job market's looking pretty glum these days, and the news about student loans has been drab as well, I posed some questions about loans to Rene Bolti, Vice President of Simply College, and an educator with 17 years’ experience creating and administering programs and services for elementary, secondary and higher education. I hope you find her answers helpful.

Here's the Q&A...

1. In layman’s terms, what’s changed in student loans over the past six to twelve months?
Probably the most significant change is a new trend toward eliminating loans from financial aid packages of students below certain income levels. As a result, students at many top-name colleges may find themselves being awarded grants (which don’t need to be repaid) instead of loans.

But, the vast majority of students attend colleges that still include loans in the financial aid equation, so unless you are accepted at one of the top-tier, no-loan colleges, you’re likely to have to grapple with the question of student loan debt.

Although some lenders are exiting the student loan market, there are still many education loans available through a variety of lenders, including federal loans. In fact, the maximum annual limit on federal loans and grants for undergraduate and graduate students has recently increased, making the loans go further toward paying for a year of school.

2. What are three things I should know about college loans today?
1) There are many different types of college loans.

- Federal Stafford loans are available to students who complete a Free Application for Federal Student Aid (FAFSA).

- A family’s financial situation determines whether a student qualifies for subsidized or unsubsidized Stafford loans. (In subsidized loans, the government pays the interest while you’re in school; in unsubsidized loans, you’re responsible for the interest that accrues while you’re in school.)

- Federal PLUS loans are a low-cost option available for parents of students.

- Private loans, made directly by banks or specialized lenders, which tend to be the most expensive option, are available to students and parents to fill any gaps that remain once financial aid has been awarded.

2) Not all education loans are taken in the name of the student; some are student loans, some are parent loans, some need to be co-signed by the student and a credit-worthy adult.

3) Private education loans need to be researched for terms of repayment, length of repayment, total cost over the life of the loan, special qualifying characteristics (like minimum grade point average), and whether all terms and special offers (like interest reduction based on a certain number of on-time payments) are guaranteed for the life of the loan.

3. Can’t parents help their kids navigate the process?
The financial aid process is complex and overwhelming, even for parents who are college-educated and highly motivated. It is a multi-step process requiring attention to timing and detail, with many significant decisions compressed into a very short period of time. To minimize the anxiety and stress inherent in the process, it is beneficial for parents and students to work together, using trusted resources, to be sure they pay attention to each critical component.

Our program, Simply CollegeTM offers a step-by-step workbook/organizer, “Financial Aid Simplified”, to guide students and parents through the entire financial aid process beginning as early as January of junior year in high school, including researching scholarships and loans, completing required forms, comparing financial aid award offers, building a “college life” budget, and more. Go to www.simply-college.com to view video segments that accompany each tab of the workbook.

4. Is the financial aid process different for grad students?
The financial aid process for graduate students typically includes the FAFSA (to make federal loans accessible), but also may include looking for fellowships, assistantships and private loans. FinAid.org has a page dedicated to information for graduate students, including information on specialized loans.

5. Are working professionals at a disadvantage when it comes to loans?
While it is true that income will determine eligibility for certain loans and grants,
working professionals might consider financing their graduate degree through a combination of: employer tuition reimbursement, fellowships, grants, loans.

If you research the possibilities, you’re likely to be able to put together a package that meets your needs. In addition to discussing all possible funding sources with your selected university’s financial aid office, be sure to discuss assistantship and fellowship opportunities with your selected department.

If you are currently employed, talk to your human resources department about tuition reimbursement options (even if you’re unsure whether your employer has a tuition reimbursement program). As mentioned above, finaid.org is a good source of information and fastweb.com has loads of scholarship opportunities, including some for graduate students.

6. If I’d like to quit working and go to school full-time, using student loans, what special considerations might I have to take?
Giving up a salary and returning to the classroom full time will mean making some adjustments to your current lifestyle as student loans are unlikely to equal your salary. Each person needs to weigh personal responsibilities, career aspirations and financial goals when considering full time graduate study and how best to finance it. Here are some specific questions you should ask.

- Is there an alternate source of support available while you’re in school, like a spouse or parent? Even if it’s a loan from a family member, the terms of repayment and amount of the loan would likely be more favorable than any formal education loan.

- Is it possible to work part-time to cover basic living expenses while in school?

- Will a post graduate-degree job in your field draw a salary sufficient to afford and justify educational loan payments?

- Do you already have employment prospects that will be enhanced by a graduate degree?

- If you need to take an educational loan, how soon will you be expected to begin repayment?

# # #

To read some of my personal thoughts and other research on college loans and education, click here and here and here.

Good luck with your applications!

House Flipping In The Real World-Part 5-Doing Time In Texas

2008-06-25T08:34:00.001-07:00

Note: This has turned into another mini-series, this time on the risks and rewards of real estate investing. To start at the beginning scroll down.

Pretty soon I was out of the picture. Cynthia took over and Alice receded into the background with Hepatitis C problems and liver ailments I really didn't want to know about. I did learn that Alice had a pretty rough life with incest, alcoholism, and some drug abuse that undoubtedly contributed to the Hepatitis C and liver issues.

One doesn't meet ex-cons every day and my curiousity got the better of me, again. "Pretty tough in prison, I bet." "Oh, you kinda get used to it." "Which prison?" "Waco." (My son went to Baylor University in Waco and I didn't know Waco even had a prison. Guess the Chamber of Commerce doesn't go out of its way to spotlight the prison.) How long? Nine years. (Wow) Finally I couldn't stand it any longer, "What did you do?" "Forgery."

Forgery? Nine years for forgery? I think the takeaway here is don't do crimes in Texas unless you want to spend a lot of time indoors.

Plunging ahead. "And Alice?" "Attempted murder...but she got framed." That's what they all say, I thought. "Who did she attempt to murder?" I asked like an idiot, I really don't know when to just shut up. "Her sister's boyfriend. The guy was beating up Alice's sister and well you know..." At that point I did decide to drop it but thought about sending Alice over to see Freddy and then dropped that thought as well.

Cynthia didn't go into a lot more detail except to offer that she was a college graduate and that forgery is one of those kind of 'classy' crimes so she got to be a trustee in prison and did a lot of repair and agricultural stuff where she discovered her love of fixing things other than signatures. And boy, could she fix things. The patched holes fit right in, she put up three light fixtures, found a new(er) backdoor, and filled, sanded and replaced the woodwork where necessary. New paint was next.

In the garage I found the realtor's "For Sale" sign, spray painted it and scrawled my phone number on it with a Sharpie. Sue saw it and wondered if I had had a stroke. Placed it in the front yard and got a call from Marion.

Possible Shorts Trending Downward

2008-06-24T20:31:00.001-07:00

Today’s screen locates stocks that may become longer term short candidates based on the direction and action of their major moving averages. They are all trading below their 200-day moving averages after reaching a new high within the past 6 months or so. This type of action has historically tipped off a longer term downtrend that may be in the stock’s future. As some of you know, I prefer to use options to capitalize on downtrends rather than shorting the stock outright.

See my posts below to understand exactly what I am looking for when placing a short trade or buying put options several months out.

Setups for Selling Stocks Short

Stages of a Stock Breakdown

10-Week Crossing Below 30-Week Moving Average

Stocks Starting to Trend Downward:

PCP – 110.69, Precision Castparts Corp. is trending lower as the stock is challenging (to move above) the 200-d m.a. for the first time since crossing below the average in January. The stock does sport a 10-week m.a. below the 30-week m.a.

GME – 47.38, Gamestop Corp was screened back in March as a stock setting up a possible short but it had one last push before starting to crumble again. Now is the more ideal entry area for a short or put options based on the 200-d m.a. and the 10/30-week crossover.

VOD – 30.10, Vodafone Airtouch is attempting to challenge (move above) the 200-d moving average but doesn’t seem to be having success. The 10-week m.a. is trading below the 30-week m.a.

GR – 57.96, Goodrich Corp. is down more than 10% this week on large volume as the 10-week m.a. also trades below the 30-week m.a. A drop below $56 would violate all recent support.

LLL – 101.90, L-3 Communications is down more than 5% this week on above average volume as it violates the 200-d m.a. (for the second time since 2006). The 10-week m.a. is still above the 30-week moving average so I would not short the stock until they cross.

GOLD – 41.14, Randgold Resources, has started to pullback and violate the 200-d m.a. for the first time since the summer of 2007. It may be early to short for the long term but keep an eye on this stock and the commodity in general. The 10-week m.a. is still above the 30-week m.a. (10-week moving average is now trending downward).

TEF – 83.21, Telefonica is about six months removed from its high as it trades beneath its 200-d m.a. for the first time in years. The 10-week m.a. is now trading below the 30-week.

Please note that it is still early for a few of the names above (they may have some life left for a bounce higher before a longer term decline).

Battling the tendency to hoard

2008-06-24T08:31:00.001-07:00

I have this tendency to hang on to things, thinking I might need them some day. I do pretty good with resisting this tendency to hoard in regard to physical things, but other things? Not so much.

By other things, I mean things like bank accounts and domain names. I always think, “Well, but what if I need them some day?” and so I leave them be, even though I'm not using them. When I wrote about finding balance, I vowed to make some changes in this area.

I started by calling up my credit union and closing my checking account there. I hadn't used it in hm, over a year, and didn't see any reason why I would use it in the future. I felt good after making the call, and I told my husband what I'd done.

He wondered why I'd left the savings account there open. I thought about it, and realized that it was the old “but what if I need it?” excuse. “Well,” I thought, “What if I DO need it?” I could open another one, among other things. This is not a permanent choice. So I called them back up and closed my account entirely — an account that I'd had for over twenty years. I felt even better after that.

Coincidentally, I got the quarterly statement from the credit union in the mail that day. I was so happy, knowing that I'd only get one more statement from them and then that would be IT. One less envelope to open. One less account to reconcile. One less paper to file. Five more minutes in my life every quarter. I felt good. Remembering that good feeling will give me the help I need to continue battling the tendency to hoard.

One Bear Stearns Asset That's Getting Bid Up: Indicted Hedge Fund Manager's Business Card

2008-06-23T20:31:00.001-07:00

Last week, former Bear Stearns hedge fund manager Matthew Tannin found himself sitting in a Brooklyn jail cell, charged with defrauding investors in a collapsed hedge fund. The University of San Francisco law school graduate was quickly released on bail, of course. And friends say he's been pouring his energies into training for a triathlon.

But things are looking up! On Sunday, someone put his Bear Stearns business card up for auction on Ebay. After an initial price of just 99 cents, the card was quickly bid up to twenty dollars. The top bid is now $20.50. Bidding is set to close on Friday. The card lists Tannin's employer as "Bear Stearns High-Grade Structured Credit Strategies, LP"--the now infamously awkward name of the hedge fund he warned his boss, Ralph Cioffi, would collapse even as they continued to ensure investors of its health. Presumably Tannin's got loads of these things in his desk drawers, so perhaps by selectively releasing them he can raise money to cover part of his legal expenses.

The Art of Deception - By Kevin Mitnick

2008-06-21T20:31:00.001-07:00

I recently finished reading ‘The Art of Deception - Controlling the Human Element of Security' which is a book written by Kevin Mitnick. In case you haven't heard of Mitnick before, he is the most famous social engineer ever.

Social Engineering is basically using the social skills of influence and persuasion to get whatever the the persuader wants. It relies heavily on the reliance and exploitation of basic human trust. It's quite similar to being a conman, only usually it's done against a company rather than an individual.

Mitnick talks about various workarounds in security systems that can be bypassed by anyone using the correct lexicon who sounds like they know what they are talking about. He explains different methods of attack and ways to get a hold of information using different scenarios.

A good portion of the book is about shielding your company from attacks from social engineers and possible policies that you might want to employ. This portion of the book is done very well and I would recommend checking it out, espicially if you have never heard of social engineering before.

Need Job Fulfillment? Read this--

2008-06-19T20:31:00.001-07:00

I love Ben Stein. Really like the first part of this, not too crazy about the middle part and back on track for the last part. Go, Ben, go.

Arm Yourself for Job Fulfillment and Retirement Bliss

by Ben Stein

Now for some decidedly non-PC thoughts.

I hear a lot of bragging from my pals about how their daughter got into Brown or their son is being courted by Goldman Sachs or their grandchild just got into a fancy prep school.

Worth Bragging About

What I never hear is bragging from parents who say, "My son just got into the Army Special Forces and is risking his life to keep your son and you alive." I never hear parents saying that their kids got into the 82nd Airborne and are now fighting in Afghanistan to give people there a decent life and keep Al-Qaeda tied down so they don't come here to attack us.

Now, you may say, "All well and good, and it's great that these military families are so modest. But what does this have to do with me?"

It has everything to do with you, my friend.

Why It Matters

First, the military people on the ground -- and those in the ground in Section 60 of Arlington National Cemetery -- are the ones who keep your family alive. They're the ones who comprise the wall around America so that we can play and make money for our retirement and enjoy our children. They, whether in training or in traction, are the ones who keep America humming and keep the noblest dream of freedom alive in our hearts.

Again, you may say, "I agree and honor them, but what does this have to do with a column about money, careers, and finance?" Again, everything.

Day after day I get letters from readers who complain about their jobs and their lives. They have dead-end careers. They have bosses who disrespect them. They have colleagues who are strangers. I know that world. I've been in it.

Real Job Satisfaction

But I also get letters aplenty from men and women in the military. They love their jobs. They do exciting work. Dangerous, of course, but exciting. They have immense responsibilities. They get challenged on a scale they would never have dreamed conceivable. They bring more out of themselves than they knew they had.

Yes, they don't get paid as much as they should. But their pay isn't terrible, and they get extraordinary benefits. More than that, they wake up each morning feeling that they matter. They never have to worry if they're making a difference in the world, because they know there would be no civilized world without them. Their colleagues on the battlefield not only treat them with respect, they would give up their lives for them. They have each other's backs in the real sense of the phrase. (Please, someone at a Wall Street firm, tell me if your colleagues feel the same way about you.)

In short, dear reader, you might want to consider a career in the military. The world needs you, and it just might make you feel like you're doing something very worthwhile with your life.

Light at the End of the Tunnel

Second, I want you to think about retirement in a serious, truthful way. This will tell you that while you're going to be fairly vigorous and sprightly for the first part of your golden years, you possibly won't be for all of them. You'll get a bit weak, often more than a bit confused, and generally not totally "there" for your duties and responsibilities.

This is one of the many reasons I love and recommend variable annuities, which you then convert into a lifetime annuity. Once you've set the annuity on autopilot and start adding to it (always with an eye on fees), it compounds month after month free from tax.

True, when you start withdrawing from it, you have to pay income tax on the amount of gains in the account. But for most Americans, that rate is now extremely low. And you get that check from the insurance company or financial house as regularly as clockwork. It mounts up and up during your contributing years, and then you get the money through the mail.

You don't have to study the market. You don't have to worry about ups and downs. The money just comes in every month or every quarter and you live on it. And it's guaranteed to be there until you die, or for some specified number of years thereafter.

Old age, especially the part of old age that involves loss of powers, is frightening enough for anyone. Old age that involves fear of financial insecurity is truly horrifying. Annuities are a safe, easily accessible, low-cost (if you keep an eye on fees) way out of that desolate valley. Keep them in mind, even if others mock them. They work.

Hardly Working

Finally, I have a correspondent who endlessly asks me if I know ways to get rich that don't involve much work so she won't miss her pedicures. She also wants to work only with nice people who are also smart.

I hate to break this to her and to everyone in her situation, but there's no such job. Making money takes hard work. The people who do it well make it look easy, but it isn't. It's hard work. Get used to it. And the people you work with aren't always nice, either.

There's no royal road to quick wealth. Hard work and disciplined, sensible savings will get you there. Not pedicures.

Saga of the pennies

2008-06-15T20:31:00.001-07:00

So the desk I have at my new job was inherited from a nice lady who is friends with my mentor lady, so I know her pretty well and have spent a lot of time with her. I have returned several things that I found in her desk that I thought she might want. Today, I went to ask her about the pennies. Lots and lots of pennies.

See, in my desk drawer I have a tray, and in the tray are some rubber bands, binder clips, bits of paper, and about 100 pennies. It seems that she just dumped all her excess pennies in this tray, and pushed it to the back. So when I went to give her something that I found in my area today, I asked her about the pennies and if she would like me to bring them to her.

She made a face and said she did not want them. Apparently she really, really doesn't like pennies.

So I put them in a zip bag and brought them home to put in my piggy bank. Hey, it's 100 more pennies than I had before!

And if you were curious, yes, I also pick up pennies off the sidewalk. That's also one more penny than I had before.

OK how dorky am I...

2008-06-13T20:31:00.001-07:00

I got all excited because Boyfriend asked me if I would do his taxes. Normally he mails his things home to his father, who has an accountant do them. Which is really silly, because Boyfriend has exactly one W-2 and an interest statement. It took us about half an hour, at least ten minutes of which was consumed by such activities as trying to get TaxCut to open in a browser (doesn't work in Linux or Firefox) and printing out the sheet he has to sign and mail in because he doesn't know his AGI from last year (which is what TaxCut asks you for to prove your identity.) We then went to the Ohio e-file site and filed that - hells no I would not let him pay thirty bucks to let TaxCut do it! He's getting a couple hundred back which is pretty nice. I have also been telling several other people that I will help them do their taxes, because I just don't see the point in paying a couple hundred for someone at a tax place to do what will take us and the programs in Free File half an hour. And maybe some chips. I do like chips.

I won't file my own until April, although they are done, so I can hang onto the money a little longer.. plus TaxCut still does not have the Ohio form that assesses me a penalty for underpayment. (I probably should have looked into this earlier, since the estimated tax payment deadline was Jan. 15th and I could have made that and saved some bucks. But, since I have no idea what they are going to charge me, I might actually earn more in interest than I will pay in penalty.)

Stock Bias Test Results

2008-06-13T08:30:00.001-07:00

I ran a post on Friday titled, Stock Bias Test, which has become one of the more popular pages on my site in only a few days. My site doesn’t generate a large number of comments per blog post, maybe 2 to 4 per post on average, but this topic got more than 30 people to respond (a huge success in my “comments world”). I guess I do a poor job in sparking conversation based on what I write.

Anyway, everyone seemed to like the exercise of analyzing the charts without a ticker symbol or frame of time.

I asked a few questions:

Which stock would you buy below based on the nameless & dateless charts? (listed 1,2,3,4)

How would you rank them in order of technical characteristics?

Would you avoid buying of any of the stocks below based on price and volume?

Would you short any of the stocks below?

Overall, many of you struck out and did not get the analysis right but I do have to say a that a few of you did a wonderful job.

The best response in the comments that I could find clearly comes from Alex who runs a blog on his google pages.

He nailed every chart (I wonder if he figured them out) as a few of you did.

#1 is the strongest buy. The last candle on #1 sets the high of the chart, therefore it’s moving into uncharted terrritory with no overhead sellers. Also, the last dip down to the 40-period line was on low and decreasing volume, thus few sellers there. Then it spiked off the 40-period MA with strong volume. Then it continued the uptrend for 5 candles.

#3 would be my second strongest buy for similar reasons, but I’d like to see what the next few candles do.

#2 & #4 I would leave alone because of the heavy selling volume on the last dips. But I wouldn’t short them because they are still above the 40-day MA.

I had to hide Aurelien’s answers for chart #3 as he guessed it: AAPL.

Steven Mac may have summed up the approach to the analysis the best by saying:

While the exercise is based upon price & volume alone or techincal aspects, for the record I wouldn’t move into a position unless I can see at least:

1) Risk-to-Reward.

2) RS Strength

3) Industry Group/Sister Stock Information

4) Fundamentals on Ownership

5) Overall Market Direction Factor

Overall – it was a great exercise and a wonderful success. I plan to do more of these in the future (possibly bi-weekly if everyone stays interested).

The original snapshots of the charts I uploaded on Friday are highlighted in blue (on the charts below). As you can see, #1 (BIDU) and #3 (AAPL) were super successful and #2 (MS) and #4 (BSC) broke down.

Proper risk/ reward setups and sell rules would have saved you from losing large amounts of money in MS and BSC so don’t worry if you got them wrong. Worry if you got it wrong and then avoided selling a clear loser.

Long time no see! An update

2008-06-12T20:30:00.001-07:00

Here's an update on my life, for the curious. I decided I missed the pfblog community so I'm going to try to keep up on Penny Foolish.

Job: Between jobs currently. Left my previous job in March as it was not much fun anymore and I was not happy. Boyfriend is no longer a student and has a FT job. So it works out financially (at least someone is paying the rent, that much I am sure of.) On the upside, this means I have had some time to work on a new business, which is still far from complete - mostly because it costs a pretty penny to get custom PHP programming done, and I don't want to spend much until I get another job. (Funnily, if Boyfriend hadn't gotten a full time job, he might have done it on the cheap.) However, since I left, I was able to roll over my 403b into an IRA, so I may convert some of that to Roth if my taxes are going to be quite low this year, so that's sadly convenient. I am anxiously waiting to hear right now, actually, whether I got a job at a place I interviewed on Tuesday, which I really really liked and they seem quite sane. I happened to have interviewed there a year and a half ago, and they did not hire me because I didn't have experience in their specific medical field. Lo and behold, that field is where I got my next job, so I'm well qualified. It's mostly a matter of me (Ms Personality) vs someone else (Ms Way More Years of Experience) but it's definitely making it a tough choice for them so I feel good about that. Also, when I did the initial phone interview and mentioned that I'd interviewed there before, the head doc commented, "We should have just hired you then!" So fingers crossed on that one.

Life: Spending a lot of time with the dog, Maggie (acquired in January 2008) and the guinea pigs (both of which have now cost me an additional $1k or so since they both got uterine cancer and one of them appears to have an abdominal mass. Fun times.) The cat is perfectly healthy as always and is enjoying his new five-foot-tall cat tree which I got for a steal at a neighborhood-wide yard sale. ($25, and you know it's a good deal when 3 other people try to buy it in the 15 minutes while you are going to fetch your car.) Still working on CashDuck, and have recently opened CashDuck Global for the UK, Canada, and Australia. Working piecemeal on the new business. I had a temp job for a while grading the Ohio Graduation Test short answer essays, and as every generation has thought about the next, we are in trouble if this is the future of our country. :) I am cooking up a few other business ideas as well. I had planned on trying to get into business school to get an MBA, but basically if I don't work for the university, it'll cost buckets. So at this point, I figure I don't need an MBA to be a mogul, Andrew Carnegie didn't have one! Perhaps if it takes off and I need help, I will recruit from among my loyal readers like I did for CashDuck. :)

Home: Still living in a rental, although Boyfriend has put in and had accepted an offer on a real house, that we will hopefully move into by the end of July. Due to the inconveniently timed job loss, this was just the way it worked out best. We were also a little nervous (although willing) about being on the mortgage and title together if we weren't married - very messy if we parted ways. I am excited about finally owning something though, because now we can actually fix things when they go wrong, instead of having our landlord's maintenance men half-fix it and then cause a housefly infestation. (In the bathroom.) The house is quite reasonably priced and is right on the border of where the taxes double, so we get a nice neighborhood with low taxes. Although we might have been able to qualify for more, especially if I were working or did stated-income with the CashDuck income, I feel a lot more comfortable with a mortgage/taxes/insurance payment that is about or a little less than our current rent payment. Plus, there are several remodeling projects that we are planning that should significantly raise the value of the home, and its value as a rental if we choose to go that way in the future. Boyfriend also seems to have caught the homeowning bug and is anxiously awaiting being able to finish the basement and put his office in it.

Finances: And now the part you've all been waiting for. Since my quitting coincided nicely with Boyfriend's full time job, we haven't had too much trouble in the cash flow department. Unfortunately I got into some debt from when Boyfriend was unemployed for three months (he didn't make a lot, but it did help) and mostly from taxes (self-employment income is a crap ton of money, and I have essentially paid for the economic stimulus checks of Everyone I Know.) But my retirement kitty has been untouched since we had some savings and I chose to do some balance transfers rather than dip into it. I will need to take out a little, since I am providing the downpayment for the house, but that's 3% of a not very expensive house so it won't be too much. But since I am not on the mortgage, it doesn't much matter how much debt I am in, and while I'm in more than I'd like, it's all on balance transfers at 4-5% interest, or on the 0% for 1 year card I got before quitting, so I'm not overly concerned about how much interest I'm accumulating. Cross fingers that I get this new job - with both of us having full time jobs, that would literally be like rolling in money. Does it mean I'm still a finance blogger at heart if the first thing I think of is, we could save so much money!!

Getting A Bit Worried

2008-06-11T20:30:00.001-07:00

The stock market is doing great and I'm a big bull but I'm getting a bit concerned. As we enter another silly season of presidential politics the Dems are making noises about taxes. Bush's tax cuts disappear in 2010 if nothing is done to make them permanent and the Dems, sorry to say this, rarely show much sense when it comes to taxes and the economy.

If the tax cuts disappear, you can probably bet on a recession. The stock market will smell this out before the fact and the market could tank, big time, in 2008 or 2009.

Never happen? Maybe but let's look at some tax facts courtesy of Investors Business Daily. Tax cuts are fairly far and few between--Coolidge in the 1920s, Kennedy in the 1960s, Reagan in the 1980s and Bush in 2003.

Here are the facts--since the Bush tax cut in May, 2003, real GDP has grown 13%, about 3.2% a year. Pretty good. Compare that to Clinton's last year in office-1.5%.

But not just Bushie. After Coolidge cut taxes, real GDP rose 59% from 1920 to 1929. After the Kennedy tax cut, real GDP rose 42% from 1961 to 1968. Real GDP rose 31% during the Reagan boom.

Other factors? Of course. But tax cuts work and tax increases don't. So all the rumblings on the campaign trail are starting to make me a bit nervous.

Why Is The Federal Reserve Talking So Much About The Costs of The Investment Banking Backstop?

2008-06-09T20:30:00.001-07:00

Although New York Federal Reserve Bank President Timothy Geithner said today that he supports the Fed's moves to rescue Bear Stearns from bankruptcy, he went out of his way to emphasize that this was a response to an acute risk to the financial system.

"It was the only feasible option available to avert default," he said. "We were not confident that the damage could be maintained by other means."

The Federal reserve has been on something of a yakking rampage lately.